www.forestinvest.com

Forest Landowners Association National Conference - June 2018

Outline

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• TIMO - Timberland Investment Management Organizations• Why invest in timberland• What we thought we knew• Future considerations• Closing thoughts

What is a TIMO Timberland Investment Management Organization

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• TIMOs don’t own timberland

• TIMOs are investment management companies o Acquire, manage and sell timber and timberland on behalf

of institutional investors

• Top 30 firms manage portfolios comprising ~33 million acres

• By comparison, timber REITS (4) own ~ 18 million acres

• Founded in 1986, FIA employs a staff of 56. Known as a preferred employer and for strong culture. Employees own the company with 51 of the staff being shareholders.

• Operations span 18 U.S. states, Brazil and Chile, comprising 2.2 million acres of timberland valued at ~ $5 billion. Our client base is roughly 75% separately managed accounts and 25% commingled funds.

• FIA has acquired approximately 3.5 million acres and sold approximately 1.2 million acres

• Domestic footprint: South – 1.5 million acres; Pacific Northwest – 228,000 acres; North – 220,000 acres.

• In the past five years, we have acquired 246,000 acres in Brazil and Chile.

• Our sister company, AgVictus Capital Management, acquires and manages farmland and related assets, including row crops, citrus, alfalfa, blueberries and hazel nuts in the U.S. and abroad.

Forest Investment Associates (FIA)Registered Investment Advisor

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Forest Investment Associates’ Client Portfolio2,195,122 Acres Under Management

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The areas highlighted represent counties / countries in which FIA’s existing clients own timberland.As of March 31th, 2018

Location AcresAL 37,538 AR 240,796 FL 189,382 GA 189,479 LA 12,596 ME 66 MS 192,463 NH 707 NY 5,867 NC 109,749 OR 134,628 PA 128,385 SC 189,446 TX 235,375 VA 104,493 WA 93,400 WV 21,347 WI 63,347 Brazil 182,553 Chile 63,505Grand Total 2,195,122

Why TimberSummary of Benefits: Cash Yield, Inflation Protection, Low Correlation, Attractive Returns

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Benefits of Timberland in a Portfolio• Biological growth is the primary driver of returns

• Provides protection from inflation

• Exhibits low to zero correlation to other financial assets

• Attractive Risk-Weighted Returns

• Tangible real asset driven yield from harvesting operations

Biological Growth Provides Low Correlation Attractive Returns: Capital Markets Line 2003-2017

Return Drivers of a Timberland Investment 1992-2007

~ 57% Biological Growth~ 27% Timber Prices~ 17% Timberland Prices

S&P 500 Index

T-Bills (90 day)

US Timberland -Total

US Real Estate - NPI

NAREIT Equity REIT Index

BofA ML U.S. Corp. Bond Index

Barclays Capital Govt Bond

MSCI EAFE

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NCREIF U.S. Timberland

S&P 500 Index

Barclays Capital Govt Bond

Real Estate

Consumer Price Index

Why TimberValue of One USD ($) – 32 years

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US Timberland

Sources: NCREIF, S&P 500 Composite, Barclays Capital Government Bond Index, CPI-All Urban Consumers, not seasonally adjusted

Timberland Markets & TransactionsWho is Buying Timberland?

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Note: Gray bar reflects impact of Caddo transaction and uncertainty surrounding classification of buyer(s)

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Forest Investment Associates Transactions

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Annual Dispositions Annual Acquisitions

It ain’t what you don’t know that gets you into trouble; it’s what you know for sure that just ain’t so.

~ Mark Twain

Three things we knew for sure that just weren’t so …

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The economy recovered painfully slow and housing is still well below expectations

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The economy and housing market will rebound quickly, similar to past recoveries ...

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2010 Forecast

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Actuals are 69% of forecast, a cumulative gap of 4 million homes

Cumulative Housing Starts

Source: RISI, Forest Economic Advisors & U.S. Bureau of the Census

The historic tight correlation between timber and lumber prices has diverged

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When the economy recovers, pine sawtimber prices will track lumber prices, as they have done in the past …

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U.S. South - Annualized Lumber Production

U.S. South - PST Stumpage

Source: Timber Mart-South & Forest Economic Advisors

Intensive silviculture has greatly improved forest productivity; coupled with deferred harvest volumes, and more efficient sawmill yields, growth now significantly exceeds harvest.

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Inventory accumulation from deferred sawtimber harvests in the South will be worked down quickly …

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Source: Forest Economic Advisors

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A combination of demand for export logs and domestic lumber has constrained Pacific Northwest forests

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Source: Forest Economic Advisors

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NCREIF U.S. Timberland

S&P 500 Index

Barclays Capital Govt Bond

Real Estate

Consumer Price Index

Why TimberValue of One USD ($) – 15 years

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US Timberland

Sources: NCREIF, S&P 500 Composite, Barclays Capital Government Bond Index, CPI-All Urban Consumers, not seasonally adjusted

Recent timberland returns have “underwhelmed”NCREIF Timberland Property Index – As of 1Q 2018

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NCREIF – South: Annualized Performance

One Year 2.64%

Three Year 2.92%

Five Year 5.32%

Since Inception 8.87%

Source: Nationall Council of real Estate Investment Fiduciaries – Timberland Index

Note: U.S. South’s date of inception – 4Q 1986

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Lumber Production FEA Forecast Forisk Forecast Southern Stumpage

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Timber Market DemandU.S. South Softwood lumber production

Source: FEA, TimberMart South, Forisk Consulting

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Lumber production continues to pivot South

Source: Forisk Consulting

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South North West

Capital Investments 2013-2018:

North $3.3 billionPacific Northwest $5.3 billionSouth $15.6 billion

Capital Investments in Wood-Using Assets

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Pine sawtimber prices are the lowest in 48 years in real terms

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1950 1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014 2018 2022

Pine Sawtimber - Nominal

Pine Sawtimber (Real - $2016)

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Source: U.S. Forest Service, Timber Mart-South, FEA

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Past decisions foreshadow unique consequences

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US South Pine Tree Plantings

20.3 MM acres

8.4 MM acres 16.3 MM acres

U.S. South – Pine Tree Plantings

Source: U.S. Forest Service

Past decade of planting is ~50% of prior decade and ~40% of decade before then

Closing thoughts on markets

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• In the South, abundant timber supply has impacted returns • Supply will tighten in the future• Markets are local with unique supply/demand dynamics• The term “south-wide average price” has little relevance• The U.S. forest products industrial infrastructure is world class• The South will continue to gain market share • Timberland is a proven asset class with attractive investment

characteristics • Timberland will remain in demand by institutional investors

Thank you

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Contact Information

Marc WalleyForest Investment Associatesmwalley@forestinvest.com

15 Piedmont Center, Suite 1250Atlanta, GA 30305www.forestinvest.com