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Yahoo
4 days ago
- Business
- Yahoo
Forests Might Be The Hottest Asset Class You're Not Watching. They Pay A Return, Hedge Inflation And Provide Planet-Friendly Optics
Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. Timberland properties are becoming a go-to investment for the wealthy, and regular investors are starting to catch on. An Overlooked But Powerful Portfolio Play Timberland is giving investors a chance to earn steady returns, hedge against inflation and diversify their portfolios with a sustainable asset. 'Forest investors are typically not looking for high risk and high return,' Campbell Global President Angela Davis told Forbes. They're looking for yield, inflation protection, 'environmental virtue' and something that doesn't move with the stock market. The company, which was acquired by J.P. Morgan Asset Management in 2021, manages $10 billion in timberland. Don't Miss: The same firms that backed Uber, Venmo and eBay are investing in this pre-IPO company disrupting a $1.8T market — Accredited Investors: Grab Pre-IPO Shares of the AI Company Powering Hasbro, Sephora & MGM— Davis oversees 1.4 million acres of timberland across the U.S., Australia and New Zealand. According to her, a properly managed forest can deliver around a 4.4% annual yield from harvested wood alone. Add long-term log price growth and carbon credit sales, and total returns can hit 7%. 'Let it grow. Sell a higher volume at a higher price later,' Davis told Forbes about her long-term approach to timber prices. Unlike public real estate investment trusts tied to mills, she can afford to be patient. Even with all the natural obstacles like wildfires, pests, protected areas, and hungry bears, Davis says sustainable forestry still works. Her team of 75 foresters actively manages risk, cuts compromised trees, and builds firebreaks. Trending: 'Scrolling To UBI' — Deloitte's #1 fastest-growing software company allows users to earn money on their phones. Timber REITs Bring The Forest To Your Brokerage Account Public investors don't have to buy land to get in. Shares of timberland REITs, like PotlatchDeltic Corp. (NASDAQ:PCH), Rayonier Inc. (NYSE:RYN) and Weyerhaeuser Co. (NYSE:WY) offer exposure without the hassle. These REITs pay dividends, and all are traded on major exchanges. PotlatchDeltic had a 4.18% dividend yield, Rayonier offered a 4.56% yield, and Weyerhaeuser had returned 3.26% year to date. Timber REITs are attractive for sustainability-minded investors because timber is a renewable resource, and many REITs follow sustainable forestry timberland comes with risks. Prices can swing with housing markets, and wildfires or new regulations can damage profits. For those interested in exchange-traded funds, there are just two timber-focused options: the Guggenheim MSCI Timber ETF (NASDAQ:CUT) and the iShares S&P Global Timber & Forestry Index ETF (NASDAQ:WOOD). But with only three timber REITs in the market, these ETFs include other lumber-related businesses like paper production. Read Next: $100k+ in investable assets? – no cost, no obligation. This article Forests Might Be The Hottest Asset Class You're Not Watching. They Pay A Return, Hedge Inflation And Provide Planet-Friendly Optics originally appeared on
Forbes
01-08-2025
- Business
- Forbes
Want To Hedge Against Inflation? Buy A Forest
I nvest capital and save the planet at the same time. Own a forest. That's the selling proposition from Angela Davis, who, as president of Campbell Global in Portland, Oregon, oversees $10 billion on behalf of institutions and wealthy individuals. So far she has acquired 1.4 million acres of trees, the majority in the U.S., with some in Australia and New Zealand. Do not expect from timberland the kind of action you'd get from a semiconductor stock. 'Forest investors are typically not looking for high risk and high return,' Davis says. What are they looking for? Four other things: a yield, an inflation hedge, a portfolio-stabilizing lack of correlation to the stock market and the environmental virtue that comes from taking carbon out of the air. Pedro Oliveira for Forbes The yield comes naturally. Trees grow. Douglas fir, the money tree in the Pacific Northwest, is harvested at 45 years of age. A timberland property that contains tracts evenly distributed over the age spectrum will have an average age of 22. This means the wood that can be taken annually from mature trees comes to 4.4% of the total volume of wood in the forest. That 4.4% botanic payout is the starting point for expected return. Log prices, sensitive to homebuilding demands, are extremely volatile, but over the long pull they, and the residual value of cleared land, should keep up with inflation. Add in inflation and a 7% nominal return is within reach. Beyond that, Davis aims to beat the averages by astute management of the land. Her trees absorbed a net two megatons of carbon dioxide last year, generating salable carbon credits. She has 75 foresters on her staff. They keep an eye on bugs and arrange for culling of compromised trees before the damage can spread. When blazes threaten, they bring in bulldozer crews for fire breaks. An acre of Doug fir, left to grow and harvested in year 45, might yield 24,000 board feet of saw timber, worth $17,000 when it arrives at the sawmill. Sounds pretty good, given that forests in Oregon and Washington west of the Cascade Mountains can be had for $4,000 to $7,000 an acre. But there is a long road between the standing tree and the sawmill's check. Landowners in the Northwest lose at least half their revenue to the cost of growing and harvesting wood. Trees must be felled with dangerous and expensive equipment, dragged up muddy and steep slopes with cables, cut into lengths, loaded onto trucks and hauled. Slash (limbs and broken pieces) must be burned or chopped. Reforestation, done right, delivers better yield than would come from natural regeneration, but it's expensive. 'You overplant, then thin, like carrots in a garden,' Davis says. In the years between seedlings and harvest, a portion of the acres will have been lost to fires, floods, insects and disease. A fraction of the acreage—16% in a recent Campbell acquisition on the Olympic peninsula—cannot be cut because it's near a trout stream or an owl's nest. Bears must be bought off; they come out of hibernation so ravenous that they rip the bark off trees unless they are given food baskets. A timber management company like Campbell (acquired in 2021 by JPMorgan Chase) has to be paid. Campbell doesn't disclose fees beyond saying it gets, in hedge fund fashion, a percentage of assets plus a performance bonus. What's left for the investors? The ones who signed up for Campbell's recent $2.3 billion funding round deserve to call themselves contrarian. Although timberland has terrific years, such as between 1991 and the financial crisis, it has done poorly of late. Campbell doesn't release results for any of its partnerships, but you can look at publicly traded real estate investment trusts that own timberland. In the past decade they have delivered a pathetic 4% a year on average, vastly underperforming the stock market. How To Play It By William Baldwin Buy timberland via shares in real estate investment trusts, handy in taxable accounts because their dividends come out as long-term capital gains. The enterprise value (common market capitalization plus debt minus cash) of Rayonier Corporation is $4.4 billion, which comes to $1,800 per acre if you assign no value to its mills. At PotlatchDeltic the corresponding number is $1,900. At both, you get a bit of Douglas fir in the Northwest, but the dominant holding is southern yellow pine, whose price is depressed because of overplanting 30 years ago. Presumably the industry will grow out of that problem. Yields are 4.9% at Rayonier and 4.7% at Potlatch. William Baldwin is Forbes' Investment Strategies columnist. Davis protests that the REITs don't have her flexibility with timing. They all are attached to mills, which they are motivated to keep running. So they cut trees even in years when prices are depressed. Her response to a dip in the log market: 'Let it grow. Sell a higher volume at a higher price later.' Davis was born in Portland 60 years ago, at a time when lumber was the region's economic mainstay. Business is more diversified now, but, she says, 'it's hard to grow up in Portland and not have a connection to the land.' She remembers gleaning hazelnuts as a youngster on a family orchard. Her connection to forestry, though, began not with the outdoors but with spreadsheets. After getting a degree in finance at nearby Linfield University, Davis worked as an auditor and then as an investment analyst for the Oregon state treasurer. She joined Campbell at the turn of the century and will become its chief executive in October. Her job is to use geographic information, climate and tree volume data to predict what will come out of a harvest decades later. A big part of this, as with a vineyard, is assessing terroir—what growth rate can the soil and the rain support? The spreadsheets go out two growth cycles. Ninety years is a long waiting time for even the most patient investors, but they don't have to stick around. A large part of the return comes not from harvesting but from selling acres after the trees have put on some weight. Campbell's last fund has a 12-year exit option. Beginning in the 1980s, environmentalists engineered drastic cutbacks in harvesting from federal timberland. President Trump wants to bring back the chainsaws. Despite the potential competition with her assets, Davis is not opposed. Untended forests are more likely to burn, she says, undoing decades of carbon absorption in a flash. 'For forest health you should be doing some harvesting,' Davis says. 'Take out the dead and dying debris. Put in some roads.' She may have a woodman's ax to grind, but she has a point. If those roads reduce fire risk, they might even find favor with the owls and the bears. More from Forbes Forbes The Best Brokers For Saving On Capital Gains Taxes By William Baldwin Forbes Is Your Broker Gouging You? Use This Guide To The Best Buys In Money Markets By William Baldwin Forbes How To Use Gold And Other Hard Assets To Hedge Against Inflation By William Baldwin Forbes How To Boost Your Cash Yield At Fidelity, Vanguard, Chase And Schwab By William Baldwin Forbes The Best Places To Retire Abroad In 2025 By William P. Barrett
Yahoo
08-04-2025
- Business
- Yahoo
J.P Morgan Asset Management's Campbell Global Announces Close of $1.5 billion Forest & Climate Solutions Fund II
-timberland management strategy exceeds fundraising target and reaches $2.3 billion with additional strategy commitments- NEW YORK, April 8, 2025 /PRNewswire/ -- J.P. Morgan Asset Management today announced the close of Campbell Global's Forest & Climate Solutions Fund II at $1.5 billion, exceeding its fundraising target. The fund launched in 2022 with a fundraising target of $1 billion and was the first fund launched following J.P. Morgan's acquisition of Campbell Global in 2021. In addition to the fund, Campbell Global also closed several separate account mandates, bringing the total capital raise to $2.3 billion. "We're very pleased to put our decades of experience in global timberland management to work for this quality group of investors interested in responsibly managed forests that generate income and value-appreciation and are a positive climate solution. Along with the financial attributes, the removal of carbon, protection of water, and enhancement of biodiversity and habitats encompass some of the important work we do in the forests on behalf of our investors," said John Gilleland, Chief Executive Officer of Campbell Global. The global fund leverages Campbell Global's expertise managing commercial forestland across OECD regions. It uses a blended approach that will support traditional timber production and carbon sequestration and offers the benefits of nature-based carbon removal and storage, biodiversity and other related benefits. Commitments in the fund include qualified U.S. investors, international banks, European pensions, insurance entities and asset managers. "This strategy is a unique investment option for our clients, offering diversification from traditional asset classes and income generation, and timberland management is a proven inflation hedge," said Jed Laskowitz, Global Head of Private Markets and Customized Solutions, J.P. Morgan Asset Management. "Given its decades of experience, Campbell Global is well positioned to take advantage of the opportunities in this sector." The Forest & Climate Solutions Fund II currently holds three unique timberland properties totaling ~212,000 acres (~87,700 hectares) located in the U.S. Pacific Northwest and U.S. South, with additional capital to deploy. The properties are 100% managed in accordance with sustainable forestry initiative standards, designed to protect the diverse wildlife and riparian forests across the properties while being continuously managed for both carbon capture and timber production to meet growing demand for sustainable building products and other uses. About Campbell Global Acquired by J.P. Morgan Asset Management in 2021, Campbell Global, LLC is a worldwide investment manager focused on timberland. Based in Portland, Oregon Campbell Global is recognized as an authority on both forest management and timberland investing, with over four decades of experience in timberland management and value creation. A pioneer in the field, they have managed more than 5 million acres worldwide for pension funds, foundations, family offices and other institutional investors since inception. Campbell Global has $10.1B Asset under Supervision and 1.4M acres under management worldwide as of 12/31/2024. About J.P. Morgan Asset Management J.P. Morgan Asset Management, with assets under management of $3.6 trillion (as of 12/31/2024), is a global leader in investment management. J.P. Morgan Asset Management's clients include institutions, retail investors and high net worth individuals in every major market throughout the world. J.P. Morgan Asset Management offers global investment management in equities, fixed income, real estate, hedge funds, private equity and liquidity. For more information, visit: About JPMorgan Chase JPMorgan Chase & Co. (NYSE: JPM) is a leading financial services firm based in the United States of America ("U.S."), with operations worldwide. JPMorganChase had $4.0 trillion in assets and $345 billion in stockholders' equity as of as of 12/31/2024. The Firm is a leader in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing and asset management. Under the J.P. Morgan and Chase brands, the Firm serves millions of customers in the U.S., and many of the world's most prominent corporate, institutional and government clients globally. Information about JPMorgan Chase & Co. is available at View original content to download multimedia: SOURCE J.P. Morgan Asset Management
