Due to demand, Forestry Services ltd., brought and international dimension to timberland investment in 2007.  The decision was taken to concentrate on countries in Europe in order to invest in countries which are economically and politically stable, where forestry presented a mature environment for business with an established sawmilling industry with export potential and an established forestry management history.  Following significant investigation an investment in Estonia was secured. 

 Forestry Services ltd. manages the Estonian Irish Forestry Investment Fund, which is the largest Irish forestry investment fund invested in forestry internationally.

Estonia has recently secured entry to the Euro currency, which is forecasted, will bring considerable benefits to the country.

The Investment

• This is a forestry and land based investment in Estonia, which has recently joined the European Union (May 2004). It is also a member of the WTO and Nato.  Property ownership rights by foreign individuals and companies are enshrined in law and the legal system has received international recognition for its transparency.

• The purchase price is €11.9 million (excluding legal and professional costs) which represents an average cost per hectare of €1,942 (€786 per acre). These prices are at a considerable discount to forestry and agricultural land throughout the rest of Europe. Land and forestry values are increasing between 15% and 20% per annum.
   
• Forestry Services Ltd. have taking an equity investment of €6.75 million in the fund at the same price and with the same conditions as all other investors, highlighting the promoters confidence in the project, apart from managing the investment on behalf of investors.
   
• International rankings by the Heritage Organisation and the Wall Street Journal rank Estonia as the 12th freest economy in the world and the 7th freest economy in Europe. (Ireland 7th and 2nd respectively).
   
• The promoters are a team of highly qualified individuals, made up of three professional Foresters and a Chartered Accountant. 

Property details

• The original estate of 6,130 hectares (15,141 acres) was purchased in June 2007. This estate is made up of Forestry 5,268 Hectares (13,011 Acres) and Agricultural land 862 Hectares (2,310 Acres).
   
• Additional purchases of 3,000 Hectares have been acquired since 2007.
   
• The Estate is broken down into approximately 350 different holdings. The holdings are spread throughout the whole of Estonia.
   
• The minimum investment was €500,000 – which entitles the shareholder to one share in the investment. The fund size is 20 million.
   
• A dividend of 3% (€15,000) is projected to be paid on an annual basis to each investor. This repayment should be tax free to all investors.
   
• Projected returns on sale of 15-20% per annum are forecast on sale of the properties in 5 years time. This is based on, increasing worldwide demand for timber, increasing world population, increasing use of renewable fuels as laid down in the Kyoto Protocol and the EU White Paper on Renewable Energy all whilst available forest recourses are decreasing.

The managers are currently working to achieve FSC certification for the EIFI fund and expect to have accreditation in early 2011.

The forest area in Estonia is approximately 2.2 million hectares or approximately 54% of the land area.  It gained independence from Russia in 1991 and began the process of redistributing forests and land back to the original owners.  Forests and lands where the original owners cannot be located are now being sold off by the state and this presents new investment opportunities.

Forestry Services ltd. are currently exploring forestry investments in the UK and have established links with Timber Investment Management Companies in America with a view to expanding the International Forestry Investment division of the company.

To subscribe for future forestry investment information from Forestry Services Ltd. please contact us at our contact page. 

Forestry Services ltd. Experience, reliability and delivery in the forestry business for over 25 years.