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NZ Super Buys More Forests

Posted on: Friday, 4 November 2005, 15:00 CST

By GRAHAM, Pam

THE Government's superannuation fund is investing in forests in the United States, while foreign pension funds buy forests in New Zealand.

NZ Super Fund has $300 million, or 4 per cent of its funds, invested in timber. It announced three new forestry purchases yesterday, two of them in the US.

It has bought timber management rights to a 5800 hectare (14,500 acre) Tahorakuri forest near Wairakei in the central North Island, an 18,000-acre property of Hemlock and Douglas Fir in Washington State and 45,000 acres of Loblolly Pine in Texas.

The new investments will be managed by US-based Hancock Timber Resource Group, which initially bought the forests from Harvard University's endowment fund.

Hancock is the world's largest timber management organisation and is believed to have been a failed bidder for huge Kaingaroa forests in the central North Island, later bought by Harvard for more than US$600 million (NZ$861 million).

When Harvard reduced its forestry holdings it elected to keep Kaingaroa. Had that decision been different, NZ Super Fund could have been a potential buyer.

NZ Super Fund wants to have 5 per cent of its assets allocated to timber investments by 2007 but chief executive Paul Costello said targets would not be a barrier if a good forestry investment came up.

Though investments in forestry in New Zealand have disappointed for more than a decade, the asset class has become fashionable globally mostly because it provides a diversification in investment portfolios.

Mr Costello said NZ Super Fund had a long-term time frame for its investments so it was naturally suited to the forest asset class. Its portfolio would be global because one principle of forestry investment was to have geographic diversity.

NZ Super Fund made its first investment in forestry last month when it bought North Island forests from Evergreen Forests. Its New Zealand forest manager is GMO Renewable Resources.

Those forests are believed to have cost between $50 million and $60 million, meaning the latest purchases were for between $240 million and $250 million.

Source: Dominion Post

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