Stockholm (HedgeNordic) – Danish pension provider Sampension is increasing its allocation to forestry following an investment commitment of DKK 965 million to RMS, a U.S. manager of forest investments for institutional investors, for forest investments in the southeastern United States. Before the new commitment, Sampension had already invested DKK 4.2 billion in forests, with investments primarily focused on the United States and Australia.
“We have been investing in forests for several years and have an ongoing focus on expanding our investments,” comments Henrik Olejasz Larsen (pictured), Chief Investment Officer at Sampension. “Similar to investments in infrastructure and real estate, forest investments represent a good alternative to bonds and can provide a reasonable, stable and return over the long-term with limited risk. At the same time, this type of investment contributes to risk diversification in the investment portfolio.”
“Similar to investments in infrastructure and real estate, forest investments represent a good alternative to bonds and can provide a reasonable, stable and return over the long-term with limited risk.”
The forests reflected in Sampension’s investment portfolio cover an area of about 177,500 hectares. Sampension made its first direct forestry investment in 2019 by investing in a forest in Oregon in the United States alongside other pension funds. The forests in the southern U.S. have been supplying a significant portion of the world’s wood products, as well as pulp and paper, with Sampension planning to increase its exposure to that market.
“The wood from the area is primarily used for the currently booming house construction,” explains Larsen. “At the same time, the area in the southern U.S. is well-positioned to capitalize on the major planned expansions of the number of sawmills in the area – which are generally declining in numbers,” he continues. “However, it takes patience if one is to be successful in owning a forest. Therefore, we see it as a long-term investment and we plan to own the forests in the southern U.S. for many years.”
“It takes patience if one is to be successful in owning a forest. Therefore, we see it as a long-term investment and we plan to own the forests in the southern U.S. for many years.”
“We want to invest directly in forests together with competent and specialized managers,” emphasizes Larsen. “In this way, we have control and influence over the investment and can, among other things, decide ourselves how much and when to cut down trees, which, on average, have a biological growth of 3-4 percent per year,” he adds. “If the price of wood, for instance, is low one year, we can cut less and leave the trees until the price is higher.”