BTG raises $100m in open-ended US timber fund – exclusive

BTG Pactual’s Timberland Investing Group has raised $100 million for an open-ended fund focused on US timber, according to a market source.

A source familiar with the fund told Agri Investor that TIG began fundraising for BTG Pactual Core Open Ended US Timberland Fund at the end of 2016, and it intends to raise about $200 million annually for the vehicle.

The fund is targeting returns of 7 percent, with no performance fee, and a 1 percent management fee based on net asset value as calculated by a third-party appraiser, the source said. So far, investors in the fund have been public and private US pensions, according to the source, who said commitments have varied between $5 million and $20 million.

TIG decided to raise an open-ended vehicle, according to the source, in part because of feedback from investors, many of whom are already familiar with the structure due to its wide use in commercial real estate investments. The structure is particularly appropriate for use in a fund devoted to timber in the US, a relatively liquid market where timing of transactions can be very important in determining overall returns, according to the source.

“It’s a structure that is much more intuitive, and makes a lot more sense for the asset class, versus a false time frame of 10 or 12 years,” the source said. “At the end of the day, this is a beta asset class. When you get in and when you get out matters.”

The Core Open Ended US Timberland Fund is already seeded with a portfolio of seven assets drawn from TIG’s existing portfolio, the source said. The assets are located throughout the US and are valued at $40 million, according to the source, who said that now is an opportune time to be building  a diversified timber portfolio in the US.

“There are assets that were acquired by certain [timber investment management organizations] in the mid-2000s that will generate deal flow,” the source said.

BTG Pactual’s TIG has 1.8 million acres of timber assets under management, including properties in the US, Latin America, Eastern Europe and South Africa. In May 2015, the firm closed its debut Brazil Timberland Fund on $860 million, after surpassing its initial target of $750 million with a strategy focused on timber in Brazil and surrounding Latin American countries.