Foresight Sustain. - Completion of three acquisitions

Foresight Sustainable Forestry

13/10/2023 07:00

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RNS Number : 8445P  Foresight Sustain. Forestry Co PLC  13 October 2023

13 October 2023

 

Foresight Sustainable Forestry Company Plc

 

Completion of three acquisitions

 

 

Foresight Sustainable Forestry Company Plc ("FSF", "the Company"), an
investment company that invests in UK forestry and afforestation assets, today
announces three acquisitions in Scotland totaling £8.3 million (inclusive of
tax and transaction costs). Following the acquisitions, FSF's portfolio
increases by 819 hectares and now covers a total area of 12,545 hectares
across 68 properties.

 

Representing 4.4% of the last communicated Net Asset Value ("NAV") (31 March
2023: £186.6m), the acquisitions have been funded through the utilisation of
the Company's Revolving Credit Facility ("RCF") which is now £10.4 million
drawn. The repayment of the borrowings will occur through a combination of
timber harvesting and the planned disposal of non-core or other assets. The
Company continues its intention to minimise exposure to interest charges
whilst also retaining a sufficient cash buffer via the headroom on its debt
facilities and free cash to fund ongoing capital expenditure and operate a
strategic cash reserve.

 

All three investments represent good value in the current market and are
forecast to deliver strong returns, given the higher interest rate
environment. These properties substantially complete FSF's acquisition of land
in preparation for its 2024/25 planting program and there are no further
material additions to the portfolio currently expected within the calendar
year. An overview of the acquisitions can be found below with more detail
listed in the appendix.

 

·      Toun Hill: This asset extends 230 hectares and is expected to
create a c.166-hectare commercial afforestation scheme. The acquisition also
includes a non-core residential property which is planned for subsequent
disposal in due course.

·      Threepwood Hill: The investment, spanning 59 hectares, will see
the creation of a 43-hectare commercial afforestation scheme and is located
close (1.5 miles) to Chatto Craig, another afforestation property in FSF's
portfolio. Together, these properties have good potential for upside marriage
value realisation.

·      Carlinden Burn: The 530-hectare property extends FSF's cluster of
properties in Aberdeenshire and is a mixed afforestation and forestry
opportunity, with 216 hectares of afforestation potential and a further 102
hectares of existing forestry. The acquisition also includes some non-core
residential property and land which is planned for disposal in due course.

 

As demonstrated in the Company's most recent NAV update, planting of
afforestation assets represents a key driver of valuation uplift. The Company
remains on track to deliver a substantial planting program during the upcoming
winter with a view to completing planting and recognising voluntary carbon on
many of its Development Stage and Planting Stage afforestation projects by the
spring of 2024.

 

The current breakdown of the portfolio, post the acquisitions above, is shown
below:

 

 Development Stage Afforestation Assets (Hectares)    3,677
 Planting Stage Afforestation Assets (Hectares)       151
 Establishment Stage Afforestation Assets (Hectares)  1,024
 Established Forest Assets (Hectares)                 5,612
 Other Land (Hectares)                                2,081
 Total (Hectares)                                     12,545

 

Definitions:

Development Stage Afforestation Assets - Land prior to the securing of
planning permission and grant application.

Planting Stage Afforestation Assets - Planning permission and grant
application completed but initial planting of trees not yet completed.

Establishment Stage Afforestation Assets- Initial planting of site completed
but trees establishing and stabilising (typically a 3-5 year period).

Established Foresty Assets - Trees stabilised and established.

 

For further information, please contact:

 

 Foresight Sustainable Forestry Company Plc                                                                        +44 20 3667 8100

 Robert Guest

 Richard Kelly

 (fsfc@foresightgroup.eu (mailto:fsfc@foresightgroup.eu) )

 Jefferies International                                                                                           +44 20 7029 8000
 Limited

 Tom Yeadon

 Will Soutar

 SEC Newgate                                                                                                       +44 20 3757 6882

 Elisabeth Cowell

 (elisabeth.cowell@secnewgate.co.uk (mailto:elisabeth.cowell@secnewgate.co.uk)
 )

Appendix - Acquisition information

 

 Name             Acquisition date  Location                                Asset Type     Size of asset (hectares)  Anticipated sequestration of additional CO(2) equivalent (tonnes)
 Toun Hill        29/09/2023        Heriot,        Scottish Borders         Afforestation  230                       35,845
 Threepwood Hill  29/09/2023        Galashiels, Scottish Borders            Afforestation  59                        10,978
 Carlinden Burn   29/09/2023        Huntly, Aberdeenshire                   Mixed          530                       56,095
 Total                                                                                     819                       102,918

 

About the Company

Foresight Sustainable Forestry Company Plc ("the Company") is an externally
managed investment company investing in a diversified portfolio of UK forestry
and afforestation assets.

 

Targeting a net total return of more than CPI +5%, the Company provides
investors with the opportunity for real returns and capital appreciation
driven by the prevailing global imbalance between supply and demand for
timber; the inflation-protection qualities of UK land freeholds; and
biological tree growth of 3% to 4% not correlated to financial markets.

 

The Company also offers outstanding sustainability and ESG attributes and
access to carbon units related to carbon sequestration from new afforestation
planting.

 

The Company targets value creation as the afforestation projects successfully
achieve development milestones in the process of converting open ground into
established commercial forest and woodland areas.

 

The Company is seeking to make a direct contribution in the fight against
climate change through forestry and afforestation carbon sequestration
initiatives and to preserve and proactively enhance natural capital and
biodiversity across its portfolio.

 

The Company is managed by Foresight Group LLP.
https://fsfc.foresightgroup.eu/ (https://fsfc.foresightgroup.eu/)

 

Notes

This announcement does not constitute, and may not be construed as, an offer
to sell or an invitation to purchase investments of any description, or the
provision of investment advice by any party. No information set out in this
announcement is intended to form the basis of any contract of sale, investment
decision or any decision to purchase securities in the Company.

 

This announcement may include statements that are, or may be deemed to be,
"forward-looking statements". These forward-looking statements can be
identified by the use of forward-looking terminology, including the terms
"believes", "estimates", "anticipates", "expects", "intends", "may", "will",
"targeting" or "should" or, in each case, their negative or other variations
or comparable terminology. All statements other than statements of historical
facts included in this announcement, including, without limitation, those
regarding the Company's financial position, strategy, plans, proposed
acquisitions and objectives, are forward-looking statements.

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