A Disciplined Strategy
FIA adds significant value by adhering to our core philosophies of capitalizing on market inefficiencies and leveraging our deep network of relationships in the industry. We evaluate more than one hundred potential investment opportunities each year which represents the majority of the institutional global timberland properties on the market. Through a rigorous screening process, our team identifies attractive investment opportunities, with only a select few making it to our Investment Committee for review. Learn more about the tenets of our acquisition philosophy below.
Acquisitions Since Inception
A hallmark of our valuation philosophy is the belief that timberland assets should be valued primarily, if not exclusively, on their ability to generate future cash for the investor from timber harvests, recreational leases, environmental goods and services, etc. Therefore, FIA analysts primarily use basic discounted cash flow techniques to place values on potential acquisitions. These techniques start with estimates of future yields and silviculture costs to develop a forest management plan and management activities such as harvests, fertilization, and competition control to best understand and quantify the intrinsic value of forestland acquisitions.
Risk comes in many forms and understanding the risks of any potential investment is critical to ensure we seek appropriate risk adjusted returns for our clients. For example, FIA assesses market risk by understanding the number and health of mills and wood using facilities around a property. When looking outside the U.S., we include assessments of country and currency risk. All projected investment returns are sensitivity-tested to understand how changes in markets may impact client performance.
Identifying Market Inefficiencies and Opportunities
Our long history of acquiring and managing timberland investments allows us to identify market inefficiencies and other attractive opportunities in the market. As in many other asset classes, certain timber properties may be over or undervalued by the marketplace at any given point in time. Careful attention to market conditions and the behavior of other buyers allows us to also identify opportunities where sellers might be highly motivated to sell or where we can structure an acquisition to meet a seller’s unique needs.