August 2, 2021

By Lynda Kiernan-Stone, Global AgInvesting Media

Timberland Investment Resources Europe (TIR Europe) announced it has successfully closed its Forestry Fund II with $200 million in capital commitments. 

TIR Europe is an affiliate of Timber Investment Resources LLC (TIR), which has AUM of $1.65 billion (835,961 acres) as of March 31, 2021. With an executive leadership team averaging more than 25 years of experience and an extensive record of consistent, sustainable returns for pension funds and institutional investors, TIR Europe provides superior risk adjusted returns through the acquisition, management, and sale of forestry and related assets.

As part of its process, the group tracks forest carbon storage levels by property based on timber stocking data and projected biological growth rates. This data is correlated and reported on a portfolio basis to clients each quarter. 

“TIR can offer institutional investors access to a solid asset class that offers good returns,” said GianPaolo Potsios, partner, TIR Europe. “Real assets such as timberland have a compelling role to play in an investor’s portfolio offering regular dividends as well as a solid source of alternative yield.”

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.

“We are proud to deliver both financial and social returns to investors,” said Hugh Humfrey, TIR Europe. “We are seeing a huge rise in the number of institutions and pension schemes looking at ESG alternatives for their portfolios that deliver consistent returns.”

“At TIR we practice sustainable forestry on all of the forest assets we manage for investors and we will continue to pursue the highest environmental stewardship and expertise in managing the forests.”

Seeing the Forest For The Trees

Evidence of this growing demand by institutional investors for forestry assets has been hard to miss this year. Just since March:

~Hancock Natural Resource Group acquired acquired 12,874 hectares (31,812 acres) of eucalyptus plantations in Mato Grosso do Sul, Brazil.

~Apple partnered with Conservation International on the launch of The Restore Fund, a $200 million vehicle to invest in timber producing commercial forestry projects. 

~ Gresham House, the largest commercial forestry manager in the UK, launched the Gresham House Forest Growth & Sustainability strategy – intended to deliver sustainable capital growth via the creation of more than 10,000 hectares of new productive woodland. 

~ The INVL Sustainable Timberland and Farmland Fund II raised an additional EUR 18.5 million for a second close at EUR 51 million. 

~ APG, the largest pension provider in the Netherlands, announced its intention to expand its investment in forestry and ag from €1.8 billion (US$2.15 billion) to €3-€5 billion (US$3.58-$5.96 billion) over the coming five years.

~ 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,

~ Global alternative investment leader AXA IM Alts made its first forestry investment, agreeing to acquire 24,000 hectares (59,305 acres) of Australian forest and the associated forest management business from investment funds advised by U.S.-based Global Forest Partners LP (GFP) through a deal valued at approximately $775 million. 

And that’s just the start. TIR Europe stated that this demand trend is likely to increase now that climate-related reporting is mandatory as of January 1, 2021 for premium-listed companies in the UK, leading many companies to offset their carbon footprint by planting trees and pursuing forestry projects.

Also driving investment 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.

– 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.