optimal global timberland investment portfolios · 2019. 4. 18. · optimal global timberland in...

IN THIS ISSUE:Optimal Global Timberland Investment PortfoliosSuppose you have decided that timberland is an attractive addition to your investment program. The next logical ques-tion is: “what kind of timberland and where?” This research note uses modern portfolio theory (mean-variance optimi-zation) to help answer that question. Several researchers have addressed this question in the past but the investable universe has evolved, new markets have emerged, wood science and engineering technology has advanced, and time has passed. More and different information is now available to support prudent investment decisions. And, this new information provides some surprising results.

APPROACH. The first step in the analysis is to define the universe of invest-ment opportunities available to an institutional investor. We do this mostly by considering where institutions have invested, with a few caveats. We omit Russia, Argentina and all of Africa on the grounds that the vast ma-jority of investors would find those regions to carry excessive political risk. Otherwise we include North America (US, Canada), Latin America (Brazil, Chile, Uruguay, Panama, Costa Rica), Europe (Sweden, Finland, Poland, Estonia, Latvia, Lithuania, Spain, Portugal) and Asia (Indonesia, Malaysia, China). We define the investment opportunities available in each country by specifying the species/forest type and management strategy. For ex-ample, two investment opportunities included in the model are (i) eucalypt pulpwood in Chile and (ii) pine sawtimber in the US South. One of the more interesting investment opportunities we include is “conservation forest-ry”, an investment in US timberlands where some of the return is generated by ecosystem service payments (Binkley, 2017).

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greenwoodresources.com

Q4 2017ISSUE NO. 1

Risk efficient timberland investing

Gains in west coast log markets

US lumber production at 10Y high

Brazil pulp export growth

CA carbon cap-and-trade program extension

Using LIDAR to improve forest management

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• one that minimizes risk (“Risk Min”);

• one that maximizes returns (“Return Max”);

• one that maximizes the risk-adjusted returns as mea-sured by the Sharpe Ratio (“Sharpe Ratio Max”); and

• one that provides a strong expected return without much increase in risk compared to the Sharpe Ratio Max portfolio (“8.5% Real Return Hurdle Portfolio”).

RISK-EFFICIENT TIMBERLAND INVESTMENT PORTFOLIOS

Risk Min Portfolio Return Max Portfolio

Sharpe Ratio Max Portfolio 8.5% Real Return Hurdle Portfolio

What about the data going into the model? We es-timate the expectations for forward-looking mean real returns for each investment opportunity based on investor surveys and GreenWood Resources experience. Our es-timates of the variance and covariances of returns come from timber/forest products price data, denominated in USD, related to each of the investment opportunities. The price data are for the period 1995-2016, covering a range of shocks to the sector: the early-1990s price spikes associated with the sudden “spotted owl” supply restrictions; the run up to the 2005 boom in US housing; the sector-wide collapse related to the global financial crisis; the following recovery, complete in some regions (e.g. the US Pacific Northwest (PNW)) but still struggling in others (e.g. the US South). The data are all in USD so the analysis accounts for FX risks, and indeed might overstate the FX risks (Busby et al. 2018).

With estimates of mean returns and the full variance/covariance matrix, we use a mathematical optimization model to solve for the efficient frontier—the set of tim-berland investment portfolios that maximizes expected returns for a given risk budget (along with a few con-straints related to minimum levels of diversification and maximum exposure to specific investments). Busby et al. (2017) provide the details of the analysis.

EFFICIENT FRONTIER

RESULTS. The analysis provides some interesting results, only a small portion of which can be reported here. The essential output from the model is the set of “best possi-ble” timberland portfolios along the efficient frontier. The table that follows provides the highlights for four timber-land investment portfolios of interest:

Portfolio Risk

Port

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urn

REGIONAL ALLOCATION

US 60% 0% 41% 19%Latin America 9% 67% 57% 66%Europe 31% 0% 0% 5%Asia 0% 33% 2% 10%Oceania 0% 0% 0% 0%FINANCIAL METRICS

Expected Nominal Return

7.4% 11.7% 10.0% 10.9%

Variance 0.0023 0.0071 0.0016 0.0028Sharpe Ratio 1.50 1.41 1.95 1.64

Risk Min Portfolio

Return Max Portfolio

Sharpe Ratio Max Portfolio

8.5% Real Return

Hurdle Portfolio

US60%

Latin America

9%

Europe31%

Latin America

67%

Asia33%

US41%

Latin America

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Asia2%

US19%

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66%

Europe5% Asia

10%


iv. Oceania is not included in the risk-efficient portfolios for USD-denominated investors detailed here. The in-cremental return assumptions for Australia and New Zealand are too low to offset the historically high vol-atility of USD returns. However, for most of the histor-ical period analyzed, there were virtually no log ex-ports from Australia. The recently observed increase in export volumes from Australia may moderate the impact of FX volatility, reducing risk and potentially supporting a positive portfolio allocation.

v. Near maximum risk-adjusted returns can be achieved with a portfolio concentrated outside of North Amer-ica. The 8.5% Real Return Hurdle portfolio offers risk-adjusted returns that are only slightly below those from the Sharpe Ratio maximizing portfolio but with nearly 100 bps of additional absolute return.

Of course, investors consider many factors when con-structing their investment programs. These findings on risk efficiency comprise but one, albeit one we think is important to consider.

References on page 10.

WHAT DOES THIS MEAN FOR INVESTORS?

i. The lowest-risk (Risk Min) portfolio includes broad geographic diversification, with nearly 10% allocat-ed to Latin America and 60% to the US. This is con-sistent with the huge growth of the forest products industry in Latin America and the continued strong demand for forest products in the US and Europe. Interestingly, this portfolio also includes the maximum permitted allocation to the conservation forestry in-vestment opportunity.

ii The portfolio that maximizes risk-adjusted returns (Sharpe Ratio Max) and the 8.5% Real Return Hurdle portfolio produce similar Sharpe Ratios but with very different regional distributions. In the 8.5% Real Re-turn Hurdle portfolio, the additional risk from greater investment in Latin America is offset by higher expect-ed returns.

iii. The gains from taking on additional risk of investments in Asia appear to be small. A risk-efficient investor may want to have a small fraction of her portfolio in Asia (<10%) but moving to the full return-maximizing allocation may actually reduce risk-adjusted returns.

NORTH AMERICAUS HOUSING• US housing demand continued with modest gains

during Q4 2017 and reached 1.2 million total hous-ing starts for the year. Although starts remain below the long-term average of 1.5 million, they have con-tinued to climb steadily since 2008.

• Single-family housing gained significant momentum during 2017, with starts up 8.4% for the year repre-senting a 71% share of residential construction. Res-idential improvement expenditures in 2017 reached pre-recession levels of $150+ billion (2009 USD) on the backbone of rapid increases in home equity with modest leverage compared to the housing boom (FEA, January 2018).

• Affordability, tight credit markets, and shortages of construction labor and buildable lots remain head-winds to speedier recovery. The residential construc-tion labor pool has not recovered since the global financial crisis (GFC), when plenty of workers exited the industry.

• US housing expectations remain positive as under-lying fundamentals remain strong. US economic growth, improving labor markets, and millennial-led demographics are all supportive of housing demand. In addition, many years of underbuilding relative to income and population growth and a rapidly ag-ing housing stock signal mounting demand for new homes and strength in repair and remodel activity.


FIGURE 1. US HOUSING STARTS

SOURCE: U.S. CENSUS; GWR RESEARCH.

LOG MARKETS• In North America, log prices in the PNW represented

the story of the year with strong demand and pricing for all species in domestic and export markets. In do-mestic PNW markets, Douglas-fir and whitewoods (i.e., hemlock and true firs) sawlog prices increased 5.9% and 6.9% quarter-over-quarter, finishing the year with annual increases of 19.5% and 24.6%, respectively (RISI, 2018).

• With continued strong demand from China through the end of 2017, log export markets also experi-enced significant gains. West Coust Douglas-fir and hemlock sawlog prices to China were up 5.5% and 4.7% quarter-over-quarter, closing the year with im-pressive price increases of 22.4% and 28.0%, re-spectively (RISI, 2018).

• West Coast log export volumes reached 0.27 BBF during Q4 2017 for a total annual figure of 1.1 BBF, surpassing the annual average of 0.93 BBF since 2000 (Figure 2). The share of total log exports to China finished the year at 60%.

• In the US South, timber prices remain muted with flat to slightly eroding sawlog prices. During Q4 2017, southern pine log prices decreased 0.2% for an an-nual total decrease of 0.8% (RISI, 2018). On the bright side, however, low timber prices in the region combined, with healthy lumber consumption in the US, continue to attract mill investment to specific re-gions. In 2017, lumber capacity additions totaled

about 1 BBF, with another expected 1.7-2 BBF com-ing in 2018-19.

• The outlook for US timber markets remains positive. Price increases in the PNW may slow down but are likely to remain supported by strong export and do-mestic demand. In the South, region-wide timber pric-es will continue to be challenged from the buildup of inventory but corporate investment from large-scale manufacturers and higher market tension in some re-gions are likely to further differentiate micro-markets.

FIGURE 2. WEST COAST LOG EXPORTS BY DESTINATION

SOURCE: U.S. CENSUS; FEA; GWR RESEARCH.

LUMBER MARKETS• In line with US housing upwards trends and positive

long-term outlook, US lumber consumption and pro-duction finished the year strong. During Q4 2017, softwood lumber consumption reached 12.5 BBF for a total annual consumption of 50.9 BBF, the highest annual figure since 2007.

• Lumber markets posted solid gains in Q4 2017, with lumber composite prices up 7.6% and 8.6% for Southern Pine and Western SPF, respectively (Figure 3). Of the total US softwood lumber consumption during 2017, Canadian imports supplied 14.9 BBF for a 29.3% market share, down from its peak of 35.2% in early 2016.

• In December 2017, the US International Trade Com-mission unanimously voted that Canadian softwood lumber imports have harmed the US industry. The rul-ing confirms import tariffs on softwood lumber from

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Canada of 6.1% and 14.2% for anti-dumping and countervailing duties, respectively, for a combined rate of 20.3%.

• Import duties on Canadian softwood lumber and a slightly strengthened Canadian dollar are expected to further decrease Canada’s market share as a sup-plier to the US. But remember, economics always wins! If the Canadian currency weakens (again), this trend could be reversed and the political show around duties may become less relevant.

• During Q4 2017, US softwood lumber production reached 8.9 BBF for a total annual production of 34.2 BBF, the highest annual figure since 2007. US West Coast softwood lumber production increased steadily from its bottom of 1.5 BBF in the depths of the GFC and has stabilized in the 2.0-2.2 BBF range. Lumber production in the US South, which was severely impacted during the housing crash, has recovered at a more rapid pace from its quarterly low of 2.6 BBF in 2009 to 4.6 BBF during Q4 2017 (Figure 4). Total production in the US South during 2017 equaled 18.5 BBF, the highest annual figure since the housing boom in 2006. As production in the US South continues to ramp up following a se-ries of recently announced mill capacity investments, the region’s large share of total production (currently 54%) is likely to further increase.

FIGURE 3. SOFTWOOD LUMBER PRICES

SOURCE: RANDOM LENGTHS; GWR RESEARCH.

NOTE: AVERAGES ARE FOR THE PERIOD Q1 2000 TO Q4 2017.

FIGURE 4. SOFTWOOD LUMBER PRODUCTION

SOURCE: U.S. CENSUS; FEA; GWR RESEARCH.

EUROPEBIOMASS MARKETSFIGURE 5. EUROPEAN RESIDENTIAL HEATING PELLET PRICES, JAN 2008 – JAN 2018

SOURCES: DEPV; PROPELLETS AUSTRIA.

• Industrial and residential pellet markets began 2018 showing signs of strength. Hawkins Wright (January 2018) reports that industrial pellet prices are at a two-year high as a result of increased demand and tightening supplies in European and Asian markets. In European heating markets, cold weather is produc-ing a strong seasonal uplift in wood pellet demand and supporting gains in prices (Figure 5).

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• European demand remains the primary driver of glob-al wood pellet trade, though Asian markets are grow-ing. Pellet imports to Europe totaled 14.9 million met-ric tons in 2017, up 5% compared to 2016. Total traded volumes are expected to continue expanding, with the UK, the Netherlands, Belgium and Denmark all planning to expand or open new power plants in coming years.

• In January, the European Parliament finalized its re-port on the Renewable Energy Directive II (RED II), laying out a plan to achieve a 35 percent renewable energy target by 2030, binding at the EU level. In general, the outcome was favorable to the biomass industry. Notably, the Parliament did not approve an amendment which would have prevented countries not party to the Paris Climate Change Agreement (e.g., the US) from being able to supply biomass eligible for member state support. RED II also lays out sustainability criteria for biomass produced or consumed in the EU, which focus on the net carbon footprint from forest biomass used for energy and ap-ply to installations of 20MW (energy input basis) or above.

FIGURE 6. EUROPEAN ENERGY PRICES, JAN 2014 – JAN 2018

SOURCES: EEX; ICE; HAWKINS WRIGHT.

• Prices in global energy markets for oil and natural gas increased steadily through Q4 2017, though natural gas prices were down at the start of 2018 (Figure 6). In late-January, Brent Index oil prices topped $70/

barrel, their highest level since December 2014, with increases driven by strong global demand and short-term supply disruptions. Continued strength in oil and natural gas markets, with Brent spot prices expected to average $62/barrel (US EIA, March 2018) in 2018, will support demand for woody biomass, par-ticularly where industrial and residential infrastructure already exists.

LATIN AMERICAPULP MARKETS• Global demand for bleached chemical pulp (BCP)

increased by an estimated 2.0 million tons in 2017, up 3.6% year-over-year (Hawkins Wright, March 2018). Demand growth was concentrated in Chi-nese hardwood pulp markets, with bleached euca-lyptus kraft pulp (BEKP) consumption up 4.7% or 1.0 million tons (Hawkins Wright, March 2018). De-mand growth has been matched by BCP capacity ex-pansion in Latin America, Europe and Asia—2018 will be the first full year of production at Fibria Tres Lagoas II and Metsa Fiber Aanekoski and will bring continued operational improvements at APP OKI.

• Latin America is well-established as the low-cost producer of bleached hardwood kraft pulp (BHKP) globally and the dominant supplier to Chinese mar-kets. Favorable growing conditions for fast-growing eucalyptus together with a well-developed plantation infrastructure and a highly efficient industry have posi-tioned Brazil and Uruguay as the two lowest cost pro-ducers in Latin America. Figure 7 shows BHKP exports from Brazil, which more than doubled both in terms of volume and value between 2006 and 2016. In 2017, Brazilian BHKP pulp exports reached an all-time high. Growth is expected to continue and in the first two months of 2018, export volume is up 10% compared to the same period a year earlier.

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FIGURE 7. BRAZIL BHKP EXPORTS, 2006 – 2017

SOURCE: BRAZIL MINISTRY OF INDUSTRY, FOREIGN TRADE AND SERVICES.

• China’s efforts to clean up air and water pollution may increase demand for virgin pulp imports. China produces a considerable amount of packaging from imported recycled paper and container board. Con-taminants arriving with these inputs end up as waste in rivers and lakes as part of the effluent stream from the production facilities consuming them. In late-2017, the Chinese government suspended import permits for such fiber as a means for upgrading the standards and perhaps ultimately eliminating this source of fiber altogether. This policy shock has contributed to in-creased price volatility and may increase demand for imported pulp, both chemical and mechanical. Latin American pulp producers would be the main benefi-ciaries of the former; Canadian bleached chemi-Ther-moMechanical pulp (BCTMP) producers the main beneficiaries of the latter.

TROPICAL HARDWOODS• Tropical hardwood plantations provide a sustainable

alternative to the increasingly constrained supply of natural-grown tropical hardwoods. A prime exam-ple of this is plantation-grown teak from Latin Ameri-ca, which has replaced native teak from South and Southeast Asia in many global markets and currently represents the vast majority of teak log trade. Howev-er, plantation management intensity and teak wood quality is highly variable across Latin America. Vari-ability in management can lead to vast differences in diameter class mix at final harvest and ratio of

heartwood to sapwood, critical factors in determin-ing teak log price.

• The International Tropical Timber Organization (ITTO) reports that average planation teak log prices held steady through Q4 2017 (Figure 8). Price differences across countries are a function of wood properties (e.g., color, ratio of sapwood to heartwood, branch-ing), plantation management, harvest and transpor-tation costs. However, for several years, Costa Rican teak has maintained a premium in global markets over teak from Ecuador, Panama, and Brazil. Market participants in Latin America report some volatility in pricing for small to medium diameter plantation logs, but increasing prices for large-diameter plantation logs (>40 cm diameter at breast height).

FIGURE 8. REGIONAL PLANTATION TEAK LOG PRICES, Q1 2011 – Q4 2017

SOURCE: ITTO.

ECOSYSTEM SERVICE MARKETS• As ecosystem service markets have developed and

grown, there is an increasing recognition that ecosys-tems and commercial timber can be jointly managed in a manner that positively impacts the environment, communities, and the investor through conservation forestry. Payments for ecosystem services (PES) mon-etize ecosystem benefits, providing a financial return for forest management that produces quantifiable ecosystem service values. The primary sources of PES from timberland include conservation easement and fee sales, carbon credits, water quality credits, and wetlands mitigation banking.

• In the US, the California (CA) carbon market is the

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major driver of demand for forest-based carbon offset credits. In 2017, the CA state legislature approved an extension of the cap-and-trade program through 2030 (AB 398), improving market stability and pol-icy certainty. Although the extension decreased the share of total compliance that can come from offsets, demand for offset credits is expected to increase fol-lowing the January 2018 addition of Ontario to CA’s cap-and-trade program.

• Well-developed regulatory carbon markets in Europe and the US provide information on pricing that can be incorporated into traditional financial analysis of investment opportunities. Figure 9 describes carbon price under the EU’s Emissions Trading Scheme. In February 2018, and for the first time since 2011, European carbon prices surpassed the €10/tCO2 mark. Prices surged following the European Parlia-ment’s approval of post-2020 reforms to the EU ETS scheme targeting the oversupply of allowances.

FIGURE 9. EU EMISSION TRADING SCHEME CARBON PRICE, 2014 - 2018 YTD

SOURCE: BLOOMBERG.

FOREST SCIENCEREMOTE SENSING TO IMPROVE FOREST INVENTORY SYSTEMS• Remote sensing of timberland using light detection

and ranging (LIDAR) laser technology is a source of accurate data suitable for forest inventory and assess-

ment. LIDAR is an advanced land surveying method that uses pulses of light sent from an airborne laser to the forest below where the pulse reflects off the forest canopy and is collected back at the instrument (Fig-ure 10). LIDAR data can be used to make high-resolu-tion inventory maps of an asset including estimates of canopy height, basal area, timber volume, and bio-mass. Forest health assessments using LIDAR can lead to early detection of insect infestation or disease, en-abling cost-effective control.

• GreenWood Resources, in collaboration with Virginia Tech’s Forest Productivity Cooperative, is using LIDAR technology to support inventory work and improve forest management efficiency in the US South.

FIGURE 10. SCHEMATIC OF LIDAR SURVEY SYSTEM

TREE IMPROVEMENT IN NORTH AMERICA• Tree improvement through selective breeding seeks to

replicate the scientific methods applied to agricultural crop improvement programs over several generations that have produced tremendous gains in the agricul-tural sector. Tree improvement begins with the identi-fication of superior trees, which are then cross polli-nated and their progeny tested in the field in order to select and deploy the individuals that grow the fast-est, produce the highest-quality wood, and are most disease resistant. Further, current research in the field of tree improvement includes molecular techniques to accelerate the realization of genetic gains.

• GreenWood Resources participates in research co-operatives aimed at producing genetically superior

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trees. In the US South, tree improvement research is in collaboration with the North Carolina State Uni-versity Cooperative Tree Improvement Program and the Western Gulf Forest Tree Improvement Programs, focusing on pine species. In the PNW, GreenWood Resources is actively involved in Oregon State Uni-versity’s Northwest Tree Improvement Cooperative, focusing on Douglas-fir and western hemlock.

FIGURE 11. GENETICALLY IMPROVED DOUGLAS-FIR

NOTE: IMPROVED TREES AT LEFT AND UNIMPROVED TREES AT RIGHT.

UPDATESBRAZIL• Political turmoil in Brazil continues. Though President

Michel Temer remains in power—in late-2017, Bra-zil’s lower house of Congress blocked a corruption trial against him—his ability to enact an ambitious reform agenda has diminished. Responsibility for reviving pension reform (and stabilizing the public finances more generally) will lie with the new ad-ministration that emerges from national elections in October 2018.

• In early-2018, S&P and Fitch lowered their long-term ratings for Brazil sovereign debt to BB- from BB. The ratings downgrades were largely the result of failed pension reform and post-election policy uncertainty. However, in spite of these downgrades, Brazil’s re-covery appears to be gathering pace and the econo-my is now growing by around 2% year-over-year—its fastest rate in four years.

POLAND• Poland’s economy is expanding at a rapid pace,

growing by an impressive annualized rate of 4.7% in Q4 2017. Wage growth coupled with the contin-uation of expansionary fiscal policy is creating posi-

tive inflationary pressure. Capital Economics (January 2018) reports that two widely-watched measures of price expectations in Poland hit seven-year highs in January, suggesting that core inflation is set to pick up markedly over the course of 2018.

• The European Commission remains concerned about the rule of law in Poland and that recent reforms to the Polish judicial system have compromised its in-dependence. The European Parliament has backed a resolution supporting a December 2017 recom-mendation from the European Commission to invoke Article 7 against Poland. This move could result in the loss of Poland’s EU voting rights and EU funding, potentially impacting medium- and long-term growth.

FIGURE 12. GDP GROWTH, 2012 - 2017

SOURCE: CAPITAL ECONOMICS.

-8

-6

-4

-2

0

2

4

6

8

Mar

-12

Jun-

12

Sep-

12

Dec-

12

Mar

-13

Jun-

13

Sep-

13

Dec-

13

Mar

-14

Jun-

14

Sep-

14

Dec-

14

Mar

-15

Jun-

15

Sep-

15

Dec-

15

Mar

-16

Jun-

16

Sep-

16

Dec-

16

Mar

-17

Jun-

17

Sep-

17

Dec-

17

GDP

Grow

th (%

Cha

nge

y/y)

Brazil Colombia Chile Poland Uruguay


FIGURE 13. FOREIGN CURRENCY EXCHANGE RATES RELATIVE TO THE US DOLLAR, INDEXED FROM 2014

SOURCE: BLOOMBERG; GWR RESEARCH.

COUNTRY STATSFX RATES• The USD maintained its relative strength in currency

markets through Q4 2017 compared to long-term trends. In 2017, Latin American currencies—the Co-lombian peso, Brazilian real and Uruguayan peso—were largely flat against the dollar while the Chilean peso was up 8%. The Euro and the Polish zloty fin-ished the year up over 18% and 13%, respectively.

• The impact of foreign currency exchange rate vola-tility on timberland investment will be explored in an upcoming issue of GreenWood Resources Research Report for Timberland Investors.

50%

60%

70%

80%

90%

100%

110%

Jan-

14

Mar

-14

May

-14

Jul-1

4

Sep-

14

Nov-

14

Jan-

15

Mar

-15

May

-15

Jul-1

5

Sep-

15

Nov-

15

Jan-

16

Mar

-16

May

-16

Jul-1

6

Sep-

16

Nov-

16

Jan-

17

Mar

-17

May

-17

Jul-1

7

Sep-

17

Nov-

17

Jan-

18

CLP/USD EUR/USD PLN/USD COP/USD BRL/USD URU/USD

REFERENCES

Binkley, C. 2017. Putting Conservation Investments into a Global Context. Panel presentation at the Credit Su-isse Conservation Finance Conference, New York, NY.

Busby, G.M., C.S. Binkley, R.P. Chudy. Foreign curren-cy exchange rate risk in timberland investment. Green-Wood Resources. Forthcoming 2018.

Busby, G.M., C.S. Binkley, R.P. Chudy. Risk-efficient tim-berland investment portfolios. GreenWood Resources. December 2017.

Caufield, J.P. 1998. A fund-based timberland invest-ment performance measure and implication for asset allocation. So. J. of Appl. For 22: 143-147.

Forest Economic Advisors (FEA). March 2018. Quarter-ly Timber Forecasting Service.

Hawkins Wright. January-February 2018. Forest Energy Monitor.

Hawkins Wright. March 2018. The Outlook for Paper Grade Pulp Demand, Supply, Costs and Prices.

Mills, W.L. and W.L. Hoover. 1982. Investment in forest land: Aspects of risk and diversification. Land Econom-ics 58(1): 33-51.

RISI. October 2018. World Timber Price Quarterly.

US Energy Information Administration (EIA). March 2018. Short-term Energy Outlook. Retrieved from http://www.eia.gov

Zinkhan, F.C., W.R. Sizemore, G.H. Mason, and T.J. Ebner. 1992. Timberland Investments. Timber Press, Portland, OR.

A Nuveen Company

1500 SW First Avenue, Suite 1150Portland, OR 97201greenwoodresources.comPhone: (800) 279-4509

Gwen Busby, Ph.D.Director, Economics Research

Rogelio IrigoyenPortfolio Manager Rafal Chudy, MSEconomist

Clark Binkley, Ph.D.Chief Strategist

IMPORTANT INFORMATIONThe information presented herein represents the opinion of GreenWood Resources Capital Management, LLC. This material is not intended to be a recommendation or investment advice, and does not constitute a solicitation to buy or sell any product or service to which this information may relate. Any information contained herein obtained from third party sources is believed to be reliable, however GreenWood Resources Capital Management, LLC makes no warranty as to its accuracy or completeness. GreenWood Resources Capital Management, LLC is a registered investment advisor and an affiliate of Nuveen, LLC.

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