At FF Forest, transparency is one of our core values. We have recently received questions regarding how user funds are secured on our platform, and we want to take this opportunity to provide a clear, detailed overview of our security structure and why we’ve chosen this model.

1. Direct Asset Backing

The loans issued by FF Forest platform users are secured by the entirety of the company’s assets. This includes:

• Our extensive portfolio of forest lands.

• All standing timber and biological assets.

• Any other physical assets held by the company.

Why Portfolio-Level Asset Backing Works

To understand this structure, it is important to distinguish between legal form and economic substance.

When you provide capital via FF Forest, you enter into a legally binding loan agreement with the company. This agreement creates:

• A documented claim for repayment of principal and interest.

• A contractual obligation of the company.

• A defined maturity and yield structure.

At the same time, the company owns a diversified portfolio of forest land and biological assets.

The protection mechanism operates at the balance sheet level:

• The total value of the forest portfolio is independently assessed.

• The total amount owed to platform users is transparent.

• The portfolio value exceeds outstanding obligations.

This creates an asset coverage structure.

Example (illustrative)

• Forest portfolio value: €15M

• Total obligations to platform users: €9M

• Asset coverage ratio: 167%

In such a structure, capital providers rely on the total asset base of the company rather than on individual plot-level mortgages.

This model is common in corporate finance. Large forestry and real estate companies operate on balance sheet–backed debt, where lenders assess:

• Total asset value

• Debt-to-asset ratio

• Absence of senior competing creditors

The economic protection comes from overall solvency and asset strength, not from separate pledges on each individual asset.

2. No Competing Creditors

We want to state this clearly: FF Forest has no other creditors. There are no banks or external financial institutions that hold claims against our assets. The users of the ff-forest.com platform are the sole group with a claim on our forest land portfolio.

3. The Refinancing & Growth Strategy

The only scenario in which external creditors might enter the picture is if we choose to refinance a portion of the portfolio. In this event:

• Full Communication: Users will be informed immediately.

• Reinvestment Choice: Users can choose to stay in the project, as the funds from refinancing are used to acquire new forest land, add value, and repeat the growth cycle.

• Early Exit: Users who prefer to exit during a refinancing event can utilize our early exit option.

4. Why Not Register Individual Mortgages on 200+ Assets?

Registering individual land pledges would:

• Require separate notarization and land registry filings for each parcel.

• Create administrative friction for asset rotation.

• Slow capital turnover.

• Increase ongoing legal and maintenance costs.

• Ultimately reduce the economic efficiency of the model.

The FF Forest structure is built around active portfolio management within a standard 24-month cycle:

1. Acquire forest land at a discount.

2. Improve forestry quality and legal positioning.

3. Increase asset valuation.

4. Reallocate capital into new acquisitions.

Rigid plot-level collateral would significantly limit this operational flexibility and reduce capital velocity - which is a key driver of returns.

At the same time, FF Forest operates within strict legal and corporate governance frameworks. The company’s management bears full legal responsibility for protecting the interests of its capital providers. Any misuse of assets, concealment of liabilities, or intentional actions detrimental to creditors would trigger serious civil and criminal consequences under applicable law.

This responsibility is not theoretical - it is embedded in corporate, insolvency, and criminal law provisions that apply to company directors and beneficial owners.

5. Comparing Security Models: Understanding the Differences

We are often asked how this structure compares to models where a specific commercial pledge or registered charge is used.

At first glance, a registered pledge over certain assets may appear more secure. However, the practical strength of any structure depends on several factors, including:

• Whether the pledged assets are sufficient relative to total liabilities.

• Whether there are senior or competing creditors.

• Whether assets can still be substituted or sold within the portfolio.

• How clearly creditor priority is defined in case of insolvency.
  

In some corporate structures, a commercial pledge primarily formalizes the existence of a financing agreement. It does not automatically guarantee asset immobility, priority strength, or full coverage of total obligations.

Rather than relying on a narrow pledge over selected parcels, the FF Forest structure relies on the strength and proportional coverage of the entire asset base.

Ultimately, different models prioritize different trade-offs between legal formality, operational flexibility, and capital efficiency. Understanding those differences is more important than focusing on labels alone.

6. Alternative Options for FF Forest Users

For those seeking even more regulated options, we are pleased to announce that FF Forest has obtained AIF (Alternative Investment Fund) licenses in Estonia.

This will allow our users to allocate funds via a more regulated mechanism where the AIF holds specific collateral over the forest land portfolio. Please note the following details for this option:

• Minimum Entry: €10,000.

• Interest Rate: 12.8% per year.

• Availability: This option will be available in March/April 2026.