Transaction Costs and Investment Interest in the U.S. South and the Pacific Northwest Timberland Regions

Abstract

In 2020, a survey was conducted of timberland investment professionals. The focus of the survey was collecting and examining transaction cost data within the timberland investment space. The data collected were generally lacking in the public domain, as well as academic literature, yet it provides insight into the significant costs that are involved in timberland investing. The survey revealed that the U.S. South and the Pacific Northwest have significant differences in investor expectations for transaction costs. The objective of the current study was to explore the differences in transaction costs for the two regions and to uncover the relationships between (1) timberland transaction costs; (2) investment interest; and (3) prior experience in owning, investing, or managing timberland in either region. The findings of this work confirmed that transaction costs were a statistically significant predictor of investor interest in the U.S. South and the Pacific Northwest. The findings also showed that prior ownership, investment, or management experience in either region were a statistically significant predictor of investor interest in the U.S. South and the Pacific Northwest. Furthermore, this work explores factors that appear to rationalize the high investor interest in the Pacific Northwest, despite investor expectations of much higher transaction costs associated with timberland acquisition within this region.

Keywords

• acquisitions
• due diligence
• real assets
• REIT
• timberland investment
• TIMO