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03/08/2021

BIG READ: Family Tree Impact Investments to spend €50m on harvesting rights in Ireland

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Forestry

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A new forestry investment platform, Family Tree Impact Investments (FTI), recently launched plans to deploy €50m into the private forest estate over the next three years.

The FTI platform, operated by sustainable forestry manager, NewGen Forestry, will acquire forestry harvesting rights from existing plantation owners, both farmers and private forest owners.

FTI and NewGen Forestry have secured backing from institutional investors and private offices and are targeting the acquisition of harvesting rights of 2,000 hectares of land in its first year of operations, with plans to build a minimum portfolio of €50m of assets by the end of 2023.

NewGen Forestry is led by John O’Reilly, former CEO of one of Ireland’s largest forest management companies, and seed investors in FTI and NewGen include the O’Kane family – the founders of Mercury Engineering and David Hourihane, who previously led the establishment and deployment of the €78m Irish Government backed Ireland Energy Efficiency Investments plc.

FTI offers a new and innovative income stream to forest owners, whilst also taking a long-term view compared to the traditional forestry model, with greater focus on the environmental benefits that the forests can deliver for communities and investors.

In return for the acquisition of harvesting rights from the landowner or farmer, FTI offers landowners the opportunity to receive up to 30% of the forest value upfront, with the balance being paid over 20 years in an annuity-like, inflation linked, income stream.

NewGen will focus initially on forests that have come to, or are close to, the end of the Government’s Forest Service Premium scheme (i.e. plantations that are 15-years-old, or more).

Unlike a traditional forest sale, the owner does not have to sell the underlying land: instead NewGen will simply take over the management of the existing forestry, removing all future operational costs, including insurance costs, managing the licensing process, attaining environmental approvals and general reporting costs that the forest owner traditionally incurs.

Under the terms of the deal, NewGen will also provide a reforestation payment to replant the forest along with offering the landowner the option of an innovative payment mechanism to secure the second rotation.

The proposed model addresses some of the major concerns voiced by forest owners; how do I manage my forest when I stop receiving premium payments from the Government, and how do I pay for the replanting of my forest?

Commenting on the launch, John O’Reilly, Chief Executive of NewGen Forestry, said: “NewGen and FTI provide the perfect match between landowners looking to obtain a hassle-free income from their forestry, this offering is all about giving forest owners options, allowing them to make real time decisions and moves away from the traditional model of waiting until clear fell to receive income from your forest.

“NewGen will carry out an onsite inventory and will make an offer to the forest owner based on real and achievable returns. We do not low-ball forest valuations; we value what we find on the ground.”

The acquisition of harvesting rights from private growers is a common international practise and the model is also consistent with the aspirations of the Programme for Government to help drive the consolidation of management of privately owned forestry in Ireland, which will make it easier to deal with the increasing regulatory, environmental and compliance demands.

If you would like to discuss the option of converting the future value of your forest into current income, please contact our Regional Forest Manager:
Thomas Fogarty
Mobile: 087 4438605
Email: thomas@newgenforestry.ie  

Established in 2020, NewGen brings a fresh and innovative approach to Irish forestry. Ireland’s current forestry model does not deliver what farmers, landowners, and the environmental pillar wants.

Through its deep forestry and sustainable investing expertise New Gen will deliver real options to forest owners.

The NewGen approach will channel institutional investment funds to deliver benefits to landowners in rural Ireland, a solid return for investors, and a strategy consistent with Government policy objectives.

The forestry sector employs 12,000 people and contributes €2.3bn annually to GDP.

The annual turnover of the wood processing sector was €800m in 2019, and this is expected to double by 2035.

The biggest counties for private forestry are: Cork (42,000 hectares), Kerry (37,000 hectares), Clare (29,000 hectares), Mayo (24,000 hectare, Tipperary (23,000 hectares), and Donegal (22,000 hectares).

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