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German Forestry Investments provide Capital Growth, give Tax Incentives, freehold title to the land in Germany

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Page 1: German Forestry Investments

Promoted by Robin ia Invest

EUROPEANFORESTRY

Page 2: German Forestry Investments

Content

2 3

12-year Paulownia plantation

PageIntroduction to German plantation forestry 5

Why invest in forestry? 6 - 7

Sources of return 9

Risk factors 11

Why invest in German plantation forestry? 13

The differences between plantation forestry and conventional forestry 15

Investment options 16 - 17

Tax incentives for UK clients 19

Robinia, the alternative to tropical hardwoods. 20

Paulownia, the aluminium of the timbers. 21

The Robinia timber market in Europe 23

The Paulownia timber market 24- 25

Plantation forestry: how does it work? 27

Establishing plantations in Germany 28

Managing plantations: what does this involve? 29

Harvesting and selling the timber 30

Paulownia International 32

Price development of German farmland 34

Frequently asked questions 35 - 46

Appendices

Robinia investment options 1

Paulownia investment options 2

Return calculations for Robinia investments 3

Return calculations for Paulownia investments 4

Page 3: German Forestry Investments

4

obinia Invest GmbH is a German company, founded in January 2007,

which specializes in establishing Robinia and Paulownia hardwood plantations

in Germany.

We offer plantation forestry plots as long-term direct investments to private

clients. We work together with specialist forestry experts, tree nurseries and

bio-engineers in establishing the plantations and three different management

companies to manage them.

Robinia and Paulownia trees grow fast: their timber is valuable and can be

commercially harvested after only 10-12 years, though longer rotations will

increase capital growth greatly.

Our clients tend to be well informed or sophisticated investors from Europe,

the Middle East and Asia.

We offer the option to purchase the leasehold or freehold title (ownership) of

plantation plots and the trees planted on them. Owning the land on which the

trees are planted offers numerous advantages to the investor, such as security

and the option to make consecutive rotations at reduced cost.

The latter is made possible as the harvested trees will simply regrow from the

cut stumps.

The purpose of this corporate brochure is to provide investors with

an understanding of our business model and how our company and

investments are structured with risk, security and capital growth in

mind. Should you require more indepth information, please request our Robinia

or Paulownia investment brochure.

The investment brochures will go into greater detail with regard to the

calculation of returns, risks involved and technical data concerning Robinia and

Paulownia timber.

Wouter Bakker

Managing Director

Introduction to German Plantation Forestry

5

R

Page 4: German Forestry Investments

6

Why Invest in Forestry?

nvesting in forestry offers a number of benefits to an investor’s

portfolio:

P diversification: an investment in forestry helps create a more

efficient portfolio as it provides an excellent complement to

the traditional asset classes of equity and fixed income

P reduced volatility: in relation to forestry’s rate of return, the

volatility is low. This is due to the biological growth of the tree.

When forestry is combined into a diversified portfolio, returns

tend to smooth over time, thereby reducing the overall

portfolio’s risk level

P low to negative correlation with other asset classes.

P forestry correlates highly with inflation and is therefore a

very effective investment for preserving capital

7

I

Page 5: German Forestry Investments

8 9

Sources of Forestry Returns

n order to understand a forestry investment, it is important to

understand the fundamental factors that drive returns. The following three

factors determine forestry returns:

Biological tree growth:

Timber is a renewable resource which will increase in value as it matures.

This non-financial source of return is unique to the timber asset class as

growth occurs regardless of macro-economic conditions or financial market

performance. Not many other assets or investments can make the same claim.

Timber price change:

This is caused by population growth and the overall level of economic activity.

Historically timber prices have always gone up over a longer period of time.1

Land value:

The value of the land represents only a small percentage of the

projected returns. Its percentage is larger with shorter rotations

but lowers with longer rotations. Owning the land will be more

important as a security than as a means to increase capital growth.

Sources of return

Biological growth 50%

Land prices 11%

Price increases 39%

I

1 Source: Timber Index

Page 6: German Forestry Investments

10 11

Risk Factors

espite the favourable return and diversification benefits of forestry, there

are still risks to consider:

Economic factor:

If timber prices are low, harvesting should be delayed until those prices have

recovered

Natural risks:

Fire, weather, wildlife and insects can have a negative impact on forestry

returns if the trees are not properly managed. Due to the intensive management

of plantation forestry, these risks are lowered considerably.

There are almost no forest fires or large storms in Germany and,

if storms occur, it is only in winter, and most damage is done to evergreen

trees as they do not shed their leaves. Nevertheless, the management company

will insure your forestry plot against fire and storm damage with AXA AG.

Hardwood trees are very resistant to insects and therefore hardly

ever suffer from insect damage. A fence is built around the plantations to

protect the trees against other wildlife.

Lack of liquidity:

Forestry is a relatively illiquid investment and is therefore not suited for those

investors seeking a quick return. It is suited for investors seeking all the

benefits that forestry does have to offer, as stipulated on page 5.

D

Page 7: German Forestry Investments

“The best time to plant a tree was 20 years ago, the second best time is now” – Chinese proverb

12

esides the benefits of investing in conventional forestry, plantation forestry in Germany has a few unique

characteristics that make it a very attractive option for UK investors:

P Plantation forestry is by definition sustainable.

P Germany offers our clients a stable economic and political location for their investments.

P Plantation forestry based in Germany offers UK clients several tax incentives.

P The option to purchase the freehold title to the land increases security and the opportunity to

benefit from ever increasing farmland prices in Germany.

P Consecutive rotations at reduced cost are another option, as the cut trees regrow from the stumps.

13

Why Invest in German Plantation Forestry?

B

Page 8: German Forestry Investments

14

orestry investments can be made into hardwoods and softwoods.

Hardwoods are trees that lose their leaves in the autumn and tend to cater to

higher niche markets, such as flooring, furniture or polewood (in the case of

Robinia).

Most plantation forestry is focused on hardwoods.

Softwoods are evergreens; most forestry owners focus on these.

The end use of softwoods is usually structural timber.

To get an overview of the differences between these two types of forestry we

have listed the key features of them below:

The Differences between Plantation Forestry and Conventional Forestry

15

F

Plantation forestry Conventional forestry

Tree species: Robinia & Paulownia Pine & Spruce

Timber: Hardwood Softwood

Timber prices: High Low

Timber volume: High in 15-20 years High in 60+ years

Management: Intensive Low

Harvests allowed: No limit Limited

Plot size: Can be relatively small Must be large

Land: Farmland Forest

Page 9: German Forestry Investments

here are three main factors that determine the size of your initial investment

and the return on your investment later on:

You have the choice between purchasing Robinia or Paulownia trees. To

assist you in making an informed decision, we have listed the key features for

both species:

Investment term/rotation: This can be a minimum of 10 years for Robinia

or 12 years for Paulownia. Longer rotations of 15-20 years will increase capital

growth greatly as the timber volume and value of older trees is higher. The

longer the investment term, the more money is needed for managing the trees.

16

Investment Options

You have the option between a freehold or leasehold agreement. Freehold

plots are available from sizes of 2,500 m2 (1.2 acres). Leasehold investments

can be made from plot sizes of 1,000 m2 (0.6 acres).

3T

1

2

17

he investment sum is comprised of the purchase price for the land, plantation

establishment and management fees.

Robinia Invest establishes the plantations while a management company looks

after the trees. We can recommend three management companies to you, but

you also have the option of managing your trees by yourself.

Investment tables for a 15-year Robinia and a 15-year Paulownia rotation are

listed under the appendices and serve as an example of what Returns On

Investment (ROI) can be achieved.

We have used the lowest management fees on offer to calculate the investment

sum.

Private placements are possible from plot sizes of three hectares and will yield

a higher ROI, as the price per hectare will be lower.

More indepth information is available in our investment brochure, which we

will gladly send you upon request.

The investment amount contains all the costs that are associated with the

purchase of the land, the establishment of the plantation and the management

of the plantation.

T

Robinia Knife Block

Robinia-Grain

key features Robinia Paulownia

European timber market: High demand Low demand

Global timber market: Low demand High demand

Growth rate: Fast Very fast

Fertilizer needed: Little Much

Irrigation needed: Little Much

Pruning needed: Intensive Intensive

Timber value of older trees: High Very high

Timber volume of older trees: Average Very high

Minimum rotation needed: 10 years 12 years

Planted trees per hectare: 4,500 600

Page 10: German Forestry Investments

18

nder current UK law there are a number of favourable tax incentives that

apply to the direct ownership of commercial forestry (or woodlands) located

in the European Economic Area:

P no income tax

P no capital gains tax on timber

P no inheritance tax after two years

Commercial forestry is defined as a property where the trees are managed

and the harvested timber is actively marketed and sold. Please request the

free tax report on commercial forestry in the EEA for all the details. The report

was drawn up by UK-based EQ accountants specializing in forestry.

As a special service to Robinia Invest, EQ will answer any basic questions our

clients have with regard to forestry and taxes, free of charge.

Should you have any questions that require more investigation, normal hourly

rates will apply.

Tax Incentives for UK Clients

19

U

Page 11: German Forestry Investments

Robinia, the Alternative to Tropical Hardwoods

obinia is a fast-growing hardwood tree that is in demand as a viable

alternative to teak. As it is such a durable hardwood, more and more

applications are being found for Robinia, boosting demand and increasing

prices.

Robinia is suited to areas with a temperate and dry climate with soil that is

sufficiently loose (the sandy/loamy soil such as is found in Eastern Germany

is ideal).

The trees grow fast: about 1m in height and 1cm in diameter per year.

The specific weight is quite high at an average of 750 kg/m3.

Freshly-logged Robinia weighs 900-1200 kg/m3. This is one of the reasons why

Robinia can be offered as a Class 1-2 durability timber.

R

Properties

very durable, even in water high resistance to abrasion replaces tropical timbers (teak, mahogany and bongossi)

natural resistance to wood-destroying fungi and insects very durable to weather influences good processibility

high percentage of heart wood no impregnation necessary late burning point

low shrinkage valuevery high resistance to wear (parquet) high dynamic strain properties (e.g. Axe handles)

very hard and heavy

Paulownia, the Aluminium of the Timbers

he Paulownia is one of the fastest growing species of trees in the world.

The tree, also known in Japan as a ‘Kiri’, grows up to 2m in height and 3 cm

in diameter per year under German weather conditions. In Bulgaria they grow

even faster. At 300 kg/m³, the specific weight of the Paulownia is relatively

light for a hardwood – the property that makes it so sought after for a range of

specific applications.

Our Paulownias can withstand temperatures of up to -25°C without any problem.

Unlike poplars and willows, Paulownias produce very thick storage roots

during their first year, making them insensitive to long periods of drought.

They are not fussy about soil type and therefore also suitable for cultivation on

marginal sites (sandy and scree soil). In addition, thanks to its fast growth, the

tree binds any quantities of the ‘climate-killer’, carbon dioxide – about 30 tons

per plantation hectare and year. This corresponds approximately to the annual

CO2 production of a family of four.

T

Properties

Very easily processed hardwood No resin or smell Insulated against low temperatures

Low silicone content Dries very quickly in the air - in approx. 30 dayscomparably sturdy, despite high growth rate

Very resistant to decay Low weight 300 kg/m3 (oak 670 kg/m3)

Animal wood pests are not known Low crude ash and chlorine content use in the luxury segment of the wood processing (furniture, musical instruments, windows, doors, yachts, surfboards, aircraft, etc.)Fire-retardant effect – burning point 400°c Very good bio-energetic usability

20 21

Page 12: German Forestry Investments

22

The Robinia Timber Market in Europe

large market for Robinia timber products has been established

in Western Europe, so we expect all of the harvested Robinia timber to be sold

in Europe. Logs and polewood (such as fenceposts) comprise the biggest share

of the Robinia timber market. Robinia logs must have a minimum diameter of

6-8 cm and a length of 1.25 meters to be commercially viable.

The value of Robinia timber greatly increases with diameter and length of the

logs, which is why older Robinia trees are more valuable than younger Robinia

trees. Longer rotations will therefore have a higher return on investment than

shorter rotations.

2 Sources: German Timber Company

23

A

Overview of current prices

Diameter Length Age of tree Price2

10 cm 2 meters 10 years € 25 retail

12 cm 3 meters 15 years € 58 retail

16 cm 4 meters 20 years € 141 retail

Robinia poles

Page 13: German Forestry Investments

24

esides the laws of supply and demand, there is also a grading system

that determines the value of Paulownia timber:

Grade A wood must be free of defects;

Grade B wood may have 1 defect;

Grade C and D wood may have 2 defects;

Grade E wood has 3 or more defects.

Timber FOB China may range from € 190 (Grade E) to € 515 (Grade A) per m3

(2010 prices).

B

25

The Paulownia Timber Market

ust like Robinia timber, the value of Paulownia timber increases with its

volume and length. Currently, most of the Paulownia timber is sold in Asia,

with Japan being the biggest importer. We expect the European timber market

to open up to Paulownia timber as soon as a steady supply can be guaranteed.

Paulownia plantations are currently set up all over Europe and this will

guarantee this much-needed supply in 10-15 years’ time. We therefore expect a

good market for Paulownia timber in Europe after the first successful harvests.

Current prices for Paulownia boards are as follows:

In our projected return calculations for Paulownia timber, a current price of

€ 312/m3 was used for 12 to 15-year-old timber and € 500/m3 for 20-year-old

timber.

China : € 250 - € 738/m3

UK : € 278 - € 345/m3

USA : € 686 - € 3659/m3

Australia: € 567 - € 1558/m3

J

3-years-old Paulownia trees

Small end Growth rings per inch

Diameter (inches) 8 6 4 4 < 4

20 + A1 B1 C1 D E

16 - 19 A2 B2 C2 D E

12 - 15 A3 B3 C3 D E

8 - 11 A4 B3 C4 D E

Page 14: German Forestry Investments

26

Plantation Forestry: How Does it Work?

here are many different aspects involved with plantation forestry, so we

have displayed the development process of the trees on this page. From the in

vitro process in the laboratory, the planting on the plantation, the management

of the trees, the growth of the trees until the harvesting and transport of the

timber to the marketplace. More elaborate information can be found in the next

three chapters.

T

2712-years-old Paulownia trees

Page 15: German Forestry Investments

28 29

Establishing Plantations in Germany

he establishment of a plantation starts by finding the right farmland:

this is used as there are no limits on how much timber can be harvested from

it at any given time.

Robinia and Paulownia trees require a soil that drains any excess water easily,

so a sandy soil is preferred. Quality of the soil is also important as poorer soils

will need more fertilizer and irrigation.

After the land has been purchased, the soil must be loosened by ploughing and

harrowing before the trees are planted. This will enable the roots of the young

trees to grow faster, thereby increasing the growth rate of the trees.

To increase their survival and growth rate, Robinia and Paulownia trees

are planted as one-year-old rootstocks. Rootstocks are grown under stable

conditions in a nursery for one year and then planted on the plantations.

We plant 4,500 Robinia or 600 Paulownia trees per hectare.

This planting density optimizes growth for both species. After all the trees

have been planted, a fence is built around the plantation to keep out local

wildlife.

T

Maintenance of plantation

The Paulownia-seedlings

The prepared planting holes

The planting of Paulownia seedlings

Page 16: German Forestry Investments

29

Managing Plantations: What Does this Involve?

fter the plantations have been

established, the trees need regular

management to optimize their growth

and value. This work is done by one

of the recommended management

companies, or the investors can do it

themselves. The following is required to

optimize the development of the trees:

A soil analysis is made to see what kind of nutrients are available for the trees

and to determine what kind of fertilizer and how much is required.

Robinia trees create their own nitrogen from the air. This is a unique

characteristic and makes the trees less dependent on fertilizer.

Paulownia trees require fertilizer during the first few years. Some herbicides

will be used to create a weed-free zone directly around the trees. Most other

weeding is done mechanically and manually. Intensive weeding is needed

during the first few years after planting.

Pruning will have to be done regularly to encourage straight growth and create

quality timber. Large side branches have to be removed every year for the first

few years.

Coppicing of Paulownia: Paulownia trees need to grow at least two meters in

the first year to create valuable timber later on.

If the trees have not reached two meters at the end of the first year, they are

cut back to five centimeters. This will encourage faster growth in year two due

to the well-established root system.

In Germany, it rains throughout the year, but there are spells of drought in the

spring and summer. During these times, it is important to irrigate the trees.

The fence around the plantation will need repairing from time to time.

This has to be done occasionally after a fence gets damaged from the fall of

overhanging branches or when an animal tunnels underneath it.

30

3-years-old Robinia Plantation

A

Harvesting and Selling the Timber

n order to make plantation forestry a profitable investment, the trees need to

grow to a certain size before they can be harvested.

A 20-year-old tree will be more valuable than a 15-year-old tree as it has a

greater volume. Processing more mature timber creates less waste; therefore

there is more useable and valuable timber.

Our clients are free to harvest their trees whenever they wish, but the

longer the rotation, the higher the return on investment will be.

After consulting with the investor, the chosen management company can advise

when the trees should be harvested.

Depending on plot size and number of trees, harvesting can be done

manually with a chainsaw or with a harvester machine. Harvesting

manually will be more cost effective when dealing with smaller plots,

whereas larger plots will be harvested using a harvester machine.

Harvesting manually currently costs about € 20/hour while the harvester

costs € 9/m3 or € 270/hour (incl. de-branching and forwarding the timber).

After the trees have been felled, they are de-branched and sawn into

manageable pieces, which are then piled up on the edge of the plot.

The harvested timber can be insured against theft at all stages up to the

point of sale to an end user.

The harvested timber must then be allowed to dry, after which it can either be

transported to a local sawmill or a mobile sawmill can saw the timber on site.

The cost of sawing the logs into useable boards or poles is currently € 54/m3.

The finished timber products will then be transported to a local warehouse

until the timber is sold.

I

Harvesting Transport

Page 17: German Forestry Investments

31 32

aulownia International is a consultancy for the production,

supply and husbandry on all types of very fast growing trees.

In the establishment of our Paulownia plantations we have

regularly asked Nigel Young from Paulownia International for

advice. He is an expert on the establishment and management

of Paulownia plantations and his advice has been very valuable.

He has calculated the yields for the Paulownia plots and has

given the management companies some advice on how to

manage the Paulownia plots more effectively.

P

Letter from Paulownia International

Page 18: German Forestry Investments

Source: Statistisches Bundesamt

33 34

< 8,000

8,000 - 16,000

16,000 - 24,000

> 24,000

Saxony

Brandenburg

Bavaria

Baden-Württemberg

Hesse

Thuringia

Rhineland-Palatinate

Saarland

Saxony-Anhalt

North Rhine-Westphalia

Lower Saxony

Schleswig-Holstein

Mecklenburg-Western Pomerania

+56%

+160%+90%

+52%

+90% +203%

+140%+172%

+25%+21%

+36%+39%+10%

+5%

0%-8%

+25%+10%

-7%+9%

+68%+88%+57%

+50%

+133%+117%

Farmland €/ha*

*(includes meadows)

Germany: 14,424 €/ha

Development from: 2007-2012 +57%

2003-2012 +57%

Price Development of German Farmland

Page 19: German Forestry Investments

Frequently asked questions

1. How does my forestry investment work?

Your freehold forestry plot consists of three assets in one: timber, biomass and

land. As the trees mature, their timber volume increases and becomes more

valuable. After a rotation of 10-20 years, the trees are harvested, the timber

process and sold.

2. Isn’t my term rather short for a forestry asset?

How does this work?

The usual rotation for forestry investments is 20 to 25 years. Our Robinia

and Paulownia investment have a maximum investment term of 20 years. With

Paulownia trees, commercial harvests for timber can be made after 12 years.

Robinia trees can even be harvested after 10 years. We do advise anyone who

is seeking the highest return on his investment possible to choose a longer

investment term. We would advise a 15-20-investment term to make the highest

profit on your forestry investment.

3. 3. What happens when the trees need to be harvested?

Your chosen management company can harvest the trees and then sell them on

your behalf, whenever you wish. They will advise you when best to harvest your

trees. If you have the freehold title you can then sell your land or make another

(much cheaper) rotation.

4. What happens if I need to sell within 10, 12, 15 or 20 years?

Should you need to sell prior to the end of your recommended rotation, you

have three options available to you (although, to maximise your returns we

recommend that this is not done unless absolutely necessary).

1. You are free to sell your trees to a third party of your choice.

We will be happy to help you with this, should you wish.

2. Upon your instruction, we will be more than happy to offer

your trees to our other clients.

3. We may be interested in buying your trees back from you.

The price of your trees can be negotiated between all parties involved at the

time you wish to sell.

5. Can I visit the plantations?

Yes! You are welcome to visit the plantations at anytime. We would be more

than pleased to help you with tips and directions for your journey.

6. I really don’t know anything about Robinia or Paulownia?

You do not need to know a lot about Robinia or Paulownia to make this a

profitable investment for you. Your management company of choice will have

all the necessary knowledge and experience to ensure a good development of

your timber.

7. Does my Robinia or Paulownia bind a lot of CO2?

Yes it does! A hectare with Robinia timber binds (on average) 15 tons of CO per

year. A hectare with Paulownia binds about 100 tons of CO2 per year, another

benefit of your investment. A typical household emits 9 tons of CO2 per year. So

if you buy Robinia or Paulownia timber, you more than compensate for your own

CO2 emissions.

35 36

Page 20: German Forestry Investments

The Current Yield Calculationsand the projected returns.

Page 21: German Forestry Investments

1

*Based on 4% p.a., price increase for timber and land, with the exception of the 10- year rotation where we have calculated at 6% p.a.

Robinia Investment Options

10

15

20

Investment Options ˙ 10-year Robinia

Investment Plot size Agreement type Projected Return ROI

£ 4,200 1,000 m2 Leasehold £ 7,400 76%

£ 13,000 2,500 m2 Freehold £ 24,250 87%

£ 25,500 5,000 m2 Freehold £ 48,500 90%

£ 50,000 10,000 m2 Freehold £ 97,000 94%

£ 96,000 20,000 m2 Freehold £ 194,000 102%

Investment Options ˙ 15-year Robinia

Investment Plot size Agreement type Projected Return ROI

£ 4.400 1,000 m2 Leasehold £ 14,100 220%

£ 13.500 2,500 m2 Freehold £ 43,000 219%

£ 26.500 5,000 m2 Freehold £ 86,000 225%

£ 52.000 10,000 m2 Freehold £ 172,000 231%

£ 100.000 20,000 m2 Freehold £ 344,000 244%

Investment Options ˙ 20-year Robinia

Investment Plot size Agreement type Projected Return ROI

£ 4,600 1,000 m2 Leasehold £ 27,800 504%

£ 14,000 2,500 m2 Freehold £ 80,000 471%

£ 27,500 5,000 m2 Freehold £ 160,000 482%

£ 54,000 10,000 m2 Freehold £ 320,000 493%

£ 104,000 20,000 m2 Freehold £ 640,000 515%

Paulownia Investment Options

2

*Based on 4% p. a., price increase for timber and land.

Investment Options ˙ 12-year Paulownia

Investment Plot size Agreement type Projected Return* ROI

£ 4750 1,000 m2 Leasehold £ 8,900 87%

£ 14,000 2,500 m2 Freehold £ 27,500 96%

£ 27,000 5,000 m2 Freehold £ 55,000 104%

£ 52,000 10,000 m2 Freehold £ 110,000 112%

£ 100,000 20,000 m2 Freehold £ 220,000 120%

Investment Options ˙ 15-year Paulownia

Investment Plot size Agreement type Projected Return* ROI

£ 5,250 1,000 m2 Leasehold £ 12,650 141%

£ 14,500 2,500 m2 Freehold £ 37,500 159%

£ 28,000 5,000 m2 Freehold £ 75,000 168%

£ 54,000 10,000 m2 Freehold £ 150,000 178%

£ 104,000 20,000 m2 Freehold £ 300,000 188%

Investment Options ˙ 20-year Paulownia

Investment Plot size Agreement type Projected Return* ROI

£ 5,750 1,000 m2 Leasehold £ 30,200 425%

£ 15,000 2,500 m2 Freehold £ 82,500 450%

£ 29,000 5,000 m2 Freehold £ 165,000 469%

£ 56,000 10,000 m2 Freehold £ 330,000 489%

£ 108,000 20,000 m2 Freehold £ 660,000 511%

12

15

20

Page 22: German Forestry Investments

Investment No Price increase0% p.a.

Low Price increase2% p.a.

Medium Price increase4% p.a.

High Price increase6% p.a.

1 ha (hectare) = 10,000 m² 1 ha 1 ha 1 ha 1 ha

Leasehold £39,000 £39,000 £39,000 £39,000

Freehold £52,000 £52,000 £52,000 £52,000

Thinning at year 10, harvesting 2,000 trees

Harvested usuable logs per Ha 2,000 2,000 2,000 2,000

Timber volume in m3 50 50 50 50

Price per log (D: 10 cm L: 2.0 m) 60% of retail price £ 13,60 £ 16,60 £ 20,10 £ 24,30

Yield logs £ 27,200 £ 33,200 £ 40,200 £ 48,600

Yield biomass £ 1,230 £ 1,500 £ 1,815 £ 2,205

Thinning yield at year 10 £ 28,430 £ 34,700 £ 42,015 £ 50,805

Harvesting costs ( £ 18 *200 hours) £ 3,600 £ 4,388 £ 5,328 £ 6,447

Processing costs (£ 49/m3) £ 2,450 £ 2,986 £ 3,627 £ 4,388

Timber yield thinning before sales £ 22,380 £ 27,326 £ 33,060 £ 39,970

Salescosts -5% £ 1,119 £ 1,366 £ 1,653 £ 1,999

Thinning yield at year 10 £ 21,261 £ 25,960 £ 31,407 £ 37,972

Harvest at year 15, harvesting 2,000 trees

Harvested usuable logs per Ha 1,800 1,800 1,800 1,800

Timber volume in m3 144 144 144 144

Price per log (D: 12-16 cm L: 3 m) 60% of retail price £ 31,4 £ 42,2 £ 56,5 £ 75,2

Yield logs £ 56,520 £ 75,960 £ 101,700 £ 135,360

Yield biomass £ 1,230 £ 1,650 £ 2,214 £ 2,948

Harvest yield at year 15 £ 57,750 £ 77,610 £ 103,914 £ 138,308

Harvesting costs (£ 18 *300 hours) £ 5,400 £ 7,268 £ 9,725 £ 12,941

Processing costs (£ 49/m3) £ 7,056 £ 9,496 £ 12,707 £ 16,910

Yield before sale of timber £ 45,294 £ 60,846 £ 81,482 £ 108,457

Salescosts -5% £ 2,265 £ 3,042 £ 4,074 £ 5,423

Yield at year 15 £ 43,029 £ 57,804 £ 77,408 £ 103,034

Yield at year 10 £ 21,261 £ 25,960 £ 31,407 £ 37,972

Total timber yield £ 64,290 £ 83,763 £ 108,815 £ 141,005

Sale of land £ 13,050 £ 17,564 £ 23,502 £ 31,275

Total yield with sale of land £ 77,340 £ 101,327 £ 132,317 £ 172,280

Return on Investment

Leasehold 65% 115% 179% 262%

Freehold 49% 95% 154% 231%

4

Investment No Price increase0% p.a.

Low Price increase2% p.a.

Medium Price increase4% p.a.

High Price increase6% p.a.

1 ha (hectare) = 10.000 m² 1 ha 1 ha 1 ha 1 ha

Leasehold £ 41,000 £ 41,000 £ 41,000 £ 41,000

Freehold investment £ 54,000 £ 54,000 £ 54,000 £ 54,000

At year 12, harvesting of 100 trees

Yield timber in m3 50 50 50 50

Price timber/m3 £ 280 £ 355 £ 448 £ 563

Yield timber £ 14,000 £ 17,750 £ 22,400 £ 28,150

Yield biomass in tons 10 10 10 10

Price biomasse/ ton £ 82 £ 104 £ 128 £ 165

Yield biomass £ 820 £ 1,040 £ 1,280 £ 1,650

Harvesting costs (£ 9/m3) £ 450 £ 571 £ 720 £ 905

Processing costs (£ 49/m3) £ 2,450 £ 3,107 £ 3,922 £ 4,930

Yield before sale of timber £ 11,920 £ 15,112 £ 19,038 £ 23,965

Salescosts -5% £ 596 £ 756 £ 952 £ 1,198

Yield at year 12 £11,324 £14,356 £18,086 £22,767

At year 15, harvesting of 400 trees

Yield timber in m3 280 280 280 280

Price timber/m3 £ 280 £ 377 £ 504 £ 671

Yield timber £ 78,400 £ 105,560 £ 141,120 £ 187,880

Yield biomass in tons 15 15 15 15

Price biomasse/ ton £ 82 £ 110 £ 148 £ 197

Yield biomass £ 1,230 £ 1,650 £ 2,220 £ 2,955

Harvesting costs (£ 9/m3) £ 2,520 £ 3,392 £ 4,538 £ 6,039

Processing costs (£ 49/m3) £ 13,720 £ 18,480 £ 24,640 £ 32,760

Yield before sale of timber £ 63,390 £ 85,338 £ 114,162 £ 152,036

Salescosts -5% £ 3,170 £ 4,267 £ 5,708 £ 7,602

Yield at year 15 £ 60,221 £ 81,071 £ 108,454 £ 144,434

Yield at year 12 £ 11,324 £ 14,356 £ 18,086 £ 22,767

Total timber yield £ 71,545 £ 95,428 £ 126,540 £ 167,201

Sale of land £ 13,050 £ 17,564 £ 23,502 £ 31,275

Total yield with sale of land £ 84,595 £ 112,992 £ 150,042 £ 198,476

Return on Investment

Freehold 57% 109% 178% 268%

Leasehold 74% 133% 209% 308%

Return Calculations for a 15-year Robinia Investment Return Calculations for a 15-year Paulownia Investment

3

Page 23: German Forestry Investments

www.forestry-investment.eu

Robinia Invest GmbHAm Rittergut 3D-14715 Milower LandTel: +49(0)30 920 383 3498

London office:Tel:+44(0)207-078 4271

Email: [email protected]