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CalSTRS Invests $250 Million in Timber Joint Venture

The California State Teachers’ Retirement System joins several institutional investors in financing Silver Creek-backed Twin Creeks Timber.

The California State Teachers’ Retirement System (CalSTRS) is among several institutional investors financing a joint timberlands venture backed by Silver Creek Capital Management.

CalSTRS has invested $250 million in the venture, called Twin Creeks Timber, which invests in timberland assets across the United States, Silver Creek confirmed Thursday.

The California pension will join the Washington State Investment Board, the Oregon Public Employees Retirement Fund, the Alaska Permanent Fund, and Maine Public Employees Retirement System as an investor in the fund.

CalSTRS’s $250 million stake will account for 25 percent of the institutional capital invested in Twin Creeks. Other allocations ranged from a $100 million investment by the Alaska Permanent Fund to a $300 million commitment from Washington SIB.w

Bob Ratliffe, president of Silver Creek and co-portfolio manager at Silver Creek, called the Twin Creeks investors a “world-class group.” According to Ratliffe, instituional investors like CalSTRS are increasingly turning to alternative assets like timber in hopes of finding yield.

“It’s a great cash flowing asset,” he said by phone. “You cut the timber every year so it produces cash flow. It produces a hedge against inflation, and it’s uncorrelated to other asset classes.”

If the market for timber is down, he added, it can be “stored on the stump” instead of being harvested immediately, allowing the assets to continue to grow in value.

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Twin Creeks Timber announced Thursday that it will acquire 100,000 acres of southern U.S. timberland from the Weyerhaeuser Company, plus an additional 21,000 acres in the Pacific Northwest from Green Diamond Resource Company. These transactions will close by the year’s end, according to a release.

As a part of the deal, Twin Creeks purchased Weyerhaeuser’s equity interest in the joint venture, which was initially founded in 2015 by Silver Creek and Plum Creek. Green Diamond will become a new equity partner in Twin Creeks, and its subsidiary, Green Diamond Management Company, will become manager of Twin Creeks’ timber assets portfolio.

Ratliffe said the fund has $100 million of remaining dry powder to invest in timberland before Twin Creek will begin working to raise a new fund. Then, they will likely return to those institutional investors who first committed capital to the venture.

“We feel fortunate that we have a great group of investors who understand the objectives here,” Ratliffe said. “They have a long-term view, which we appreciate.”

CalSTRS could not be reached for immediate comment on the deal.

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