Through strategic forest management, Wells Timberland REIT seeks to balance tree harvests, which may provide income, with the long-term tree growth that drives improved land and timber values. In addition to promoting returns, we seek to mitigate risks by acquiring a diverse portfolio of timberland properties. We plan to pursue these strategies over a mid- to long-term time horizon to better maximize their potential benefit to the portfolio.

As part of our long-term strategy for growth, we may strategically use debt to finance acquisitions. For example, near the start of our offering of shares, we had the opportunity to acquire Mahrt Timberland. This property contains an extensive collection of high-quality timberland parcels in Georgia and Alabama and is located in one of the most productive timber-producing regions of the U.S. Our independent Board of Directors felt that it would be in our stockholders’ best interest to assume the debt necessary to take advantage of this significant acquisition opportunity. This acquisition has made us more highly leveraged at present than we intend to be throughout the course of our offering program.

Forest Management

Wells Timberland REIT works with qualified forest managers to maximize healthy tree growth and to maintain our full timberland portfolio as a certified sustainable forest under the Sustainable Forestry Initiative^® (SFI). Our forest management strategy involves:

• Combining established forestry practices with modern silvicultural science to promote the health, growth, and overall value of our timberland investments.
• Developing strong relationships with a variety of leading forest-products customers.
• Continually reassessing market conditions to determine optimal sale conditions for our timber.
• Seeking revenue opportunities from recreation leases for hunting and fishing or mineral extraction rights, and for "higher-and-better-use" land sales.

Diversification Strategy

Diversification helps to reduce portfolio risk and promotes continuous productivity, cash flow balance, and harvest timing opportunities. Wells Timberland REIT will focus on U.S. timber-producing regions but also may invest in certain international markets for exposure to rapid-growth climates. Wells Timberland REIT seeks portfolio diversification in the following areas:

• Tree age classes
  To develop an inventory of mature trees for harvest and younger trees for long-term growth.
• Tree species
  To reduce our risk of dependence on any one type of tree in a particular market.
• Geographic regions
  To reduce our risk of dependence on any one particular market and also to limit the impact of natural risks.