Income & Growth Fund I

Rock & Water Capital’s Income & Growth Fund I seeks to provide investors with market-rate value-added total return levels in the resource land space through a host of environmentally sustainable investment strategies, including sustainable land-management practices, conservation easements, carbon credit generation, water rights transactions and others. Given the rapid change in each environmental strategy, Rock & Water is excited to offer a diversified environmental product that reduces the risk inherent in investing in rapidly developing markets.

The fund is targeting an annual 1-3% cash yield to investors, net of fees and expenses, and a total return to investors of 14-16%, net of fees and expenses. Planned targeted product types include timber, agriculture and ranching properties, and the fund plans to pursue investments in the Southeast (GA, TN and NC primarily) and the Northern Rockies (ID, MT and WY). The firm is targeting a raise of $40M and will include a 2% asset management fee on committed capital and a 20% back-end promote over an 8% preferred rate of return. The partners of Rock & Water Capital plan to commit 2% of the fund, up to $1M, plus any active purchase contracts.

The Income & Growth Fund I is a continuation of the investment strategy that Rock & Water Capital has pursued successfully since 2005. Since inception, the firm has had realized IRRs ranging from 16.2% to 90.2% on each investment and a realized aggregate investment multiple of 1.6x.

Financial description

Rock & Water is targeting resource properties—timberland, farmland or ranchland—that provide both an annual income and strong capital appreciation for its Income & Growth Fund I. On each investment, the firm plans to customize an environmentally sustainable land-management strategy to maximize total return while supporting the firm’s commitment to conservation and the environment. Rock & Water plans to exit the majority of its investments as higher-priced conservation or recreational property.
The Rock & Water Income & Growth Fund I targets a total return IRR, net to investors, of 14-16%, with an annual yield to investors, net of fees and expenses, of 1-3%. Rock & Water is targeting to raise $40M, with the firm contributing 2% of committed capital (up to $1M in total) and is including a 2% annual management fee and a 20% back-end promote over an 8% preferred rate of return.
Rock & Water has a targeted investment horizon, once the fund closes, of 2-3 years, with a 5-7 year holding period and 3 1-year extensions. The fund will be a diversified holding, with 8-12 properties once fully invested, across a mix of geographies (with a primary focus on the Southeastern US and Northern Rocky Mountains), product types (timber, ranch, farm) and environmental components (conservation easements, carbon credits, mitigation banking, water rights trading, etc).