Skip to main content

EcoCrops reports traditional Investors are looking at forestry investments


Traditional Investors interest for forestry investments is on the rise due to the high returns available and its ability to protect capital and the flat lining of other more traditional investments classes protect capital
With the world’s lumber industry beginning to adapt to institutional capital’s stewarding requirements and the environmental, social and governance of the sector, more than ever before the sector seems ripe for the picking.
With underlying demand for forest and timberland products continuing to increase across the world, the growth in the investor marketplace comes as little surprise. What is a surprise is just how fast investors are flocking in, driven by major growth for these products in powerhouses such as China despite China’s recent economic stagnation. Bob Flynn, director, international timber at RISI, told IPE Real Estate: “Even with the recent slowdown in China’s economy and construction, Chinese demand for wood is still increasing. China is the major driver of international trade in forest products.”
Whether investors are growing trees in Europe, North America, or Latin America, they are often producing wood whose end-market will be in China.
IPE Real Estate also reported that there was around $1 billion of institutional capital linked to the timber sector 10 years ago. Indeed, scale will continue to matter as timber will remain a concentrated marketplace despite its growth, with the next few years likely to see a wider range of timber and forest-product strategies being offered by investment managers.
RISI, a Boston-based forestland research and consulting firm confirmed that the world’s top 30 timber investment management organizations hold around $58 billion of managed assets between them, discounting the real estate investment trusts also held by them. Of those, the five biggest firms make up more than half – 53 per cent – of the total, with the biggest 10 of these organizations accounting for around 74 per cent of total assets.
In terms of the US market alone, the index from the National Council of Real Estate Investment Fiduciaries (NCREIF), entitled the Timberland Fund & Separate Account index, revealed a 0.4 per cent gross return in the quarter to the end of September 2015. This followed a gross return of 9.29 per cent over 2014 and 9.76 per cent over the previous three years. The NCREIF requires funds and accounts to have the vast majority – at least 95 per cent – of their assets held in US timber as well as timberland, timber leases, deeds and cutting rights, highlighting the ongoing importance of the sector.
With interest rates at historic lows, the forestry asset class offers investors a total return of value gains and land ownership, highlighting the attraction for investors who have long-term commitments, including pension funds. Forestry also offers real income growth from crop harvesting.  The future demand for forestry products such as wood pellets looks strong Digital Journal
James Grangier, Ecocrops International spokesman, said: “Forestry as an asset class is indeed ripe for the picking, with investors enjoying the multiple returns that come from the investment. From the long term gains including land values appreciating, to the income growth that can result from crop harvesting, forestry is increasingly pressing investors’ buttons.”

Comments

Popular posts from this blog

Trumps biomass policy

In 2007 the USA Federal Government passed the US Renewable Fuel Standard which required ethanol blending with domestic oil in large quantities with frequent increases in amounts of ethanol being used.  The bill was passed to reduce the USA carbon footprint and increase the amount of renewable biofuel being used in the USA. Under the Trump administrations, they have been far less supportive of the biomass blending mandate, granting biofuel waivers to major industry players and allowing the trading of biomass credits to develop. Despite the less than active support for biofuel domestically Trump has been pushing his trade negotiators to get big concessions from his Chinese counterparts by asking them to lower their tariffs on biomass in particular biofuel. China's ethanol demand is expected to grow nearly sevenfold as the country prepares to introduce E10 fuel throughout the country next year. E10 fuel is a fuel using 10% ethanol and 90% petrol. U.S. trade negotiato...

China preparing solar farms in Space

Ecocrops internationa l reports that the Stations would orbit 22,000 miles from Earth and would weigh over 1,000 tons, that is 600 tons more than the International Space Station.  They plan to deploy small and medium stations between 2021 and 2025 and a megawatt level satellite in 2030. Space-based solar power has two major advantages over Earth-based solar power:  due to the orbit they can collect energy 24 hours a day, and they collect more energy as the sunlight is not filtered by the Earth’s atmosphere. Under the plans, huge satellites would be put into orbit to collect the sunlight with huge solar rays.  Once the energy is collected it would be sent back to receiving stations on earth as microwaves.  On Earth, these microwaves would be converted to electricity and fed into the grid. Due to the huge size of the satellites, the Chinese are proposing to fabricate with 3D printer technology and then assemble in the Earth orbit with robots. Pang Zhihao, a re...

Markets just saw the best earnings season since the financial crisis, and nobody cares

Even mildly pessimistic guidance has investors spooked amid macro headwinds Earnings for S&P 500 companies grew by 25.8% in the third quarter, the strongest performance since the third quarter of 2010, when companies benefited from very attractive, recession-era comparable earnings. Nevertheless, from the start of earnings season to the close of trade Friday, the S&P 500 index SPX, +0.22% has fallen 2.7%, the Dow Jones Industrial Average DJIA, +0.49% 1.1%, and the Nasdaq Composite Index COMP, -0.15% 5.5%. “Third quarter earnings were outstanding both on earnings and revenue growth, the percentage of companies beating expectations, and the magnitude of those beats,” Michael Arone, chief investment strategist at State Street Global Advisors. But the selloff that accompanied these announcements is a testament to the fact that “Wall Street doesn’t care what you’ve done in the past. It’s all about what you’re going to do next quarter,” Arone said. The pairing of r...