UNITED STATES - Massachusetts Pension Reserves Investment Management Board (Mass PRIM) is to invest a further $500m ($376m euros) in US timber after selling a $700m section of its portfolio approximately three years ago.

The pension fund decided to sell the timber holdings in 2007 when it identified US timber had reached the top of its market cycle.

Mass PRIM now believes it is a good time to re-enter the market, specifically in the Northwest region of the US.

Tim Schlitzer, senior investment officer for real estate and timber for Mass PRIM, said: "Timber prices in that part of the country are down 15% to 20% from a year ago".

He added: "This commitment is a situation where we are rebuilding our timber portfolio".

Demand for timber in the US is lower than it has been in recent years due to the downturn in the housing market and the low growth in the wider economy.

Mass PRIM's strategy is to buy timber assets at the current low point in the market cycle with a view to holding onto them over the long-term in anticipation of demand returning.

Schlitzer said: "For us timberland is viewed as a long-term asset class. I would estimate that other pension funds view timberland investing as a long-term investment as well."

The new investment by Mass PRIM will be managed in a separate account by The Campbell Group.

Mass PRIM seeks a 7-8% real return on its investments in timber.

It has an existing timber portfolio valued at approximately $1bn, representing 2.3% of its total assets under management.  Its strategic allocation for timber is 4%.
 

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