Investors are turning towards asset based investments to ensure their capital is protected against market volatility. The U.S. real estate market has become saturated with investor competition, driving prices up and investment returns down.
Wood is one of the world’s most valuable commodities. It is multifunctional, serving as a building material, an energy source, and an ecosystem and climate regulator. Unlike many other commodities, wood is renewable. This makes it both economically and ecologically one of the most important natural resources.
To get better acquainted with the financial benefits that managed plantations have to offer, let’s take a closer look at the potential returns involved with purchasing a 5-acre timber plantation at $65,000.
The following investment scenario shows expected returns based on the price of mahogany at USD $800 / cubic meter. While historically timberland has consistently increased in value, neither Directed Evolution, LLC or BMW can guarantee future mahogany prices.
12 YEAR VS. 20 YEAR HARVEST
SALE OF TIMBER IN 12 YEARS
Original investment $65,000
Returned Value $200,000
Gain on Investment $135,000
Return on Investment 207.7%
Simple Annualized R.O.I. 17.3%
SALE OF TIMBER IN 20 YEARS
Original Investment $65,000
Returned Value $600,000
Gain on Investment $535,000
Return on investment 823.1%
Simple Annualized R.O.I. 41.1%
Sale of 50% of timber in 12 years and the remainder sold in 20 years
(combined total return on investment)
Original investment $65,000
Returned Value (12 year + 20 year harvest) $400,000
Gain on Investment $335,000
Return on Investment 515.4%
Simple Annualized R.O.I. 25.8%
Utilizing this approach returns the original investment capital in 12 years and allows the fruits of that investment to continue for 20 years.
Experts say that the demand for wood will continue to grow in step with the world’s population, and thus will rise dramatically in the long term. World demand for tropical hardwood shows that the demand increased by 25% from 1994 to 2010 (Source: International Forestry Review).
WHAT YOU GET WITH YOUR INVESTMENT:
- 500 planted Mahogany trees of cultivar Swietenia Macrophylla.
- Warranty for crop replacement and growth.
- Plantation nursing and rearing costs, fertilization, stature defect removal and personnel support until felling of trees.
- Asset backed investment that provides sustainable materials while helping the planet.
BOATMAN MAHOGANY WORKS LTD OF BELIZE (hereafter referred to as BMW) has partnered with Directed Evolution, LLC to offer a simplified approach for investing in resource producing assets.
We are inviting responsible investors to participate in ownership of selected plantation developments designed for profit, capital appreciation and diversification, with the added benefit of being environmentally friendly.
The initial plantation comprises 700 acres, for a combined 120 plantation sites.
Each BMW plantation will have 800 mahogany trees initially planted, 500 for the plantation owner and 300 for BMW to be used for twelve years as crop replacement insurance and to guarantee the wood volume yields predicted at the time of purchase.
Trees owned by BMW not used to offset crop replacement insurance obligations at the end of twelve years will be harvested and owned by BMW. If BMW elects to wait until later years to harvest its trees, it will offer annual rental to the plantation owner for land use. BMW may interplant additional trees to enhance the mahogany plantation, including trees resistant to hurricanes and insects as well as planting vegetables and fruits for profit.
In the event an owner chooses to construct a building on his plantation, any trees needing to be removed will be subtracted from the 500 trees included with initial purchase. Experts expect the plantation to have marketable timber in its 12th year and value enhanced growth each year thereafter to 20 years.