Exclusive: Lyme nears second close on Fund V

The TIMO is targeting around $250m for the vehicle which will invest in conservation easements as well as traditional timber production.

The Lyme Timber Company, a Hanover, New Hampshire-headquartered private timberland investor, expects to reach a second close on its fifth fund in late June, according to the firm’s chief executive.

Jim Hourdequin told Agri Investor that Lyme Forest Fund V held a first close on $50 million in February. He did not disclose the precise amount of capital constituting the second close expected in June, but did reveal the vehicle’s target as being similar to its $250 million predecessor.

That vehicle, which closed at $75 million above its target, was a 12-year fund with a mandate covering timber production, recreational leasing, conservation easement sales and mitigation-banking stakes.

Regulatory filings for Lyme Forest Fund V and a related vehicle (Lyme Forest Fund V FB) shown in January did not reveal a target for the vehicle and were filed before it had made its first sale.

Hourdequin declined to provide further detail.

Established in 1976, Lyme focuses on the acquisition and sustainable management of forestlands and rural real estate with unique conservation value. The firm currently oversees a portfolio of about 700,000 acres in the north-east United States, Appalachia, California and the US South, and has permanently conserved about 820,000 acres through the sale of working conservation easements.

Over 85 percent of Lyme’s total investments are devoted to forestlands and the firm’s investments in conservation assets, including mitigation banks, are described as being opportunistic.

The firm expects capital from Fund V to be deployed to support its investment in a 67,500-acre portfolio of timberland located in northwest Pennsylvania and southwest New York that the firm secured in two transactions last year.

The deal was financed in part by $50 million in loans provided by the Pennsylvania Infrastructure Investment Authority designed to support investments in water and sewer projects and have since been criticized by a state senator as being awarded through an insufficiently competitive process.

This month, Hourdequin told Agri Investor that Lyme’s conservation investments often entail using advantageous debt arrangements like the New Markets Tax Credit, a government-backed program which incentivizes investment in low-income communities, and concessionary financings from non-profit conservation organizations such as land trusts.

Nonprofit organizations Lyme has worked with include the Nature Conservancy, the Society for the Protection of New Hampshire Forests and Maine Coast Heritage Trust, among others.

In December, Lyme purchased 163,500 acres of West Virginia timberland from affiliates of the Forestland Group for an undisclosed price. The firm said at the time that the property was subject to a California carbon-credit development project and that Lyme planned to run the property under a sustainable forest management mandate.