September 23, 2024

By Gerelyn Terzo, Global AgInvesting Media

Through its sustainable land management strategy, Canada’s Caisse de dépôt et placement du Québec (CDPQ) is targeting forestland in the lower 48. The investment group, which manages funds for public pensions and insurance plans, has launched a new investment platform while concurrently taking a minority position in Chinook Forest Partners, a Grants Pass, Oregon-based natural capital investment management firm. Founded in 2018, Chinook manages working forestland for investors through its subsidiary Chinook Forest Management.

The platform will build a diversified portfolio of forestland in the U.S. Pacific Northwest region, leaving the deployment of capital and management of forestland assets to Chinook. As a minority shareholder, CDPQ will support the firm’s growth by expanding its portfolio of natural capital
assets and developing additional structures to attract new investors.

Timberland has piqued the interest of investors of late given its low correlation to traditional asset classes such as stocks and bonds, offering both portfolio diversification and an inflationary hedge in an uncertain economy. Meanwhile, the U.S. Pacific Northwest is an attractive bet for forestland, where the state of Washington alone boasts 22 million acres of forestland, representing the second-biggest lumber producer in the nation.

With C$452 billion (US$334.7 billion/A$489 billion) in AUM, CDPQ in its mid-year 2024 update reported a return of 4.2 percent over six months and 6.0 percent over a five-year stretch. In H1 2024, the real assets portfolio generated a return of 5.3 percent, outperforming its benchmark index’s 4.3 percent. Its tie-up with Chinook Forest Partners occurs approximately a year after the U.S. investment firm acquired working forestland in Washington and Oregon from Nuveen Natural Capital, enhancing its portfolio throughout the Pacific Northwest region.

In addition to the U.S., CDPQ has also set its sights on Australian agriculture, buttressed by a strategic partnership formed with Aussie green bank Clean Energy Finance Corporation (CEFC) last year. Through an investment platform, the partners earmarked A$200 million (US$137 million/C$178 million) for Australian assets managed by Australian farmland manager Gunn Agri Partners, in which CDPQ and CEFC hold minority stakes. That platform’s maiden acquisition was row-crop farm situated New South Wales.

Of the latest deal, CDPQ Executive Vice-President and Head of Infrastructure Emmanuel Jaclot said, “We are thrilled to partner with Chinook as we look to deploy our constructive capital to contribute to the preservation and sustainable management of lands in the Pacific Northwest region of the United States, the world’s second largest forest area. By investing in forestland, we are not only protecting valuable natural assets but also contributing to the transition towards a greener economy.”

Chinook Founding Partner Kelly Droege noted, “We could not be more excited about our partnership with CDPQ. The alignment of culture, values and commitment to sustainability provide a solid foundation for the long-term management of forestlands in the Pacific Northwest.”

Chinook Forest Partners Scott Marshall, Founding Partner and CEO stated, “This partnership represents a fantastic opportunity to efficiently deploy capital while increasing operational efficiencies across our forestland ownership base, which will better serve our investors.”

*The content put forth by Global AgInvesting News and its parent company HighQuest Partners is intended to be used and must be used for informational purposes only. All information or other material herein is not to be construed as legal, tax, investment, financial, or other advice. Global AgInvesting and HighQuest Partners are not a fiduciary in any manner, and the reader assumes the sole responsibility of evaluating the merits and risks associated with the use of any information or other content on this site.