Before you invest…
Before you invest in forestry we think there are a number of important things you need to check first so you can be sure your investment is as safe and successful as it can possibly be.
Not all areas of New Zealand grow Radiata pine equally well. Similarly, not all areas are as well serviced by the infrastructure necessary for the planting, tending and harvesting of trees.
Forest Enterprises’ forests are all located on the east coast of the North Island of New Zealand in the Wairarapa, Hawkes Bay and Gisborne regions. These three regions are well known as good areas for growing Radiata pine and have a well-established supporting infrastructure in place. Refer to Our Investors’ Forests for further information.
Distance from a Port
Currently around 70% of New Zealand’s forest produce is exported and this percentage is projected to grow with the increase in harvest over the next 5 years. Exporting needs access to a port and, as land transportation is costly (up to 25 cents per ton per kilometre), it is important for a forest to be located within a reasonable distance to a log export port.
Wairarapa, Hawkes Bay and Gisborne are well serviced by Ports in Wellington, Napier and Gisborne. Refer to Wairarapa Forestry, Hawkes Bay Forestry and Gisborne Forestry for further information.
Although simple in concept, forestry is in fact a very specialized activity. The expertise of the Forest Manager will determine the eventual harvest return. The better and more experienced the manager the greater the likely return (profit) to investors.
Forest Enterprises has been in the forestry business since 1972 and in that time has built up a reputation second to none in terms of its experience and expertise. Read more about us.
Registered Forestry Consultants
As there are accountants and chartered accountants, so there are forestry consultants and Registered Forestry Consultants. Only Registered Forestry Consultants are full members of the industry’s professional body, the New Zealand Institute of Forestry (NZIF). Less than 100 industry participants are Registered Forestry Consultants.
Our Forestry Director, Bert Hughes and Forest Estate Manager, Malte Coulmann are NZIF Registered Forestry Consultants. As is John Schrider from Forme Consulting, our forestry auditor. Forest Enterprises is unique among forestry investment companies in having as a Director a Registered Forestry Consultant.
Learn more about NZIF, Bert, Malte and John Schrider.
Regular clear and comprehensive reporting is a critical element of any investment. Investors need to know what is happening in their forest and how their money is being spent.
Our Accounting & Administration team pride themselves on the quality and timeliness of their investor reporting. Read more about our investor reports here.
No Disguised Payments to the Promoter/Manager
A forestry investment promoter is entitled to be rewarded for the work and associated risk involved in releasing new investments, no different to promoters of other investment options. What they should not do is disguise these payments.
All Forest Enterprises fees and payments are transparent – they are at arms length, clearly disclosed and contestable. Furthermore, investors have absolute control over the manager during the investment by being able to replace Forest Enterprises at any time. Read about replacing the manager and investor control above, and more about investor protections.
A key advantage of direct forestry investment compared with indirect forestry investment is the ability of investors to exercise real control. To be able to exercise control depends upon investors receiving timely comprehensive and authoritative information and the ability to participate and vote on key decisions.
Forest Enterprises investments are structured so that investors retain control at all times. Learn more about our investments.
Ability to Replace the Manager
The profitability of a forestry investment depends to a large extent on the expertise of the Manager and to a lesser extent on the expertise of the other support professionals (refer to Expertise of the Manager). If the Manager is not performing, the investors must have the power to replace him. Similarly, they must also have the power to replace the other support professionals.
Forest Enterprises investments are structured so that investors can replace the Manager at any time. Clause 15.1 (c) of the Deed of Participation empowers investors to remove the Manager for any reason (or no reason) by special resolution. More information about our investment structure here.
All investments should be structured to provide investors with the protection of limited liability. This protection is provided in our Limited Partnership investment structure.
The concept of limited liability in a forestry investment is simply the limitation of the amount an Investor may be called upon to pay to the amount they have invested to date plus any share calls made to fund the budget for the current year.
Read more about Limited Partnerships.
Ownership and control of the land on which the forest is growing is both profitable and prudent.
All Forest Enterprises investments comprise an investment in the forest and also the land on which the forest is growing. Read more about our investment structure.
Ability to Sell Your Investment
As the underlying life cycle of a Radiata pine forest is 28 to 30 years, investors must be able to liquidate their investment earlier. This might be as part of a planned realisation before harvest or to meet unforeseen changes in circumstances.
Forest Enterprises operates a secondary market to facilitate the sale of existing Forest Enterprises investments. Read more about selling your investment.
As the underlying growth cycle of a Radiata pine forest is 28 to 30 years (although Forestry Enterprises’ secondary market allows much shorter investment periods) it is important that an independent reputable party acts as an investor watchdog from start to finish – someone to keep an eye on both the detail and also the bigger picture. This should not be an investor responsibility.
Forest Enterprises’ investments use the professional services of Trustees Executors Ltd in a number of capacities including trustee and supervisor. Learn more about the role of the Supervisor.
Annual Forest and Financial Audits
A forestry investment comprises money (what you have invested) and a forest.
The New Zealand investment regulations require an annual financial audit that checks and reports that the money is being accounted for and used appropriately. A prudent forestry investment also requires a forest audit to check and report that the forest is being managed and developed appropriately.
We facilitate the annual financial and forestry audits with professionally qualified experts. Read more.
Who Holds Investors’ Cash?
Large amounts of cash are involved in a forestry investment, in the earlier years when the forest is being established, during the pruning and thinning years and at harvest. New Zealand investment regulation requires that this cash be securely managed and controlled by a reputable party independent of the manager.
The Forest Enterprises Limited Partnership investment structure provides for all cash to be paid to and held by Trustees Executors Ltd until called upon to meet authorised and budgeted expenditure or harvest dividends to investor. Learn more about the role of the Supervisor.