Sumitomo Forestry and Eastwood Forests establish ¥60bn US timber fund

The 15-year closed-end fund has been seeded with capital from 10 Japanese companies including Sumitomo Forestry, Japan Post Holdings, and Sumitomo Mitsui Banking Corporation.

Eastwood Forests, a forestry asset management company established in November 2022 with the backing of Sumitomo Forestry, has announced the establishment of its first investment vehicle, Eastwood Climate Smart Forestry Fund I.

The firm announced the fund has been seeded with approximately ¥60 billion ($435 million; €388 million) of capital from the US subsidiaries of 10 Japanese companies. Alongside Sumitomo Forestry itself, the other investors are ENEOS Corporation, Osaka Gas, Tokyo Century Corporation, Japan Post Holdings, Nippon Yusen Kaisha, Fuyo General Lease Co, Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Trust Bank and Unicharm Corporation.

The fund has been structured as a 15-year closed-end vehicle and aims to sell timber as well as create and sell carbon credits in the US. The investors said in a statement they were backing the fund to help contribute to the mitigation of climate change and to increase biodiversity.

The fund intends to purchase and manage around 130,000ha of forest by 2027, based mainly in North America. Eastwood Forests is in charge of fund operations and will oversee the acquisition and sale of assets as well as asset management, while Sumitomo Forestry America, a wholly-owned US subsidiary of Sumitomo Forestry, will support the business on the Japanese side on fund formation and private placement.

Parent company Sumitomo Forestry is a Japanese-listed conglomerate with interests in forestry, distribution of timber and other building materials, housebuilding, real estate development and other businesses in 15 countries.

The firm has announced Mission TREEING 2030, a plan to help decarbonize society with a target year of 2030 in line with the United Nations’ Sustainable Development Goals. The establishment of Eastwood Climate Smart Forestry Fund I is the first in a planned series of global forestry funds, with future vehicles likely to focus on South-east Asia and Australasia. It has ambitions to grow Eastwood Forests to more than ¥100 billion in AUM by 2030.

Eastwood Forests is based in Chapel Hill, North Carolina and is led by president and CEO Alex Finkral, formerly vice-president at timberland investment manager The Forestland Group, and managing partner and CFO Glenn Wallace, also previously of The Forestland Group.