Which return rate can I expect, if I decide to invest in Baltic forests?

The expected return rate is 5-6 %, when you invest through HD Forest. The return rate is unleveraged and net of all costs.

How has the Internal Rate of Return (IRR) been in the past?

Our clients have experienced different return rates, but none have suffered losses during our 25-year long track record:

• More than 2/3 of our investors have had above 10 % IRR
• Around 1/5 have had 6-8 % IRR
• Under 1/10 have had 2-4 % IRR.

How do you ensure a responsible forest management?

All our managed forests are certified according to either PEFC or FSC – two globally recognized forest certification systems. This guarantees that all harvested timber is responsibly produced, which means that we:

• Protect exposed nature areas
• Harvest less cubic meters of timber than grown every year
• Leave deadwood for insects and fungi
• Secure new generations of trees to grow up after harvest of mature trees.

Is it safe to invest in the Baltics?

We claim that investing in Baltic forestry is as safe as investing in forestry in any other European country.

Estonia, Latvia and Lithuania are all members of NATO and EU as well as being part of the EURO-zone. Investing in the Baltics therefore comes with the same benefits as for the rest of Europe.

All Baltic countries generally score high in international transparency ratings and are acknowledged for having open, modern economies with growth above the EU average.

Property rights are secure and well-documented with fully digitalised land cadastral systems and low transaction costs when trading properties.

Do I get the hunting rights, when investing in Baltic Forests?

In the Baltics the hunting rights don’t follow the ownership of the forests. This means that you won’t take over the hunting rights of the forest properties, when you invest through HD Forest.

The expected 5-6 % IRR is therefore also not dependent on hunting, but is solely generated through forestry and increase of property value.

What is the risk profile for this kind of investment?

HD Forest offers low risk investments. Investing in real estate, farmland and forestland has always been acknowledged as secure investments with a low risk. Baltic forest investments are no exception: Historically we have seen a stable development in timber prices and the value of forest properties.

The biological risks such as wildfire or severe insect attacks are relatively low, because the semi-natural mixed forests of the Baltics show a great resilience towards these threads. In addition, your investment will typically spread geographically over several properties, which decreases the risk further.

What are the advantages of investing in Baltic forests compared to other European forests?

A main advantage is the relatively low forest pricing, and compared to the Northern European countries the price is considerably lower.

Forest properties in the Baltics are priced according to their commercial potential for producing wood. This means that recreational or hunting interests don’t push up the price, as it might occur elsewhere in Europe. Another advantage is the Baltic woodworking industry, which is considered one of the most modern and efficient in the world, as well as it is well integrated in the international market for wood products. The strong industry secures the sales from your forest investment.

What are the prices for Baltic forests?

In the Baltics forests are priced according to the value of the current timber stock and the growth conditions. Prices are barely influenced by recreational or hunting values.

Geographical aspects like proximity to industry or harbor also influence the price. Contact us to hear about actual prices on different properties.

Which tree species are the most common in the Baltic Forest?

Spruce, pine, birch, alder and aspen are the most common species grown in the Baltic forestry.

Products as veneer, constructional timber, fruit boxes, paper and biomass are generated from these species. We expect the future demand for these biobased products to increase in the coming years.

How have timber prices been developing, and what are the future prospects?

We have seen a steady rise in timber prices during the last decade - but the last couple of years prices generally have been taking a leap up.

The society is shifting towards being biobased, and there will be a need to replace fossil fuel-based products with biobased products. In the future we thus expect a beneficial price development for timber products.

What drives the return rate?

The return on your investment is generated through the biological growth of trees and the increase of property value.

• Growth of trees is both stable and predictable; consequently you can harvest an amount of timber each year without depleting the forest. Most of the timber products are sold to local industry where it is processed to refined wood products like rafters, veneer, packaging products and paper.
• Each year we estimate your property value. General economic growth ensures a stable increase in property value, but the value of your forest can also increase due to other factors such as
  • Increase in demand for forest
  • Rise in demand for timber
  • Capital appreciation from undervalued younger crops

How much do I need to invest?

You need to own a certain amount of forest, before its profitable to manage and trade. At HD Forest we have set the entry limit at 1.000.000 euros to ensure this.

How do I exit from the investment again?

Your investment at HD Forest consist of tangible forest properties that you at any given time can sell again. There is no binding period, which is otherwise common in comparable long term investments.

Your investment is not as liquid as shares on the stock market. You will need to find a buyer of your forest holding on the open real estate market. The transaction can be conducted within weeks, provided a new investor can be identified.

Fortunately, the Baltics have a very active forest market where both private individuals, investment companies and timber industries are active. This is an important advantage both when getting in and out of the Baltic forest market. You should thus be able to sell your forest again within a reasonable amount of time, when you decide to get out of your investment.