But despite the fact that the real estate portfolio returned only 1 percent in 2002 compared with 4.8 percent for the benchmark, a 2002 HMC report was hopeful that this sector would recover “in the next year or two.”

Meyer described a plan that would allow Harvard to reap maximum reward from its New Zealand property by waiting for the forest to recuperate for a number of years before harvesting the timber.

“This is a luxury we have that many companies would not have,” Meyer said. “It allows us to be a better steward of the property.”

Meyer said he could not comment on Harvard’s investment in the timber industry in the United States and South America.

CUTTING A DEAL

By some accounts, the property was a steal.

While Tenon paid 2.2 billion New Zealand dollars for the land in 1996, several estimates say Harvard paid only $650 million, or 970 New Zealand dollars, at the December auction.

Neil Paku, a native New Zealander whose wife is a post-doctoral student at the Graduate School of Arts and Sciences, said the conditions were ripe last December for Harvard to purchase the forest at a discounted rate. Paku worked this forest in log transport.

“When the government sold the cutting rights to Tenon, it was made at a time when the export demand for forest products was extremely hated. There were groups of people against this deal. And so the cutting rights were overvalued,” Paku said.

Meyer said that he felt the price Harvard paid was a just one.

“We did purchase it at a price far less than what the property was sold at four or five years ago,” Meyer said. “But the timber industry has been stressed recently.”

Despite selling many of its forest assets, Tenon maintains confidence in the resilience of the timber industry as a major source of profit.

“While the company will no longer have its own forests, it will continue to enjoy the advantage of proximity to one of the world’s most sustainable sources of good quality timber—the forest plantations of the Central North Island of New Zealand,” according to the Jan. 21 notice to Tenon shareholders.

Meyer said that Harvard will not face Tenon’s problems since they will not be involved in processing the timber beyond the harvest.

“In many cases, forest product companies back out of timber because their timber sales are all tied up with their forest product operations,” Meyer said. “And we don’t have that issue.”