Some of the new real assets interest coincides with steady price increases in wood fiber for pulp manufacturing.
Neale Ellis, Dallas-based co-chief investment officer at Fidelis Capital, a registered investment adviser that gives assessments of alternative investments for institutions, said pension funds are also increasing allocations to non-correlated assets that also serve as an inflation hedge. Most of timber’s value comes from the actual growth of trees.
“A lot of these pension plans are revisiting their allocation to these hard assets like timber and farmland, (to) take some of the volatility out of their investments,” he said.
In June 2021, J.P. Morgan Asset Management struck a deal to acquire Oregon-based Campbell Global, a sustainable investment manager that focuses on timber.
When Campbell was acquired by JPMAM, Anton Pil, global head of J.P. Morgan Global Alternatives, said that the acquisition would provide an opportunity for the firm to strengthen and diversify its ESG focus by building a carbon sequestration platform as well as enhance its offerings in alternatives.
According to a February news release, institutions advised by Campbell Global had acquired roughly 250,000 acres of commercial timberland in the Southeastern U.S., valued at around $500 million.
Joe Sanderson, CEO and senior managing director of Domain Timber Advisors LLC who is based out of Atlanta, also sees ESG benefits to owning timber.
“(One) thing to think about timber from an ESG standpoint is, unless you burn the wood from the trees, really what it is doing is constantly pulling carbon out of the atmosphere, and then it’s storing it permanently in the wood,” he said.
“You’re starting to see, especially on the pension side, (the interest having) to do with ESG and the idea of folks wanting to invest the things that are good for the environment for a long time,” he said. “Timber always had this (misconception) … some folks thought about people cutting down Brazilian rainforests or things like that and had sort of a negative environmental view … but you couldn’t be more wrong.”
Of the $500 million in timberland acquired Campbell Global’s institutional clients, 120 million standing trees, more than 700 miles of streams protected by 30,000 acres of forestry adjacent to bodies of water and 250,000 acres of wild life habitats for recreational pursuits are included in addition to the storage of 18 million metric tons of CO2 equivalents, according to the news release.
