Forest covers right at half of Florida’s 34.23 million acres of land, and 71 percent of that timberland is privately owned, according to the Florida Forestry Association.
Most Florida timberland in Florida is north of Orlando, and most counties in the northern half of the state are at least 50 percent forested. The Forestry Association says Liberty County in northeast Florida is 90 percent covered by timberland while several counties in Southeast Florida have less than 10 percent timberland.
Florida’s vast forestland adds $16 billion-plus to the state’s economy annually, more than any other single agricultural commodity, the University of Florida’s Institute of Food and Agricultural Sciences (UF-IFAS) reports. Florida’s forestry industry employs approximately 75,000.
More than 5,000 items are made from forest products, ranging from furniture to pharmaceuticals, the Forestry Association reports.
INVESTING IN TIMBERLAND
Investors typically analyze timberland for a long-term hold, says timberland specialist Tony Wallace of the Coldwell Banker Commercial Saunders Real Estate (CBCSRE) Forestry Group. He reports that most investors are primarily concerned with the ability of the land to produce returns from timber products. Considerations in determining those returns include site productivity, percentage of plantable acreage, past cultural treatments, condition of timber stands, current timber volumes and location relative to wood-producing facilities, he says.
Wallace says timberland investors typically rely heavily on discount cash flow analysis, which incorporates timber growth modeling, harvest scheduling, management optimization and timber price forecasting. “Both sellers and investors in the timberland market need to be able to employ these specialized knowledge and analytical tools to effectively market, or invest in, these properties,” he says.
A UF-IFAS publication, “Florida Forest Stewardship,” provides more information about timberland investing. “In any investment, you must know the time period,” it states. “In southern pine timber management, commonly used time periods are 30 years or more. Some pine stands can be cut for pulpwood at 15 to 20 years. Holding the stand for a longer rotation can result in products of higher value (i.e. sawlogs) and usually a higher rate of return.”
“You need to know what price to expect for the trees you will sell, known as stumpage price,” the UF-IFAS publication adds. “Stumpage price is the price paid for trees as they stand in the forest. Each product (sawtimber, poles, pulpwood) has its own stumpage price. Unfortunately, you must project the selling price of the products you plan to grow 15, 20 or 30 or more years from now.” The publication says investing in forestry is complex, “but when all factors are considered, forest management can be a profitable investment for many landowners.”
CBCSRE’s Wallace says real estate investment trusts, timber investment management organizations and individual investors recently accounted for most Florida timberland purchases. Some investors had recreational and speculative interests, he added.
“Forests have a positive impact on your life,” the Florida Forestry Association reports. “Environmentally, they provide habitat for wildlife, act as natural air and water filters; and offer many recreational opportunities and much-needed green space.”
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