University Sells Most Of Forest Holdings

Less than eight years after amassing over 2,000 square miles of forest land, Harvard will sell two-thirds of its holdings in the United States and New Zealand—a combined area larger than Rhode Island—to the Hancock Timber Resource Group (HTRG), the Boston-based investment firm announced Wednesday.

Because the deal will not be completed until the fourth quarter of 2005, neither HTRG nor Harvard provided details about the 938,000-acre transaction.

But when the University purchased rights in 2003 to a 468,000-acre swath of New Zealand forest belonging to Maori natives to become the second-largest forest owner in New Zealand, industry sources estimated it sold for more than $600 million.

The current deal with HTRG involves the sale of more than twice that amount of land, including about 720 square miles northeast of Houston, Texas; about 510 square miles in western Washington state; about 210 square miles in northwest Pennsylvania; and about 23 square miles on the Central North Island of New Zealand.

This week’s sale will leave Harvard

rights to about 1,100 square miles of forest land, about 734 of which are in New Zealand.

Harvard owns the properties—or, in some cases, just the rights to use the lands—in order to plant trees and later cut them down and sell them as timber.

In a statement yesterday, the Harvard Management Company (HMC), the steward of the University’s $22.6 billion endowment, said that it had “not lost [its] enthusiasm for timber as an asset class,” adding that it would “continue to acquire timber properties on an opportunistic basis.”

Neil Paku, a New Zealand native whose wife is a postdoctoral student in the Graduate School of Arts and Sciences, said New Zealand forests can be unprofitable for a variety of reasons, including difficult access to property and Maori natives making claims on the value of improvements to the land.

Paku, who has relatives involved with timber operations in New Zealand, said that the forest industry there, which is fueled to a large extent by Asian demand, has lately been difficult.

“[I’m] scratching my head as to why the Asian demand would drop off the way it has,” he said. “Nobody’s making a lot of money.”

In a statement Wednesday, HTRG President Dan Christensen said that the company was “very pleased” to reach an agreement with Harvard, calling the 938,000 acres “excellent additions to our investors’ portfolios.” He added that the company planned to manage the new properties according to a “long-term, sustainable perspective.”

HTRG is the world’s largest company specializing in investing in forests for institutions, with more than $2.5 billion in land holdings in the United States, Australia, and New Zealand. It is owned by Manulife Financial, the Canadian company that bought John Hancock Financial Services in 2004.

HTRG representatives did not return a request for further comment yesterday.

—Staff writer Brendan R. Linn can be reached at blinn@fas.harvard.edu.