The document discusses forest asset appraisal and outlines the six main steps: 1) property inspection, 2) regional analysis of bare land values, 3) regional analysis of wood prices, 4) regional analysis of wood markets, 5) estimate using the cost, sales comparison, or income approaches, and 6) conciliation of the estimates. It also provides details on Index Florestal's 49 years of experience conducting forest asset appraisals in Brazil and other Latin American countries using their proprietary approach developed from international standards and Brazil's national standard.

1. SINCE 1971 WORKING TOWARDS
BRAZIL’S DEVELOPMENT

2. F O R E S T R Y A P P R A I S A L
I N D E X M E T H O D

3. FORESTRY APPRAISAL
INDEX METHOD
Appraisal is the act of estimating value, an analysis, an opinion. It is
defined by some as a kind of valuation aimed at real assets where there
are no intangible values involved. As forest assets are real assets, where
the financial return occurs over the long term, knowledge of the value of
the forest through an adequate financial assessment is essential to
understand the return it will bring.
WHAT IS APPRAISAL?

4. FORESTRY APPRAISAL
INDEX METHOD
All forest assets that belongs to investment funds must, for internal
reporting reasons, have their value updated annually through an appraisal.
This requirement created a large demand in Brazil for companies that have
knowledge of the forestry market, since this experience is a fundamental
part of conducting an appraisal.
WHY SHOULD I HIRE AN APPRAISAL
OF A FOREST ASSET?

5. INDEX METHOD
FORESTRY APPRAISAL
A appraisal can be divided into 6 main steps, which are:
WHAT ARE THE MAIN STEPS TO PERFORM A DETAILED APPRAISAL?
6 - Conciliation
1 - Property Inspection 2 - Regional Analysis - Bare land 3 - Regional Analysis - Wood
Price
4 - Regional Analysis - Wood
Market
5 - Estimate

6. In this step, the appraiser must seek to understand the characteristics that
will be decisive for the value of the asset. Although it is impossible to visit
the entire asset (the inspection is sample), the largest number of
representative points from the total area must be visited. In addition, it is
of great importance that the appraiser talk in detail with the area manager
and collect all current and future data related to forest management.
PROPERTY INSPECTION
1.
FORESTRY APPRAISAL
INDEX METHOD

7. The regional analysis is essential to give the appraiser the necessary
elements for the correct understanding of the variables that determine the
value of the asset. An important item to be observed in the regional
analysis is the value of bare land. Collecting data from similar real estate
transactions, the appraiser will thus form a reference real estate
database, which will be used later in the “sales comparison” approach.
REGIONAL ANALYSIS - BARE LAND
2.
FORESTRY APPRAISAL
INDEX METHOD

8. By collecting price data on timber transactions carried out in the region,
the appraiser will determine the value of the timber to be considered in
the assessment.
REGIONAL ANALYSIS - BARE LAND
3.
FORESTRY APPRAISAL
INDEX METHOD

9. Understanding the market is a very important part of the appraisal, since
it is the sale of wood that pays the forestry asset and determines part of
its value. For the correct simulation of the production and sale of future
wood, it is of great importance to understand the volume that the
market is capable of absorbing, which products are sold and the type of
sale, etc.
REGIONAL ANALYSIS - WOOD MARKET
4.
FORESTRY APPRAISAL
INDEX METHOD

10. Once all the information is collected, we enter the calculation stage to
determine the property value. There are three approaches to performing
these calculations:
● Cost approach: It is an estimate from the cost of building or reproducing what
already exists on the property;
● Sales comparison: It is the analysis of different sales of similar properties carried out
in the region and their adjustment, in order to serve as a basis for comparison with
the evaluated asset;
● Income approach: The income approach, or revenue approach, determines the total
value of the project by the sum of expenses less the sum of revenues.
ESTIMATE
5.
FORESTRY APPRAISAL
INDEX METHOD

11. Finally, after all the estimates are made, conciliation is carried out, a
stage where the appraiser will take stock of the three approaches
considered above to determine which should be used. The conciliation, in
some cases, can be carried out even before the beginning of the
estimates, in cases where the appraiser anticipates that the use of this or
that approach is not relevant to the property being evaluated.
CONCILIATION
6.
FORESTRY APPRAISAL
INDEX METHOD

12. The Index Florestal team has over 49 years of experience in carrying out
real asset valuations. In the last 10 years, the team combined this
experience with the demand brought by international clients to develop
appraisals in Brazil and other Latin American countries as well. The
combination of the company's experience with the national standard with
appraisal's particular methodological assumptions allowed Index to
develop an exclusive approach, meeting all the requirements of
international standards and, at the same time, adding to the appraisal
technical elements of the national standard, which make the final result
more solid and connected with the market reality.
FORESTRY APPRAISAL
INDEX METHOD

13. Are you interested in the Index Florestal Forestry Appraisal service, or other
services of the Index Group and want to talk with us? Click the button below
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FORESTRY APPRAISAL
INDEX METHOD