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Brookfield Closes US$1 Billion Global Timberlands Fund

Brookfield Closes US$1 Billion Global Timberlands Fund | Timberland Investment | Scoop.it

 Brookfield Asset Management Inc.  (NYSE:BAM)(TSX:BAM.A)(EURONEXT:BAMA), announced today that it held the final close on Brookfield Timberlands Fund V L.P. with equity commitments totaling US$1 billion, creating a global fund that will invest in timberlands, primarily in the U.S., Brazil and Australia and may also pursue opportunities in Canada, Chile, Uruguay and New Zealand.


Commitments to the Fund exceeded the original US$750 million fundraising target, reflecting strong investor demand. Investors in the Fund include a diverse group of institutional investors, including sovereign wealth funds, public and private pension plans and insurers. Brookfield committed US$250 million to the Fund, aligning its interests with those of third party investors.

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An Under The Radar Timber Investment

An Under The Radar Timber Investment | Timberland Investment | Scoop.it

Acadian Timber Corp. is a Canadian company with timberland holding in New Brunswick Canada and Northern Maine in the US. It has been in business as a Canadian corporation since 2010. Before that, Acadian was a Mutual Fund Trust created in 2006 by Brookfield Asset Management. It converted to a corporation in 2010 because of changes in Canada's tax laws. Its land holding are from the former Fraser Paper Company. Brookfield currently owns about 45% of Acadian Timber Corp. For all practical purposes, Acadian is run by Brookfield Asset Management.


Acadian owns 310,000 acres in Northern Maine and 764,000 acres in New Brunswick totaling 1,074,000 fee acres. In addition, it manages 1,313,000 acres of Crown timberlands owned by the Canadian government and leased to Twin Rivers Paper Company. 

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Acadian's primary business is selling logs. It also manages 1.3 million acres of Crown lands for Twin Rivers Paper Company and receives a fee for its management services. In addition, Acadian owns a seedling nursery, which I assume grows seedling for Acadian, and sells seedlings to third parties. 

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Since Acadian is a relatively new company, only since 2010, the timberland asset value on their balance sheet should be just about market value in 2010. This was $282 million or about $263 per acre. Comp sales that I was able to find for the Northeast show an average price per acre of about $420 so Acadian may be undervalued as far as its assets are concerned.


Acadian pays a quarterly dividend of $.20 giving it a yield of 6.3%. Its PE ratio is 10.24, so Acadian is relatively cheap compared to the US timber REITs at this time. Free cash flow per share last year was $.84 so nearly all free cash is being paid as dividends. Average volume is only 9,538 shares so it is somewhat narrowly traded. Acadian's 52-week trading range has been from $11.07 to $15.76. Acadian has $72 million in long-term debt and a debt to equity ratio of 38.6%

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Brookfield wants to sell its stake in Island Timberlands

Brookfield wants to sell its stake in Island Timberlands | Timberland Investment | Scoop.it

Brookfield Infrastructure Partners has reported that it is negotiating the sale of its 25-per-cent stake in Vancouver Island forest company Island Timberlands for $170 million.


The sale involves a change in the positions held by the timber company’s existing shareholders and is expected to close in the second half of 2013.
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“Since the release of our quarterly results on May 2, 2013, we have executed definitive agreements to sell the remainder of our Canadian timber operations for $170 million,” the prospectus stated. “Consistent with our financing strategy, we will seek to re-invest these proceeds at our targeted, after-tax annual return on equity of 12 per cent to 15 per cent.”


Island Timberlands is a private forest company that owns 258,000 hectares of timber land, most of it on Vancouver Island. It is the second-largest private landowner in the province.

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The Wall Street Journal reported last November that the China Investment Corp. was close to making a deal to purchase a stake in Island Timberlands. That deal did not happen.

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Brookfield Infrastructure Reports Year-End 2012 Results; timber income down; $85 million deal completed

Brookfield Infrastructure Reports Year-End 2012 Results; timber income down; $85 million deal completed | Timberland Investment | Scoop.it

Brookfield Infrastructure posted solid results for the year ended December 31, 2012 with funds from operations ("FFO") totalling $462 million ($2.41 per unit) compared to FFO of $392 million ($2.41 per unit) in 2011. This 18% increase in year-over-year FFO was primarily driven by significant expansion projects that were successfully commissioned during the year and to a lesser extent, new investments. FFO per unit of $2.41 was flat compared to the prior year as investments made with proceeds from recent equity offerings did not fully contribute to cash flows during the year. Brookfield Infrastructure's payout ratio was 62%, which is well within its target range of 60%-70%, and it earned a solid AFFO yield of 10%.

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Brookfield Infrastructure's timber platform reported FFO of $22 million in 2012, compared to $33 million in the prior year. Results reflect soft demand from Asia early in the year, which caused average realized prices to decline by more than 7%, combined with operational restrictions due to a prolonged fire season that impacted its harvest in the second half of the year. For the year, exports represented 41% of total log sales, which was down from 47% in the prior year as demand in the domestic markets strengthened with early stages of recovery in the U.S. housing market.

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In December, Brookfield Infrastructure completed the sale of a 12.5% interest in its Canadian timberlands to an institutional investor for approximately $85 million, which is equivalent to its IFRS book value.

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Brookfield optimistic in latest report

Sam Radcliffe's insight:

Key quote: We do not expect timberland values to be meaningfully positively impacted by improving timber prices as we believe most timberland buyers have been underwriting reasonable price recovery expectations into their discounted cash flow valuation models. However, increased certainty of achieving these prices and the prospect of significant increases in near-term cash yields are expected to increase investor enthusiasm in the timberlands asset class and attract additional capital, leading to upward pressure on timberland valuations

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China Close to Signing $100M Timber Deal with Brookfield

China Close to Signing $100M Timber Deal with Brookfield | Timberland Investment | Scoop.it

China Investment Corp. is close to purchasing a 12.5% stake in some timber assets in Canada from an infrastructure affiliate of Brookfield Asset Management Inc. for about $100 million, according to people with direct knowledge of the matter.


The move marks the latest effort by the Chinese sovereign-wealth fund to step up its investment in assets that could help shield its giant overseas portfolio from rising inflation risks.

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The timber assets are part of closely held Island Timberlands, which is jointly owned by Brookfield and other institutional investors and consists of about 634,000 acres of freehold timberlands mainly on Vancouver Island, the people said. Brookfield Infrastructure, which is publicly traded, told investors in July that it planned to divest some of its timber and other assets.


“In the current low interest-rate environment and given strong interest in infrastructure assets from institutional and strategic buyers, Brookfield Infrastructure believes that there could be opportunities to monetize these assets and reinvest capital in assets that offer superior returns,” the company said at the time.


CIC has been shifting toward long-term, hard assets in foreign markets that can throw off steady cash flow. Like other investors, CIC is looking to protect its portfolio from rising inflation risks potentially posed by stimulus measures in Western countries.

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Ohio Police & Fire builds up its timber commitments

Ohio Police & Fire builds up its timber commitments | Timberland Investment | Scoop.it

Ohio Police & Fire Pension Fund, Columbus, committed $25 million to Brookfield Brazil Timber Fund II, confirmed spokesman Eric Eramo.


The commitment is the $12 billion pension fund's fourth to timber; it created a 3% target allocation to the asset class in March 2010. The fund committed $100 million each to Forest Investment Associates and Hancock Timber Resource Group and $50 million to Brookfield Timber Fund V earlier this year.

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Ohio Police & Fire's timber commitment to climb

Ohio Police & Fire's timber commitment to climb | Timberland Investment | Scoop.it

Ohio Police & Fire Pension Fund, Columbus, plans to make an additional $175 million in commitments to timber in the coming months...


The $11.8 billion pension fund created a 3% target allocation to timber in March 2010. The fund in January hired its first timberland managers — Forest Investment Associates and Hancock Timber Resource Group — to run $100 million each.


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Weyerhaeuser to Buy Longview Timber for $2.65 Billion

Weyerhaeuser to Buy Longview Timber for $2.65 Billion | Timberland Investment | Scoop.it

Weyerhaeuser Co. (WY), a U.S. real-estate investment trust that owns timberland, agreed to buy Longview Timber LLC for $2.65 billion including debt from affiliates of Brookfield Asset Management Inc. (BAM/A) in the third-largest forestry acquisition in North America.


The deal is expected to close in July and immediately add to Weyerhaeuser’s funds for distribution, the Federal Way, Washington-based company said yesterday in a statement. Weyerhaeuser plans to boost its quarterly cash dividend to 22 cents a share in September from 20 cents.

Weyerhaeuser, which also said that former Temple-Inland Inc. Chief Executive Officer Doyle Simons will take over as its CEO in August, will get about 645,000 acres (261,000 hectares) of timberlands in Washington and Oregon from buying Longview. The deal will boost the U.S. acreage that it owns or controls to about 6.6 million.


Weyerhaeuser is paying $4,109 per acre for the timberland, more than the estimated $3,200 per-acre value of the company’s existing lands in the Pacific Northwest, Paul Quinn, a Vancouver-based analyst at RBC Capital Markets who has a buy rating on Weyerhaeuser, said today in a note to clients.

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Brookfield closes second Brazilian timber fund at $270m

Brookfield closes second Brazilian timber fund at $270m | Timberland Investment | Scoop.it

Brookfield Asset Management’s second Brazilian timber fund has hit its $270m target after raising $150m in five months, AltAssets has learned.

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Brookfield: interpreting the NCREIF index

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Retirees on the Rampage

Retirees on the Rampage | Timberland Investment | Scoop.it

John Woolley, a retired public school teacher, recently blockaded a logging road with family and fellow islanders on Cortes Island to protect the 2,700-acre forest from an unlikely adversary—his own pension funds. Woolley is the latest kind of Vancouver Island activist: a pensioner appalled at the way his pension is being invested in the liquidation of private forest lands on Vancouver Island by companies in the portfolio of BC Investment Management Corporation (bcIMC).

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Woolley is outraged that the company managing his pension—and those of half a million other British Columbians—has moved aggressively over the last ten years into “destruction of habitat and the devastation of our forests, which is not responsible investing.” bcIMC owns 25 percent of Island Timberlands, 50 percent of TimberWest (the other half is owned by the federal Public Sector Pension Investment Board), and is a major shareholder of a Brookfield Asset Management (BAM) company that owns another 51 percent of Island Timberlands and 49 percent of Western Forest Products.

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Woolley, in correspondence with bcIMC’s Pearce, questions bcIMC’s claims as an ethical investor. Pearce claims that at 25 percent ownership, bcIMC is only a minority investor, and therefore has no say in day-to-day operations. Woolley argues that “does not excuse blindness to corporate responsibility.” But Pearce says Island Timberlands operations meet ethical investment standards under Sustainable Forestry Initiative (SFI) certification, a certification that leading market campaigner and Cortes Islander Tzeporah Berman has plenty to say about.

Sam Radcliffe's insight:

Timber has only been lightly promoted as a "social investment". The Cortes Island conflict is a relatively minor skirmish... or is it the tip of the iceberg?

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PPF appoints seven farmland and timberland managers

PPF appoints seven farmland and timberland managers | Timberland Investment | Scoop.it

The Pension Protection fund (PPF) has appointed seven farmland and timberland fund managers. Some managers will be funded immediately, while others are appointed for deferred investment.


The selected managers are Brookfield Asset Management, Dasos Capital Oy, GMO Renewable Resources, Hancock Timber Resource Group, Macquarie, New Forests Pty, and Stafford Timberland.

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PPF executive director for financial risk Martin Clarke said: “We now have an investment portfolio worth more than £12bn and the size of our assets means that we can take advantage of a broader range of investment opportunities.

“Investing in farm and timberland will complement our existing alternative investment portfolio, allow us to diversify our investments more widely and make our portfolio more resilient.


“But we do need to be aware that there are some risks in these asset classes, for instance land price risk. Therefore, our approach will be to invest conservatively – which is consistent with our overall low-risk strategy.”


The proportion of PPF assets allocated to farm and timberland will vary over time and depend on the opportunities available now and in the future, the fund said. All managers are appointed for four years, with the flexibility for two extensions of up to two years.

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Overview of the Brazilian Timber Industry

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Ohio Police & Fire commits another $50 million to timber

Ohio Police & Fire commits another $50 million to timber | Timberland Investment | Scoop.it

Ohio Police & Fire Pension Fund committed $50 million to Brookfield Timberlands Fund V and $35 million to private equity fund Advent International GPE VIII.

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The pension fund in January hired its first timberland managers — Forest Investment Associates and Hancock Timber Resource Group — to run $100 million each.

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Brookfield Infrastructure Reports Strong 2012 First Quarter Results

Brookfield Infrastructure Reports Strong 2012 First Quarter Results | Timberland Investment | Scoop.it

Brookfield Infrastructure posted strong results for the quarter ended March 31, 2012 with funds from operations ("FFO")(1) totalling $108 million ($0.58 per unit) compared to FFO of $98 million ($0.62 per unit) in the first quarter of 2011. Results reflect a significant increase in FFO from Brookfield Infrastructure's transport and energy segment, partially offset by below average performance in its timber business.

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Brookfield Infrastructure's timber operations reported FFO of $6 million in the first quarter of 2012, compared to $10 million in 2011. This segment's performance was negatively impacted by a decline in realized prices due to a build up of inventory primarily in the Chinese market, which was partially offset by firm demand from Japan.

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