Timber Funds Get Impacted by Pacific Northwest Fires and Hurricane Laura
Posted on 09/20/2020
Public pensions, endowments, and foundations have allocation to timberland funds in the United States. Rayonier Inc. bought Poulsbo, WA-based Pope Resources on May 8, 2020. Pope Resources has an investment management unit called Olympic Resource Management LLC. Olympic Resource Management LLC manages timberland portfolios owned by Pope Resources and investors in the Timber Funds.
Hurricane Laura
Rayonier disclosed that on August 27, 2020, Hurricane Laura made landfall near Cameron, Louisiana as a Category 4 hurricane and progressed inland through southwestern Louisiana. Based on currently available information, Rayonier estimates that approximately 10,000 acres of their timberland properties in Louisiana sustained severe damage from the storm, the majority of which appear to be contained in recently thinned stands.
Rayonier also revealed that the Beachie Creek fire in Oregon spread through approximately 9,000 acres of land owned by ORM Timber Fund II, which Rayonier manages and in which Rayonier holds a 20% economic interest, and the Slater fire in Oregon spread through approximately 1,000 acres of land owned by ORM Timber Fund IV, which Rayonier manages and in which Rayonier holds a 15% economic interest.
Rayonier already had sales impacted in the Pacific Northwest Timber segment due to lower log export volumes resulting from the implementation tariffs by China in late 2018 and competition from European salvage volume. There was significant increase in European Spruce salvage volume flowing into the China market. Before 2010, China was not a major importer of Pacific Northwest Timber, Japan was the biggest.
Disclosed in early 2020, Olympic Resource Management was rated as an attractive third-party private equity timber fund business with 141,000 acres under management and total assets under management of US$ 545 million based on the most recent appraisals at the time. Fire, insect infestation, severe weather, disease, natural disasters and other causes can reduce the volume and value of timber that can be harvested.
