Why timberland is a good investment

Hong Kong businessmen can now consider a long-term investment that will not just be profitable – but can preserve nature as well.

EcoForests, a boutique forestry management company, specializes in tropical timber species such as teak, oak, mahogany and eucalyptus that are grown in several geographic locations in Central and South America. 

With investors all over the world, the company is “vertically integrated”. This means that it takes care of the seed selection, tree nursery, planting, management, harvesting and placing the timber to market. 

“Keeping a vertical integration allows us to have direct control of every aspect of the project,” says Michael Ackerman, EcoForests’ CEO. “This results in the best possible returns to our investors. In addition, we are very innovative in our management practices, such as adding interesting research technologies like our recent implementation of drone mapping of the plantations.”

The solution to climate change

Mr. Ackerman believes that forestry is indeed the answer to the climate change brought about by pollution and deforestation.“The moment an individual or institution invests in forestry, they are already contributing to the better of our planet,” he maintains. “We at EcoForests are cultivating timber for future demand. This means that our timber production - which is grown with the highest standards of sustainability - will replace the felling of aboriginal and natural tropical forests. Since the beginning of the Industrial Revolution, we have been harvesting our precious natural forests with disregard to the consequences. Therefore - in addition to the above average returns in forestry - every dollar invested in the timberland industry improves our forest area and protects our aboriginal forests.”

Thus, EcoForests thrives on the philosophy of good stewardship that considers a strong environmental record as central to business success. 

Benefits and returns

The CEO guarantees forestry investors of many benefits, one of which is the inflation hedge where forestry is considered a commodity. He explains that if inflation goes up, commodities inevitably go up. 60%-70% of the returns generated in investing in timber are based on the natural growth of the tree, which is invariably positive.

As the trees continue to grow, so does the investment. But when the harvest period for the investment is affected by economic uncertainty (like the 2008 market collapse), the investor can hold his investment for an additional number of years, so it can continue to grow and gain additional value. Still another benefit that Mr. Ackerman points out is the fact that timberland investments are non-correlated to another asset class. This makes it a great portfolio diversifier. “Over the last 30 years, timber returns have beaten stocks and the S&P 500,” he says.

Growing sturdy

Like a tree growing from a seed, Ecoforests begun with a small group of investors, and developed to offer various investment projects to high net worth individuals, family offices, pension funds and institutions. Ecoforests boasts of a complete tailored structure, with the investment consisting of a direct investment in tropical timber, tailored to the needs of the investor. 

EcoForests also takes into time frame, cash flow requirements, timber species, geographical locations, and land ownership for a sturdy investment structure. Ecoforests prides itself in a unique business model, combined with a personal touch with its clients.

The challenge for 2016

For 2016, Mr. Ackerman is optimistic that his company would succeed in educating its prospects on the benefits of timberland investment. “In recent years, there has been an important influx investment in forestry. Fifteen years ago, there was a mere 40 billion dollars that was invested in timberland. Today, there is about 200 billion.

“If we look at the investable universe, 200 billion dollars is only a fraction. Yet, it is comforting to see that the interest is growing. My company has noticed this trend, as family offices and institutions continue actively looking for timber opportunities.” 

The CEO adds that his company would serve its clients with the personal touch and professional treatment they can expect. EcoForests has offices in Canada, England, Northern Ireland, Gibraltar and Israel, along with representative agents in over 30 countries worldwide. It will soon establish a branch in Hong Kong. 

For more information, visit https://www.ecoforests.ca.