1 / 6

The Rise (and Fall?) of TIMOs

The Rise (and Fall?) of TIMOs. Ownership Changes in US Forestland. Clark S. Binkley, Ph.D. Managing Director International Forestry Investment Advisors Cambridge, MA +1 617 945 9059 tel +1 617 868 1096 fax cbinkley@ifiallc.com e-mail www.ifiallc.com website. Agenda.

stu
Télécharger la présentation

The Rise (and Fall?) of TIMOs

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. The Rise (and Fall?) of TIMOs Ownership Changes in US Forestland Clark S. Binkley, Ph.D. Managing Director International Forestry Investment Advisors Cambridge, MA +1 617 945 9059 tel +1 617 868 1096 fax cbinkley@ifiallc.com e-mail www.ifiallc.com website

  2. Agenda • A brief history of forest-sector dis-integration in the US II.Why has this happened? III. Some thoughts on the future IV.Implications: why should we care?

  3. I. Dis-Integration of the US Forest Sector • 20+%/yr change since 1980s • A brief history: • First funds in 1970s: Travelers, Eastern Airlines; British Coal Board • Private equity grew out of farm lending • Securitization provided liquidity; protection: IP and Rayonier MLPs; Plum Creek spinout from BN Source: HTRG Research

  4. II. Why has this happened? • Good risk-adjusted returns from timberland as a stand-alone asset: insights from academic research • Total Return = 15.3% 1987-2005 • Low correlation with other assets diversification/low risk • Good inflation hedge, esp. for unexpected inflation • Accounting treatment for public companies • According to American accountants, trees don’t grow! • Even worse, they depreciate (v. IFRS) • ERISA of 1974: private pension funds must diversify • Tax Treatment • IRC 631(b): capital gains tax preference for individuals • IRC 631(b): passive income for tax-exempt institutions • REITs: no tax for “qualifying” corporations

  5. III. Some thoughts on the future • TIMO/REIT growth in the US is just about over • Lots of TIMO/REIT land will be sold in smaller parcels • “HBU” sales ~ 1/3 total return? • Fixed-term funds started in the 1980s are winding down • “We’re eating our babies”—anonymous TIMO forester • Forward-looking returns are falling • Timberland markets are more efficient • More capital pressing against a relatively fixed asset base • A plethora of TIMOs and private-equity funds have emerged • “Quality” of returns is deteriorating

  6. IV. Why should we care? • “Private-equity investing leads not only to value creation, but also to economic and social benefits, for example, increases in employment, innovation and research and development” H. Kravis, 2007 • What about the forest sector? • Positive focus on forest management • Marked reduction in R&D • Ever more fragmented ownership (but not necessarily a more fragmented forest) • Investors susceptible to economic inducements • New-land planting in the US? • Meltdown scenario?

More Related