Thursday 20th October 2011
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Harvard Management, the manager of Harvard University's US$32 billion endowment, made an 18.8 percent annual return on its natural resource portfolio, which includes majority ownership of the cutting rights to the Kaingaroa forest.
Harvard, the oldest and most richly endowed university in the US, has put 10 percent of its portfolio into natural resources, which it says is mostly timberland, and agricultural and other resource-bearing properties on five continents.
The return on the natural resources portfolio in the year ended June 30 contributed to an overall portfolio return of 21.4 percent for the period, according to a statement on its website.
The natural resources portfolio has been built up during the last decade by Andy Wiltshire, a New Zealander who started his career with the New Zealand Forest Service, the developer of the Kaingaroa plantation forest in the central North Island.
Wiltshire, who has Bachelor of Forestry Science degree from Canterbury University in Christchurch, is head of external management for HMC. Harvard said its natural resources portfolio has returned 12.8 percent annually over the last ten years.
"We started investing in timberland properties in the 1990s and as a result we have benefited from a meaningful first mover advantage," Jane Mendillo, HMC's chief executive said.
Harvard beat out China's Citic to buy the Kaingaroa cutting rights from receivership in 2004. The price was not disclosed but it was believed to be near US$650 million. The same forest was sold by the Crown in 1996 for $2.2 billion.
Since then the New Zealand Superannuation Fund has acquired a minority interest in the Kaingaroa forest estate for approximately $NZ300 million. Harvard retained majority ownership and the property's manager Timberlands, based in Rotorua, continues to manage the estate.
Kaingaroa is an estate of approximately 170,000 hectares of cutting rights. The bulk of the timber is Radiata Pine, with a small quantity of Douglas Fir. It is regarded as a premier timber estate because it is contiguous, flat and near a port and local timber mills.
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