November 18, 2024

By Gerelyn Terzo, Global AgInvesting Media

New Forests, an Australian-based investment manager of real assets and natural capital strategies, is making a U.S. expansion push. As its maiden investment into the southern U.S., the firm has acquired a forestry estate in Oklahoma from timberland real estate investment trust (REIT) Rayonier. Spanning 36,741 hectares (90,791 acres) of land, the land acquisition was made through a separately managed account, reflecting a strategy to focus on the southern U.S., one of the richest forestry markets on the planet.

New Forests Managing Director for North America Jeff Briggs told GAI News, “The U.S. South represents one of the largest forestry markets in the world and an opportunity for New Forests to build on what we’ve done in other regions of the U.S.” They do this by focusing on new revenue streams for investors coupled with providing positive impacts on the environment and local communities, he noted.

“We’re increasingly speaking to investors about how natural capital and nature-based solutions can help them achieve their net zero goals, and how investing in forestry and nature-based solutions are important components of portfolio construction,” Briggs added.

While New Forests is keeping the size of the deal close to the vest, Rayonier revealed the disposition of nearly $500 million in timberland assets. These sales included approximately 91,000 acres in Oklahoma and 109,000 acres in Washington State. Rayonier pointed to a “public-private valuation disparity” as a catalyst for the sale of the properties, which were sold in four separate transactions to what the seller described as “high-caliber institutional investors”. So far, three of those deals have closed while the last one is expected to wrap up by year-end.

With A$11.7 billion (US$7.5 billion) in total assets under management, New Forests’ U.S. strategy targets the southern states, which represent more than 50 percent of U.S. timber production, per the announcement. Its newly acquired acreage sits under a canopy of multi-use forest comprising an operating wind farm, commercial recreational leases, a combination of natural and plantation stands, and ample biodiversity including species like the American black bear. Additionally, the forest is located in close proximity to big sawmills as well as pulp and paper mills, all of which are beneficial for timber sales.

Briggs shared that New Forests plans to develop a carbon project on the acreage while keeping an active harvest program intact. By focusing on producing sawtimber-sized logs and sequestering above-average carbon compared with traditional management practices in this area, New Forests expects to support the local circular bioeconomy. As part of the deal, New Forests will inherit several of Rayonier’s key management personnel as property managers to ensure the seamless transition of the project while also protecting key relationships within local communities.

While the southern U.S. represents new ground for New Forests, the firm has had a presence in U.S. forestland for the better part of two decades. It currently oversees an open-ended U.S. forestry strategy that generates returns from both timber and carbon. Last year, New Forests’ U.S. strategy included an acquisition of thousands of acres in Mount Shasta, California, dubbed the McCloud Forest. In addition to Australia, the firm also has offices in Singapore, the U.S., Africa and New Zealand.

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