May 23, 2024

By Lynda Kiernan-Stone, Global AgInvesting Media

Private investment management services firm Domain Capital Group announced that its subsidiary Domain Timber Advisors has completed the full placement of committed capital with the acquisition of five new assets totaling 5,800 acres on behalf of its timberland portfolio.

The newly acquired holdings are located in Mississippi (2,530 acres), Alabama (1,950 acres), Virginia (730 acres), and Georgia (590 acres) and have increased the total acreage under Domain Timber Advisors’ management to nearly 245,000 acres. 

“We are extremely pleased with the pool of assets acquired for the portfolio with our targeted small and middle market investment strategy,” said Peter Walker, chief investment officer, Domain Timber Advisors. 

“Through a very active and somewhat non-traditional approach to acquisitions, we’ve assembled a well-diversified Southeastern-focused timberland portfolio with 16 individual transactions, averaging 2,000 acres each, across seven states.”

Scott Reaves, director of natural resources with Domain Timber Advisors, gave GAI News a more in-depth description of the team’s unique approach in an October 2023 interview. 

“Domain’s value-added approach to the timber asset class focuses on a variety of return drivers beyond just the biological growth of the trees,” said Reaves. “We focus on smaller, less institutional, and fragmented assets as purchasing targets then overlay management tactics such as non-core small tract land sales, opportunistic timber sales, and exploration of unique end uses (such as solar power generation), to help generate alpha. Ultimately, we seek to create sustainably managed, institutionally scaled timberland packages for continued management or potential sale depending on client preferences.”

Regionally, the choice to focus on the U.S. Southeast has proven to be a popular one, and for good reason. 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. Furthermore, Southview explained that timber from the U.S. South reaches the sawmill at less than half the cost of timber from the Pacific Northwest, when contrasting pine with hemlock and Douglas fir. 

However, the benefits of these investments expand beyond the geographical, according to Reaves, who told GAI News, “Mass timber continues to be of interest to investors, especially with its potential for consistent performance under testing standards such as those for Machine Stress Rated lumber, which may help drive demand over the next several years (SLB September 2023 Newsletter – Softwood Lumber Board).”

“Carbon storage and sequestration also remain key drivers,” continued Reaves. “Sequestration in woody biomass and wood products is a primary focus, but alternative methods are also coming online, such as underground storage of carbon beneath working forests. Biodiversity is another topic we are hearing more about with conservation and protection of important habitats at the forefront of that conversation. We believe a sustainably managed timberland portfolio can meet multiple objectives of these types in addition to providing an economic return.”

Given the myriad channels through which a well-managed timberland portfolio can benefit all stakeholders, Domain Timber Advisors noted that it intends to continue to explore opportunities for additional, strategic acquisitions in the U.S. southeast to meet growing demand for lumber and other wood products. 

“Our strategy has proven effective for investors that include sovereign wealth funds, public and private pensions, insurance companies, and family-owned wealth management interests from the United States, Europe and Australasia,” said Walker. 

“The fact we have committed the full allocation of capital confirms the point and illustrates that our differentiated approach offers an attractive entry point for timberland investing.”

~ 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. She can be reached at lkiernan-stone@globalaginvesting.com.

*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.