Summary Update. Contents

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1 Contents Summary Update Timber Prices Product Prices Timberland Markets Economic News The FIA Quarterly Dashboard Summary Update Timber and Product Prices Pine stumpage markets in the Southeast improved across all benchmark products. In the Pacific Northwest, domestic demand remains strong, while export markets are considered to be at, or near peak levels. Modest gains occurred in the Northeastern hardwood market, as demand increased for multiple species. Improved housing starts contributed to the stable lumber and panel markets over the quarter. U.S. housing starts reached their highest level in five months in February, reaching a seasonally-adjusted annual rate of 1.18 million units. Mortgage rates remained stable over the first quarter, averaging around 3.71% for 30-year fixed mortgages. Timberland Markets There were three closings of note in the first quarter: Molpus Woodlands Group purchased 87,000 acres in Georgia and Florida from Claw Forestry; Timberland Investment Resources (TIR) purchased 15,500 acres in Virginia and North Carolina from Conservation Forestry; and in West Virginia, The Conservation Fund purchased 32,400 acres from the Forestland Group. Forest Investment Associates 15 Piedmont Center Suite 1250 Atlanta, Georgia Investors continue to follow large-scale U.S. offerings in the Pacific Northwest, South and Lake States. Outside the U.S., markets remain active in Latin America, Australia and New Zealand as investors continue to await announcements on several transactions in these regions. TEL: FAX: Forest Investment Associates 1 1 st Quarter 2016

2 Timber Prices Southeastern Southeastern pine stumpage markets improved across all products over the first quarter of According to Forest2Market, southwide average prices for pine sawtimber increased 4.1% and ended the year 0.9% below year-ago levels. Chip-n-saw prices also improved, increasing 5.3% and ending the year 2.4% above year-ago levels. Pine pulpwood prices increased by 11.4%, finishing 9.1% ahead of last year s prices. Hardwood stumpage demand was stagnant across both benchmark products. Hardwood pulpwood prices held flat, increasing only 0.3% over the quarter, ending at 6.6% below year-ago levels. Average prices for hardwood sawtimber fell 13.8%, ending the quarter 16.4% below last year s average. Southeastern Timber Prices Source:Forest2Market Northern Hardwoods In Pennsylvania and New York, markets for many major species improved slightly from the previous quarter. According to the Pennsylvania Woodlands Timber Market Report, black cherry prices increased 4.1% during the fourth quarter (the most recent publicly reported pricing), ending 0.6% under year-ago levels. Northern red oak prices decreased 9.1% last quarter, finishing the year 3.1% below year-ago prices. Hard maple prices decreased 7.2% below last quarter s level, ending down 10.2% year-over-year. Soft maple prices improved 7.2% and ended 12.0% above year-ago levels. White ash prices also improved, rising 5.1%, ending 22.5% above last year s level. The pulpwood markets in Wisconsin have declined as mills hold large inventories, eroding prices. Veneer markets remained strong all winter. Continued strong demand and stable markets are expected through the spring and into the summer months. Forest Investment Associates 2 1 st Quarter 2016

3 Northeastern Hardwood Timber Prices Source: Pennsylvania Woodlands Timber Market Report - Northwest Region Pacific Northwest According to Log Lines, Pacific Northwest (PNW) average delivered prices for Douglas-fir #2 logs improved by 1.7% over the quarter, concluding 6.5% below year-ago levels. Whitewoods (i.e., true firs and hemlock) average delivered log prices declined 2.8% and ended 14.7% lower than year-ago levels. Domestic markets remain relatively strong across most of the region. Export markets are considered to be at, or near peak levels with Japan-quality log prices dropping slightly at the end of first quarter. Demand from China flattened over the quarter, however price increases are expected soon. Pacific Northwest Log Prices Source: Log Lines Forest Investment Associates 3 1 st Quarter 2016

4 Product Prices Lumber and Panels Improved housing starts contributed to the stable lumber and panel markets over the quarter. The Random Lengths Framing Lumber Composite Price increased 7.8% over the quarter and 2.7% above yearago levels. The Structural Panel Composite Price did not change over the quarter and remains 4.3% below year-ago levels. Lumber and Panel Prices Source: Random Lengths Pulp and Paper Varied results occurred across the major pulp and paper indices. The benchmark NBSK (northern bleached softwood kraft) pulp price index improved 1.1% over the quarter, ending 3.1% beneath year-ago levels. U.S. Newsprint (30 lb.) gained 7.9% over the quarter, ending the year 4.4% below year-ago levels. Uncoated freesheet (20 lb.) fell 2.0% over the quarter, while boxboard prices saw no variation. Pulp and Paper Prices ($/short ton) Source: FOEX Indexes, Ltd., RISI Pulp & Paper Week Forest Investment Associates 4 1 st Quarter 2016

5 Timberland Markets Transactions In the South, Molpus Woodlands Group closed on 87,000 acres in Georgia and Florida from Claw Forestry for a reported price of $125 million. In Virginia and North Carolina, Conservation Forestry sold a 15,500-acre package to Timberland Investment Resources for $27 million. The package included approximately 15% leased acres. In West Virginia, The Conservation Fund closed on a 32,400-acre package from the Forestland Group for $20.3 million. Transactions in Progress Investors continue to monitor several offerings on the market, headlined by a 130,000-acre Campbell Global property in Oregon and Washington. In Michigan, the Forestland Group is reportedly close to selling its 365,000-acre Bishop property in the upper peninsula to an unknown buyer. Several packages have been recently announced and will be monitored closely in the coming months including almost 300,000 acres in Texas and Arkansas from Hancock Timber Resource Group (HTRG). HTRG is also selling a package in Washington and Texas totaling 52,400 acres. Additionally, there are multiple large-scale offerings expected to hit the market soon in the South and the Pacific Northwest. All signs point to a busy transaction year in Forest Investment Associates 5 1 st Quarter 2016

6 Economic News Housing U.S. housing starts reached their highest level in five months in February, hitting a seasonally-adjusted annual pace of 1.18 million units, the highest level since September. Housing starts remain, however, below longterm averages of closer to 1.4 to 1.5 million units per year. Mortgage Rates Rates have been reasonably stable over the first quarter with average rates on a 30-year fixed-rate mortgage around 3.71%. A 15-year fixed rate ended closer to 3%. Jobs The U.S. job market report for March showed the creation of a seasonally adjusted 215,000 jobs, and an increase in the unemployment rate to 5% as labor-force participation rose to 63%. Consumer Confidence Consumer confidence rebounded in March, as Americans regained optimism about the short-term outlook for the economy. The Conference Board s index of consumer confidence rose to 96.2 in March from an upwardly revised 94.0 in February. Inflation Year-over-year core CPI inflation has increased to 2.3% for the month of February, while core PCE inflation has risen to 1.7% (closing in on the Fed s 2% target), following several monthly increases in the measure which excludes volatile prices of food and energy. Much of the surge in core inflation is related to increased medical expenses and apparel prices. Trade Deficit The U.S. trade deficit widened in January as both exports and imports decreased, indicating slower global economic growth. The trade gap expanded 2.2% from the prior month to a seasonally adjusted $45.68 billion. Exports to Canada, China, and South and Central America all hit multiyear lows, reflecting how expensive it has become for consumers in regions with slowing economies and weaker currencies to buy American products. By contrast, U.S. imports of cellphones, diamonds, and wine increased as a strong dollar made foreign products more affordable here. Interest Rates The U.S. central bank raised its benchmark overnight interest rate in December of last year for the first time in almost a decade. Financial markets see a 30% chance of a hike at the Fed's June policy meeting and a 50% chance of such a move in September according to CME FedWatch. Oil Prices Oil prices remain up 30 to 40% from around 12-year lows struck in mid-february, ending the quarter around $38 a barrel. U.S. Dollar The dollar had its worst quarterly performance since 2010 as investors pare their expectations for interest-rate increases this year. The Wall Street Journal Dollar Index, which measures the dollar against a basket of 16 currencies, fell about 4% in the first quarter. After a strong January, the dollar fell over February and March as the outlook for interest-rate increases has dimmed. Forest Investment Associates 6 1 st Quarter 2016

7 The FIA Timber Economics Quarterly Dashboard Southeastern Timber Prices Northeastern Hardwood Timber Prices Source: Forest2Market Source: Pennsylvania Woodlands Timber Market Report - Northwest Region Pacific Northwest Timber Prices Pulp and Paper Source: Log Lines Source: FOEX Indexes, Ltd., RISI Pulp & Paper Week Forest Investment Associates st Quarter 2016

8 ($/ton) 000's in thousands The FIA Timber Economics Quarterly Dashboard Housing Starts 30 yr. Mortgage % % % 600 4% 400 Feb-11 Aug-11 Feb-12 Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 Feb-15 Aug-15 Feb-16 3% Feb-06 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14 Feb-15 Feb-16 Source: NAHB.org Source: The Federal Reserve Lumber Inflation (CPI) $260 $240 $220 $200 $180 $160 $ % 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% $120 Feb-06 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14 Feb-15 Feb-16* Source: U.S. Department of Labor, Bureau of Labor Statistics -5.0% Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Source: Forest Investment Associates st Quarter 2016