ForestryBrief Professional #24 🌳💰📈📡

Hello,

This isn't a regular Professional issue. This is a Communication and Investment pillar hybrid. Today I'm launching something I've been building for months.

Part 1 of the Playbook series was about one kind of communication failure. Forestry losing the public. The empty harvesting site. The story nobody told.

But there is a second failure. It is quieter. And it costs more.

It is the failure between foresters and the investors who want to fund them.

Billions of euros want into European forests. Pension funds. Insurers. Family offices. They need real assets. Forests need patient capital. The match is obvious.

Then everyone sits at the table. And the deal breaks.

The forester can't speak finance. The investor can't read a forest. Value gets lost in translation. Both sides walk away frustrated. The capital goes somewhere else.

That gap is a communication problem. So we wrote the dictionary for it.

📖 Here's a piece of Chapter 5. This is the actual Dictionary.

A Finnish pension fund manager and a Finnish forest owner sit at the same table. They look at the same 1,000 hectares. Same trees. Same soil. Same map.

The pension fund says the forest is worth €6.5 million. The forest owner says €4.2 million. A German family office looked at it last month and said €8.1 million.

Nobody is wrong. That's the problem.

Each used a different method. Each arrived at a number that made perfect sense inside their own head. And baffled the other two.

Here is why.

A forester values a forest the way you'd value a warehouse. Count what's there. Check what it sells for. Multiply.

Growing stock times stumpage price. That's it. Every forester in Europe knows this. It takes five minutes and a call to the local sawmill.

An investor does something completely different. They project every future harvest, every carbon credit, every lease. Over 40, 60, 80 years. Then they discount all that future money back to today.

Same forest. Different math. Different answer.

The forester asks: "What is here right now?"
The investor asks: "What will this produce over its lifetime?"

Both questions are fair. Neither answer is complete.

And one number decides everything. The discount rate.

SCA, the Swedish forest company, used a 3.5% after-tax discount rate for 2022. A pension fund uses a higher one. A private equity fund higher still.

Watch what that does. Take one cubic metre of spruce worth €100 when it's cut in 40 years.

At 3.5%, that future cubic metre is worth about €25 today.
At 8%, the same cubic metre is worth about €5 today.

Same tree. Same forest. Five times less money. Only because the discount rate changed.

That one number hides in plain sight. Most foresters have never run the math behind it. It is the single biggest reason their valuation and the investor's don't match.

Chapter 5 goes on to the five ways a forest gets valued. When each one is used. And how to close the gap between the forester's number and the investor's.

That's one chapter. There are eleven.

The Dictionary works both ways.

It teaches the investor to read a forest. Growing stock, increment, rotation, risk.

It teaches the forester to read a term sheet. IRR, NAV, discount rate, fund structure.

An investor learns what "increment" means. A forester learns what "IRR" means. Both discover they've been talking about the same thing all along. Growth. From opposite ends of the table.

That is the whole point. Two worlds. One language.

Here is what's inside.

The Forest-Investment Dictionary — 151 pages, across 11 chapters:

Plus 14 printable tools. Two full glossaries. A valuation quick reference. A risk framework. An EUDR cost estimator. A pitch scorecard. A discount rate decoder. A meeting question card. And more.

Plus 3 interactive calculators.

Here's where it came from.

Part 1 taught foresters to talk to the public. Then the question changed. How do foresters talk to the people with the capital?

I analyze the European forestry sector. I am a forest engineer. But I am only one side of this table.

So I did not write this one alone. I wrote it with Anders Tærø Nielsen. Anders is a Danish forest economist. He buys forests for institutions for a living.

One author reads forests. The other prices them. One voice from each side of the table. That is the only honest way to write a book like this.

The Forest-Investment Dictionary.

151 pages. 11 chapters. 14 printable tools. 3 calculators.

€99.

My guarantee: If this Dictionary doesn't change how you value a forest or read a deal, email me. I'll refund you. No questions. I'd rather have your trust than your money.

For the forester across the table from an investor. And the investor who can't price the forest. Now you both speak the same language.

If you have ever watched good capital walk away from a good forest — this is for you. If you have ever sat across from an investor and felt the words slip away — this is for you.

I wrote this because I believe in European forestry. I want good money to find good forests. That starts with both sides learning to talk.

Until Tuesday!

Wish you all the best: Peter

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P.S. What’s the biggest challenge you’re facing in forestry right now?
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Shauna Matkovich's Forest Invest Podcast is one of the best resources for understanding where forest finance is heading. If you are interested in Forest Investments, start there.

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