Impact Investment Profile

Investor

RSF Social Finance

Investee

Lyme Forest Fund III

RSF Social Finance (RSF) is a nonprofit financial organization dedicated to changing the way the world works with money and supporting businesses generating social and environmental impact. The Lyme Timber Company is a private timberland investment management organization that owns and manages high conservation value forests to conserve their ecological value. RSF invested USD 1 million through its Donor Advised Fund Impact Portfolio in Lyme Forest Fund III to increase the amount of ecologically-valuable land under conservation management and to support job creation in rural U.S. communities.

Investor Targeted Impact

Conserve ecologically valuable forestland

Investor

Name RSF Social Finance
Investor description RSF Social Finance (RSF) is a nonprofit financial services organization dedicated to transforming the way the world works with money by facilitating financial transactions that are direct, transparent, personal, and based on long-term relationships. RSF offers investing and giving services to over 1,000 clients and extends loans to both for-profit and nonprofit organizations committed to improving society and the environment. Since 1984, RSF has made over USD 250 million in loans and USD 100 million in grants to social enterprises in RSF's focus areas of Food & Agriculture, Education & the Arts, and Ecological Stewardship.RSF manages USD 40 million through its Donor Advised Fund (DAF) Impact Portfolio program as of July 2012. DAF programs receive capital from donors and invest the capital to increase the funds available for grantmaking. RSF's DAF program is distinctive because it invests 100 percent of the funds in financially rigorous impact investing portfolios so that all of the donor's capital works towards positive impact.

Investee

Fund/product name Lyme Forest Fund III
Manager information The Lyme Timber Company LP (Lyme Timber) is a private timberland investment management organization that focuses on acquiring and sustainably managing land with unique conservation values and significant timber resources. As of July 2012, Lyme Timber owns and manages 475,000 acres of forestland located in nine states across the U.S. It has achieved attractive financial returns while protecting the ecological and social value of undeveloped lands.Lyme Timber uses its network of nonprofit conservation organizations to identify lands of conservation priority, which include properties that provide habitat to endangered species, encompass important bodies of water, or buffer already protected public and private land. In partnership with nonprofit conservation groups, Lyme Timber will purchase such properties and then sell control of specified land use rights over time to government natural resource agencies, sometimes in fee and often through conservation easements, to generate returns to its investors. Conservation easements are legal agreements that limit certain activities and land uses on a property in perpetuity. Lyme Timber then manages these lands sustainably, employing practices that ensure the production of forest products will occur while conserving the ecological health and biological diversity of the forest, usually through the Forest Stewardship Council third party certification system.
Sector Environment
Geography North America - United States
Asset class Real Assets
Size of fund/product USD 160.4 million
Fund/product description The Lyme Forest Fund III closed in February 2011. As of July 2012 it had purchased 3,200 acres of conservation land and 72,800 acres of working forestland. The fund aims to purchase 3-5 additional properties before the fall of 2014. Most properties are purchased with a combination of the fund's equity and low cost debt from outside sources, and capital is generally returned to investors after 5-8 years of property ownership. During the fund term, capital is returned to investors from property sales, conservation easements sales, and land management activities such as sustainable timber harvesting and sale of forest products. The fund is also targeting investments in wetland and endangered species mitigation banks. In mitigation bank investments, Lyme Timber will establish or protect habitats to generate conservation credits which developers or other agencies purchase to compensate for loss of equivalent habitat that is impacted through their development activities.
Motivations for investment Lyme Forest Fund III was an attractive investment to RSF for several reasons. First, the fund's measurable land conservation outcomes and sustainable forest management activities on its portfolio properties aligned with RSF's Ecological Stewardship focus area. Second, the fund manager is a recognized leader in the field of conservation investment and sustainable forest and land management. Since 1976, Lyme Timber has followed a disciplined and value-oriented investment strategy with the goal of achieving superior risk-adjusted financial returns. In addition, Lyme Timber has experience with "community forest" transactions, in which land that is protected by conservation easements is transitioned to local community ownership and management at the end of Lyme Timber's ownership. Communities benefit because they are able to purchase the land at a discounted value, directly control its natural resources, and derive income through sustainable management. This expertise connects to RSF's goals to create a financial world more closely tied to meaningful relationships and to generate positive community economic development in rural communities.

Investment

Instrument Equity
Investment size USD 1 million
Investment term 10 years
Investment impact objectives RSF seeks to increase the amount of ecologically-valuable land under conservation management, as well as support job creation in rural communities in the U.S.
Social and environmental metrics tracked on investment The fund reports the conservation and community development impact of its investments in an annual report. It tracks the following metrics on its social and environmental performance, some of which are IRIS metrics (IRIS alignment noted in parentheses): High Conservation Value Forest Preserved (IRIS aligned - PI8325)Land Preserved (IRIS aligned - PI2012)Water Bodies Preserved (IRIS aligned - PI8005)Number of endangered or threatened species protectedArea of prior conservation land buffered (surrounded by areas of permanent vegetation)Trees Planted (IRIS aligned - PI4127 )Trees Planted: Native Species (IRIS aligned - PI3848)Forest area that is third party certified for sustainable harvest Percent of timber sold locally Area open to public recreational accessNumber of forest-related jobs created

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