BIRMINGHAM, AL, July 24, 2020 – The National Council of Real Estate Investment Fiduciaries (NCREIF) has released first quarter 2020 results of the NCREIF Timberland Index. The index returned 0.08% for the quarter, down slightly from 0.11% last quarter and down from 1.04% in the second quarter of 2019. The EBITDDA return, at 0.47%, decreased by 20 basis points from last quarter and 17 basis points from a year ago. Appreciation return in the first quarter was reported at -0.39%.
The Total Timberland Index had a 0.34% rolling one year return, with a 2.47% EBITDDA and -2.10% appreciation return.
Timberland Quarterly Total Return Trends by Region
Returns for each region were relatively flat for the quarter. The South and Lake States regions returned, respectively, 0.33% and 0.28% for the quarter, driven primarily by EBITDDA returns of 0.52% and 0.25%. The Northeast and Northwest regions saw improvements in quarter over quarter returns, from -4.17% and -0.91%, respectively, in the first quarter of 2020 to -0.60% and -0.52%, respectively, in the second quarter of 2020. Appreciation returns across the board were flat or negative for the second quarter of 2020 due in large part to market uncertainty from the COVID-19 pandemic.
Timberland Market Value per Acre in USD by Region
Timberland market value per acre was $1,769 for the second quarter, down from $1,865 in the first quarter, due to both negative returns as well as the addition of new property to the NCREIF Timberland Index in the Lake States region, which typically carries a lower market value per acre than other regions within the index. Each region saw a quarter-over-quarter decline in market value per acre, with South and Lake States regions posting second quarter values per acre of $1,805 and $625, representing moderate declines of -0.49% and -0.62%, respectively. The Northwest and Northeast region market values per acre saw somewhat sharper quarter-over-quarter declines of -3.49% and -1.23%, respectively, with final second quarter values of $2,711 and $1,172.
The NCREIF Timberland Index consists of 458 investment-grade timber properties with a market value of $23.4 billion. This includes 315 properties in the South, 89 in the Northwest, 34 in the Northeast, and 19 in the Lake States. This data enhances the ability of institutional investors to evaluate the risk and performance of timberland investments across the United States.