Domain Timber Advisors has purchased Timbervest’s fund management business together with a 530,000 acre timberland portfolio which was separately valued at $1 billion.
The total deal price was undisclosed price.
Joe Sanderson, managing director at Domain Timber Advisors, told Agri Investor that the buyout of previous general partners’ contracts ends the involvement of Joel Shapiro, David Zell and William Bowden in the business. In September 2015, the SEC issued a finding that the three had defrauded one of Timbervest’s pension fund clients by selling an asset to another client at a below-market price without disclosing the firm’s conflict of interest.
“It gives a clear path forward for the staff and the investors, which we are very pleased about,” he said.
Sanderson declined to comment on whether the SEC action had any effect on pricing or Timbervest’s desire to sell its platform.
Six Timbervest funds have been transferred to the Domain Timber Advisors platform and will be rebranded as Domain Timber Advisors Funds, Sanderson said. Three of the funds are focused on traditional timber investments while the remaining three are focused on mitigation banks located on the US west coast and southern US.
Sanderson said Timbervest Partners I, which closed on $231 million in 2005, has 9,000 acres left that he expects to be sold over the next six to 12 months. The $374 million Timbervest Fund II closed in 2007 and will be winding up within three years, while 2012’s Timbervest Fund III has about eight years left in its fund life, according to Sanderson.
While the platform did not include any separate accounts at the time of acquisition, Timbervest had raised separate accounts in the past and Sanderson said DTA plans to respond to growing investor demand for such vehicles “vigorously”.
The timber portfolio within the funds is largely concentrated on smaller properties in the pine belt of the southern US, according to Sanderson. He said that Timbervest had purchased the properties with the intent of potentially selling to private landowners who want the land for hunting, real estate development or conversion to agricultural commodities, a strategy DTA intends to continue.
“If there’s a way we can stay in a little less efficient market and take advantage of up-selling to other uses, that’s a sweet spot for us,” he said. “There is a real demand in this space for very-targeted timber funds with specific objectives.”
The Timbervest portfolio also contains high-value hardwood assets in the north-eastern US and while the firm had no timber properties in the Pacific north-west, the region is a focus for the three environmental funds, according to Sanderson.
Those funds include Timbervest Crossover Partners, which closed on $21.8 million in 2006; Timbervest Crossover Partners II, which closed on $250 million in 2008; and Timbervest Crossover Partners III, which closed on $30 million in 2012.
Addressing demand, Sanderson said that in addition to a traditional focus on continued recovery in US housing demand, he is currently encouraged by the increasing use of wood for bioenergy projects, the potential for increased tariffs on Canadian lumber and an increase in demand for packing materials brought about by the growth in online shopping.
DTA is an affiliate investment advisor Domain Capital Advisors established in October with the hiring of Sanderson and Mark Foley, both former US Trust timberland executives.