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KPERS commits $75m to RMS timber fund

The RMS Evergreen US Forestland Fund plans to use a mix of strategies to achieve long-term net returns in the high single digits.

The Kansas Public Employees Retirement System (KPERS) has committed $75 million to the RMS Evergreen US Forestland Fund, a spokesperson for the firm confirmed to Agri Investor.

Launched in April 2015, the RMS Evergreen US Forestland Fund is an open-ended fund managed by Resource Management Service (RMS). Commitments have included $125 million from the New Mexico State Investment Council (NMSIC), which noted that the fund will focus on assets in the US south.

The fund’s timber investments target regional saw and pulp mills that serve US housing markets and those producing pulpwood used in packaging and wood-pellet production. It also looks to create additional returns from strategic land sales, leases, conservation easements, mitigation banking and carbon sequestration, according to an investment summary prepared by Townsend, which advised NMSIC.

“The fund’s open-end structure is unique and appropriate for investing in lower risk timberland investment, given the life cycle duration of the underlying assets which can average 25-30 years,” Townsend wrote.

The fund is targeting long-term net returns in the high single digits and an average net income cash yield on net asset value in the mid single digits, according to the summary. One investment went to Red Mountain Timber, a 2.1 million acre portfolio of diversified timber assets located in eight US states.

RMS officials were not available for comment, though executive vice president for acquisitions and land sales Ed Sweeten previously told Agri Investor that the firm planned to raise about $300 million for its next US-focused vehicle.

According to the KPERS’ 2016 annual report, the $17 billion pension’s timber investment produced a 2.1 percent total return in fiscal year 2016, while during the three years ending in June 2016, total returns from the timber portfolio were 8.9 percent. In addition to providing inflation protection, timber investments are expected to provide current cash yield and modest capital appreciation over the long term, according to the report.

RMS is a global timberland investment manager with $4.5 billion in assets under management. Founded in 1950 and based in Birmingham, Alabama, the firm manages 2.8 million acres located in the US, Brazil, Australia, New Zealand and China.