Panama Teak Forestry offers the best investment in reforestation. The shareholders enjoy a high yield ecologically sound investment. The long-lasting environmental benefits include tropical wood binding of CO2, which aids in reversing the damage from carbon dioxide pollution while producing quality hardwood thus reducing future pressure to cut natural rain forests.
We offer the best options for investments in reforestation.
Share prices and Company Assets.

Why Invest In Timber?

1. Timber beats stocks. Managed timber (as the professional investors call it), has actually beaten the stock market - with less risk - over the long run. From 1973-2002, managed timber returned roughly 15% annually, while stocks returned about 11%. (Visit the "research" section of http://www.htrg.com for the full story here.)
   
2. Timber is uncorrelated to stocks. Trees don't know about the war in Iraq, or the bear market in the Nasdaq. While stocks couldn't keep up with inflation in the 1970s, timberland never had a losing year! Trees just keep growing year after year. So timber is an excellent way to balance your portfolio as its value rises even when stocks are falling.
   
3. Timberland is relatively cheap. While real estate soared, timberland values fell in 2000, 2001, and 2002. A "perfect storm" hit the value of timberland. That's good for us now... while everything else is expensive... stocks, bonds, real estate, commodities, you name it... timberland is relatively cheap.
   
4. The price of timber has consistently beaten inflation. Timber is thought of as a good inflation hedge, and the numbers show that to be true. According to legendary investor Jeremy Grantham, over the last century, timber prices have risen at 3.3% above the rate of inflation. Add 5% a year in income, and you've got an asset that has returned double digits, competing with stocks over the long run.
5. Timberland has become recognized as an attractive investment opportunity. Globally over $12 billion is invested in timberland holdings by institutions like banks, insurance companies, pension funds and universities. Analysis has shown this is a relatively low-risk investment that provides excellent diversification for institutional portfolios (with negative correlation with stock and bond returns and little correlation with the real estate market). More importantly, rates of return for timberland investment have been excellent, with nominal rates of return averaging 9 to 12 percent. Over the 1990's the major timber index showed a 17 percent average annual rate of return and university research indicates that intensive timber management can produce 12 to 15 percent nominal rates of return. Teak although a small nich market in the timber industry it is the highest yielding timber investment availible

    

The Demand for Timber Isn't Going Away

Every American "consumes" a 100-foot tree... every year. From paper (from a tree) to sitting at a conference table made of wood, in a wooden chair, in a room with wood trim all around, in a one-story office that was likely framed with, well, wood.

Are there alternative materials other that wood that could have been used? Sure. But the use of wood doesn't appear to be shrinking. Don't be alarmed by this, thinking that timber companies are cutting down forests with abandon..

Forest science is highly advanced. Modern plantations are managing timber land as a sustainable crop that helps sequester carbon, provide jobs and provide a valuable sustainable natural resource that is a great ecologically sound investment.

Instead of chopping down a forest and moving on, it is in the best interest of timberland companies to think in the very long term, and harvest in a sustainable way. In essence in Washington, they'll cut and replant roughly 1/40th of their forest every year. In Panama with the highly prized teak we can harvets 1/25th of our forests every year producing almost twice the volum of wood annually.

The Easiest to Invest

The easiest way to invest in timber is to buy stock in timber companies. There are publicly traded companies like Rayonier (RYN) like Plum Creek Timber (PCL) They both traditionally pay dividends in the 4% range. And they're both relatively cheap, with timber assets valued at only $800 to $1,500 per acre (depending on how you crunch your numbers) But the returns from the smaller companies involved in sustainable management of high value tropical hardwoods is much better. Simply put with a growth rate of twice that of pine or fir and a value of twice that of pine or fir the return on investment is higher even with the more intensive managment practices required for teak.

Supply and demand for wood products

The United States is the world's largest producer of industrial timber, accounting for roughly 25 percent of global industrial round-wood production. It both imports and exports wood, but imports greatly exceed exports. Southern timber products play a major role in this international trade, especially southern pine and hardwood lumber, southern pine plywood, kraft pulp and kraft-based paper.

The USDA Forest Service is required to make periodic assessments of the nation's timber situation. The current assessment makes projections to the year 2050. The South is expected to lose 4 million acres of timberland and the rest of the country may lose 20 million timbered acres. Timber production should shift to the South with its greater share of private land. Over the same period significant increases are expected in domestic consumption of both softwood and hardwood, with corresponding increases in harvest levels of timber.

The South will continue to be the Nation's wood basket. Currently, just over 60 percent of the nation's softwood harvest comes from the South; by 2050 it will be nearly two-thirds. Hardwood harvest will continue to amount to nearly 60 percent of the nation's harvest. Modest nominal price increases are projected until 2050. Timber production will flow to the South from other regions and increases in timber prices will result from increasing consumer demand and diminished timber supply. As international markets open up and embrace more intense plantation management these will become a more significant part of the world hardwood supplies.

What are the characteristics of timberland as an investment?

Trees grow. The value of timber products in each tree tends to increase over time. That is, trees grow into more valuable products over time (pulpwood into saw-timber into poles and plywood). Even with constant stumpage prices, tree volume increases and more valuable products are available for harvest, so value naturally increases over time.

• Timber investment usually involves an additional investment in land.
• Timber investments offer the flexibility in cash flows; timber sales can be timed for the market.
• Timber investment typically involves a long time period. However, the age structure of purchased forest stands establish the possible cash flows.
• Timber can be illiquid, but this can create buying opportunities for investors.
• Natural risks like diseases, insects and fire can cause losses, but mortality due to all causes is less than 1 percent in large holdings.

What factors influence the rate of return?

• Changes in timber prices. Since World War II pine saw-timber prices have exceeded inflation by 2 to 3 percent annually and pine pulpwood has kept up with inflation. USDA Forest Service projections are for continued real price increases. Tropical hard wood have had the greatest increases over time.
• Tree growth and yield. Tree growth is highly impacted by site quality and forest management intensity. Tree growth can be accurately predicted via computer models.
• Changes in tree value. Forest management practices control stocking and influence the size of trees on a tract (and thus the products that can be produced). Overall value can be maximized.
• Changes in land value. Increases in land value typically increase overall rates of return.
• Costs. Cost effective forest management will result in higher rates of return.

What rates of return have historically been earned by timber investments?

University studies show real rates of return in the 10 to 12 percent range can be reasonably expected. A leading timber index based on actual returns found rates of return vary from 11 to 16 percent depending on region. Since 1986 the major timberland property index has returned just over 16 percent annually (40% from income and 60% from capital appreciation). Managed teak plantations have had rates of return of about 20%

Timber income represents a cash flow; how predictable is this cash flow?

Timber can produce a managed cash flow. Timber can be stored on the growing tree in bad markets and will grow in volume while stored. Age structure of the forest stands dictates cash flow opportunity and age structure is known at the time of investment.

The law of the land In Panama

1. All wood that is harvested within projects that were certified before 2004 (the terms of "harvesting" are spelled out in the management plan provided by the forestry expert) are completely exonerated from any and all taxes, including export taxes, for 25 years. All capital gains are tax-exempt.
   
2. Equipment, which can include vehicles, heavy equipment, and any other direct investment into the reforestation project, are exempt and can be brought into the country almost tax-free.
   
3. Perhaps the largest incentives for investors, however, are the potential returns. It is clear that the existing supply of wild teak is fast diminishing in traditional teak-producing areas such as India, Myanmar (formerly Burma), and Thailand.

So what are the numbers for the environmentally friendly and socially conscious investment?

In a plot of one hectare, (approx. 2.4 acres) planted with 1,100 teak trees. Some thinning of weak trees is done at three years to about 900 trees per hectare, and at seven to ten years the trees are thinned to about 700 to 800 per hectare depending on the stand. At 12 to15 years they are thinned to about 400 to 500 trees per hectare and at 18 years they are thinned to 220 to 300 trees per hectare. Final harvest is ready in about 20 to 25 years. We use 23 years for all our calculations. Even though the early thinnings can be quite valuable, we have left the value in thinnings prior to the 12 to 15 year thinning at 0 for our calculations. The 15-year thinning would yield about $10,000 per hectare if we assume a very conservative 3% annual inflation rate in the price of teak. The 18-year thinning will yield a net profit of about $10,000 per hectare assuming a 3% inflation rate. At 25 years the remaining trees will produce a harvest of a net profit of about $130,000 per hectare. This is a total yield of 300 cubic meters per hectare or an annual yield rate of 12 cubic meters per hectare. The added safety benefit is that in an inflationary time both the price of the teak and value of the land will appreciate thus protecting the return on your investment.

Share overall ROI will be 15% per year which will increase share value and will be paid out as dividends as we start to harvest timber.

One quick measure of return is that you get about 12 cubic meters of growth per hectare per year.