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Alternatives

Investing in timberland

Aerial view of forest

Enduring principles support the fundamental case for timberland investing

Timberland — and the wood fiber it generates — is vital to the global economy, providing a renewable resource for housing, furniture, packaging, tissue, heat and energy. In addition to providing a source of wood fiber, we depend on forests for environmental services like air and water purification, nutrient cycling and climate regulation. For many decades, timberland was owned primarily by governments, wealthy families, and corporate operators. But that all began to change about 50 years ago, creating a timberland investment landscape that continues to evolve and adapt to changing markets, climate and investor preferences.

Rising demand for timberland in the 1980s corresponded with the restructuring of the forest products industry in the U.S., resulting in a shift in timberland ownership from operating companies to financial investors. Timberland investment strategies built compelling track records over the subsequent years, demonstrating timberland’s ability to produce strong, consistent returns through cash yield and capital appreciation as well garnering increasing recognition as a powerful source of climate mitigation and carbon diversification.

We feel the asset class’s unique characteristics provide portfolio-level benefits that make timberland an enduring part of many institutional portfolios and provide a fundamental case for investing in timberland through five key principles:

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