Timberland investment offers many attractive benefits to institutional investors including, risk/return payoff, portfolio diversification, and solid cash flows. The Campbell Group recognizes the importance of timberland as an investment, and creates value for its clients by acquiring and managing high-quality timberland investment properties to optimize financial return.
Traditionally, a large percentage of non-government timberlands has been owned by large, publicly-traded, integrated forest products companies, or smaller family-owned forest products companies. The timber on these lands has been used in company mills to produce paper, cardboard, plywood, furniture, boards, and beams for home and building construction, as well as a host of other consumer and industrial products.
Over the last 30 years, a fundamental change has occurred in the ownership of a significant part of these commercial timberlands. Institutional investors, such as public and private pension funds, have purchased large tracts of timberlands from these forest products companies and, in turn, sold logs harvested from these lands back to the producers of forest products. These investments have generally been made through private equity investments in limited partnerships, commingled funds, and insurance company separate accounts. This trend is expected to accelerate as more forest products companies sell portions of their timberland in order to focus on their core business of forest product development and production.
One of the most compelling reasons for including timberland investment in a long-term institutional portfolio is the ability to enhance the risk/return characteristics of the total portfolio. Timberland has a low correlation to other major asset classes, including stocks and bonds, and is negatively correlated to real estate. Besides being an excellent portfolio diversifier and inflation hedge, timberland makes a good investment because its returns are equal to or better than comparable risk/return investments.