Sustainability and the green transition are the most critical issues that investors must navigate today. Professionally managed forestry portfolios offer investors the potential for competitive, risk-adjusted returns while also providing attractive environmental benefits. In the long term, forest land has consistently performed well compared to other real assets. Svefa was commissioned to assist GreenGold in valuing its diversified forestry portfolio across the seven markets in which it operates.
The Assignment
GreenGold is a dedicated forestry company that invests directly in forest properties across the European market. The company and its forest holdings are unique, comprising 80,000 hectares of forest land in Sweden, Finland, Estonia, Latvia, Lithuania, Romania, and the United Kingdom. The valuation and analysis of these seven European forestry markets, where Svefa's experts developed country-specific price trend analyses and conducted value assessments based on a "comparable sales" approach for each country, is unparalleled.
The assignment included:
- Investigation and assessment of the conditions of the forest holdings based on market conditions in each country.
- Development of country-specific price trend analyses.
- Analysis of market conditions for larger forest investments.
- Valuation of GreenGold’s diversified forestry portfolio using a "comparable sales" approach.
How We Tackled the Assignment
GreenGold follows a strict value-based investment strategy, where each property must contribute value on its own merits, although synergies with existing holdings are also sought.
What makes GreenGold unique is its direct investments in forest properties while remaining entirely independent of the forestry industry. The company focuses 100% on the raw material—forests and forest land—with a long-term ownership perspective to optimize management over time.
Unlike many other players, GreenGold operates without debt, giving it a unique financial strength. The combination of a lean organization and significant ownership by management and key personnel makes the company unique among institutional forest owners. According to GreenGold, this structure provides the best platform for maximizing the long-term value of its forest properties.
Challenges
- Forest holdings across seven different markets
- Varying levels of information availability across the different markets
- Adapting to different local and national regulations
- Diverse local market conditions, including geography, tree species, environmental, and biological factors
Solution
Svefa developed an analytical methodology that combined desktop and physical valuation assessments of the individual holdings to map the markets, establish country-specific price trends, and highlight overall portfolio effects.
Accurate, stringent and transparent appraisal highlights the value within the portfolio
For complex assignments such as valuing forestry holdings, experience, methodology, and systems enabling accurate valuation are of utmost importance.
The country-specific price development and valuation of the seven European markets in which GreenGold operates is unique. The results show that the market valuation of an individual holding benefits from the portfolio effects generated by strategically allocated investments across multiple countries.
According to Svefa, if GreenGold's combined property portfolio were to be offered to the market, there would be benefits associated with the aggregation of its pan-European forestry holdings. These added values are primarily linked to the fact that a diversified forestry portfolio, actively managed by the company’s own forestry managers, reduces biological risks and the cost and time required to build a comparable portfolio from scratch.
”Svefa is a professional player with a strong reputation. We currently have a multi-year collaboration with them, and they have come to know us, our properties, and the different markets in which we operate, which builds trust.”
Svefa’s Advice
- Diversify your holdings for risk management and better returns – Spread your forestry investments across different regions to mitigate biological risks and stabilize returns.
- Commit to sustainability and the green transition – Invest in companies with clear sustainability strategies. Sustainability benefits both the environment and can lead to long-term financial gains.
- Be structured and ensure transparent valuation – Use professional valuation reports and engage independent consultants to ensure that forest properties are correctly valued and that investments are well-founded. Svefa is the market-leading and largest independent player in forest property valuation.
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