Documenting Forest Ownership in Oregon
Our first Wall Street Forestry project documented forest ownership in Western Oregon. While the cost of data was bearable, data analysis took a large amount of staff time over four months. We wanted to know the current extent that private forests were owned by large corporations and whether those owners were traditional corporations or newer financial forms of ownership. Specifically, we wanted to know what portion of the private forest was owned by Timber Investment Management Organizations (TIMOs) or Real Estate Investment Trusts (REITS).
We acquired all real property records for Western Oregon (Cascade crest to the coast) and built a geodatabase. Using geographic information software (GIS) we then deleted all parcels in Urban Growth Boundaries (UGB). This resulted in approximately 550,000 real property records. Next, we coded all parcels according to one of five ownership categories:
- Wall Street Forest Ownership: TIMOs, REITS and investor LLCs. (Red color)
- Traditional Corporate Forest Owners. (Orange color)
- Public Lands: All local, state and federal ownerships. (Green color)
- General Use: Rural residential, farms, small forest owners, etc. (Grey color)
- Tribal Lands. (Purple color)
After coding all parcels, it was just a matter of assigning the above colors to each category. The deleted urban areas were colored black.
A Colony Called Oregon
Clastop & Columbia Counties
What are TIMOs and REITs?
A Timber Investment Management Organization (TIMO) is a management group that aids institutional and high net-worth investors in managing a forest property. TIMOs find, analyze and acquire forest investment properties that would best suit their client investors — which are generally looking for safety in maintaining asset value and providing a profitable return.
Once an investment property is chosen, the TIMO is given the responsibility of actively managing the timberland to achieve adequate returns to investors. Privately held partnerships and other investors, managed by TIMOs own the land and equity. Their names are on the title to the property.
A Real Estate Investment Trust (REIT) is a company that owns and operates income-producing real estate. If a REIT directly transfers 90% or more annual net profits to the investors, the managing REIT is exempt from income tax on the profits transferred. REITs own many types of commercial real estate and timberlands. REIT forest ownership continues to grow and some of the largest REITs are publicly traded companies (i.e. Weyerhaeuser).
Why do TIMOs and REITs matter for forest management?
TIMOs and REITs elevate return on capital to the central criteria for when to harvest the forest and thereby insert capitalist profits (called rent by economists) into the heart of forest management.
The good new is that since TIMOs and REITs are opportunistic managers they are often willing to sell the land if a sizable profit is realized. The bad news is that they manage strictly for a rate of return and thereby manage planting, operations and harvesting based on lowest cost financial criteria. This results in:
- Practice as early a harvest as possible
- Spend the least amount of money on their properties
- Place downward pressure on wages and outsource timber harvest activities. Use highly exploited B1b work visa labor for replanting.
- Extract rents wherever they can be found i.e. requiring people to pay to hunt and fish on their property
- Practice an intensive plantation forestry using aerial herbicide spraying
Traditional Forest Ownership
- Vertically Integrated Forest Product & Paper Companies
Estimated 40+ million acres sold since 1985
- TIMOs & REITs
- Private Equity
- Conservation NGOs
The Rise of TIMO & REIT Forest Control
Oregon’s largest forest owner is The Weyerhaeuser Company. Here are the top managers and the major institutional investors in the company.