Rayonier, Inc. The stock has won 9.6% against a 2.5% decline in the past month.
This Timberland Real Estate Investment Trust (REIT), responsible for Zacks Rank #3 (Hold), is poised to be obtained by unlocking the long-term value of high and top use (HBU) development. Recent developments in biological genetics and cloning continue to drive the company’s momentum. Its healthy balance sheet is a sign for long-term growth.
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Decipher the factors that may be behind the stock price surge.
Rayonier enjoys a solid portfolio of Timerland in some of the most productive timber growing regions of the Southern United States, the Pacific Northwest and New Zealand. The company has emerged as a major “pure play” lumber REIT. As of December 31, 2024, its portfolio included 1.75 million acres in the Southern United States, 308,000 acres in the Pacific Northwest United States, and 412,000 acres in New Zealand. Over the past few years, wood production and capacity has grown considerably in the southern United States. With approximately 71% of the company’s Southern Timberland at the top of the quartile market, the company can benefit from the positive trends.
This month, Rayonier announced that Ents LP, an investment fund managed by Rohatyn Group, will be selling it for $710 million to a 77% New Zealand joint venture. The exit will allow the company to concentrate on its core US markets. The transaction is expected to end in 2025.
Rayonier is always trying to find alternative uses for HBU’s Timberlands. The coastal corridors, primarily in Florida and Georgia, have many attractive HBU opportunities in the southern United States. The company focuses on unlocking the long-term value of its HBU development and rural real estate portfolio into the real estate segment. It is encouraged by the continued strong demand and realisation of HBU properties. The current pipeline expects another solid year for both rural land sales programs and improved development projects.
The company’s business has benefited greatly from recent developments in the field of biogenetics and cloning, which has faster tree growth and ensures the right size for maximum extraction of wood.
Rayonier’s strategic measures have significantly strengthened the balance sheet position. The company reported $323.2 million in cash and cash equivalents in the fourth quarter of 2024. The weighted average maturation of the debt portfolio was about four years, and there were no major debt expirations until 2026.
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