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Canada profits from Australian forestry

An Alberta Heritage Savings Trust Fund investment into private woodlots in Australia is paying huge dividends since more than 2500 square kilometres of land was purchased out of bankruptcy following the 2008 global recession, said AIMCo chief executive Leo de Bever. Source: The Calgary Herald

De Bever said the CND$400-million investment in 2011 paid a nearly CND$100-million return this year after the bankruptcy issues were resolved and the Great Southern Plantations started to produce forestry products.

“This is a perfect example of why it pays to be a long-term investor,” he told an all-party legislature Heritage Fund committee meeting.

“We were the only investor that could come in and say: ‘Ok, this is a royal mess . . . but we can provide cash now to the receiver and you will be through with this problem, and we’ll work it out over time.’ In this particular year, that strategy came to fruition.”

Most investors can’t wait two or three years for a return on their investment, but the Heritage Savings Trust Fund is an investment for future generations and doesn’t have to post quarterly profits for clients, he said.

The investment’s staggering 27% return last year helped boost the fund’s overall annual rate of return on investments to 11.6% by the end of December 2013 and pushed its net value to CND$17.3 billion.

De Bever said in an interview following his presentation that the Australian woodlot investment is “a picture deal” that will likely generate another CND$50 million to CND$100 million in profit.

Other deals may produce significant returns, but this one captures people’s imaginations, he said.

“People can visualize what we did,” he added. “In fact, you’re going to see it featured in our annual report. We’re highlighting this transaction as one where we could use our expertise to get a better result.”

The opportunity to purchase 640 properties in a half-dozen Australian states occurred after a government program to induce Australians to invest in timber to address a nationwide shortage of wood fibre went off the rails during the world economic crisis, he explained.