Twin Creeks Timber could look to build on the experience it gained from a hybrid November deal in which it acquired 61,000-acres of timberland, but which also created room for The Conservation Fund to separately purchase 35,000 acres of forestry from the same seller which it will seek to permanently conserve.
Twin Creeks partnered with The Conservation Fund and Washington-headquartered sawmill operator WKO to purchase the assets of SDS Lumber, a lumber, plywood and pulp producer founded in 1946. WKO acquired the company’s mill operations. Financial details for all three parts of the deal were undisclosed.
“Opportunities like this don’t come around that often,” Silver Creek president Bob Ratliffe told Agri Investor. Twin Creeks is a collaboration between investment manager Silver Creek Capital Management and a group of institutional investors.
“Obviously, it [SDS’s approximately 96,000-acre timber portfolio] could have been sold to someone who was just going to blanket harvest all the timber, or it could have all gone into conservation. You end up with a lot of benefits here.”
The 35,000 acres of timberland assets acquired by The Conservation Fund, a Virginia-headquartered non-profit, are located in Washington State and Oregon near the Columbia River, and will be conserved permanently for wildlife, recreation and community benefits.
The 61,000 acres of forestry purchased by Twin Creeks are also located in the Pacific Northwest and will be harvested sustainably.
In addition to the continued local employment provided by sustaining operation of mill operations formerly owned by SDS, Ratliffe explained, The Conservation Fund’s plans will also help meet growing demand for conservation and related credits.
Ratliffe said collaboration with The Conservation Fund was facilitated by Green Diamond Resource Company, a privately held forest products company headquartered in Washington, which is a co-investor in Twin Creeks and manager of its properties.
Twin Creeks was established in 2015 by Silver Creek in collaboration with the Washington State Investment Board, the Oregon Public Employees Retirement Fund and the Alaska Permanent Fund Corporation. In late 2017, the California State Teachers’ Retirement System invested $250 million into Twin Creeks in a commitment announced alongside the acquisition of 121,000 acres of Pacific Northwest timberland.
According to its most recent regulatory filing in October 2018, Twin Creeks had raised at least $1.3 billion from 10 LP commitments of at least $50 million. Ratliffe explained that in addition to Green Diamond and the pensions listed above, Twin Creek’s LPs base also includes an ultra-high-net-worth family office that joined the group in late 2017.
The existing Twin Creeks vehicle is fully invested, and any potential future effort would likely have a stronger focus on emerging areas such as carbon credits, Ratliffe said. Regionally, he added, Twin Creeks would probably remain focused on the US South and Pacific Northwest, with fundraising likely to begin with existing investors.
“If they were to tell us they don’t have an appetite for additional timber assets, we would go out to the broader market,” he said. “The climate change focus, the ESG focus, carbon, conservation; I think the high-net-worth marketplace might have a real interest. Impact investment and wealth management firms could [also] have a high level of interest in sustainably managed timberland.”