Nuveen, the global investment manager with over $1 trillion in assets under management, today announces the launch of the Nuveen Global Timberland strategy.
The strategy seeks to provide investors with targeted exposure to sustainable timberland investments in core geographies, including the U.S., Chile, Uruguay, Canada, New Zealand, and Australia.
As global investors seek to transition portfolios to net zero by 2050, timberland investments could play a significant role. The strategy provides a natural climate solution to reduce carbon emissions by producing more timber on less land, reducing emissions through efficient operating practices and sequestering and storing carbon in soil and trees. Natural climate solutions are the lowest-cost scalable route to climate mitigation and according to the World Resources Institute can provide up to 30% of the emissions reductions needed by 2030.
According to the Wuppertal Institute for Climate, Environment and Energy, global demand for timber is expected to grow by up to 200% by 2050, owing to increased demand from a continued growth in global population and per capita income, presenting a compelling return opportunity for timber production. The investments will target a net total return of 5-7% p.a. from the sale of timber, land sales, carbon offsets, conservation easements and the natural appreciation of the assets, with a targeted 2-3% p.a. cash yield. It offers a unique global exposure, blending a stable USD return profile with access to the potential for high returns, uncorrelated strategies outside of the U.S.
Commenting on the launch, Martin Davies, Head of Nuveen Natural Capital, said, “This strategy will offer clients access to quality timberland assets with compelling growth and sustainability central to the investment thesis. In the current economic environment, real asset characteristics make timberland an attractive inflation hedge, with downside risk mitigation against different economic cycles and stable income. This launch is our latest step in bolstering our first-class real assets offering for clients, at a time when global investor demand is growing rapidly.
Timberland is an intrinsic investment in natural capital assets. With trees storing carbon it is a proven and low-cost technology to remove greenhouse gas emissions from the atmosphere. As economies transition to low carbon, sustainable timber is a crucial material in replacing carbon intensive steel and concrete in building construction. We believe this is one of the many factors that position timberland to deliver both attractive returns and climate solutions for clients.”
Carbon reporting
Carbon reporting based on the GHG Protocol and aligned with the IPCC Guidelines will provide quantitative data on carbon emissions and removals on an absolute and intensity basis. This will support institutions in their efforts to decarbonize portfolios and to advance their own climate targets. Forest carbon metrics backed by field data and tracked over time will quantify the climate benefits generated by the strategy.
The strategy will sit under Nuveen Natural Capital, Nuveen’s land-based investment specialist, and part of the newly structured Nuveen Real Assets platform, which combines Nuveen’s capabilities in real estate, farmland, infrastructure, timberland, agribusiness, and commodities into one offering.
Nuveen Natural Capital’s timberland team employs more than 100 investment and forest management professionals working across 10 countries globally. This group creates value for investors through a disciplined, active forest-management approach backed by market knowledge, forest data and analytics, climate science and on-the-ground operational expertise.