Ensuring limited liability, liquidity and tax deductibility

Not all forestry investments are the same. After 43 years, a Forest Enterprises forestry investment still stands apart for the way we structure and manage the investments. We have proven to our investors that we know what adds value to forestry investment and that we understand what they need from an investment beyond real returns.

Our investments are structured to give clients control of their investment

A Forest Enterprises investment is a professionally structured direct investment in New Zealand Radiata pine forestry, structured to ensure that:

  • investors’ money is protected
  • the forest activity is undertaken to the highest standards
  • investors are kept fully informed
  • investors retain ultimate control
  • there are built in checks and balances

Investors own the land as well as the treecrop being established and grown on the land which has inherent benefits to the value of the investment and investor control.

Forest Enterprises provides forest management, investment administration services and harvest consulting and management. While the day to day management of the forest and the administration of the investment is undertaken by Forest Enterprises as Manager, investor control is assisted by the supervision input of Trustees Executors Ltd, together with reporting from the Manager, plus annual Financial and Forestry Audits.

When you invest in forestry with Forest Enterprises, you become a joint owner in an asset (land and trees), and you participate as an investor. As Forest Manager and Investment Administor, we ensure that your investment is protected, that forest activity is undertaken to the highest standards, and that you are kept fully informed on all matters.

The key elements of our investor protections are the Limited Partnership investment structure, land ownership, annual financial and forestry audits, reporting to investors, forest visits and informal meetings, and the important role of the Supervisor.

Limited Partnership
The Limited Partnership investment structure is ideally suited to investment funds. It ensures that investors’ retain control of the investment at all times and no material changes can be made without investors’ approval. Learn more about the benefit of Limited Partnerships.

Supervision
The Trustee and Supervisor is a central component of investing in New Zealand. The role of the supervisor includes oversight and supervision of the investment as an independent, and to hold investors’ money until expenditure has been approved. The Supervisor of Forest Enterprises’ investments is Trustees Executors Ltd. Learn more about Trustees Executors and the role of the supervisor.

Land Ownership
We firmly believe that land ownership is an important and profitable part of the total forestry investment package. Therefore our investment structure includes ownership of the trees as well as the freehold of the land on which the trees are growing. Not owning the land means more risk and less profitability. Learn more about why land ownership benefits the investor.

Financial Audit
Each year an independent financial audit of each Forest Enterprises’ managed investment is undertaken by Staples Rodway. They also audit the cashflow and financial projections included in our Investment Reports. Learn more about Staples Rodway and the financial audits.

Forestry Audit
Each year, an independent forest audit is undertaken to ensure the afforestation program is on target, completed to a high standard, and is consistent with industry practice for similar forests. They also audits the afforestation program and projections in the prospectus. Forme Consulting Group conducts the independent forest audit for Forest Enterprises’ Limited Partnership investments. Learn more about Forme Consulting and the forest audits.

Regular Reporting
Each year, investors receive a comprehensive Annual Report specific to their investment. They also receive regular Forestry Updates by email, progress reports at key stages throughout the forest and investment life cycle, such as when harvesting. Learn more about reporting here, and for general updates go to our Investor Information page.

Forest Visits & Informal Meetings
Approximately every five years we invite investors to an organised forest visit and informal meeting, providing investors with the opportunity to get up close to their investment and meet fellow investors. Forest Enterprises explains the work being undertaken in the forest and answers investors’ questions. Learn more about forest visits and informal meetings.

When you invest with Forest Enterprises, you make a direct investment (by way of shares) in a Limited Partnership which owns a Radiata pine plantation forest. The Limited Partnership structure is ideally suited to investment funds.

Limited Partnerships are a form of partnership involving General Partners, (who are liable for all the debts and liabilities of the partnership) and Limited Partners (who are liable to the extent of their capital contribution to the partnership). You become a shareholder of the Limited Partnership, and also in the General Partner which is the active manager, responsible for the day-to-day management of the Limited Partnership and its business.

This structure provides the protection of limited liability, tax efficiency and a transferable asset. But most importantly it provides investors with decision making rights so that investors retain control of their investment at all times and no material changes can be made without investors’ prior approval.

A Limited Partnership has a separate legal personality (similar to a company) which offers limited liability to investor partners. Limited liability means that investors (Limited Partners) are only liable to the extent of their capital contributions (funds invested), plus any other obligations expressed in the Limited Partnership Agreement.

It has a ‘flow-through’ tax status, which means the tax consequences of the partnership’s activities flow directly to the investor partners. Any profit or loss from the Limited Partnership ‘flows through’ to the Limited Partners proportionate to their shareholding.

We firmly believe that land ownership is an important and profitable part of the total forestry investment package. Therefore our investments include ownership of the trees as well as the freehold of the land on which the trees are growing.

Historically, ownership of the land has proved to be very profitable. Land for which we paid $25 a hectare in 1972 has a value today in excess of $1,500 a hectare!

If the land is not owned by the investors, the landowner must be paid for its use. This can be by annual rental or by sharing the proceeds of the harvest. In other words, the initial capital investment is replaced by either an annual expense or a reduction in future return.

Not owning the land means more risk; you don’t have absolute control over one very important input into the investment, rental may become excessive, or the profit share may become disproportional.

At current land prices, the land cost represents approximately 11% of the total sum invested. The financial impact of paying for the land at the outset is alleviated by the prudent use of a short-term mortgage.

 

Forestry investment by nature is a contributory investment, where an investor pays the funding required each year, spread over one or two instalments, called Calls (due in February, June or October).

The largest amount of funding is required in Year One in order to buy the land and establish the treecrop. Lesser amounts are required from Year 2 through to about Year 9 to complete the pruning and thinning operations, to repay any initial mortgage borrowings and to pay the annual charges such as rates, insurance, maintenance and management. From about Year 10, only one Call is required to cover the ongoing annual charges.

Projections of the annual instalments are updated during the course of the investment and are provided to investors on an annual basis with the Annual Report.

The investment Calls can be paid by cheque, credit card, direct debit or by transfer from an investor’s bank account into the investment trustee’s bank account (Trustee Executors Ltd).

Learn why we do not offer a lump-sum full payment option.

A notable feature of forestry investment is its long term nature, making it an excellent choice for a balanced investment portfolio. However, we understand the importance to investors that should their personal circumstances change there is the option to liquidate before harvest.

We facilitate the sale and purchase of established Forest Enterprises investments by co-ordinating an open tender process. This creates the opportunity for our clients to liquidate their investment prior to harvest, and for new or existing investors to buy into one an established Forest Enterprises investment.

So if you prefer a shorter-term to harvest, you can invest in an established Forest Enterprises investment. Or should you choose to invest in a new issue forest investment, you need not hold the investment until harvest – instead you may sell whenever it suits your personal circumstances, and we can facilitate the process for you.

Purchasing an established Forest Enterprises investment means it has the same industry leading forest management and administration characteristics that are the hallmark of all our investments dating back over the last 43 years.

Learn more about buying and selling through Forest Enterprises.

A guide for buyers
A guide for sellers

The total forestry investment package

Forest Enterprises is a full service forest investment company. We provide expert forest management, investment administration services and harvest consulting and management.

The inclusion of investment administration and marketing within the operation of the company means that we are directly responsible to our investors for their total forestry investment package. The same company that introduces you to forestry investment remains responsible for managing your forest and administering the associated investment, right through until harvest.

Being involved for the duration, we therefore remain accountable for meeting the investment expectation we originally promise and this enduring accountability strongly influences everything we do.

A deep rooted investor-focused attitude has always set Forest Enterprises investments apart from all other forestry investments. This philosophy enables us to stand in the investor’s shoes and dominates and directs all aspects of our business.

Our role as your investment manager is to provide day to day administration of your investment:

  • Ensure your investment is protected
  • Co-ordinate key elements of the investor protection regime such as independent financial and forest audits, regular reporting, and forest visits and informal meetings
  • Ensure your compliance obligations are met regarding GST, income tax and other regulatory reporting
  • Maintain full accounting records
  • Facilitate sale and purchase of shares
  • Ensure you are kept fully informed on all matters
We know forestry from establishment to harvest. Our deliberate focus on forestry enhances our investment administration and marketing activities and defines the essential character of the company.

We are responsible for your forest. We hire experienced, passionate foresters who are committed to continued professional development, using the latest technology and team work. And we only work with reputable contractors. Not only do we conduct annual financial audits, but we also conduct forestry audits that provides quality control over forest operations and vital data.

Our role as your forest manager is to ensure forest activity is undertaken to the highest standards:

  • Be responsible for Health & Safety and resource management issues
  • Coordinate and supervise all field work such as roading, pest control and silviculture
  • Maintain extensive database of field activity and forest data for financial modelling and valuation, as well as accurate digital maps
  • Engage reputable forestry contractors
  • Liaise with independent forest auditor
  • Maintain positive relationships with stakeholders such as neighbouring landowners, local and central government, and members of the public
  • Coordinate and manage the harvest
  • Represent investors on relevant industry bodies

Who can invest

Our 6,400+ investors are of all ages and from all walks of life. Only by investing directly in the ownership of land and trees via a Forest Enterprises investment do you fully participate in the success of New Zealand’s forestry sector.

Investing in forestry with Forest Enterprises is very accessible. An eligible investor:

  • May be an individual
  • May be a legal entity recognised in New Zealand – a company, a trust or a partnership
  • Must be at least 18 years old (ie not a minor)
  • Must have a New Zealand IRD number and a New Zealand bank account
  • May be a New Zealander or an overseas investor
    • Overseas Persons (investors who are not New Zealand citizens and who are not resident in New Zealand) must apply for permission to invest
    • Resident non-New Zealanders may invest
    • New Zealand investors may be non-resident, and we provide additional information about the legal and tax implications on non-residents
Aan increasing number of non-residents are investing with us as the success of the New Zealand plantation Radiata pine industry becomes known around the world.

The Overseas Investment Act 2005 defines an Overseas Person as an individual who is neither a New Zealand citizen nor ordinarily resident in New Zealand.

Overseas persons can invest provided no more than 25% of the forestry investment is held by overseas persons. Any application by an overseas person to purchase Forest Enterprises shares must be made to the Directors of the General Partner of the investment for permission to invest.

More information for overseas investors.

A person is a non-resident for New Zealand taxation purposes if he or she:

  • is away from New Zealand for more than 325 days in any 12 month period, or
  • is in New Zealand for less than 183 days in any 12 month period, and does not have an enduring relationship with New Zealand such as a permanent place of abode.

There are separate rules for determining whether a trust is a non-resident. Learn more about tax residency and status from New Zealand’s Inland Revenue Department.

More information for non-resident investors.

We are required under the New Zealand Anti-Money Laundering and Countering Financing of Terrorism Act 2009 to undertake due diligence on all new customers to prevent the criminal use of funds. This involves us:

  1. gathering information about customer identity, and
  2. verifying a customer’s identity, to ensure the customer is who they say they are.

We are also required to gather this information from existing investors who are investing in a new forest.

Learn more about what is required and why.

What our investors think

There are good reasons why our investors chose a Forest Enterprises forest investment:

  • It’s a perfect part of a retirement plan – forestry delivers a lump sum at the time of retirement
  • Forestry makes great sense as an investment – participate in the success of an important sector of the economy; as a bonus, it’s tax deductible
  • It’s a great way to start some serious saving – forestry is different from traditional investment products; as well as being profitable, its great for the economy and the environemtn
  • Superannuation backstop – forestry investment provides that additional financial security for a long and active retirement
  • A legacy for the family – the returns from forestry investment can help provide a great start in life for the next generation, such as paying for education or a deposit on a first home

We do not provide financial advice

While Forest Enterprises provides forestry investment products and documents relating to those investments its staff cannot and do not provide specific financial or personalised investment advice. LEARN WHY.