Investment is about creating wealth. To achieve this you have to grow your capital at a rate faster than inflation. There are a number of opportunities available to you and each one carriers certain risks in exchange for promised returns.

Then there is forestry.

The significant difference with a forestry investment is that it’s real. We literally grow your wealth for you.

Forestry is sustainable

Wood is good. It is a renewable resource and a carbon sink, sequestering and locking in carbon throughout its life. The role that forests play in countering the effects of climate change have never been so important as they are today. And aside from its economic benefits, wood feels good and it has high utilitarian, social and environmental value.

Plantation forests play an important role in environmental management. As a managed resource, plantation forests are vital as an alternative wood source, supporting the global movement to cease logging of indigenous forests. Forests provide environmental ‘services’ like maintaining soil quality and land stability in otherwise marginal areas and this is especially important in regions like New Zealand’s east coast of the North Island, and they provide stable ecosystems during each rotation. Plus, they have social value as places for our communities to enjoy recreationally. Learn more about the environmental impacts of plantation forestry from the new Planted Forests Portal.

Forests are a net carbon sink. They sequester carbon during their lifecycle and beyond harvest, as some carbon remains locked in the stumps and soil and also in the wood products themselves after processing. Learn more about carbon sequestration and emissions trading on the New Zealand Forest Owners Association website.

Forests are recognised for their key role in meeting the challenge of climate change. Global frameworks like the Paris Agreement identify afforestation and reforestation as having the best mitigation potential because they are easy options to implement, and quickly. But the contribution of wood energy and wood products have further potential as replacements for fossil fuel and therefore their contribution towards low-carbon economies.

Forestry is helping New Zealand meet its international climate change obligations via the Emissions Trading Scheme (ETS). Learn more about the ETS from the Ministry of Primary Industries website, and we also have a FAQ about the ETS. Learn more about climate change from the Ministry for the Environment website.

Innovation in wood processing and engineering is ensuring that wood can substitute for steel, aluminium and concrete, all of which have high energy and environmental costs. Multi-storey commercial and residential buildings are being built around the world at present using wood, not reinforced concrete or steel structures. Engineered wood products like Cross Laminated Timber (CLT) and Laminated Veneer Lumber (LVL), both produced in New Zealand, provide strong, exact and versatile options for building from framing to appearance grade finishes.

Wood is being favoured for construction by governments, not only for its engineering properties such as for earthquake strengthening but also for health benefits as well as aesthetics, particularly for residential builds. The environmental benefits of wood such as locking in carbon and energy efficiency, as well as the economic benefit of supporting local economies, are further drivers behind ‘wood first’ policies being adopted by authorities in Canada and Australia, and also Gisborne and Rotorua in New Zealand.

We like to share wood innovation stories via our Wood is Good news category.

Forestry is tangible

Forestry is one of very few tangible investments. A tree is a solid living thing which you can touch and experience. Trees can’t be moved or be stolen; they are always there. You can visit your forest and will always be surprised how much your trees have grown.

The key difference between forestry and other investments is the organic growth, simply done by harnessing nature’s resources. A forest’s organic qualities as a tree crop make it easy to relate to. And it is all achieved naturally. Plant a crop of 30cm seedlings that over time grow into trees 40 metres tall, each yielding valuable logs for sale nationally and internationally.

The natural wealth creation process continues year after year. Regardless of what the financial markets are doing, irrespective of whether property prices increase or decrease or interest rates rise or fall, the trees keep growing.

All the while your forest quietly and unobtrusively grows taller and fatter and you grow wealthier. Most importantly, with forestry you instinctively understand the wealth creation process. You know where your money is and what it is doing.

As a sustainable real asset you own and can touch, forestry is reassuringly solid. It is reassuring that you are not relying on someone to make instant business decisions to lock in a profit, or avoid a loss.

With Forest Enterprises, you have direct ownership of the trees as well as the land on which they grow. The investment is yours and you have the security of knowing where your money is invested and what it’s doing. It won’t move, it can’t be stolen, misappropriated or squandered.

Forestry is profitable

The natural growth of a forest as a crop requires little manipulation to realise its value. It keeps growing in value, literally. Combine this with skilful interventions of an experienced forest manager and profitability is maximised.

The affordability of a Forest Enterprises forest investment ensures investors can include forestry in a balanced investment portfolio or retirement plan.

Not only is the total investment sum affordable, but you don’t pay it all at once. A forest investment is contributory, meaning that after an initial lump-sum payment, you pay in annual instalments called Calls, usually paid once or twice per year. Calls are also set at an affordable level so investors can meet ongoing family and financial commitments during the life of their forest investment. However, with Carbon Lease arrangements in place for most of our Limited Partnership investments, there are no Calls required which also helps improve profitability.

Should an investor’s circumstances change, we are able to facilitate the sale of shares so that the investment can be liquidated prior to harvest.

Forestry investment is one of few investment products that is tax-deductible. A forestry investment is tax deductible because you don’t earn income until harvest, plus any expenses are deductible. We have ensured tax-deductibility is achieved by using the Limited Partnership investment structure. For most years during the term of your forestry investment before harvest, you will be entitled to a share of the investment’s tax losses.

Go to our Investment structure page to learn more about tax and our Limited Partnership investments.

As the industry leader, we take a more conservative approach to valuation than most and still come up with solid projected returns for our investments. We calculate return projections for all current investments using a number of scenarios. Refer to the Product Disclosure Statement (for new issue investments) or the Investment Report (for established forest investments) for projected returns relating to specific investment opportunities.

Importance of Tax Paid Real Returns
With any medium to longer term investment, it is the projected return after maintaining the purchasing power of your money and paying any tax due that is most important. This is the tax-paid real return.

The difference between the gross return and the tax paid real return is the impact of inflation over the period on the purchasing power of the New Zealand dollar plus taxation.

Inflation at just 2.0% halves the purchasing power of the dollar in about the same time as it takes a Radiata seedling to grow into a mature tree.

Historically, forestry investment has demonstrated an ability to maintain value with inflation and to reward investors with substantial real (after inflation) returns. Other investments with a similar potential are property and equities.

The value of New Zealand radiata pine forestry as an investment is clear to corporate forest owners and international pension funds who own large areas of plantation forests in New Zealand. So it makes sense that New Zealanders have the opportunity to profit from forestry investment too.

Global market conditions favour wood and New Zealand’s competitive advantage puts forestry into the top three export earning sectors in the country. We are close to the Asian markets and we have excellent growth rates meaning we can supply quality radiata pine in shorter time frames. Our forestry exports are worth $5 billion to the New Zealand economy and this will grow. The industry is a big contributor to regional economies and its role is recognised in the government’s regional economic development action plans.

Global demand for wood alternatives is declining while demand for wood products is increasing. Population growth continues to increase demand for wood, and wood consumption increases further with a country’s increase in economic and social development. We see this in the ‘rising middle classes’ of China, India and Korea, our major export markets. With the global movement to preserve dwindling native forest resources, by either not logging at all or by logging on a sustainable basis, the trend is towards a log supply reduction and increased demand for plantation forest products.

The substitute products for solid wood like steel, aluminium, plastic and cement all have very high energy inputs and high carbon outputs. As the cost of energy increases and as carbon taxes are progressively introduced to limit climate change, inevitably the price for these substitutes will also increase.

The role of Forest Enterprises is to maximise profitability for investors. A full-service, total forestry investment package achieves this through economies of scale, service continuity, a professional and scientific approach to forestry, and an unwavering commitment to providing investors with both control and protection.

Our size results in significant economies of scale which we pass on to investors. We have a reputation as a forest manager of quality, able to derive maximum value from the forest for our investors, from forest establishment to harvest. We have excellent contractor relationships and employ highly skilled forestry professionals. Plus, our forests are located in some of new New Zealand’s best sites for plantation radiata pine.

Our role is also to help you manage risk. Our skill as the manager comes into play in the careful management of the crop (and insuring for specific risks where possible), and of the market such as harvesting so that returns can be maximised (in the meantime the trees keep growing in size and in value).

Learn more about our investments here.

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Latest investment opportunities

Forest Enterprises has opportunities for you to buy shares in new as well as established forestry investments.
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Wood: our low-carbon future

Wood: our low-carbon future showcases New Zealand’s plantation forestry sector, and the many lifestyle benefits of forests and wood resources. Go to the Wood: our low-carbon future website for stories about carbon, trees on farms, engineered timber, and the people helping to deliver a positive economic and environmental future through forestry in New Zealand.

Wood our low-carbon future

Sustainable forestry in New Zealand

In 2013, we helped the New Zealand Farm Forestry Association and the Ministry for Primary Industries tell the story of sustainable forestry in New Zealand. Sustainability of forest management in New Zealand is monitored through an international system called the Montreal Process.

This short video features a number of our contractors and partners and features the full range of forest activity from planting to export.

We manage around 34,000 hectares of radiata pine forest on behalf of Forest Enterprises investors and private landowners. Read more about forestry in the Wairarapa, Gisborne and Hawkes Bay.

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How our investments work

Beyond the trees, it is the expertise of the investment and forest manager that derives the returns for investors.
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We have proven to more than 7,500 investors why we are New Zealand’s leading full service forest management and investment services company.
About Forest Enterprises

Wood is Good

Investing in forestry means investing in wood innovation – taking the benefits of wood beyond the natural environment and into daily life.
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