- Targeting $1 billion of select asset sales over the next 18
months
- Reducing target leverage to ≤3.0 Net Debt / Adjusted
EBITDA
- Actions intended to enhance shareholder value by capturing the
significant disparity between public and private timberland values,
reinforce the Company’s balance sheet position, and return
meaningful capital to shareholders
- Announcing $242 million asset sale in Oregon – first step
toward effectuating the plan
Rayonier Inc. (NYSE:RYN) today announced an asset disposition
and capital structure realignment plan (the “Plan”) targeting $1
billion of select asset sales over the next 18 months. The proceeds
of the asset sales will be used to reduce the Company’s leverage to
≤3.0x Net Debt / Adjusted EBITDA* and return meaningful capital to
shareholders. The Plan is intended to enhance shareholder value by
capturing the significant disparity between public and private
timberland values and reducing the level of debt the Company
maintains in a higher interest rate environment. The Plan will also
improve the Company’s competitive positioning by divesting less
strategic assets and concentrating capital in markets with the
strongest cash flow attributes and most favorable long-term growth
prospects. The Company today announced the first step toward
effectuating the Plan with the sale of 55,000 acres in Oregon for
$242 million.
“Rayonier remains committed to its nimble, value-added capital
allocation strategy,” said David Nunes, Chief Executive Officer.
“The disconnect between private market timberland values and the
Company’s public market valuation is at an historically wide level,
and the plan announced today will allow us to take advantage of
this opportunity to create value for our shareholders as well as
right-size our leverage to the current market environment. Our
portfolio scale and pure-play timber REIT structure afford us the
flexibility to take these initiatives, and we are confident that
they will result in meaningful value accretion for our
shareholders.”
Reducing Leverage Target
Pursuant to the Plan, Rayonier is adjusting its long-term
leverage target from ≤4.5x Net Debt / Adjusted EBITDA* to ≤3.0x Net
Debt / Adjusted EBITDA* and commensurately reducing its Net Debt /
Asset Value target from ≤30% to ≤20%. “While Rayonier enjoys a
long-dated and well-staggered debt maturity profile as well as a
low-cost, primarily fixed-rate debt structure, these new credit
ratio targets are intended to reduce future interest costs and
mitigate refinancing exposure in a higher rate environment, as well
as enhance our capital allocation flexibility,” said Mark McHugh,
President and Chief Financial Officer. “Maintaining a conservative
capital structure has always been a priority for Rayonier, and we
believe the current interest rate environment and the
‘higher-for-longer’ rate outlook calls for a more cautious approach
to debt utilization within our business. We plan to be selective
and opportunistic in achieving our enhanced leverage target over
the next 18 months.”
Announcing Disposition of Oregon Properties
As an important first step toward effectuating the Plan,
Rayonier is concurrently announcing an agreement for the sale of
55,000 acres of timberland in Oregon to Manulife Investment
Management on behalf of clients for $242 million (~$4,400 per
acre), which represents a significant premium to Rayonier’s implied
EBITDA* and CAD* trading multiples as well as the per-acre value
implied by the Company’s current public market valuation.
“We began evaluating this asset sale six months ago as a way to
reduce leverage and take advantage of the significant disconnect
between private market timberland values and the valuation implied
by the company’s share price,” said Mr. Nunes. “This valuation
disconnect has only widened since then, which motivated us to
commit to a more transformational initiative to drive value
accretion for our shareholders. We intend to remain disciplined and
nimble as market conditions evolve, and we will adapt as needed to
strengthen our competitive positioning and enhance long-term
shareholder value.”
The Oregon disposition is expected to close in the fourth
quarter. The Company plans to use $150 million of the proceeds to
pay down its only floating rate debt, which will translate to
annual interest savings of approximately $9.3 million. The
remaining proceeds will be retained to retire debt or return
capital to shareholders. Pro forma for the disposition and
application of proceeds, the Company’s leverage will decline to
4.2x Net Debt / 2023E Pro Forma Adjusted EBITDA* (based on the
midpoint of the Company’s latest full-year guidance adjusted for
the Oregon disposition), its weighted average cost of debt will
decline to approximately 2.8%, and 100% of its debt will be fixed.
Pro forma for the disposition and the application of proceeds, the
Company anticipates CAD per share accretion of approximately
6%.
Additional details on the Plan and the Oregon disposition can be
found in a supplemental presentation posted to Rayonier’s website.
Further details on Rayonier’s progress toward achieving $1 billion
of targeted asset sales will be provided as future transactions are
completed, as well as at an upcoming Investor Day on February 28,
2024 in New York City.
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 the Oregon disposition will not be
completed on a timely basis or at all; the risk that the remaining
$1 billion of select assets sales does not occur on the
contemplated timetable or at all; the risk that we will not be able
to reduce our existing debt in accordance with 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 (“REIT”) 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.
*Non-GAAP Financial Measures – To supplement Rayonier’s
financial statements presented in accordance with generally
accepted accounting principles in the United States (“GAAP”),
Rayonier uses certain non-GAAP measures, including “cash available
for distribution,” “pro forma operating income (loss),” “pro forma
net income,” and “Adjusted EBITDA”. Rayonier’s definitions of these
non-GAAP measures may differ from similarly titled measures used by
others. These non-GAAP measures should be considered supplemental
to, and not a substitute for, financial information prepared in
accordance with GAAP.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231101867361/en/
Investors: Collin Mings, investorrelations@rayonier.com,
904-357-9100 Media: Alejandro Barbero,
alejandro.barbero@rayonier.com
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