November 4, 2024

By Gerelyn Terzo, Global AgInvesting Media

Craigmore Sustainables, a New Zealand-domiciled farmland, orchard and forestry manager, has reached a major milestone in its fundraising efforts. Craigmore’s Tōtara Forestry Partnership, an investment vehicle, has raised NZ$50 million (US$29.8 million) over the past quarter, buoying its total commitment tally to almost NZ$100 million (US$59.7 million).

With a target of NZ $200 million (US$119.5 million) and hard cap of NZ$300 million (US$180 million), the fund is expected to reach final close in 2025 at the current pace. Craigmore Sustainables serves as the investment manager of this partnership and oversees a trio of other vehicles that invest in New Zealand pastoral farms and horticultural assets.

Craigmore Head of Investor Relations Nick Tapp told GAI News, “Limited Partner demand for this investment vehicle is predominately from European capital partners. A significant portion of investors are family office LPs who understand the long-term nature of this asset class. Craigmore also works closely with a select group of institutional investors, who have significant global experience in farmland and forest investment. It is important for Craigmore that we align the tenure of capital with the relevant investment class.”

Tapp also shared how the Tōtara Forestry Partnership has purchased three assets to date with a further three under contract, which will settle shortly. The properties cover 3,727 hectares (9,209 acres) and are located across the North Island from Northland to the Wairarapa region in the south.

Commenced in 2021, the fund invests in a combination of mid-aged forests and tier-three grazing land in New Zealand’s North Island. With a focus on Pinus Radiata forests, a softwood used in construction, the investment strategy targets properties in close proximity to key ports and mills with a view to leverage returns from timber and carbon markets. Additionally, the fund set out to plant 30-meter-wide riparian strips of native trees near waterways to maintain water quality and enhance forest biodiversity.

With carbon credits trading at NZ$63 (US$37.6) per unit as of Q2 2024, early cashflow is a key incentive. However, the partnership is also committed to investing in properties that will produce long-term timber profits. New Zealand is home to some of the fastest-growing softwood plantations on the planet, resulting in a rotation period on the shorter side — inside of three decades — for high-grade structural and appearance grade timber.

With 23,000 hectares (56,834 acres) of forestland across nearly two-dozen properties under management, most of which is eligible for carbon credits under the Emissions Trading Scheme, Craigmore takes a different tack to timber investing compared with its larger industry peers.

Craigmore CEO Che Charteris explained, “Our estates are built up by aggregating smaller properties over a longer period by leveraging our network across both the forest and farming sectors. This enables us to make fewer compromises when building a portfolio, and to focus on properties with good timber economics, strong growth rates for carbon sequestration and opportunities to significantly improve biodiversity outcomes.”

Craigmore’s Northland forestry estate as part of the PF Olsen Forest Stewardship Council recently earned a coveted endorsement. Nearly a dozen of its forests under management comprising over 5,500 hectares (13,590 acres) secured the Forest Stewardship Council (FSC) certification, plus other forests in the pipeline. This certification is not easy to come by, setting the standard for forest managers on responsible forest management and reporting.

PF Olsen Environmental Manager Heather Arnold stated, “The commitment to achieving and maintaining FSC certification is no mean feat. A new FSC Standard for New Zealand has just been embedded, and the bar is now set significantly higher than the previous national standard.”

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