Rayonier Completes Previously Announced Disposition of Oregon Properties

Rhea-AI Summary

Rayonier Inc. (NYSE:RYN) completes the sale of 55,000 acres of timberland in Oregon to Manulife Investment Management for $242 million, using proceeds to pay down debt and plan a special dividend. CEO David Nunes announces plans to capture the disparity between public and private timberland values, position the balance sheet for a higher interest rate environment, and return capital to shareholders.

Insights

Financial Analyst

The transaction involving Rayonier Inc.'s sale of timberland assets to Manulife Investment Management represents a strategic financial maneuver that is likely to influence the company's fiscal health and investor confidence. The divestiture at approximately $4,400 per acre has facilitated a substantial paydown of Rayonier's floating rate debt, which is a prudent move in anticipation of rising interest rates. This debt reduction enhances the company's financial flexibility and potentially improves its credit profile.

The earmarking of $30 million for a special dividend signals a shareholder-friendly capital allocation policy, which can be attractive to income-focused investors and could influence the stock's desirability in the market. However, the special dividend could also be viewed as a short-term reward at the expense of long-term reinvestment in growth opportunities. Investors should weigh the immediate income benefit against potential future growth trade-offs.

Additionally, the CEO's commentary on aligning the balance sheet for a higher interest rate environment and returning capital to shareholders underscores a strategic approach to capital management in a shifting economic landscape. The intent to bridge the valuation gap between public and private timberland assets indicates a proactive stance in asset management that could lead to further portfolio optimization.

Market Strategist

The sale of timberland assets by Rayonier Inc. reflects a broader trend in the market where companies are divesting non-core assets to streamline operations and strengthen their balance sheets. The transaction's completion is a positive signal to the market, as it demonstrates Rayonier's commitment to its previously announced capital realignment plan. Such strategic moves are often well-received by the market, as they indicate disciplined financial management and a clear strategic direction.

Investors might also interpret this sale as a move to mitigate risk in a volatile economic environment, where liquidity and a strong balance sheet are increasingly important. By reducing debt, Rayonier is likely improving its risk profile, which could potentially lead to a re-rating of the stock by analysts and investors. The company's focus on capturing the disparity between public and private timberland values could also suggest a savvy approach to asset management that may unlock additional shareholder value in the long run.

However, it is essential to monitor how the proceeds are ultimately allocated beyond the announced debt reduction and special dividend. The management's ability to execute further asset sales and the subsequent capital allocation decisions will be critical factors in sustaining investor confidence and supporting the company's stock performance over time.

Debt Market Analyst

The repayment of floating rate debt using the proceeds from the timberland sale is a significant move for Rayonier Inc., particularly in the context of the current economic climate where interest rates are expected to rise. Reducing exposure to variable interest payments can stabilize future interest expenses and protect the company's profit margins. This strategic decision may be viewed favorably by debt market participants and credit rating agencies, potentially leading to improved borrowing terms in the future.

Moreover, the choice to retain a portion of the proceeds for further debt reduction or other capital allocation purposes suggests a conservative approach to leverage and liquidity management. This could enhance Rayonier's appeal to conservative investors and debt holders who prioritize financial stability over aggressive growth strategies, especially in industries like timberland that can be cyclical and sensitive to economic downturns.

It is also noteworthy that the transaction price per acre could set a benchmark for valuations in the timberland sector, affecting the market dynamics and influencing future transactions. The transparency in disclosing the per-acre price provides valuable information for stakeholders evaluating the sector's investment potential and Rayonier's positioning within it.

WILDLIGHT, Fla.--(BUSINESS WIRE)-- Rayonier Inc. (NYSE:RYN) today announced the completion of its previously announced disposition of 55,000 acres of timberland in Oregon to Manulife Investment Management on behalf of clients for $242 million (~$4,400 per acre), subject to customary prorations and closing costs. The Company has used $150 million of the proceeds to pay down its only floating rate debt and plans to use approximately $30 million for a special dividend to be paid in January 2024 (as announced in a separate press release today). The remaining proceeds are being retained for further debt reduction and/or other capital allocation purposes.

“Successfully closing on this asset sale is an important step toward effectuating the asset disposition and capital structure realignment plan that we announced on November 1^st, targeting $1 billion of select asset sales over 18 months,” said David Nunes, Chief Executive Officer. “We are actively working to bring additional timberland assets to market as we execute on our plan to capture the disparity between public and private timberland values, position our balance sheet for a higher interest rate environment, and return meaningful capital to shareholders.”

About Rayonier

Rayonier is a leading timberland real estate investment trust with assets located in some of the most productive softwood timber growing regions in the United States and New Zealand. As of September 30, 2023, Rayonier owned or leased under long-term agreements approximately 2.8 million acres of timberlands located in the U.S. South (1.90 million acres), U.S. Pacific Northwest (474,000 acres) and New Zealand (419,000 acres). More information is available at www.rayonier.com.

Forward-Looking Statements – Certain statements in this communication regarding anticipated financial outcomes including Rayonier’s planned asset dispositions, use of proceeds, impact on debt and leverage levels and targets, impact on EBITDA and CAD trading multiples and expected cost of debt, earnings guidance, if any, business and market conditions, outlook, expected dividend rate, Rayonier’s business strategies, expected harvest schedules, timberland acquisitions and dispositions, the anticipated benefits of Rayonier’s business strategies, and other similar statements relating to Rayonier’s future events, developments or financial or operational performance or results, are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements are identified by the use of words such as “may,” “will,” “should,” “expect,” “estimate,” “believe,” “intend,” “project,” “anticipate” and other similar language. However, the absence of these or similar words or expressions does not mean that a statement is not forward-looking. While management believes that these forward-looking statements are reasonable when made, forward-looking statements are not guarantees of future performance or events and undue reliance should not be placed on these statements.

The following important factors, among others, could cause actual results or events to differ materially from those expressed in forward-looking statements that may have been made in this document: the risk that we will not be able to reduce our existing debt in accordance with the capital structure realignment plan (the “Plan”); the risk that we will not be able to achieve our revised leverage target in accordance with the Plan; the risk that we will not be able to deploy net proceeds from the asset dispositions contemplated by the Plan in the manner and timeframe we anticipate, including the risk that such proceeds will not be sufficient to achieve the target leverage ratio described in the Plan or to return capital to shareholders; the risk that we will otherwise not be able to execute on the Plan; the uncertain outcome, impact, effects and results of the Plan or the announcement or execution of the Plan, including the diversion of management time and attention; the cyclical and competitive nature of the industries in which we operate; fluctuations in demand for, or supply of, our forest products and real estate offerings, including any downturn in the housing market; entry of new competitors into our markets; changes in global economic conditions and world events, including the war in Ukraine; conflict in the Middle East and escalating tensions between China and Taiwan; business disruptions arising from public health crises and outbreaks of communicable diseases; fluctuations in demand for our products in Asia, and especially China; the uncertainties of potential impacts of climate-related initiatives; the cost and availability of third party logging, trucking and ocean freight services; the geographic concentration of a significant portion of our timberland; our ability to identify, finance and complete timberland acquisitions; changes in environmental laws and regulations regarding timber harvesting, delineation of wetlands, endangered species and development of real estate generally, that may restrict or adversely impact our ability to conduct our business, or increase the cost of doing so; adverse weather conditions, natural disasters and other catastrophic events such as hurricanes, wind storms and wildfires; the lengthy, uncertain and costly process associated with the ownership, entitlement and development of real estate, especially in Florida and Washington, including changes in law, policy and political factors beyond our control; the availability of financing for real estate development and mortgage loans; changes in tariffs, taxes or treaties relating to the import and export of our products or those of our competitors; changes in key management and personnel; and our ability to meet all necessary legal requirements to continue to qualify as a real estate investment trust and changes in tax laws that could adversely affect beneficial tax treatment.

For additional factors that could impact future results, please see Item 1A – Risk Factors in the Company’s most recent Annual Report on Form 10-K and similar discussion included in other reports that we subsequently file with the Securities and Exchange Commission (the “SEC”). Forward-looking statements are only as of the date they are made, and the Company undertakes no duty to update its forward-looking statements except as required by law. You are advised, however, to review any further disclosures we make on related subjects in our subsequent reports filed with the SEC.

View source version on businesswire.com: https://www.businesswire.com/news/home/20231218300187/en/

Investors: Collin Mings, investorrelations@rayonier.com, 904-357-9100

Media: Alejandro Barbero, alejandro.barbero@rayonier.com

Source: Rayonier Inc.

FAQ

What did Rayonier Inc. (NYSE:RYN) announce today?

Rayonier Inc. (NYSE:RYN) announced the completion of the sale of 55,000 acres of timberland in Oregon to Manulife Investment Management for $242 million.

What does Rayonier Inc. (NYSE:RYN) plan to do with the proceeds from the sale?

Rayonier Inc. (NYSE:RYN) plans to use $150 million to pay down its floating rate debt, approximately $30 million for a special dividend to be paid in January 2024, and retain the remaining proceeds for further debt reduction and/or other capital allocation purposes.

Who is the CEO of Rayonier Inc. (NYSE:RYN)?

The CEO of Rayonier Inc. (NYSE:RYN) is David Nunes.

What is the ticker symbol for Rayonier Inc.?

The ticker symbol for Rayonier Inc. is RYN.