The Montana Board of Investments has committed $25 million to a timber fund managed by Olympic Resource Management (ORM), according to meeting materials posted on the $10.3 billion pension’s website earlier this month.
ORM is a subsidiary of publicly-listed land and timber owner Pope Resources, which manages timber portfolios held directly by the parent company in addition to portfolios held within dedicated private equity funds. ORM also provides third-party management for 1.5 million acres of timberland located in the western United States and Canada.
According to a regulatory filing shown in January, ORM Timber Fund IV registered its first sale in December and raised $388 million from 10 investors.
Pope has provided 15 percent of the capital for Fund IV, with other unnamed large institutional investors providing the rest, according to ORM vice president of timberland investments Kevin Bates.
Bates told Agri Investor in an interview that Fund IV will be used to buy properties valued between $10 million and $90 million in the Pacific Northwest over the next three to five years. He said ORM will use capital from the fund for investments designed to meet both domestic and export log demand, with China and Japan as especially important markets.
The previous fund in the series, ORM Timber Fund III, closed on $180 million in 2012 and used leverage to purchase a total of $211 million of timber assets, Bates said. ORM plans to employ leverage on Fund IV, he said.
Bates said that while previous ORM funds had a fund life of 10 years beginning after a two or three-year investment period, Fund IV will have a 15-year fund life.
“The silvicultural investments that you make often take 10 or more years before you actually realize the value from those investments, so we see value in having the longer hold period to take advantage of that,” he said.
Last week, Pope reported $5.9 million in net income for 2016, a decrease from the $10.9 million the company reported during the same period of 2015. The change was attributed in part to a $7.7 environmental remediation charge that came as a result of the need to remove a larger-than-expected volume of pilings and wood waste from Port Gamble Bay in Washington State.