Nuveen sells 11,000 acre timberland asset to Conservation Fund

Nuveen has sold 11,332 acres of Oklahoma timberland for an undisclosed price to the non-profit The Conservation Fund, which is collaborating with state officials to permanently conserve the property as a state forest.

The deal was supported by the Richard King Mellon Foundation and a $150 million 10-year green bond underwritten by Goldman Sachs. The property is called Round Mountain Forest and located east of Ouachita National Forest, within driving distance of Oklahoma City and remote enough to house planned invasive species and fire management training.

Brian Dangler, senior vice-president of The Conservation Fund’s Working Forest Fund, told Agri Investor the non-profit had initially been interested in acquiring the property for conservation about five years ago but was unable to arrange financing. After Nuveen Natural Capital bought the properties at auction last year, he said, his team reached out to enquire about acquiring a portion of the property.

Dangler – who held positions at International Paper and Blue Sky Timber Properties before joining The Conservation Fund in 2008, according to his LinkedIn profile – declined to disclose the price paid for the property. Nuveen declined to comment.

“As a non-profit, we have to make sure we do not pay over fair market value, that could jeopardize our 501(c)(3) status as a charity,” he added. “We have to be very careful not to provide private benefit.”

The Working Forest Fund will likely own the property for three to five years, depending on how quickly the state of Oklahoma can locate funding to buy out its stake, Dangler explained. The US Department of Agriculture’s competitive Forest Legacy Program, which has been active since the late 1990s, is the most likely source of capital to support the transaction to create Oklahoma’s first state forest, he added.

“Sometimes it takes longer than we anticipated, sometimes it comes more quickly, but the important thing is that we’ve stopped the fragmentation and parcelization process and given everybody a breather, so we can say: ‘Okay, now let’s do it right’,” he said.

Dangler said the Working Forest Fund has changed the scale at which The Conservation Fund can act effectively in large timberland transactions. Other deals from the vehicle have included a January 2022 collaboration with Twin Creeks Timber and Washington-headquartered sawmill operator WKO, which allowed The Conservation Fund to acquire 35,000 acres it plans to permanently conserve.

“Before the Working Forests Fund, we took what came to us. Because we have the ability through the green bond raise and some other capital sources, we can now be at auctions and we can partner with other TIMOs when these lands come up [for sale].”

The statement announcing the Oklahoma deal cited the threat to working forestry posed by an uptick in out of state second home buyers. Dangler added that such development is a key motivator of conservation efforts across timber markets.

“It’s everywhere, particularly in the Southeast, with everybody moving to the Sun Belt,” he added. “It used to be just proximity to growth in cities, but this [acquisition] is a good example. People are willing to drive two or three hours from a metro area like Dallas to have their little piece of heaven and own a hunting lodge as opposed to going to a public hunting ground. The threat of parcelization is everywhere now.”

Proximity to Dallas was among the factors that attracted Nuveen to acquire the broader 69,000-acre portfolio on behalf of the TIAA General Account, according to its Spring newsletter. It describes a collection of assets in northeast Texas and southeast Oklahoma with strong timber markets and biological assets along with “perhaps most importantly” a natural capital opportunity in the form of the state forest sale.

“The majority of these acres are located in the rocky, low productivity areas and will benefit the public by providing access to numerous recreational activities,” Nuveen wrote. “This deal would be a first-class example of creating value through active management with positive social outcomes for people, planet and nature.”