Latin American Timberland
Historically, timberlands have offered investors strong long-term returns with regular cash yields, low volatility, low correlation with many traditional asset classes, and a positive correlation with inflation. Timberlands have become an attractive portfolio hedge and diversifier to many institutional investors.
Location of timberland investments held by U.S. institutional investors. Source: Timberlink 2011.
Institutional investment in timberlands has increased dramatically over the past decade, particularly in traditional geographies such as the USA, Australia, and New Zealand. This concentration of investment, coupled with a growing reliance by many North American timberland managers on Higher-and-Better-Use real estate sales to support returns, has led to widely recognized yield compression in these geographies. Many timberland investors now report nominal returns on investment in US timberlands of 4-7% p.a., while nominal returns of 14-18% p.a. are achievable in Latin America.