Why Hardwoods

  • Neglected sector—least informationally efficient component of the domestic timberland marketplace. Specifically, the sector has generally been overlooked by institutional investors and publicly traded timber REITs.
  • Fragmented ownership with steady deal flow of mid-sized opportunities. Families and family-controlled enterprises dominate both hardwood-timberland ownership and timber processing.
  • The private sector dominates domestic hardwood ownership. The public sector owns a majority (57%) of the softwood resource by volume, but only 22% of the hardwood resource.
  • A fully diversified timberland portfolio includes hardwoods. In the US, hardwoods account for 46% of the commercial timber inventory.
  • Diverse species mix with multiple niche products.
  • Hardwood crop trees can move through a progression of material “step ups” in value as they ripen (i.e., pulpwood → small sawtimber → large sawtimber → veneer).
  • Most domestic hardwood properties are naturally regenerated and thus planting costs are unnecessary.
  • There are regional supply limitations for temperate hardwoods since new forest establishment via plantings is rare and significant resources grow in paths of development. With their presence in mountainous and lowland areas, material volumes of the resource are difficult and expensive to access. Globally, the environmental movement has curtailed the harvesting of tropical natural hardwoods.
  • Growth of the global middle class should contribute to an expansion in aggregate demand for appearance-application hardwoods, while the “green” attributes of hardwoods (and other woods) relative to competing raw materials (e.g., plastics, concrete, steel, aluminum) should improve its market share in both industrial- and appearance-application sectors.
  • Differential advantages of TFG in sector: Only US team assembled to focus on hardwoods–systems. Valuation approaches, problem-solving orientation, network of relationships (with customers, service providers, and landowners), array of product distribution alternatives, certification approach, and geographic footprints in all significant hardwood regions (enabling organic growth) are unique.