Twin Creeks enlists CalSTRS as investor, expands portfolio

A series of transactions sees the collaboration between several LPs and Silver Creek Asset Management add the pension to its ranks, along with an additional 121,000 acres of timberland.

Twin Creeks Timber, a tie-up between Silver Creek Capital Management and a consortium of institutional investors, has secured a $250 million commitment and expanded its portfolio into the Pacific Northwest through its first deal in the region.

Silver Creek president Bob Ratliffe told Agri Investor that the $209 billion California State Teachers Retirement System is now an investor in Twin Creeks, after making a commitment of $250 million.

He said while Twin Creeks might yet add more members in the future, there is currently an agreement that keeps the venture from taking on any new investors before 80 percent of capital is deployed.

Twin Creeks would consider welcoming additional institutional investors contributing their timber portfolios in the meantime, Ratliffe said, and the company expects to pass the deployment threshold and begin talking to existing investors about increasing their commitments some time next year.

Twin Creeks was created in 2015 as a $600 million joint venture between timber REIT Weyerhaeuser, Plum Creek Timber Company and a group of institutions that included the $120 billion Washington State Investment Board, the $69 billion Oregon Public Employees Retirement Fund and the $62 billion Alaska Permanent Fund. They were joined by the Maine Public Employees Retirement Association, which committed $150 million to the venture in November 2015.

Later that month, Plum Creek merged with Weyerhaeuser to create the largest timberland owner in the US.

 

On Thursday, Weyerhaeuser announced that it had sold its 21 percent stake in Twin Creeks to an unnamed buyer for $107.5 million in cash. The company has also divested 100,000 acres to Twin Creeks, comprising 80,000 acres in Mississippi and 20,000 acres in Georgia, for $202.5 million.

Weyerhaeuser also said it would be ending its management relationship with Twin Creeks.

The company’s president and chief executive Doyle Simons explained that the decision came as part of the company’s efforts to simplify its operations.

In a separate announcement, Twin Creeks said it would also “receive a contribution” of 21,000 acres located in the Pacific North West from Green Diamond Resource Company. Twin Creeks added that Green Diamond Management Company, a subsidiary of Green Diamond, would take over management of Twin Creeks’ assets from Weyerhaeuser.

Ratliffe, who also serves as co-portfolio manager of Twin Creeks, told Agri Investor that closing the deal was a bit like “three-dimensional chess.”

Dedicated to the dividend

He explained that Weyerhaeuser communicated its desire to leave the venture in November 2015. Subsequent negotiations with the REIT then resulted in the 100,000-acre sale and collaboration on the search for an appropriate replacement as operator of Twin Creeks’ timber assets.

Ratliffe said that Twin Creeks decided to partner with Green Diamond, which has a 10 percent stake in the venture, because of its reputation in the industry and its status as a private company.

“If you are a publicly-traded timber REIT, you are going to be driven by the need to pay a dividend every quarter, the need to satisfy the analysts who are watching my stock every quarter,” Ratliffe said. “Even though you are aligned because you are invested alongside them, they are hardwired to make sure they meet that objective every quarter. The decision to store the timber and wait for the market to recover is not as easy a decision for them to make.”

Weyerhaeuser representatives did not return messages seeking further detail by the time of publication.