March 24, 2022

By Lynda Kiernan-Stone, Global AgInvesting Media

Atlanta-based Domain Capital Group announced that its subsidiary, Domain Timber Advisors, has acquired 1,672 acres of timberland, called Whitewater Creek, in the western region of the state of Georgia. 

This deal serves to expand Domain’s holdings in the U.S. Southeast, following two acquisitions in Georgia and Kentucky (undertaken for two separately managed accounts [SMAs]) in September 2021, and brings the total acreage of timberland under Domain’s management to 260,000 acres. 

Situated within 10 miles of the I-85 corridor and 60 miles southwest of Atlanta, this property, featuring young loblolly pine, offers a prime opportunity to gain exposure to sustainable forestland management and the potential for higher-and-better use land sales due to its extensive frontage, multiple access points, and the area’s growing population.

The range of expertise of Domain Capital Group’s teams reaches across numerous asset classes including natural resources, real estate, media, entertainment, technology, credit, and other financial services. As of September 30, 2021, the group managed approximately $6.5 billion in AUM through its two registered subsidies: Domain Timber Advisors, and Domain Capital Advisors. These two units comprise approximately $5.8 billion in real estate, debt, alternative, and other assets, and $664 million in non-RAUM real properties.

Domain Timber stated that it continues to focus on researching opportunities for further strategic acquisitions in the U.S. Southeast in response to the exceptionally strong demand for lumber and other wood products being seen in the region.

“We believe this investment presents a promising opportunity as timber prices continue trending upward and are forecast to maintain positive growth in 2022,” said Joe Sanderson, managing director and CEO of natural resources, Domain Timber Advisors.

“Demand-driven competition, supply chain issues, and tight timber supplies are expected to keep spot-prices above average in many regions,” Sanderson continued. “As such, timber values should remain positive for the foreseeable future and competition for raw materials is projected to yield attractive returns for timberland owners.”

This regional focus has been evident in recently highlighted timberland deals.

In November 2021, global investment group Caisse de dépôt et placement du Québec (CDPQ) and The Westervelt Company announced the creation of a new strategic partnership and the acquisition of 76,000 acres of high-quality pine timberland in Georgia from family-owned Superior Pine Products.

And in February 2022, the Ontario Teachers’ Pension Plan Board (OTPPB) completed a redemption transaction through Tamarack Timberlands LLC, an investment vehicle owned by the pension fund, with mortgage holder Resource Management Service (RMS) assuming direct ownership and full governance of approximately 870,000 acres of loblolly pine forest spread across the U.S. Southeast.

As part of this deal, MetLife Investment Management (MIM) provided long-term, first mortgage loans for $625 million to be secured by approximately 832,000 acres of timberland and timber portfolio assets. 

Timberland is 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.

A major factor driving the increased investment activity in the asset class is the UN’s Principles for Responsible Investment forecast that corporate demand for carbon removal and offsetting could represent $800 billion annually for investors by mid-century, along with initiatives such as the universal consideration of the SFI standard, which acknowledges the impact on the use of sustainable forestry practices on the capacity of working forests to sequester carbon and other greenhouse gas emissions.

The overall benefits and upside of holding timber assets was roundly summarized by Christopher Metrakos, managing director of natural resources at Ontario Teachers’, in February of this year 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.”

– Lynda Kiernan-Stone is editor 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 Oilseed & Grain News. She can be reached at lkiernan-stone@globalaginvesting.com.

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