Timberland Investment Overview:

Latin America and the Rest of the World

Bob Flynn

Director, International Timber, RISI

Latin American Timberlands Investment Conference, Rio de Janeiro

August 25-26, 2014

Agenda

• Global Focus: Based on RISI’s International Timberland

Ownership and Investment Database, covering 760

companies in 74 countries, a total of 100 million hectares of

forest ownership (approximate value >US$370 billion)

• Latin America Focus: Based on RISI’s Latin American

Plantation Forests: Outlook for Timber Supply and

Markets

Timberland investment is

more concentrated by

company, and more

geographically diverse, than

we previously thought

The Top 30 TIMOs in the world have a combined

US$57 billion in assets under management. But the

top 5 companies account for 54% of the total, and

the top 10 have 77%

0.0

2.0

4.0

6.0

8.0

10.0

12.0

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Bill

ion

US

Do

llars

Top 30 TIMOs, Assets Under Management

This does not

include direct

investment by

pension funds, or

investment in

Timber REITs.

A proper accounting of institutional investment

reveals that Europe, Latin America and Oceania have

attracted similar levels of timberland investment

0 5 10 15 20 25 30

Africa

Asia

Europe*

Latin America

North America**

Oceania

REIT/Other

TIMO

Million Acres

All of the 10 largest TIMOs have forest

assets outside of North America; 8 have

forest in Latin America, 6 in Oceania

TIMO North

America

Latin

America

Oceania Africa Asia Europe

Hancock Timber X X X

Campbell Global X X

RMS X X X

FIA X X

Brookfield X X

Global Forest Partners X X X X

BTG Pactual X X X X

New Forests X X

The Forestland Group X X

GMO X X X

Top Ten TIMOs and Region of Investment

40% of the Top 30 TIMOs are based outside of

North America; 10% are based in Brazil, including

BTG Pactual, Floresteca and Copa Investimentos

North America60%

Latin America10%

Europe23%

Oceania4%

Asia3%

11 of the Top 30 TIMOs have investment in Brazil

(compared with 6 in Australia, 5 in New Zealand)

Brazil Uruguay Chile Colombia Costa Rica Panama Guatemala Belize

Hancock Timber X X

RMS X

FIA X

Brookfield X

Global Forest Partners X X X X X

BTG Pactual X X

The Forestland Group X X X

GMO X X X X X

Floresteca X

Greenwood Resources X

The Forest Company X X

Copa Investimentos X

Aquila Wald Invest X

Global Environment Fund X

Top 30 Global TIMOs, Investment in Latin America

But TIMOs play a smaller role in Latin

America than in some other regions

Ten Largest Private Forest Owners by Type and by Region, 2014

Type North

America

Latin

America

Oceania Africa Asia Europe

TIMO 6 2 7 2 0 2

REIT 3 0 0 0 0 0

Other Listed 0 8 1 2 2 3

Private 1 0 1 6 8 5

Tribal 0 0 1 0 0 0

Three of the top 10 countries for timberland

investment are in Latin America

0

500

1,000

1,500

2,000

2,500

3,000

Ownership of Forest by Financial Institutions by Country, 2014 Thousand Acres

Note: #1 is USA,

#2 is Canada,

not shown in

chart

82% of “TIMO” investment in forest in Latin

America is in just 3 countries

Brazil54%

Colombia1%

Chile9%

Costa Rica1%

Argentina4%

Ecuador1%

Guatemala1%

Belize7%

Nicaragua1%

Panama1%

Uruguay19%

Paraguay1%

TIMO Ownership in Latin America, 2014

A key attraction for institutional investors is

having large-scale forests available for

acquisition

0

10

20

30

40

50

60

Latin America: Number of Forest Ownerships Greater Than 10,000 ha in Size, 2013

There are approximately 3.0 million hectares of

foreign owned plantation forests in L. America

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

Forest Industry FInancial Investors

Th

ou

sa

nd

He

cta

res

Foreign Ownership of South American Plantation Forests, by Forest Industry and Timberland Investors

2009

2014

55% of the foreign-owned plantations are in

Brazil, 19% in Uruguay

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

Argentina Brazil Chile Uruguay Other S. Am. Cen. America

Tho

usa

nd

He

ctar

es

Foreign Ownership of Forest in Latin America, 2014

TIMO

Forest Industry

One third of Latin American plantations

owned by foreign forest products companies

is in Chilean hands

0

200

400

600

800

1000

1200

Argentina Brazil Chile Colombia Uruguay Venezuela Other

Th

ou

sa

nd

He

cta

res

Foreign Investment in South American Plantation Forests by Forest Industry, 2014

Chilean Overseas

Target species vary by region

Region Primary Target Species

North America Loblolly pine, Douglas-fir, other conifers, mixed hardwoods

Latin America Eucalyptus (various species), loblolly pine, radiata pine, teak

Europe Mixed northern conifers, poplar

Oceania Radiata pine, E. globulus , E. nitens

Asia Acacia, teak, rubberwood

Africa Eucalyptus, pine, teak, rubberwood

Primary Species of Interest for Timberland Investors

Globally, investment in eucalyptus and other

fast-growing hardwoods is surging, but pine

is left behind

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2000 2012

Th

ou

sa

nd

Ac

res

Eucalyptus and Pine Plantation Area in Brazil, Chile, Australia and New Zealand

Eucalyptus

Pine

India has increasingly been relying on Latin

America for teak log imports, and this is

likely to increase in the future

0

50

100

150

200

250

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Th

ou

sa

nd

Cu

bic

Me

ters

India: Teak Log Imports from Latin America

Central America

South America

0

10

20

30

40

50

60

US$

Mill

ion

India: Teak Imports from Latin America, 2013

Lumber

Logs

Most of India’s teak imports

are in log form, but from

Brazil is processed/semi-

processed products

Latin American Timberland Investment:

Significant stories in 2013/2014

• BTG

• Fibria/Brookfield

• Interest in new geographies, e.g. Colombia

and now also Paraguay

• China’s impact

• Biomass

BTG Pactual: Evolution of the TIMO sector

• Regions Timberlands Group(formerly RMK) was one

of the long-term major TIMOs, based in Atlanta.

• Like many North American TIMOs, Regions had

been investing in Latin America for several years, in

Uruguay and Brazil

• In September 2013, BTG Pactual acquired Regions,

marking the biggest move by a Latin American bank

in the timberland investment space.

Fibria and Brookfield – why this matters…

• On the seller side --- while some pulp companies in Latin America had previously sold forest (including Klabin, Fibria, Arauco, etc.) these were always either tied to the sale of an existing pulp mill, or were not a core resource for the mill. This time it’s different!

• On the buyer side --- while Brookfield is “kind of a Brazilian company” (in Brazil for more than 100 years), this demonstrates a flexibility in structuring a timberlands deal that “fits” the Latin American situation particularly, and may open up other possibilities!

Colombia’s growing market for forest

products has caught the eye of global

timberland investors

0

200

400

600

800

1,000

1,200

Millio

n U

S D

olla

rs

Colombia: Imports of Forest Products, 2000-2014F

Wood Products

Pulp/Recovered Paper

Paper

24

Paraguay is another company that is rapidly

opening up for plantation development by

outside investors

Silvipar project in southern

Paraguay – 3 days old

Silvipar project at

200 days

China is becoming an increasingly important

market for Brazilian pulp --- will this be

followed by Chinese investment?

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2007 2008 2009 2010 2011 2012 2013 2014F

Tho

usa

nd

To

nn

es

China: Imports of BHKP from Brazil

Brazil has a larger area of plantations dedicated to

producing wood for biomass energy than the rest

of the world combined

• Consumption of eucalyptus for energy

in Brazil is larger than consumption

for pulp production. In 2012, 23

million m³ of eucalyptus was used to

produce charcoal, primarily for the

steel industry (processing iron ore

into pig iron). An additional 37 million

m³ of eucalyptus was used as

industrial fuelwood (for the agriculture

industry, ceramics, etc.).

• In other Latin American countries we

are also seeing tree plantations for

biomass energy becoming a more

important factor.

0

8

16

24

32

40

48

56

64

Mil

lio

n C

ub

ic M

ete

rs

Eucalyptus Consumption in Brazil, 2012

Industrial Fuelwood

Charcoal

Pulp

Source: ABRAF

7th International Woodchip &Woodpellet Trade

Conference Nov 3-4 & Field Trip Nov 5-7 2014

• Nov 6: CMPC Plantations • Nursery & Genetics

• Radiata pine

• Eucalyptus nitens

• Eucalyptus globulus

• From planting through harvesting

• Nov 7 morning: Woodchipping and woodchip

export loading operations

• Nov 5: Arauco Nueva Aldea Industrial Complex

Register on-line:

www.woodfibreconference.com

Mark your calendars: 2015 New York City

Forest Investment Conference

• 2nd Annual RISI/DANA

event in NYC, March 31 &

April 1, 2015

• Highlights:

• Outlook for all forest

products markets by

RISI economists

• Focus on pension

funds and other

institutional investors

• Regional review of

global timberland

investments

Conference web page:

http://events.risiinfo.com/investment-

conference/

This presentation is based on RISI’s January 2014

publication Latin American Plantation Forests: Outlook for

Timber Supply and Markets and RISI’s August 2014

publication International Timberland Ownership and

Investment Database

www.risi.com/LAtimber

www.risi.com/timberland

Contact: Bob Flynn

Email: rflynn@risi.com

Thank you for your attention!

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