If you have been watching the stock price of the timber REITs for the past few months, you should have noticed some pretty dramatic gains (way above all market indices!). Plum Creek went from about $34 into the low $40's. When they announced lower earnings and a less than optimistic outlook, the stock price barely hiccuped. Potlatch is up. Rayonier jumped. In fact, during the last 30 days when the S&P jumped about 1.5%, PCL, PCH, RYN, TIN, WY, & JOE are all up from 6% to 12%! What's happening?
Private investors are looking for the pure timberland play but it's hard to buy a tract of timberland (at least in a knowledgeable manner). And that timberland is not too liquid either but a share of one of the above companies is. And private investors with the big bucks have the same thing in mind. Example: Carl Icahn moving heavily into Temple-Inland.
On the institutional investor side, the demand for timberland just keeps building and getting more competitive as more institutional investors recognise timberland as an asset class in itself. What started with institutional investors here in the U.S. is now spreading world-wide at a pretty fast pace. Here is an interesting article that illustrates the increased interest by investors in Europe. All told, there is a lot of money chasing timberland with no outlook on the horizon suggesting that the demand will decline anytime soon.