About 25 years ago, a few insurance companies and big pension funds started buying forests. Timberland was just beginning to be recognized as a hedge against inflation. This new investment strategy has changed industrial forest ownership to its core while giving thousands of investors an opportunity to become "timber owners" without owning a single acre of forest land.
Financial institutions now own about 5% of the forests in the United States. Many of these big institutions are on Wall Street and can be traded on several exchanges. These timber investment management organizations or TIMOs and real estate investment trusts or REITs aggressively manage millions of acres of timber and claim to make returns that have annualized more than 12% after expenses.
TIMOs are for the big investor with hundreds of thousands to millions of dollars to invest. Timber land REITs can be had by the average investor and generally will pay off in dividends which give the REIT a tax advantage. Who are these companies?
- Hancock Timber Resource Group (TIMO)
- Timbervest (TIMO)
- Plum Creek Timber Company (REIT)
- Rayonier Inc. (REIT)
- Potlatch Corporation (REIT)
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