The South (Virginia, North Carolina, South Carolina, Georgia, Florida, Alabama, Mississippi, Louisiana,Texas and Oklahoma)

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1 Hancock Hancock Timber Resource Group Timberland Investor Third Quarter 20 Measuring Timberland Performance The Hancock Timberland Investor makes frequent use of the NCREIF Timberland Index to measure an array of performance characteristics for investments in private timberland equity total rates of return, per-acre values and EBITDDA multiples. Many of our readers, however, may not be familiar with either the NCREIF organization or the data collection and compilation procedures that underlie its Timberland Index. Here, we provide some useful background information on both NCREIF and the Timberland Index. Background The National Council of Real Estate Investment Fiduciaries (known by the acronym NCREIF ) is a non-profit association of stakeholders in institutional private real estate investment advisory firms, appraisers, property managers, institutional investors, consultants and academics. NCREIF s mission is the resolution of technical industry issues, training through education, sponsoring relevant industry research and producing useful property performance indexes. The most visible products of these efforts are NCREIF s various reports on real estate investment performance. Several timberland investment advisory firms joined NCREIF in the early 10s with the aim of creating a third party, industry-wide measure of timberland performance. These efforts were successful, and NCREIF commenced publication of its Timberland Index in 14, with timberland performance reported back to 17. Procedures for the collection and reporting of timberland performance data were patterned after those for NCREIF s long-standing commercial real estate indexes to foster apples-toapples comparison of performance. NCREIF members who manage timberland investments are required to submit quarterly performance data for all U.S. properties that qualify for inclusion in the Timberland Index. Qualifying properties must be comprised primarily of full fee ownership (so, leased land or timber deeds are not in the Index) and be marked-to-market via appraisals at least annually. As of 3Q 20, NCREIF was collecting performance data for 148 properties distributed throughout three regions of the United States: The (Virginia, North Carolina, Carolina, Georgia, Florida, Alabama, Mississippi, Louisiana,Texas and Oklahoma) The Pacific Northwest (Washington, Oregon and California) The (Maine, New Hampshire,Vermont, New York and Pennsylvania). Geographic Distribution of NCREIF Timberland Market Value (as of Q3 20) Pacific Northwest 28% 8% 64% The total appraised market value of these properties is over $3.7 billion, weighted 64 percent in the, 28 percent in the Pacific Northwest and 8 percent in the. For each qualifying property, NCREIF members submit data on: Operating EBITDDA (earnings before interest, taxes, depreciation, depletion and amortization) which is effectively gross revenues from the sale of timber and other products, less operating costs Capital expenditures primarily plantation establishment and road construction Proceeds from timberland sales Costs of timberland purchases Market value at quarter end Acreage at quarter end NCREIF staff combine the performance data and use formulas (shown on the back cover) to calculate aggregate performance. Historical Performance Like the NCREIF Property Index for commercial real estate, the NCREIF Timberland Index separates the total return into two components: EBITDDA (this is equivalent to net operating continued on page 2 Hancock Timber Resource Group High Street, Boston, MA

2 Measuring Timberland Performance continued income for commercial real estate, and in fact, has been labeled income in the NCREIF timberland reports, prior to Q4 20) and capital appreciation or depreciation (See Notes Section on the back cover for more detail). Annualized Timberland Index returns for one, three, five and 10-year periods are shown in Table 1.Total annual returns over the past 10 years have been 17.0 percent with 6.7 percent from EBITDDA. Performance has varied by region. In recent years, northeastern timberland has generated the highest total returns. ern timberland has consistently generated the lowest EBITDDA returns. This is primarily the result of the relatively young age of the timber on many southern properties. EBITDDA returns in the should continue to rise as the timber matures and harvest levels increase. Table 1. NCREIF Timberland Index Annualized Returns (through 12/31/) In addition to these returns, NCREIF plans to report a rate of capital expenditures for the Timberland Index beginning Q4 20.A preview of the results is presented in Table 2. The rate of capital expenditures for all regions combined has been about 70 basis points per year. It has been highest in the, where substantial capital is allocated to the establishment of intensively managed pine plantations. If we deduct quarterly rates of capital expenditures from quarterly EBITDDA returns, we obtain an approximate measure of cash yield.the annualized results of this calculation over the same multi-year periods are also presented in Table 2. Over the past 10 years, the annual cash yield for the Timberland Index has been 6.0 percent. Regionally, the relatively high rate of capital expenditures in the further depress historical cash yields for southern timberland compared to Total Return (% per year) Capital Return (% per year) EBITDDA Return (% per year) Pacific Pacific Pacific Total Northwest Total Northwest Total Northwest 1 year year year year 17.0 NA NA NA Note: Returns for the were not reported before 14. Although quarterly appreciation and EBITDDA returns sum to the total return, they do not in longer periods due to inter-quarter compounding. Table 2. NCREIF Timberland Index Capital Expenditures and Cash Yields (through 12/31/) Capital Expenditures Pacific Pacific Total Northwest Total Northwest 1 year year year year 0.7 NA NA Note: Returns for the were not reported before 14. Cash Yields timberland in the Pacific Northwest and. It is interesting to note that the rate of capital expenditure for commercial real estate properties is well over 2 basis points per year.thus, although the 10-year income return for NCREIF s commercial Property Index of 8.1 percent has been higher than the 6.7 percent EBITDDA return for the Timberland Index, the 10-year cash yield of 5.4 percent for commercial properties has actually been lower than the 6.0 percent cash yield for timberland. Some Issues and Caveats There are several potentially problematic features of the Timberland Index that bear mention. First, the market values of the properties in the Timberland Index are based largely on appraised values (although by no means exclusively, as well over $1 billion of timberland has been sold from the Index).Appraisals are thought to lag actual changes in timberland values and lessen volatility in reported performance. Furthermore, although nearly all of the properties in the Index are appraised at year-end, many are not appraised in intervening quarters.this limits the usefulness of reported quarterly returns. Also, although the Timberland Index has historically covered a large proportion two-thirds to three-quarters of all institutional timberland investments in the United States, the number of investment managers reporting information has ranged from only two to the current four (HTRG, Forest Investment Associates, Forest Systems and The Campbell Group). Properties contributed by HTRG have historically comprised about three-quarters of the Index value. Finally, the regional results for the were dominated during continued on back cover 2 Hancock Timberland Investor Third Quarter 20

3 Quarterly Average Regional Composite Prices: Softwood Sawtimber Stumpage US$ per MBF $1,0 $8 $6 $4 $2 Pacific Northwest Export Pacific Northwest Domestic New Zealand Export Sources: Log Lines, Timber Mart-, New Zealand Ministry of Forestry and HTRG analysis Figure 1. Sawtimber stumpage prices fell across all regions in the third quarter, with the exception of export prices in the Pacific Northwest.This increase was a surprise to many, as prices for New Zealand export radiata dropped 21 percent from last quarter, and domestic stumpage in the Pacific Northwest fell over 11 percent.the strength in Pacific Northwest export markets has been speculated by some to be a combination of a decreasing supply of export quality and legally exportable Douglas-fir logs and less competition in the region for the Japanese log market. Quarterly Average Regional Composite Prices: Softwood Pulpwood Stumpage Per Ton $40 $35 $30 $25 $20 $15 Pacific Northwest Sources: Log Lines, Timber Mart- and HTRG analysis Figure 2. Pulpwood stumpage prices dropped further during the third quarter. Prices for southern pine and spruce/fir pulpwood averaged $7.26 and $4.55 per ton, respectively levels not seen in either region for quite some time. In the Pacific Northwest, pulpwood stumpage was up about 30 cents over last quarter s price.optimism for a rebound in stumpage prices still exists, yet is clouded by prospects of weakening prices for market pulp. $10 $5 Regional Timberland Values Per Acre $2,5 $2,0 $1,5 $1,0 Pacific Northwest Figure 3.Timberland values were flat to slightly up across all three regions during the third quarter, despite the downturn in most regional stumpage prices. Note, however, that many properties in the NCREIF Timberland Index (the source of these values) are not appraised during the third quarter. Next quarter s values will provide a better measure of trends in timberland prices. $5 87 Source: NCREIF Hancock Timberland Investor Third Quarter 20 3

4 Timberland Enterprise Value per ern Equivalent Acre Per Acre $1,2 $1,0 $8 NCREIF ern Timberland Index Timberland Enterprise Value/ ern Equivalent Acre Figure 4. Public timberland markets moved in sync with private markets this quarter. Our estimate of Timberland Enterprise Value per ern Equivalent Acre was up just over 6 percent, the same positive movement seen in private timberland markets in the. $6 $4 $2 Sources: NCREIF and HTRG analysis EBITDDA Multiples for Privately Traded Timberland Figure 5.Timberland in the continues to have high EBITDDA multiples compared to the Pacific Northwest and, as expectations of future value from young stands carry timberland valuations in the.as colder weather permitted early winter logging in the, a notable rise in income was recorded during the quarter, bringing a decline to the region s pricing multiple. 10 Pacific Northwest 5 Sources: NCREIF and HTRG analysis Timberland Investment Performance Indexed: 10(1)= NCREIF Pacific Northwest NCREIF All-Region S&P 5 Index NCREIF NCREIF S&P Forest Products Index T-Bill Figure 6. Private timberland markets continue to be sheltered from the stock market declines.while both the S&P 5 and the S&P Forest Products Index slipped further during the third quarter, returns to private timberland were up over 2 percent in all three regions reported by NCREIF Sources: NCREIF, Ibbotson and HTRG analysis 0 4 Hancock Timberland Investor Third Quarter 20

5 Timberland Investment Performance Indexed: 14(1)=1 2.5 NCREIF All-Region S&P Forest Products Index Securitized Timberland Figure 7. Shares in integrated forest products and paper companies continued to fare poorly relative to both public and private timberland equity. Over the last three quarters, private and public timberland equity has generated respective returns of 5 and 7 percent. Over the same three quarters, shares in integrated companies have returned a negative 40 percent. 1.0 Sources: NCREIF, Ibbotson and HTRG analysis 0.5 Securitized Timberland Performance Indexed: 14(1)= Deltic Crown Pacific Plum Creek U.S. Timberlands The Timber Company Index Figure 8.The Hancock Securitized Timberland Index reflected the early quarter announcement of a buyout of The Timber Company (TGP) by Plum Creek (PCL) as TGP valuations rose substantially in July.As the news settled,tgp results have somewhat settled, returning our Index at quarter-end back to last-quarter levels. U.S.Timberlands (TIMBZ) on the other hand, although up slightly in the third quarter, has lost over half the value of its shares since inclusion into the Index in the first quarter of Source: HTRG analysis 3/1/ 6/1/ 9/1/ 12/1/ 3/1/ 6/1/ 9/1/ 12/1/ 3/1/ 6/1/ 9/1/ 12/1/ 3/1/ 6/1/ 9/1/ 12/1/ 3/1/ 6/1/ 9/1/ 12/1/ 3/1/ 6/1/ 9/1/ 12/1/ 3/1/ 6/1/ 9/1/ Hancock Timberland Investor Third Quarter 20 5

6 Measuring Timberland Performance continued from page 2 19 and 19 by the exceptionally high returns reported for a single property that comprised well over half of the value of all northeastern properties during those years. (The property was removed from the Index during the fourth quarter of 19 at the request of its institutional owner.the historical information for the property was retained.) We believe that this limits the usefulness of the Index as a general indicator of timberland performance in the during those two years. In the Hancock Timberland Investor, we use the performance of HTRG s northeastern properties submitted to NCREIF as the best proxy for regional performance. A Logical Next Step NCREIF is developing for release sometime early next year a fund-level timberland performance report to illustrate the performance of portfolios of timberland properties managed for single or multiple institutional investors.this will complement the extant property-level Timberland Index by capturing 1) the effect of investment advisory fees on returns (the Timberland Index reports performance before such fees), and 2) the distribution of performance across funds. Several additional timberland investment advisers are planning to join NCREIF and contribute both property and fund-level data.thus, both the scope and amount of available timberland performance information will increase substantially in the near future. NOTES: Although the Timberland and Property Index formulae are similar, there are two noteworthy differences. First, the Timberland Index includes a variable to capture the addition of more land to a tree farm through partial purchases. Second, one-half of net income is subtracted from the denominator in the Timberland Index to reflect an assumption that revenues from timber harvests are received randomly throughout each quarter. In the Property Index, one-third of net income is subtracted from the denominator to reflect an assumption that lease payments are received monthly. NCREIF Performance Calculations Timberland Index Property Index EBITDDA EBITDDA t I t Return MV t (CI t -PS t +PP t -EBITDDA t ) MV t (CI t PS t ) 0.33I t Capital MV t MV t-1 CI t + PS t PP t MV t MV t-1 CI t + PS t Return MV t (CI t PS t + PP t EBITDDA t ) MV t (CI t PS t ) 0.33I t Research Team Clark S. Binkley, Ph.D. Chief Investment Officer cbinkley@hnrg.com Courtland L. Washburn, Ph.D. Director of Economic Research & Investment Strategy cwashburn@hnrg.com Mary Ellen Aronow Forest Economist maronow@hnrg.com Timothy Fritzinger Financial Analyst tfritzinger@hnrg.com Hancock Timber Resource Group is a division of Hancock Natural Resource Group, Inc., a registered investment adviser and wholly owned subsidiary of John Hancock Financial Services, Inc. 20 Hancock Natural Resource Group, Inc. where EBITDDA t = net operating revenue obtained from timberland property (primarily from timber sales) during quarter t CI t = capitalized expenditures on timberland property during quarter t PS t = net proceeds from sales of land from timberland property during quarter t PP t = gross costs of adding land to timberland property during quarter t MV t = market value of timberland property at end of quarter t Figure 1. The composite price for southern sawtimber is based on quarterly average Timber Mart- published prices for pine sawtimber and chip-n-saw stumpage. Pacific Northwest prices are derived from quarterly average Log Lines published prices for whitewoods and Douglas-fir with internal analysis of logging costs for stumpage calculations. New Zealand export prices are based on New Zealand Ministry of Forestry quarterly average published prices for Radiata unpruned A, J and K sort export logs with internal analysis of logging costs for stumpage calculations. sawtimber prices are calculated from internal analysis. Figure 2. Pulpwood composite prices are derived from quarterly average Timber Mart- published prices for southern pine pulp wood stumpage, Log Lines published whitewood and Douglas-fir pulp logs with internal analysis of logging costs for the Pacific Northwest, and HTRG analysis of Spruce/Fir pulpwood in the. Figure 3. Regional NCREIF timberland market value per acre is derived by dividing the total regional market value at quarter end by the number of acres reported in that region. Due to the small sample of property in the Pacific Northwest in 17 and 17 Q2, these values were back cast from 17 Q3 with quarter-end appreciation returns. Market values for timberland were re-estimated for the period 19Q4 through 19Q3 to adjust for what we believe to be an anomalous property included in the NCREIF database during those quarters. Figure 4. Timberland Enterprise Value per southern Equivalent Acre (TEV/SEA) for five timber-intensive publicly traded companies compared to southern timberland values per acre calculated from the NCREIF database. TEV is a quarterly estimate based on total enterprise value (total market equity + book value debt) less estimated value of where I t = net operating income generated by commercial property (primarily from leases) during quarter t CI t = capitalized expenditures on commercial property during quarter t PS t = net proceeds from partial sales of commercial property during quarter t MV t = market value of commercial property at end of quarter t processing facilities, other non-timber assets and non-enterprise working capital. SEV uses regional NCREIF $/acre values to translate a company s timberland holdings in various regions to the area of southern timberland that would have an equivalent market value. Figure 5. EBITDDA multiples are calculated using NCREIF timberland value per acre at quarter end divided by a trailing four-quarter average NCREIF net income per acre. Figure 6. Total quarter-end returns to timberland based on the NCREIF database. returns prior to 14 are based on the John Hancock Timber Index. Additional adjustments were made to return calculations in the for the period 19 Q4 through 19Q3 to adjust for what we believe to be an anomalous property included in the NCREIF database during those quarters. This re-calculation in the results in a re-calculated All-Region NCREIF return series during the same period. Ibbotson Assoc. database was used for S&P 5, U.S. T-Bill and S&P Forest Products quarter-end returns (dividends reinvested). Figure 7. Total quarter-end returns to securitized timberland based on internal analysis. The Securitized Timberland Index includes Plum Creek (PCL), Crown Pacific (CRO), U.S. Timberlands (TIMBZ), Deltic (DEL) and The Timber Company (TGP) (dividends reinvested). Figure 8. The HSTI uses a base-weighted aggregate methodology (similar to that used to construct the S&P 5) to calculate a market capitalization-weighted value for five publicly traded timber-intensive forest products companies. Base weights were readjusted for the emergence of new companies or at the beginning of each year. Dividends are not reinvested. References to expected investment performance in this newsletter are based on historical information and are not to be interpreted as guarantees of future results. 6 Hancock Timber Resource Group High Street, Boston, MA