Timberland Investment Resources Europe, part of global timberland investment management organisation Timberland Investment Resources, has held a first close on its TIR Europe Forestry Fund on $74 million.
The majority of the fund’s backers are based in Europe and the firm says its LPs are following trends in the US, where institutional investment in forestry and timberland is more established. It is targeting 8 to 10 percent returns with 3 percent annual distributions.
“We are … able to offer European institutional investors access to an asset class that is well established amongst US investors at a time when the world economy continues on its uncertain path,” said managing partner Gian Paolo Potsios. “Real assets such as timberland have a compelling role to play in an investor’s portfolio given the bond-like characteristics with a solid source of alternative yield.”
“We have our in-house economic and biometric research methodologies to inform and guide our investment decision-making process and remain ‘boots on the ground’ foresters while assisting our investors to achieve their portfolio objectives,” said managing partner Hugh Humfrey.
The fund’s strategy is to buy core assets in the US Southeast, but it will also consider a broad range of strategic opportunities in Europe, South America, Australia and New Zealand, according to a fact sheet. The documentation also indicates that it will take advantage of opportunities in mitigation banking.
Growing global markets for woody biomass, which are in increasing demand among utility companies, will also be considered in investment choices, according to TIR Europe.
In July, Arkansas Teachers Retirement System invested $25 million in a wood pellet manufacturing plant that will source its wood from Weyerhauser-owned timberlands, and has a 10 year agreement to supply the UK’s largest power plant owner, Drax, with more 600,000 tonnes of wood pellets per year. The US is the UK’s main supplier of the material.
TIR manages approximately $1.5 billion on behalf of endowments, insurance companies, pension funds and a range of other institutional investors, according to the firm. TIR is based in Atlanta, Georgia, while TIR Europe has an office in London.