The New Mexico State Investment Council has made its initial investment into an open-ended timberland fund.
The sovereign wealth fund committed $125m (€112m) to the RMS Evergreen US Forestland, one of the first private timberland funds to be offered to the institutional market.
Vince Smith, deputy investment officer at New Mexico, said: “We like that, with this investment, we are able to have capital being invested right away into a fund that has already invested in some assets.
“We have some existing timberland managers that are having a hard time investing capital we have committed to them.”
The sovereign wealth fund has so far invested capital with Brookfield for its Global Timberland Fund V, Hancock Fund XII and FIA Timber Value and Growth Fund.
All of the funds have a closed-end structure and an investment period of 2-3 years.
RMS’s fund has an existing 2.1m-acre portfolio with a net asset value of $3.9bn.
The assets in the open-ended fund are in the southern US.
New Mexico made its commitment based on the recommendation of its consultant, The Townsend Group.
Townsend said in a board meeting document that the fund was expected to have a long-term net return target in the high single digits, with an average annual net income cash yield on NAV in the mid-single digits.
New Mexico has placed its timberland assets in its real assets portfolio.
The new investment with Evergreen means the sovereign wealth fund has made commitments of $375m to the timberland sector.
The figure amounts to 21.2% of its real asset allocation, in line with an allocation for timberland to account for as much as 40% of its real assets portfolio.
The investor is looking to invest $50m in timberland on an annual basis.
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