March 23, 2023

By Lynda Kiernan-Stone, Global AgInvesting Media

Private investment management services firm Domain Capital Group announced that its subsidiary Domain Timber Advisors has assumed investment responsibilities for a timberland portfolio containing assets located in the U.S. Southeast and Northwest regions. 

This transfer marks the ninth separately managed account to be assumed by Domain Timber since 2017, and brings total acres of timberland under management to nearly 250,000 acres (not including environmental fund assets). 

Based in Atlanta, Georgia, Domain Capital Group manages $8.5 billion in total AUM (as of September 30, 2022) spread across its two registered subsidiaries: Domain Capital Advisors and Domain Timber Advisors. These assets are comprised of approximately $7.3 billion in real estate, debt, alternative, and other assets constituting Regulatory Assets Under Management (RAUM) and approximately $1.2 billion in non-RAUM assets including real properties and additional loans services. 

This specific transfer includes eight tracts of land in Georgia, North Carolina, Washington, and Oregon, with the Southeast tracts located near major population centers, giving them the potential to be sold into higher and better use markets. 

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 regional focus on the U.S. Southeast for timberland deals has been very evident in recent years. 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. as a whole. 

In September 2021, Domain Timber Advisors closed on two timberland acquisitions in the states of Georgia and Kentucky for two separately managed accounts (SMAs). In March 2022, Domain acquired 1,672 acres of timberland, called Whitewater Creek, in the western region of the state of Georgia, and last month announced that it had acquired 22,000 acres of timberland throughout the U.S. Southeast via six separate transactions spanning October 2022 – January 2023.

A few additional examples include:

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. 

Large-scale timber deals have also been abounding in the U.S. Pacific Northwest region.

In July 2021, Global investment manager New Forests acquired 156,000 acres of forest land in the Hilt-Siskiyou Forest – a mixed conifer forest along the border of California and Oregon – from Fruit Growers Supply Company (FGS), alongside an institutional investor client. 

Almost concurrently, BTG Pactual Timber Investment Group (TIG) acquired the management of two timber funds, (Fund III and Fund IV), with a co-investment interest in both vehicles from Olympic Resource Management (ORM), a subsidiary of Rayonier Inc., for an aggregate sum of $35.9 million. 

And in August, U.S. timberland investor CatchMark agreed to sell 18,063 acres of prime timberland in Oregon, known as the Bandon property, to Roseburg Resources via a $100 million cash deal. 

For Domain Timber’s separately managed accounts, the manager explained that it offers clients a great deal of flexibility and control of asset portfolios, allowing investors to maximize diversification or to potentially reduce risk exposure. Within this framework, clients can establish separate account mandates based on asset size, geography, and yield versus net return requirements, among other factors. 

Jack Izard, vice president of investments with Domain Timber Advisors, explained what sets Domain apart, making it the ideal custodian and manager of these accounts. 

“I believe timberland investors appreciate Domain’s active management strategy and unique approach to create additional value across portfolios,” said Izard.

“In my opinion, what distinguishes us is our creative sourcing of ancillary income, well-executed timing of timber sales, and thoughtful design and preparation of tracts for higher and better use markets, among other differentiators. When appropriate, we also work closely with our clients to liquidate tracts at opportune times, based on local supply and demand dynamics, to help meet their investment goals.”

~ 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, as well as HighQuest Group’s Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

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