A sound investment in rocky times: that’s what private investors are thinking of the 92,000 acres of Adirondack forest they recently purchased from The Nature Conservancy. The property, part of the Conservancy’s epic Heart of the Adirondacks project, represents more than half of the 161,000 acres the Conservancy purchased from Finch Paper LLC in June, 2007.
The lands were sold subject to a strict and binding conservation easement designed to ensure the long-term health of river corridors, wetlands, and other valuable ecological features.
The sale of the forest timber land was always part of The Nature Conservancy’s protection plan. The key was in finding the right partner, one that could balance its own bottom line with the Conservancy’s commitment to conservation and the community.
Enter ATP Timber Invest, a subsidiary of Danish pension fund ATP and investor client of the RMK Timberland Group, based in Atlanta.
While the past decade saw major timber companies divest themselves from every major tract of timberland in the Adirondacks, the Conservancy’s recent sale to ATP may indicate that timber continues to be a safe investment despite the bear economy.
Indeed, according to the Wall Street Journal, from a financial perspective, timber forest purchases may represent one of the safest investments in this economic environment. The Journal asserts timber values are outperforming real estate, stocks, and commodities like oil, corn and copper.
What’s more, holding on to timber investments for 10 years or more could return asset value appreciation of around 4%, a figure comparable to high-grade bond yields. That’s because, as one investor put it, “as long as there’s sun, trees will grow.” In addition to the steady rate of appreciation, timber can also be counted on to generate steady annual returns through regular, sustainable harvesting.
The growing demand for eco-friendly forest products is another reason why investing in sustainably managed timberlands makes good sense. Widespread media attention on the adverse impact of unmitigated forest destruction in the Amazon and Indonesia has raised the public’s awareness of (and appetite for) sustainably harvested products, like those produced under the Sustainable Forestry Initiative and Forest Stewardship Council certifications. RMK must adhere to both standards as a condition for the purchase of the Adirondack timberlands.
Socially responsible investors are increasingly attracted to opportunities that can reconcile market forces, consumer demand and environmental stewardship. The ATP Group of Denmark is, in fact, a signatory of the United Nation’s Principles for Responsible Investment.
The sale of the land to a qualified timber investor is part of the Conservancy’s large-scale efforts to protect forestlands around the world — many of which are working forests supplying sustainably harvested timber. Beyond their immediate commercial timber value, working forests can provide less tangible economic benefits like clean air, clean water, flood control and wildlife habitat.
Over the past five years, the Conservancy has protected 3.5 million acres of forestlands — at a time when nearly one-half of Earth’s original forest cover is gone and global deforestation rates continue to rise.
The Nature Conservancy believes that the timberlands being sold can accommodate compatible uses while still contributing to the overall ecological health of the Adirondacks, which is part of the world’s temperate deciduous forests, the most degraded and fragmented forest type on the planet.
Finch Paper LLC currently operates the paper mill founded by Finch, Pruyn & Company in 1904. A substantial employer in upstate New York, the mill produces about 250,000 tons of paper. Under the terms of the sale, RMK will continue to provide green-certified pulpwood to the Finch Paper mill.
Yet despite the solid long-term investment value timber holdings may offer in today’s volatile markets, timberlands are expensive to own and manage. As a sound business strategy and to honor the long tradition of recreational leasing, RMK assumed some 60 hunting leases as part of its timberland purchase. That’s good news for the leaseholders as well as local merchants who welcome their business during the high hunting and fishing seasons.
Finally, with more than 90 mountains, 70 lakes and ponds and over 415 miles of rivers and streams, the Heart of the Adirondacks hold great promise for public recreation like hikers, paddlers, campers, birders, and shutterbugs. Read about the plan for the future of all 161,000 acres here.January 15, 2011