Anyone know about Silva Tree investments? intially looks too good to be true: 13% p.a

So let's be quite clear.

There is a guarantee but you won't discuss it in public.

So you will call people to explain it.

This is absolute nonsense. Either explain your product publicly or stop using askaboutmoney to promote it.

Brendan
 
Silva Tree is advertising again in today's Sunday Business Post Here is the heading:

Want to make up to 18.71% and save the planet?

The Princess Project is an ethical timber investment with guaranteed returns*

High Return - Returns of up to 18.71% paid out every 5 years over 20 years*
Low Risk - Managed by UK FSA regulated trustee
Low Entry Level
Help the Environment.
Click to expand...

If this was a regulated investment I would certainly complain the ad to the the Financial Regulator.

I cannot read the small print to which the asterisk refers.
I have no idea how the "guarantee" is provided. I would be very surprised if any solid guarantor was guaranteeing a return of 18.71%
"Managed by UK FSA regulated trustee" could mislead people into thinking that this fund is regulated by the FSA - which I presume it is not.

I presume that there is no point in complaining to the ASAI?

Is there any point in bringing it to the attention of the Sunday Business Post?
 
hi i have been looking for investments in forestry and came across Silva tree. If i understood correctly the 18.71% is a "simple" return, not compounded. So at the end of the 20 years an investment of USD 7.5k will give you USD 33,196.82 as per their brochure, which on a compounded basis is 33,196.82/7500^(1/20) - 1 = 7.7%pa. For a 20y investment a 7.7% return pa is ok, but not spectacular, especially given the "projections" on the increase in value of tree plantations. It is also a leasehold investment meaning after 20y you don't own anything. So if anybody thought that the investment would grow at 18.71%pa, that is not the case. Hope this helps, but please be aware this is my understanding of the investment. If it were wrong, I would be more than happy to hear others' interpretation or understanding.
 
The ads in Ireland said "up to 18.71% paid every 5 years"

This is meaningless.

What does "up to" mean?

And they did not quote a Compound Annual Rate.

It also said it was "guaranteed" and they have refused to explain online who gives the guarantee.

If something looks too good to be true, it usually is.

if they decline to explain how it is so good, then you should avoid the product until they explain it.
 
A closer look at the Silva Tree investment

I read the above mentioned postings with interest and hoped that my own experience might prove useful to others.

I came across Silva Tree some weeks ago when I was searching for alternative investments. I was attracted by the lack of correlation with stock market performance and the guaranteed yields of “up to 18% per annum” mentioned on the Silva Tree website. I requested a prospectus which was well presented and cogently argued the case for investment in growing lumber as a green and attractive alternative investment.

Although I was aware of some negative comments on the web regarding Silva Tree and the old maxim that “if something is too good to be true it probably is” I decided to take a closer look by applying for a $35,000 one hectare 20 year investment in Pauwlonia trees. I found Silva Tree’s personnel to be charming, confident and reassuring during my dealings over the phone and was struck that they tackled allegations that their investment was a scam head on in a diligent, confident and perhaps even aggressive manner.
Up until this stage I had no real information to go on other than the website, Prospectus and my conversations with their UK based employees but signing the application allowed me to receive the completion documents from Silva Tree Panama.

I noted that the completion documents made extensive reference to other documents that were not provided. For example, the Prospectus mentions the involvement of an FSA approved Trustee but the Deed of Trust describing the Trustee’s responsibilities and how they would operate was not provided; also, the lease which would give one one’s rights to grow the lumber would be created at a future undefined date and was not provided. Similarly, there was no technical or expert studies provided which could substantiate the tree growth projections and underpin the business plan and Silva Tree Panama provided no documentation to show that they were indeed the freeholder (though they did warrant to this effect).

I requested that further information be provided and, although all the documents were not produced many were and I was able to observe that the investment appeared to operate in the following way:
• $35,000 would be paid over to the offshore bank account of the FSA approved Trustee and held in escrow pending creation of a lease under Panamanian law.
• Following creation of a lease (with unknown provisions) in the name of the Trustee he would issue certificates of proportionate ownership in the name of the investors (or “renters” as described in the document).
• At this stage (presumably not too far down the road as the monies would be returned to the investors by the Trustee within 12 months) $35,000 minus $1,250 held in escrow by the Trustee for the maintenance contractor ($250 per year for the first five years) ie. $33,750 would be paid over to Silva Tree Panama and that would mark the end of their legal responsibilities to the investors (though not the investors’ responsibilities to them – see below). Future performance of the investment would rely on others.
• The trees would grow and thrive under the care of the maintenance contractor (appointed by the investor from an approved list of three) who for $250 per year would plant the trees, irrigate, keep free from disease, keep secure, construct access roads, thin out, harvest, transport to a saw mill, process and deliver FOB to a local port.. I noted that the management contract could be terminated by either party with 3 months notice. Furthermore, I noticed that the Forestry management contract between the investor and Silva Tree Panama contained a clause to say that both parties acknowledged that the contract was under the jurisdiction of the courts of England who would not and could not compel performance from a Panamanian legal entity but certainly could do so for a UK based investor. I noticed there was a clause which said that in the “unlikely event” that $1250 was not sufficient to cover maintenance or if a dispute arose between the management company and the renter Silva Tree could intervene to pay monies due to the management company on the renters’ behalf.
• The trees – if they complied with certain quality conditions and as long as over 3 years notice was given of the exact quantities involved – the World Pauwlonia Institute would purchase the lumber for a price some 50% of world market values allowing the guaranteed return of up to 18% to be calculated. Using the world market price for Pauwlonia the returns would indeed be staggering. WPI would maintain an (unseen by me) insurance policy to secure their end of this deal.

At this stage I withdrew from the process.
 
Further clarification

Dear Silva Tree

Thank you for your warm words - I would like to clarify my position.

I withdrew from the investment as there were many terms in the contract that could best be described as unusual and perhaps more accurately be described as onerous which, when taken together with other documents, meant that the guarantee was dubious. It was clear that Silva Tree would quickly get the lion’s share of the investment monies leaving the performance of the investment and the guarantee in the hands of others.

I cannot possibly comment on the competence of the management contractor but do question whether he can perform his extensive duties for $250 per year and, if he can’t, the somewhat curious arrangement by which Silva Tree appears to be able to pay him more and charge the renters.

Also, I understand the World Paulownia Institute’s vocation to be “the World’s largest producer and supplier of genetically superior tissue cultured Paulownia seedlings”. Whilst getting into writing options to purchase extensive quantities of lumber may be a new departure for them I note that their latest filing with the US authorities indicated sales of about $300k and showed they had 5 employees. I was sent a copy of WPI’s application form to their broker for General Liability insurance rather than the policy schedule and would be very surprised indeed if their finalised insurance would cover WPI for option contracts they choose to write. I note that the application did seem to make a reference to the contract liability regarding the Timber Purchase Agreement with Silva Tree but cannot comment further on the cover they have managed to obtain or will obtain in the future.

Finally, as long as Silva Tree maintains the use of such onerous and one-sided contract clauses (some examples of which mentioned in my previous post) and to use investment structures that are highly complex and not properly explained by the documentation provided then there is no chance that I would consider future Silva Tree products.
 
Brendan Burgess said:
The ads in Ireland said "up to 18.71% paid every 5 years"

This is meaningless.

What does "up to" mean?

And they did not quote a Compound Annual Rate.

It also said it was "guaranteed" and they have refused to explain online who gives the guarantee.

If something looks too good to be true, it usually is.

if they decline to explain how it is so good, then you should avoid the product until they explain it.
Click to expand...
I believe that Warren Buffett has a CAGR of something like 16% since he took the helm at Berkshire Hathaway. These guy are promising nearly 4% better than the greatest investor of all-time.
 
No one on this thread is questioning whether or not forestry is a good investment.

They have asked many questions about whether Silva is an appropriate investment vehicle.

Forestry could be a good investment while Silva might not be a a suitable vehicle.

Brendan
 
Silva Tree said:
This was set up for our company and not for investors. Our solicitors and the trustee think the vehicle is right for investors, but this is something for each individual to decide.

It is not up to a supposed moderator to make the claims you are making Brendan.
Click to expand...


So Silva is not set up for investors! Then why should anyone invest in Silva?
 
You must log in or register to reply here.
Back
Top