Tree Farm Investments

It's time for a new approach to timber investments. With more capital available than assets, institutional timberland investors are increasingly turning to "new forestry" opportunities such as short-rotation tree farming on agricultural sites.

GreenWood has the resources, skills and depth to target, assess and acquire properties that meet defined investment criteria. We can address the cultivation risks, market risks and government-policy risks inherent in these assets and generate early-stage cash flow from sources such as carbon credits, dedicated bio-energy crops or intercropping with traditional agricultural crops.

Timber investment overview - the case for a new approach

In the U.S. since the 1980s, capital available for timber investments has grown by over 20% per year. By the end of 2006, total investment in U.S. timberlands was approximately $40 billion, with another $20 billion in committed capital looking for a home.
The rationale for this consistent growth includes:

  • It's profitable – with 15+% returns in early years.
  • It balances a large capital portfolio, with low or negative correlation with other assets.
  • It's an effective hedge against inflation.
  • It's a real asset with biological growth.

And yet, as capital available for timber investments has grown, real annual rates of return (IRR) for traditional timberland investments have fallen from over 15% in the recent past to today's range of 5-8%.
The result of this decline in returns for traditional timberland investments is that institutional timberland investors are increasingly turning to "new forestry" opportunities. These include emerging markets, long-horizon funds and short-rotation tree farming on agricultural sites.

The need for an experienced partner

Investors typically collaborate with an experienced partner who can help target, acquire and manage timberland assets while addressing agricultural, market and government policy risks.
Our investment approach is to focus on the acquisition and development of short-rotation, fast-growth tree farms and value-added processing in North America, South America and Asia. Our environmentally sustainable approach is designed to achieve the highest possible return for investors.

Investment strategy

We look for strategic, existing fast-growing tree farms and new-development opportunities that have the potential for improved growth and yield. To these farms, we apply our tree improvement capabilities, elite germplasm, silvicultural expertise and modern manufacturing techniques to achieve superior risk-adjusted returns for our investors. Our management approach, which can be FSC-certified and provide FSC-certified products, offers additional tree farm value.

Tree farm strategy

In order to capture tree farm returns at their highest level, our planting regime is designed after careful analysis of the local environment, as well as regional and global markets. Planting and harvesting is typically a 10- to 15-year cycle. By focusing our strategy around a sustainable yield model, we create a planting and harvesting cycle that yields annual harvests and financial returns in perpetuity.

Core Competencies

Our underlying science and resource management expertise give us a sustainable advantage over competitors.
We have a strong foundation of core competencies that will drive and support the success of our investments:

  • Access to capital markets through our investment management services
  • Genetically superior plant material and tree improvement leadership
  • Innovative, cost-effective sustainable forestry practices
  • Extensive history in successful tree farm operations and resource management
  • Access to global timber markets through our timber products sales and trading
  • Access to renewable energy markets
  • Socially responsible investment opportunities with extensive environmental applications
  • Strategic partnerships that enhance and extend our capabilities worldwide

Location, Sustainability, Growing Trees: an aiCIO article

Timber Primer

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