WILDLIGHT, Fla. - Rayonier Inc . (NYSE:RYN), a timberland real estate investment trust, has announced the sale of approximately 200,000 acres of timberland for $495 million. The transactions, which include about 91,000 acres in Southeast Oklahoma and 109,000 acres on the Olympic Peninsula in Northwest Washington, are part of the company's strategy to realign its capital structure and reduce debt.
The sales were made to institutional investors through four separate transactions, three of which have already closed this quarter, and the fourth is expected to close by year-end. This move is aimed at exploiting the valuation gap between public and private timberland markets, particularly in a period of rising interest rates.
Rayonier's President and CEO, Mark McHugh, expressed satisfaction with the team's execution of their strategy to enhance shareholder value and adjust the company's leverage to the current market conditions. With these dispositions, Rayonier has reached nearly three-quarters of its original $1 billion target in asset sales, which were initiated last November.
The company has already utilized $90 million from the proceeds to pay down its floating rate debt and plans to use the remaining funds to further reduce leverage and potentially return capital to shareholders. A special distribution related to the dispositions is expected to be announced by the end of the year.
Following the sales, Rayonier anticipates its pro forma Net Debt to pro forma Adjusted EBITDA to decrease to approximately 2.8x. The aggregate sale value of the transactions represents a 45x multiple of the trailing three-year average EBITDA.
Rayonier owns or leases approximately 2.7 million acres of timberlands in the U.S. South, U.S. Pacific Northwest, and New Zealand. The company's strategy includes concentrating capital in markets with the strongest cash flow attributes and favorable long-term growth prospects.
The information in this article is based on a press release statement from Rayonier Inc.
In other recent news, Rayonier Inc. announced a fourth-quarter cash dividend of $0.285 per common share, demonstrating its ongoing commitment to providing returns to its investors. The company also reported a decrease in its second-quarter earnings, with adjusted EBITDA standing at $56 million and pro forma net income at $4 million. Rayonier attributed the lower earnings primarily to reduced harvest volumes in their timber segments. Despite this, the company remains optimistic about recovering these volumes and is still on track to meet their $1 billion disposition target. Furthermore, Rayonier anticipates favorable pricing conditions in the future, particularly in the New Zealand carbon market. Rayonier executives have expressed confidence in meeting their targets and reported increased interest in opportunities. These are recent developments in the company's performance and outlook.
InvestingPro Insights
Rayonier's recent timberland sales align with several key financial metrics and trends highlighted by InvestingPro. The company's strategic move to reduce debt and realign its capital structure is reflected in its current financial position.
According to InvestingPro data, Rayonier has a market capitalization of $4.75 billion, indicating its significant presence in the timberland REIT sector. The company's revenue for the last twelve months as of Q2 2024 stood at $1.01 billion, with a notable revenue growth of 21.97% over the same period. This growth, coupled with the recent asset sales, positions Rayonier to potentially improve its financial metrics further.
An InvestingPro Tip notes that Rayonier is trading at a low P/E ratio relative to its near-term earnings growth, suggesting potential undervaluation. This aligns with the company's strategy to exploit the valuation gap between public and private timberland markets. Additionally, Rayonier has maintained dividend payments for 31 consecutive years, demonstrating a commitment to shareholder returns that may be bolstered by the planned special distribution from the asset sales.
The company's profitability is underscored by another InvestingPro Tip, which indicates that Rayonier has been profitable over the last twelve months. This profitability, combined with the substantial proceeds from the timberland sales, supports the company's ability to reduce leverage and potentially enhance shareholder value as outlined in their strategy.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips that could provide deeper insights into Rayonier's financial health and future prospects.
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