Sale of the Century
Page 6
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Major Corporate Ownership of
U.S. Timberlands
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Sidebar: Timberlands in Investors’ hands
After a century of paper company dominance over U.S. private forests, institutional investors are now among the country’s largest owners of timberland. Employing a new group of investment entities called TIMOs (timber investment management organizations) and REITs (real estate investment trusts), investors have snapped up more than $20 billion worth of U.S. forestland in the past decade.
While traditional timber companies pay corporate and dividend taxes on their profits, TIMOs and REITs, which pool money from tax-exempt pension funds, foundations and endowments, operate without these costs. The benefits are substantial: Given the tax savings alone, investors can profit by as much as 20 to 35 percent on a forest sale, without cutting any more trees.
Based on this math, paper companies—faced with stagnant profits and the growing value of U.S. forests as real estate—have found greater returns selling their lands than harvesting them. Five years ago, few TIMOs or REITs were among the top 15 timberland owners. But today, Plum Creek, a REIT, is the largest owner of private timberlands in the United States.
Sidebar: Your very own TIMO
The wholesale shift in ownership of private U.S. forestlands from paper companies to real estate investors may be linked to your own pension, alma mater or 401(k).
Timberland purchases by TIMOs and REITs are fueled by pension funds, university endowments, foundations and other tax-exempt institutional investors. The largest include public pension funds such as the California Public Employee Retirement System, retirement funds such as TIAA-CREF, and endowments from Yale and Harvard.
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