US Carbon Forestry Strategy

US Carbon Forestry strategy provides the opportunity to acquire timberland assets that can deliver above-market returns in the mature US domestic timberland market. This is achieved by:

(1) acquiring US timberland with high carbon value at pricing consistent with timber-only market value;

(2) developing and monetizing the California carbon offset projects;

(3) implementing additional conservation finance strategies where applicable (such as conservation easement sales); and

(4) managing forests for income from log and carbon sales and timber inventory growth to maximize total returns.

New Forests has a long track record and experience in California forest carbon with Eco Products Fund, the first US fund for mitigation banking and forest carbon, and Forest Carbon Partners, a forest carbon offset project finance investment fund that is one of the leading suppliers of offsets to the California carbon market, with 4.3 million offsets sold as of January 2017.

Financial description

The US Carbon Forestry strategy seeks to generate up to 8% to 10% real pre-fee, pre expenses, pre-investor tax IRR from US timberland assets. This return is comprised of 5% to 6% real gross IRR from timber-only management, with a combined return of 8% to 10% real gross returns from combined timber, carbon and conservation finance strategies.
MP will invest in assets that are likely to:
• Generate revenues from the sale of mitigation banking credits for compensation of environmental impacts; and
• Have potential to earn additional revenue streams from ancillary activities, such as limited timber harvesting and recreational activities.
The complexity of securing and operating under a regulated environment, combined with the local market characteristics of mitigation banking credit pricing, necessitate a specialized skill set to maximize value from these assets.
New Forests is uniquely positioned to acquire assets at off-market pricing from operators seeking to exit and expand market positions on an opportunistic basis. New Forests will employ rigorous due diligence and acquisition processes, including valuation based on disciplined market and financial metrics. The objective is to add value through improved marketing and sales strategies for mitigation credits, application of rigorous financial analysis, and re-capitalization of underperforming assets. New Forests seeks to provide Fund investors with commercial returns enhanced by positive environmental outcomes.