Stafford Capital Partners nets $532m for ninth timberland fund

Timberland partner Stephen Addicott says timberland prices have held steady during the pandemic, encouraging some to dispose of their assets to pursue opportunities elsewhere.

Stafford Capital Partners has reached a second close of $532 million on the ninth iteration of its Stafford Timberland International Fund.

The 2019 vintage has a $700 million target and held a first close of $60 million last August. It will continue SIT’s strategy of acquiring secondary positions in existing timberland funds and making co-investment purchases, Stafford Timberland partner Stephen Addicott told Agri Investor.

“Timberland values are holding quite steady, so some people have decided to sell and pursue opportunities in other markets,” said Addicott. This has created several acquisition opportunities for the firm.

The fund has already completed five investments with a combined value of $168 million.

SIT IX has a cash yield target of 4 percent and an internal rate of return of 8-10 percent, said Addicott. It has been backed by four repeat investors from the firm’s predecessor timberland funds, as well as four new investors. The majority are made up of pension and insurance firms.

After the financial market turmoil caused by the enforcement of lockdowns in Europe and North America in March, investor engagement with the timberland asset class is at “relatively high levels,” said Addicott.

He attributed this to the asset class’s historic low volatility levels and resilient price levels in the face disruption and lost values elsewhere due to the coronavirus pandemic.

“We did see a drop off in demand [for logs] from China during Chinese New Year, but coupled with reduced supply from New Zealand, that helped to balance the market,” explained Addicott.

Stafford’s predecessor SIT VIII fund raised $612.5m at its final close in May 2018, exceeding its $500 million target.

The firm has $2.6 billion invested in over 190 timberland assets globally, with dedicated forestry teams in the US, Australia, Brazil and the UK. Stafford acquired Dutch firm Robeco’s $1.5 billion private equity business at the start of June to take its total assets under management to $6.8 billion.