About Timberland Investing

Timber value drives forestland market value

The value of hardwood timber grows significantly faster than the physical volume and is optimized by professional management.

Physical Growth. Trees in the northeastern US grow at 2-3 percent per annum. Professional forest management can channel this growth into more valuable tree species.

Ingrowth. Trees are valued according to the end product. The sale value of a good quality tree increases dramatically with diameter, especially as it grows into the next product class.

Price Growth. Price can grow three ways:

1. From management techniques that improve the quality of individual species, optimizing ingrowth and unit price of favored trees

2. From historical precedent, as hardwood lumber prices (excluding short-term fluctuations) have consistently exceeded inflation for 200 years

3. From shifting global markets, due to dwindling tropical supplies, US hardwoods have gained prominence worldwide and prices for veneer have soared.

Timber value growth and investment returns

The combined effects of physical growth (2.5 percent), ingrowth (3.5 percent), and price growth (2.5 percent) produces:
Real timber value growth of 7-9 percent
Real investment returns of 5-7 percent¹

The concept of hardwood investment has been verified through re-measurement, appraisals and actual market sales on some 100,000 acres of property managed by fountains forestry with the following results:

Physical growth of timber: 2.5 percent
Real timber value growth: 8.1 percent
Real return all properties: 5.9 percent
Real return large properties (+20,000 acres): 7.6 percent

Other factors that add value to timberland

Personal Use: Fishing, hunting, skiing, enjoying the Great Outdoors
Development: Planning permission is easily obtained in most cases
Sustainable Resource: Naturally diverse and well-suited to forest management practices

The forests of the northeastern US are capable of producing some of the finest quality hardwoodtimber in the world. Naturally biodiverse and resilient, these forests are truly renewable and well-suited to intensive use. As deforestation of tropical forests continues and remaining public timber reserves are protected, properly managed and privately held timberland will be increasingly important in providing timber resources to the growing world population. 

Please refer to our Investing in Hardwood Forests and Valuation and Appraisal of Timber white papers for more information.

See newsletters related to timberland investments written by forest economist Jack Lutz, PhD.

Contact michael.tragner@fountainsamerica.com to find out more about timberland investing.

¹Real Timber Value Growth and Real Investment Return figures are based on average actual results calculated on fountains managed timberland investments.  These timberland investment returns are consistent with widely published data by state, private and academic institutions.  As each timberland investment return will vary depending on the purchase and sale prices, and inherent attributes of the land, buyers may not achieve similar returns.  Investors are encouraged to hire independent qualified professionals prior to acquisition, to evaluate property specific potential investment performance calculations. 

Serving New England including Vermont, New Hampshire, and Maine; the state of New York;
and much of the Appalachian region including West Virginia, Kentucky and Tennessee.

Fountains Forestry Inc., Fountains Land Inc. and Fountains Spatial Inc. are subsidiaries of Fountains America Inc.

© 2008 Fountains America Inc., Pittsfield, NH. All rights reserved.