INVL Asset Management has held a €51 million second close on its evergreen Sustainable Timberland and Farmland Fund II.
The 2020-vintage vehicle has a €100 million target and has taken commitments from institutional LPs and a collection of individual European private investors.
Sustainable Timberland and Farmland Fund II has a €200 million hard-cap and will target an 8 percent-plus net IRR. The vehicle features an initial three-year lockup period and several liquidity events such as a dividend-like quarterly unit redemption. It also has an annual liquidity window during which investors can dispose of a capped number of units per year.
INVL expects the fund to reach its €100 million target “by the end of 2022 at the absolute latest,” fund managing partner Martynas Samulionis told Agri Investor. STAFF II has so far deployed more than €19 million, he added.
“We completed a large deal at the end of 2020, acquiring 2,000 ha of top-quality farmland in Lithuania and a large number of smaller transactions acquiring timberland and farmland in Lithuania and Latvia,” Samulionis said.
“Today we are managing more than 3,400 ha in total and are continuously looking for opportunities to expand in the Baltics as well as Central European countries – the fund strategy determines that we invest only in EU countries.”
STAFF II is the successor to the firm’s INVL Baltic Forrest Fund I, a 2017 vehicle that raised €15 million and invested exclusively in Lithuanian timberland. The fund generated a 27.4 percent internal rate of return when the majority of the portfolio was sold to Swedish investor Silvestica in December 2019.
“We were consolidating the very highest-quality portfolio of timberland in Lithuania,” Samulionis told Agri Investor following the €32 million first close for STAFF II in November.
“In two-and-a-half years we achieved a portfolio size of around 4,300 hectares and this portfolio was very attractive in the market. By selling this whole portfolio as one, we managed to generate this return.”
INVL elected to incorporate agriculture into the second iteration of the vehicle due to its low correlation with wider market assets, as well as its ability to complement timber, Samulionis said.
“They have different return profiles so it means even though we might feel some volatility, for example in a timberland sector, the farmland sector can smooth out the returns for the investors, and vice-versa.”
“In farmland there are rent returns creating the cashflow from the investments and in timberland, harvesting management of the properties brings cashflows,” Samulionis added. “So, they are a bit different but they are basically fulfilling each other.”