Stockholm (NordSIP) – AP3, the Third Swedish National Pension Fund and one of four funds that manage capital on behalf of the Swedish state pension system, announced it had invested US$500 million to purchase approximately 300,000 acres of eastern Texas timberland.
The transaction was carried out through Three Tree Holding LLC, an American company wholly owned by AP3, which manages and invests sustainably for the long term in North American timberland assets. The timberland was acquired from Texmark Timber Treasury L.P., a subsidiary of Catchmark Timber Trust.
”This investment is part of AP3’s strategy to build a sustainable and robust portfolio – a portfolio that can deliver good returns also under negative climate scenarios. We see great potential in our strategic collaboration with Hancock Natural Resource Group (HNRG) – it will enable us to contribute more to the long-term supply of sustainable forestry products.”, says AP3’s Head of ILS & Timberland Investments, Dan Bergman.
Discussing the returns available in the industry with NordSIP, Bergman noted that ”Timberland investment target returns can range widely perhaps even north of 20%. Our investments are mainly in core markets with return expectations in the lower half of this spectrum. AP3 invests long-term and sustainably in assets with attractive risk-adjusted return expectations. The fund’s strategy is to build a portfolio that can perform well also under negative climate scenarios. AP3’s timberland portfolio returned 14.3% in 2020.”
Bergman also notes that the Swedish pension fund is changing its investment approach to timberland. ”AP3 is executing a strategic shift from fund investments to direct long-term sustainable ownership of timberlands. Currently, approximately SEK10 billion have been invested in long-term vehicles and around SEK 2 billion remain in fund structures. Although the fund is well underway to implement its strategic shift towards direct long-term sustainable ownership of timberland assets, the overall allocation target has not yet been reached,” Bergman added.
According to AP3, the Swedish public pension fund owned US$394 million and AU$151 million in timberland funds and in timberland companies as of June 2021. Asides from ThreeTree, AP3 also has also invested in other American companies, including Capricorn Forest Fund K/S, Global Timber Investors 7 Ltd, GTI 8 Institutional Investors Company Ltd., GTI 9 Institutional Investors Ltd., Hancock Timberland GAC, Latin America Fund, LLC
Inverleven/RMK GAC, and Southern Cone Timber Holding LLC.