​Sampension makes first direct forestry move with Oregon deal [corrected]

Denmark’s Sampension and two pension funds it manages have invested a triple-digit million Danish krone amount in a forest in Oregon, US, in the first direct forestry investment made by the DKK262bn pension provider.

Sampension said that, since 2004, it had already invested over DKK4bn in forestry globally, via external funds, with the two independent pension funds it manages — the Pension Fund for Agricultural Academics and Veterinary Surgeons (PJD) and the Architects’ Pension Fund (AP) — currently having around DKK400m between them in the asset type.

Sampension said it and the funds had entered into an agreement with a local timber company — a producer of products for housing and construction, most famously Oregon pine floorboards.

Henrik Olejasz Larsen, Sampension’s CIO, said: “Forest grows organically 3-5% a year, and a Douglas fir is harvested on average after more than 40 years. This means that we have an inventory that is constantly growing and is protected from inflation. Because this is a direct investment, we decide how much and when we will fell.”

He said investments in forestry are generally low risk, as they provide stable, inflation-linked returns over the long term, and that they are good for spreading risk throughout the portfolio.

Much of the deal price is to be recouped quickly, Sampension said, because the asset inventory is heavily tilted to older age classes of timber, meaning there are now many old trees that need to be felled.

“We must start by cutting a lot of trees, meaning that we expect to get a large part of the investment back quickly, but we have no plans to quickly separate ourselves from the investment again,” said  Olejasz Larsen.

Sampension said it would manage the Oregon forest sustainably in the sense that new trees would be planted when the old ones were felled. It said the forest covered an area one and a half times the size of the Danish island of Samsø.

The pension provider said it now has a wide, diverse portfolio of forests in which it has investments, spread across different countries and which produce different types of wood.

Due to an error at source, an earlier version of this story incorrectly said Sampension and two pension funds it manages have invested around DKK500m in the Oregon forest. Sampension has also clarified that much of the deal price is to be recouped quickly because the asset inventory is heavily tilted to older age classes of timber and not because the asset was not very well managed.

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