NCREIF Timber posts 10.48 total return in 2014

Timberland assets are approaching the return levels of property assets in the US, according to The National Council of Real Estate Investment Fiduciaries.

US timberland assets returned 10.48 percent in 2014, closing in on the returns offered by property assets in the country and continuing a 5-year upward trend, according to The National Council of Real Estate Investment Fiduciaries (NCREIF).

The NCREIF Timberland Index returned 6 percent during the fourth quarter of the year as annual appraisals bumped returns up from just 1.05 percent in the third quarter and 1.08 percent in the second quarter. The fourth quarter return also beat the NCREIF Property Index’s 3.04 percent return. The property index returned 11.82 percent across the year.

Income accounted for 2.86 percent of the total investment return average for timber during the year; price appreciation contributed to the remaining 7.46 percent. This is a 77 percent increase on the 5.92 percent total return recorded for 2013.

Ryan Reddish, chair of the Timberland Committee and acquisitions analyst for Forest Investment Associates, put the strong performance down to “renewed demand for wood in domestic markets”, in a statement.

Since the inception of the index in 1986, the average annual return for timberland has been 12.59%.

The NCREIF Timberland Index consists of 452 investment‐grade timber properties worth just under $24 billion. This includes 320 properties in the South, 83 in the Northwest, 16 in the Lake States, and 28 in the Northeast.