Many questions often arise when the subject of timberland investments is discussed.  This portion of the FIA website was designed to answer some of the more common questions associated with timberland investments.  If you have any additional questions or would like to discuss timberland investments in further detail, you may call us at 404.261.9575 or you can fill out the Request Additional Information form.

Answer.  A very good question and one we frequently get. The U.S. Forest Service has kept very good records of the actual number of timberland acres affected by any of the natural risks such as fire, wind, ice, disease, etc. and the risk of having any one acre damaged by a natural risk is less than 1/2 of one percent. That is on all timberlands. On intensively managed lands, such as those FIA manages for its clients, the risk is much less.

Additionally, the risk varies by region.  In the South, the average number of acres burned is about four.  This is because of a very good detection and suppression system, the natural topography of the land, and excellent road systems.

Answer.  We frequently have more than one client that is in the acquisition or portfolio development mode. Given our emphasis on diversifying each account across geographic regions, as well as by age of timber, a specific timberland investment typically "fits" into one portfolio better than another due to the needs of each portfolio. For example, if client "A" committed $50 million and their portfolio was 75% invested, the account may "need" a particular age of timber or exposure to a geographic region to complement their existing holdings and to further diversify the portfolio.

If an investment fits more than one client's portfolio, our policy is to physically divide the timberland investment, if practical. A separate appraisal is completed for each piece of the deal. Typically, when acquiring timberland properties of 5,000 acres or more, the age and quality dispersion is such that each client receives a property of very similar quality.  If it is not practical to divide the property, then it would go to the account with the oldest commitment. 

Answer.  Typically, an investment in timberland is best suited to, although not limited to, a 10 - 20 year time frame.

FIA has years of experience detecting unique opportunities to improve earnings through timely land sales. Sales are "triggered" when the return from selling is substantially higher than the projected return from holding for timber production. Successes in this area have enhanced returns and improved the quality of clients’ portfolios. For example, FIA has sold several small parcels at rates of return far exceeding portfolio target returns. 

The knowledge required for consistently sound decisions on when, where and how to sell is a major advantage of the services provided by FIA. Timberland portfolio managers regularly look for land sale opportunities. As an aid to the sale decision, they analyze the projected future cash flows of the property, including expenses and timber sale income under a range of timber price assumptions. As a general rule, properties are sold when net sale proceeds are greater than the present value of estimated future cash flows.

Answer.  No, you do not have to wait until the investment is sold to receive a cash return.   Cash flow is generated throughout the life of the investment from the sale of timber, recreational leases and various other sources.  

Answer.  For more than three decades timberland has been very competitive with stock market returns and has out-performed both fixed income and conventional real estate.  Timberland portfolios are expected to generate long-term returns in the range of 6% - 10% above inflation.  Strong returns allow timberland investments to meet portfolio diversification needs while enhancing overall portfolio performance. 

HOME | SITE MAP | EMPLOYEE RESOURCES | SEARCH