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Hancock Timber after Gunns property

US company Hancock Timber Resources Group and three Canadian superannuation funds are believed to have entered talks with receivers about a potential purchase of 200,000ha owned by Tasmanian timber company Gunns, which is expected to sell for more than $400 million when it goes to market next month. Source: The Australian

The pension funds include the Canada Pension Plan Investment Board, Ontario Teachers Pension Plan and Alberta Investment Management Corp, according to a source.

The Tasmanian timber business was placed into administration last year, with debts of about $560m, and is expected to come up for sale in about a fortnight through insolvency firm Korda Mentha, with investment bank Moelis advising on the transaction.

On offer will be about 200,000ha of Tasmanian land, half of which is native forests that could not be used for timber plantations.

The Canadians are expected to look at the Gunns business along with interests of the collapsed listed company, Forestry Enterprises Australia.

About 220 properties previously controlled by FEA would come up for sale around the same time as the Gunns business, a source said, with advisers on the deal understood to be investment bank Gresham.

In what is believed to be one of the largest offerings of Tasmanian land, sources said major groups from all over the world were expected to scrutinise the Gunns business when it is officially placed on the market next month.

As well as the three Canadian pension funds that have made contact about a potential purchase, US public companies that specialise in forestry ownership, known as Timber Investment Management Organisations, have already approached either receivers or investment bankers about a potential purchase.

Among them is understood to be the Hancock Timber Resource Group, about $US10.8bn of timber assets under management in the US, Canada, Australia, New Zealand and Brazil.

The quality of trees, soil and land gradient would be under scrutiny by the potential buyers.

Major Australian assets such as timber plantations, property firms, infrastructure and nursing homes have been keenly sought after by Canadian pension groups this year.

CPPIB is bidding with the Dexus Property Group to buy the Commonwealth Property Office Fund for more than $2.7 billion, a deal that would add to the Toronto-based fund’s existing $7bn Australian portfolio. Canadian pension funds are also understood to have made approaches about other Gunns properties on the market in a separate campaign through real estate firm CBRE on behalf of McGrath Nicol.

The real estate agency this month put 94 Gunns properties in Tasmania on the market, with expectations they could sell for about $50m.

Before their collapse, both FEA and Gunns oversaw hundreds of millions of dollars worth of managed investment schemes on behalf of investors.