'Resource Holdings' is explained in detail and with examples in the Corporate Finance edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.
Resource Holdings, also known as Resource Land Holdings and RLH, is a private equity firm which focuses on purchasing huge pieces of real estate which are rich in natural resources. The company’s ultimate goal with these acquisitions is to sell off those parts of the properties that do not generate cash flow so that they can reduce the cost basis of the property to as nearly zero as they can. At the same time, the work to maintain and improve the cash flow of the remaining piece of property to share this out to their investors. They also enter a number of partnership arrangements with original owners so that these parties remain actively involved in the management and success of the operations. The company is headquartered in Colorado Springs, Colorado in the United States.
Resource Holdings arose in 1998 because its founders wished to provide opportunities for and to invest themselves in timber, agricultural, and mining properties and operations throughout the United States. They work with a variety of local operators, brokers, and entrepreneurs in order to invest in this range of land parcels across a wide range of asset classes which are rich in resources. As of time of publication of this article, RLH had created and managed two individually funded entities along with four different private equity funds.
The first Resource Land Fund I they capitalized with $20 million worth of committed equity. It entered its first investment back in December, 2001. Their second Resource Land Fund II they established using $51 million in equity. It purchased its initial investment in July, 2003. Their Resource Land Fund III received a larger $175 million. It obtained its first investment March of 2006. Each of these investment funds received full investment and then was closed in turn. The Resource Land Fund IV closed with $316 million in committed funds back in August of 2010.
The firm seeks out investments in land across a range of asset classes. Their primary focus has always been on regional timber, agriculture, quarry, mining, and other resource rich properties which have typically been ignored or overlooked by the massive institutional investment world. Such regional entrepreneurs that require significant capital intense investment have found that the needed funds are often not available to them as economic cycles create financial and funding challenges for these medium sized operations. In these particular scenarios, Resource Holdings appears on the scene as a life saving potential source of capital. They often invest right along with local entrepreneurs and partners.
As part of their specific portfolio of investments and property holdings, Resource Holdings owns or invests in properties across 20 different states in the U.S. spanning from Florida, to Texas, to California. At time of publication, they had 46 different properties within their various funds and portfolios. Among these were a limestone quarry in Texas, a citrus operation in Florida, timber operations in California, sand quarrying in Alabama, a large coal surface mine in the Midwest, and apple orchards in Washington state.
As an example, Resource Holdings saw that there were positively growing trends within the building stone market. They used this basis to seek out and invest with two long standing operator-owner partners of two different limestone quarries found in the center of Texas. The owners continue operating the limestone quarrying firm with RLH as the capital partner.
In another instance, the investment firm saw an opportunity to become involved in a successful Florida citrus business a few years ago. They arranged a unique sale-leaseback with the owners which guaranteed the investment company both a minimum yearly return and a profit split with the operating partner-owners. Thanks to their sympathizing and working with the various concerns of the owners, they were able to obtain a high quality property that the markets never had an opportunity to seize. The final arrangement which the company struck with the owner operators allowed both of them to sit on one side of the table to share economic objectives and interests.
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