This white paper was designed to highlight the results of a web survey distributed to timberland executives, investors, and other industry participants by KPMG provides insights into investor profiles, attitudes and certain underwriting criteria, as well as forward looking sentiment on timberlands as a distinct investment group.

• Majority of the investors expect a real discount rate between 5 and 6 percent when evaluating new acquisitions of timberland assets
• The majority of respondents utilized an investment term between 0 to 20 years. While the 30-year and greater investment term did not change significantly, the 20- to 30-year investment term appears to have been shortened compared to the 2014 KPMG Survey results.
• The majority of respondents noted they utilize no real growth rate over the term of their investment, which is close to the current rate of inflation of 0.1 percent and is a decline from the 2014.
• Respondents indicated they assume a real growth rate greater of 0 percent to 2 percent, with fewer respondents expecting growth greater than 2 percent compared to the 2014 KPMG Survey as prices have trended to near pre-recession levels.
• The increase in growth rate can be attributed to the increase in housing starts. According to Forbes housing permits in June 2015 are higher than previous all-time high just before the Great Recession in June 2007 indicating a strong demand in the future for log prices.
• The majority of respondents expect market and selling time to take less than one year, which is shorter than the one year time horizon from the 2014 KPMG Survey.
• Government involvement in the industry and changes in land use continue to be the most significant factors to respondents’ risk profiles. Compared to the 2014 KPMG Survey, changes in forestry practices are not as significant to the risk profile. Changes in global warming and sawmill technology are the least significant factors.

The survey revealed the following with regards to investor sentiment in the sector:

• The portfolio species mix is similar to the ideal mix with the exception that respondents would like less Hemlock and more Other Hardwoods this year.
• The majority of respondents, 84 percent, continue to be net buyers of timberlands indicating a more competitive market.
• 73 percent of respondents plan on making significant timberland acquisitions in the next twelve months.
• A majority of respondent’s surveyed plan to export little to none of their annual harvest indicative of strong domestic demand.
• An increased number of respondents in 2015 have indicated that taxes may influence their decision making process.

The survey revealed the following results with respect to international interests:

• More respondents indicated they do not have significant investments outside North America
• The majority of survey respondents anticipate discount rates to remain the same or decrease outside of North America, indicating that markets outside North America are improving.
• Respondents continue to use an investment term of 20 years or less in their analysis.
• The growth rate of log prices continues to be between 0 to less than 3 percent.
• The majority of respondents, 100 percent, indicate Asia has the highest potential for import, followed by Europe, and Australia/New Zealand reflecting expected growth in those regions.
• North America and Australia/New Zealand surpass South America in being the most attractive geography for investors in 2015.