The Missouri Department of Transportation & Patrol Retirement System (MPERS) has entered into a joint venture with CatchMark Timber Trust to invest in timberlands. The joint venture, in which both partners have an equal stake, calls for CatchMark, an Atlanta-based real estate investment trust that invests in timberland, to be the fiduciary for MPERS and manage the joint venture’s timberland investments.
The joint venture has made its first investment, acquiring 11,031 acres of timberland in North Georgia called the Dawsonville Package. This land is on the border of the Chattahoochee National Forest and is within 90 miles of both Atlanta and Chattahoochee, the REIT reports. The lands, which are 75% pine with 41% sawtimber, have an average of 51 tons of marketable timber per acre.
Jerry Barag, CatchMark’s president and CEO, said, “The acquisition marks CatchMark’s first transaction with an institutional partner and is in keeping with our strategy to acquire prime timberlands with sustainable characteristics and well above average harvest stockings to propel durable revenue growth. The tracts are extremely well located in metropolitan growth paths and over the long term offer higher and better use options.”
CatchMark sees opportunities to expand the MPERS relationship, and also to partner with other pension funds and institutional investors that are looking for diversification opportunities and interested in the income timberland investments provide.
Pension funds have been seeking out timberland investments in recent years as they look beyond traditional investments and seek return benefits, and also see them as green investments. For instance, Reuters reported that the Washington State Investment Board, the Oregon Public Employees Retirement Fund, and the Alaska Permanent Fund Corporation had put in a combined $600 million in a $1 billion joint venture with Plum Creek Timber Company and Silver Creek Capital Management in late 2015.
And according to a PriceWaterhouseCoopers report, though timberlands provide a cash flow, they are most suited to long-term investors. There is also a defensive aspect to timberland investments, considering that timber grows through the economic cycle. Although timber prices are volatile, investors can continue to maintain the value of their timber holdings since the wood can be literally “stored on the stump.”
As competition for timberland rises, US investors have also been looking into overseas timber opportunities, according to the accounting firm. These investments also come with challenges, such as the need to structure the investments to suit the tax needs of multiple investors.
Tags: CatchMark, Georgia, Missouri Department of Transportation & Patrol Retirement System, MPERS, Timber