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Forestry. Timberland. Woodland. 

Our Services  

Forestry. Timberland. Woodland. 

1. Forest Asset Management

Forest Asset Management works hand in hand with traditional forest management, or silvicultural management. The objective of Forest Asset Management is to ensure that financial returns for the owner are optimised.

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Silvicultural forest management and relevant technical forestry matters can define what actions are best undertaken in the forest to, for example, produce the best quality or quantity of timber over time.  However, using only silvicultural forest management actions which produce the greatest timber quality or quantity of timber may not deliver the optimal financial return. Indeed, in some cases there may be a significant divergence between what makes the best sense silviculturally and what is the best choice financially.

Forest Asset Management generally entails scrutiny of management options using financial assessment tools to analyse the business merit of silvicultural options such as:

  • When should timber crops be considered for sale?

  • When is the timber price right for me to obtain optimal returns?

  • Which tree species mix should be replanted for highest long-term profitability? 

  • What kind of thinning pattern should be pursued?

  • Does it make sense to undertake capital expenditure on roads, tracks, drains, fertilisation, etc.

 

Forest Asset Management can also encompass overall oversight of local forestry managers, administration and reporting.  So, for larger forest owners Forest Asset Management can provide a convenient solution to the potential problem of direct ownership requiring significant owner input and time to ensure the timber growing business is optimised.  Forestry Investment Advisor has no stake in forest operational or timber sale matters and so is well placed to provide Forest Asset Management in a completely independent and unbiased manner on your behalf.

2. Timber Sales - decision analysis

Probably the largest decision any forest owner will need to take is regarding sale of the timber held within their forest.  But when is the right time to consider sale of timber in a rotation?  And when should forest owners take the timber price offered? 

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Forestry Investment Advisor can offer ad hoc consultancy to owners considering timber sales to analyse:

  • Is now the right time to harvest timber?

  • Is the timber price I am being offered right?

  • What does the timber price do to my overall return?

 

These analytics would all feature in Forestry Asset Management, but for mid-size owners stand-alone analysis at time of timber sale may be the most efficient approach

 
 

3.   Capital Expenditure - decision analysis

After timber sales, the next area of largest possible financial impact on the success of a timber growing business is probably appropriate capital expenditure.

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Forestry Investment Advisor can offer ad hoc consultancy to owners considering capital expenditure to analyse what the impact of capital expenditure may be.

Areas of capital expenditure may include:

  • New forest roads / tracks

  • New forest drains

  • Fertilisation

 

These analytics would all feature in Forestry Asset Management, but for mid-size owners stand-alone analysis at time of timber sale may be the most efficient approach

 
 

4.    Define Forestry Investment Objectives

What is an appropriate return profile for forestry investment?

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Within the literature a wide range of appropriate discount rates are quoted for timberland.  These may range from under 5% for the lowest risk regions to over 20% in higher risk areas.  However, for an individual investor to use an appropriate rate of return for their equity requires an awareness both of the risks of forestry in the region, but also a wider appreciation of where their returns come from. 

 

Returns from forestry investment generally may be sourced from three areas:

  • biological growth,

  • timber price change and

  • land value appreciation  

 

There are formulaic approaches that may be taken to define what target return on owner equity is appropriate. Definition of a return target is a crucial element of successful forestry investing, since without an appropriate target it is not possible to critique performance.

Also, through analysis it is possible to discern how much of the returns are required to be sourced from the three different forestry investment elements of biological growth, timber price change and land value appreciation.  This means the risk profile of obtaining different levels of return can be considered.  (For example, there may be a relatively greater assurance of the occurrence of biological growth than land value appreciation.)  

Appropriate return expectations may vary over time.  Therefore, refreshment of return expectations in conjunction with ongoing appraisal of the strategic outlook for a forest asset may provide crucial insight as when is the best time to divest or further invest.  To discuss your forest investment objectives,

 

5. Forestry Business Analysis

For any existing forest owner who currently is making use only of silvicultural management, Forestry Investment Advisor can offer consultancy in bespoke forest business analysis.  The intention of such analysis would be to normally discern forest asset performance as a business.  The requirements of such analysis would normally be discussed with the client on case by case basis. 

 

6. Forest Acquisition Decisions

Perhaps the biggest decision in a timber growing business is the expenditure required to purchase a forest asset.  Forest acquisition decisions require a sound understanding of investment objectives, timber income flows, the potential of timber growing land over the long term, cost considerations, risks, silvicultural and regulatory factors.

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Forestry Investment Advisor can project manage your acquisition, drawing together information and advice from various professionals, to build a business case to support bids on forest assets.  To browse a sample of acquisition opportunities, check out our Forests for Sale page.