April 6, 2023

By Lynda Kiernan-Stone, Global AgInvesting Media

Timberland and agriculture investment manager Manulife Investment Management (Manulife IM) has acquired 55,000 acres of timberland in South Carolina from global sustainable packaging company Sonoco for $72 million in cash. 

Manulife IM manages a timberland portfolio of truly global proportions, totaling approximately 6 million acres across the U.S., Canada, New Zealand, Australia, Brazil, and Chile. It also manages approximately 400,000 acres of prime farmland assets in major production regions across the U.S., Canada, Chile, and Australia.

Explaining the rationale behind the decision to sell, Howard Coker, CEO of Sonoco, noted that the company now produces paper exclusively from recycled fibers and is no longer in need of natural tree fiber for production. 

Founded in 1899, Sonoco today has global operations spanning 300 sites, employing 22,000 people, generating net sales in 2022 of $7.3 billion by serving some of the world’s most notable brands. The company ranked first in the Packaging Sector on Fortune’s Most Admired Companies in 2022 and was included in Barron’s 100 Most Sustainable Companies for the fourth consecutive year. 

“Through this sale, we are pleased to have the opportunity to maximize value for our shareholders while also ensuring that the property goes to a buyer that puts sustainable management at the forefront of its natural capital investment strategy,” said Coker.  

“Manulife Investment Management has extensive experience with these types of sustainable transactions, and we feel confident that these lands will continue to be held in good stewardship.”

Timberland has been rapidly gaining credibility as a prime alternative investment for gaining environmental, social, and governance (ESG) benefits for portfolios. As such, demand for these kinds of sustainable alternatives continues to strengthen among the pension and institutional investor space as part of their broader commitments to climate change mitigation and sustainability.

On a more granular level, a regional focus on the U.S. South has pervaded timberland deals in recent years. Known as the U.S. “wood basket”, the region is responsible for more than 55 percent of the country’s timber harvest by volume, and produces more wood products than any country on Earth except the U.S. in its entirety. 

In February 2022, Manulife IM provided long-term mortgage loans of $625 million – secured by approximately 832,000 acres of timberland and timber portfolio assets – to fund a deal between The Ontario Teachers’ Pension Plan Board (OTPPB) and Tamarack Timberlands LLC, an investment vehicle owned by the pension fund, with mortgage holder Resource Management Service (RMS) for direct ownership and full governance of approximately 870,000 acres of loblolly pine forest spread across the U.S. Southeast.

At the time, Christopher Metrakos, managing director of natural resources at Ontario Teachers’, commented on the overall benefits and upside of holding timber assets, when he said, “A responsible, sustainable, and long-term approach to forestry has value beyond timber production.”

“These assets will continue to provide Ontario Teachers’ with stable and robust cash yields as well as long-term capital appreciation, while also acting as a natural climate solution to help mitigate the impacts of climate change.”

Four months later, in June 2022, Manulife IM, together with 1PointFive, a subsidiary of Occidental’s Low Carbon Ventures (OLCV) business, announced their entering into a lease agreement on 27,000 acres of timberland in Western Louisiana as the foundation for a carbon capture and sequestration project. 

Aside from Manulife IM, another recent, high-profile timber deal in the region occurred in February of this year, when Campbell Global, the wholly owned timber investment manager of J.P. Morgan Global Alternatives, advised investors and led the acquisition of more than 250,000 acres of commercial timberland across three properties in the Southeastern region of the U.S. The deal was valued at more than $500 million, reflecting the scale of capital commitments being made in the asset class and geographic region. 

~ Lynda Kiernan-Stone is editor in chief with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

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