Ecotrust Forests - Bettina von Hagen


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TBLI CONFERENCE™ EUROPE 2012 - Zurich - Switzerland

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  • Pioneer a new style of forestry for the region:Generate superior risk-adjusted returns for investors while enhancing the health and productivity of ecosystems and rural communities
  • Ecotrust Forests - Bettina von Hagen

    1. 1. 1
    2. 2. OVERVIEW• We are a forestland investment manager that invests in ecologically significant forestland in the Western United States• Our investment strategy reduces reliance on traditional timber markets and creates additional value by monetizing over-looked sources of income from conservation easements, tax credits and environmental markets• Unique capacity in combine private investor capital with low-cost concessionary debt and new market tax credits to generate superior returns• Currently Launching Ecotrust Forests II: Raising $75 million in Equity 2
    3. 3. Pnw forests globally unique 3
    5. 5. carbon 1200.0 Douglas-fir, Pacific NW W side Hemlock-Sitka Spruce, Pacific NW W side• Total demand forecasted for offsets in CA 1000.0 Douglas-fir, Northern Rockies Lodgepole Pine, Northern Rockies Maple-Beech-Birch, Lakes States cap and trade is 200 MMT CO2e Metric Tons CO2e per Acre Maple-Beech-Birch, Northeast Loblolly-Shortleaf Pine, Southeast 800.0 Oak-Hickory, Southcentral• 8 MMT CO2e shortfall forecasted in first 600.0 compliance period• PNW forests have outstanding capacity to 400.0 store carbon; one of few approved carbon 200.0 offset project types. 0.0 0 5 15 25 35 45 55 65 75 85 95 105 115 125 Years After Clearcut 5
    6. 6. water 6
    7. 7. biodiversity 7
    8. 8. community benefitsGreater number of jobs per acreharvested.Long-term relationships with localcontractors and additional forestryactivities generate employment andcommunity valueEnhanced community benefits in form ofclean water, recreation, hunting, fishing,viewsAccess to New Market Tax Credit programwith $3.5 billion of annual authoritygenerates 25% subsidy for every $1invested in an economically distressedcommunity. 8
    9. 9. INVESTMENT STRATEGYWe employ an integrated forestland investment strategy that produces high-quality timber while at the same time enhancing the health and resilience of ecosystems and rural communities • We aim to identify and captures revenue from over-looked sources of value like conservation easements, restoration grants and environmental markets that can unlock additional income for investors • Our integrated approach allows us to access low-cost capital via concessionary debt from foundations and tax credits for EXPENSES EXPENSES investments in economically depressed communities that are not usually available to other managers FOR ILLUSTRATIVE PURPOSES ONLY 9
    10. 10. CASE STUDY: FUND I - GARIBALDIEFM has generated timber income, carbon offsets, tax credits and conservation funding on the Garibaldi property Mgmt Objective: Water Quality, Habitat Restoration Activity: Bridge replacement, log placement & pre-commercial thinning Grant Funding ($80 K) Mgmt Objective: Economic Opportunity & Access Activity: Firewood program & local employment New Market Tax Credits ($4M) Mgmt Objective: Forest Structure Activity: Variable Retention Harvest Timber Income ($550K) Mgmt Objective: Carbon, Water & Species Protection Activity: Potential 1215 acre road less reserve in Moss Creek watershed Carbon Credits / Mitigation Bank GARIBALDI PROPERTY MAP funding (Potential $5M) 10
    11. 11. ECOTRUST FORESTS I – HIGHLIGHTS• Ecotrust Forests, LLC is an open ended, perpetual duration investment fund managed by EFM• Acquired 4 properties in Oregon and Washington between 2005 and 2012* totaling ~13,000 acres• Harvested ~7 MMBF on properties, using silvicultural treatments like variable retention harvesting, patch cuts and pre-commercial thinning• Secured New Market Tax Credit transactions that provided below-market financing for all of our property acquisitions, leveraging investor capital by $7 million without dilution.• Attracted ~$300,000 in conservation funding that enabled us to execute log placements, pre-commercial thinning and habitat creation• Entered into carbon transactions valued at $500,000 •3 properties purchased between 2005-06. •Garibaldi: Bought in phases between 2006-2010 • 1 follow-on investment in 2012 (Dickey-Gap) 11
    12. 12. ECOTRUST FORESTS II - INVESTMENT STRATEGY • Proprietary deal flow • Customized Spatial analytical tools • Differentiated valuation and due diligence capacity • Integrative management approach that generates unique monetization opportunities • Relationships and technical capacity to integrate conservation strategy with timber production model • Relationships with strategic buyers and timberland market actors creates flexibility in exit options 12
    14. 14. observationsOpportunities to monetize ecosystem markets are expanding, but there is considerable investor fatigue, especially with carbonSuccessful investment strategies access carbon (and other ecosystem service markets) to enhance results but do not rely on them.Continuing investment needed in carbon (and other ecosystem service market) accounting, tax treatment, and valuation – implications for property exit.Forestland investment has potential to combine traditional financial benefits of timberland (inflation hedge, diversification, low risk) with exposure to emerging ecosystem service markets for a superior integrated return. 14
    15. 15. Tangible.Stable.Secure.Intergenerational. For further information: Amrita Vijay Kumar,; (503) 467-0801 Bettina von Hagen,; (503) 467-0756 15