Investment in timber and timberland has historically been coveted for multiple reasons. A primary reason is that the investment is supported by biological growth. The land or investment ‘site’ is the foundation for biological growth. The ‘site’ resources are leveraged by the chosen species. The chosen species is managed with specific silvicultural (culture and management of the trees) prescriptions that affect the timing and magnitude of timber volumes produced. The ‘site’ exists in a forest products market, with mills that utilize wood with various size and quality specifications. All timber production is subjected to a series of risks, including environmental risk, social and regulatory risk, and market risk. So, the forest investment is in large part driven by the decisions of:

• 1.Where to invest (site)?
• 2.What tree species and level of tree improvement to plant (genetics)?,
• 3.How to manage the genotype on the site (silviculture)?
• 4.How to manage or offset risk?

Within each of these four real-world ‘questions’ are many, many important details. The finances around these questions, the details, and the post-risk results all interact to determine the rate of the return for the investor. In the Progressive Forest Investor Blog, we will discuss and learn about investment details and management systems. Subsequently, we will learn to practice forest investment at an advanced level through applying advancing knowledge empowered by the applied research, advanced tools, and strong analysis capabilities developed through FORTE.

Further empowering the investment return, are the ‘arts’ beyond just growing timber. These include:

• 1.Maximizing the ‘buy’ – Identifying, negotiating, and buying the property at the ‘right’ price and terms? Many say that the money is really made at the time of the ‘buy’.
• 2.Recognizing and capitalizing on alternative and creative income solutions
• 3.Opportunistic or planned real estate sales
• 4.Advanced timber sale planning and execution
• 5.Optimizing inventory (opportunity) throughout the rotation

• a.Inventory creation is initiated at the time of timber stand establishment
• b.Inventory is maintained or empowered through optimized, mid-rotation management treatments
• c.Inventory (opportunity) is maximized at the time of sale and harvest through optimal marketing and merchandising.

You can have the best investment strategies in the forest investment world, but if you don’t execute well, realized performance can fall substantially below expectations. This ‘falldown’ effect has to be managed. Fall-down can come in the form of:

• 1.Less than optimal ‘site’ analysis (of potential and limitations)
• 2.Less than optimal genotype allocation and silvicultural prescription
• 3.Less than optimal operational execution

Optimizing the strategy, execution, and the ‘fall-down’ management is the business of forestry. For the investor, the business is just as crucial as the biology of forestry. Welcome to FORTE’s Progressive Forest Investor’s Blog!

Derek Dougherty, Director

Forest Owners Research & Technology Exchange, LLC