From Reuters.com - U.S. timberland prices are overvalued and timber prices could drop by as much as 50 percent in coming years, severely hurting wood and paper companies, business weekly Barrons reported on Sunday.

It said real estate investment trusts (REITs) focused on timber, such as Plum Creek Timber Co (PCL.N), Potlatch Corp (PCH.N) and Weyerhaeuser Co (WY.N), could see their shares fall.

Analysts at Off Wall Street Consulting wrote that Plum Creek "increasingly looks like a self-liquidating entity rather than an ongoing business concern," Barrons said in its latest edition.

Plum Creek shares are flat so far this year and closed on Friday at $34.06. The company is expected to generate most of its profits this year through land sales, Barrons said.

But "U.S. timberlands may be one of the worlds most overvalued asset classes," it added. Last year, when the U.S. stock market shed 35 percent, timberland prices rose 9 percent on top of a 17-percent increase in 2007.

"Timber prices could be vulnerable to a decline of as much as 50 percent in coming years," Barrons wrote. If timber prices crash, not only would the forest-products REITs be hurt, but also university endowments and other institutional investors that plowed an estimated $40 billion into timber in the past decade as part of a shift toward so-called alternative investments, the magazine said.