Northwest US leads timber returns in 2017

Big deals have pulled valuations upwards in the South and Northwest, while Lake States assets have depreciated so steadily in recent quarters that they are now close to 2013 levels.

Regional disparities are growing ever larger in US timberland as per-acre values of Northwestern properties reach an average worth about four times the typical Lake States asset.

The latest update to the National Council of Real Estate Investment Fiduciaries’ Timberland Property Index shows the Northwest posting 3.85 percent returns in Q4 2017, largely driven by appreciation returns at 2.86 percent. Lake States returns, meanwhile, were at -3.04 percent, with properties depreciating 3.56 percent.

NCREIF attributed the divergence to strong deal activity in the South and Northwest. “In particular, recent deals such as Roseburg’s acquisition of 158,000 acres in the South will impact appreciation returns via appraisals. That acquisition was at an estimated $2,025 per acre, well above the $1,775 average value per acre in the South for the fourth quarter,” the council said.

This trend, prevalent over the past three years, has pushed overall timberland values per acre to $1,808 – nearly three times the $686 value observed in the Lake States. That region has been sliding steadily in recent years, to the point that it is now close to levels last observed at the end of 2013.

Overall, returns were strong in Q4. At 1.52 percent, they surpassed both Q3 and Q4 2016. Appreciation and EBITA growth contributed about as much to total return.