Stafford Capital Partners has merged three of its existing core timberland funds to create a new $1.2bn (€1bn) perpetual fund that holds 74 assets across the US, New Zealand, Australia and Latin America.
The investment manager has rolled up the Stafford International Timberland (SIT) VI, VII and VIII funds into Stafford International Timberland Continuation Fund, a new perpetual vehicle.
Stafford Capital said 73% of existing investors in STI VI, VII and VIII rolled their interests into the new vehicle. The remaining 27% of interests were acquired by new capital commitments. The new fund also secured backing from UK local government pension funds, which represent 54% of the fund’s capital.
Stafford Capital Partners said it did not plan to raise additional capital or make new investments for the continuation fund. Instead, the manager intends to manage and consolidate the portfolio around its strongest performing, highest cash-yielding assets.
As part of this strategy, Stafford Capital will seek to sell down approximately 28% of the portfolio in the coming years, a divestment expected to generate cash yields exceeding 8% over the next decade.
Angus Whiteley, CEO of Stafford Capital Partners, said: “We are excited to offer investors access to one of the most diversified, high-quality timberland portfolios globally, supported by our deep sector expertise and asset management. The establishment of the continuation fund follows closely behind our $1bn close of SIT X, our 10th core timberland fund.
“We believe this further signals the growing momentum and institutional interest in timberland as a strategic asset class. Through the continuation fund, we can offer investors access to immediate diversification, active asset management and a proven track record of value creation.”
Stephen Addicott, managing partner at Stafford Capital Partners, said: “The strong support from our existing investors demonstrates the continued confidence in our timberland strategy and in a market that continues to deliver stable returns. The continuation fund offers investors an opportunity to maintain exposure to a highly diversified, mature timberland portfolio with attractive cash yields and long-term value.
“The establishment of our first perpetual continuation vehicle is a testament to investors’ belief that timberland investments are a cornerstone of long-term portfolio construction by acting as a diversified source of investment returns that support carbon sequestration.”
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