HMC To Buy New Zealand Forest

Move over Arnold Arboretum. Harvard may soon own a 400,000-acre New Zealand forest.

Harvard Management Company (HMC), the group responsible for investing Harvard’s $19.3 billion endowment, is in the process of buying a forestry estate speculated to be worth $500 million from New Zealand’s Central North Island Forestry Partnership, The New Zealand Herald reported on Friday.

Although HMC President Jack E. Meyer said he could not comment on the reported deal, he said that timber investments are not unusual for Harvard.

“We think [timber investments] have an attractive rate of real return and are good diversifiers. The returns won’t be precisely like those of any other asset class,” Meyer said.

According to the Herald, the state-planted tree farm was in receivership to a consortium of 12 banks, and was originally on the market for $650 million. The Herald also reported that Harvard was believed to be behind a thus-far failed bid for another massive New Zealand forest, raising the prospect that they could end up with a “super-estate.”

Neil Paku, a New Zealand native whose wife is a Harvard graduate student, said that in 1992 he worked in log transport in the forest that Harvard is reportedly buying.

“It is a huge place, volcanic country. It would be like the moon if it weren’t for the trees,” Paku said. “The soil is basically pumice and there’s almost no resistance to the roots of the trees. They explode in height. It’s probably the best growing conditions you could ask for.”

Meyer said that while schools like Princeton and Yale also invest in timber, Harvard has “more timber investments than most,” representing about 7.5 percent of total investments.

If Harvard does in fact buy the land at its speculated value of $500 million, the purchase would add 2.6 percentage points to the timber investment share.

Meyer said an investment in timber forest involves deliberately planting trees to remove them later on.

“It’s managed as a plantation. These are trees that are grown to be cut down,” Meyer said. “We are quite confident we are managing them to the highest standards. We are good stewards to the properties.”

Denis M. Schweder ’04, a New Zealand native, pointed out that the country will remain the owner of the actual land even though the timber will belong to HMC.

“The fact that the underlying land of the estate remains in the hands of the crown shows that while the Harvard Management Company’s expansion of its $1.2 billion worldwide investments in timberland is welcomed, it is by no means intended that actual New Zealand land should be sold off to international companies or private bidders in large quantities,” Schweder wrote in an e-mail.

Paku said he understood why Harvard would opt for the seemingly unconventional investment.

“Harvard is obviously interested in long-term investments. This forest is already in rolling production. Because the forest is so large, there’s blocks of trees coming [up] every year. It’s a steady revenue stream,” Paku said.

According to its website, the Central North Island wood supply region spans about nine million acres, with annual harvesting expected to reach 11 million cubic meters of logs this year.

Paku’s wife, Gillian F. Prowse, a post-doctoral student at the Graduate School of Arts and Sciences, said she was pleased to hear that Harvard is investing in her homeland.

“If it has to go to anyone, I’m glad it’s Harvard,” Prowse said. “I just hope the money comes back to the graduate school.”

—Staff writer Jenifer L. Steinhardt can be reached at steinhar@fas.harvard.edu.