Most of the capital we manage will meet client obligations decades into the future.
With that time horizon in mind we can target investments with erratic or limited short-term returns, but a superior long-term payoff.
AIMCo employed this strategy when it acquired the timber assets of Great Southern Plantations in Australia in 2011.
Great Southern Plantations acquired by AIMCo & new forests by gross area
2013 Timberlands Performance
The Great Southern Plantation assets cover approximately 270,000 hectares on 640 parcels of rural land in six Australian States. The land was leased to investors to grow blue gum trees which are harvested and processed into woodchips for the pulp and paper industry in Japan and China.
Investors in both the land and the trees had been attracted by tax incentives, but excessive leverage resulted in bankruptcy for all entities involved.
AIMCo, with our local partner New Forests, understood that we were unique in having the capital and patience to deal with the complex legal issues and to restore the plantation back to normal operating conditions. After three years of hard work, control over the trees and the land, regular timber harvesting had resumed, and this much simpler and better capitalized structure had become much more valuable because of greater operational control over asset management.
AIMCo now seeks to extract value from this investment in two ways. A portion of the land base offers good long-term potential for timber growth and returns that fit in our clients’ timberland portfolios. The rest has a higher and better use in agriculture or real estate development. AIMCo is working with New Forests to exploit this optionality to maximize total return.
Our clients’ long-term return horizon allows AIMCo to target opportunities not accessible by investors judged against short-term market returns.