Major brands set their sights on timber market

Highlighting the growing importance of the forestry and timber sector on the investment world stage, The Guess Corporation has announced that it is to make several major acquisitions of tracts of forest land across the US.

The Durham, North Carolina-based company, which will be making the purchases through a subsidiary, The Guess Lumber Company, will be focusing its sights on tracts of land that are at least 100,000 acres in size and comprise both hardwood and softwood.

Via The Guess Lumber Company, the organisation will be expanding its timber acquisition business and has confirmed plans to change the name to The Guess Wood Company. It plans to partner with major timber buyers and aims to complete its first large timber purchase by August of this year, making use of timber management organisations to oversee the harvesting of the timber.

Currently, a team within the company is reviewing tracts of land located across the US in order to decide which to opt for. Whilst it began as a luxury goods holding company in 2012, focusing mainly on diamonds and selling to ultra-high net worth consumers, it has since branched out into numerous other business areas, with forestry one of its main targets.

Another organisation to be adding to its timberland portfolio this year is Rayonier Inc, which has confirmed that it has completed a purchase to boost its Pacific Northwest timberland portfolio. The purchase comprises 61,000 acres of productive timberlands based in Washington and Oregon — which included the acquisition of Menasha Forest Products Corporation. It is hoped that this new purchase will help to improve the sustainable yield from the land, as well as the species mix and market diversification of the company’s timberland portfolio.

The Menasha acquisition is comprised of around 85 per cent operable lands and also contains merchantable timber inventory of approximately 2.6 million tonnes, of which the majority is Douglas-fir. Rayonier hopes that this purchase will boost the company’s sustainable yield by around 305,000 tons annually, as well as increasing the company’s average annual harvest by approximately 320,000 tonnes over the coming five years.

David Nunes, the president and chief executive of Rayonier, said: “These transactions exemplify how Rayonier is improving value for our shareholders through active portfolio management and disciplined capital allocation. The combination of the Menasha acquisition and the Washington disposition will upgrade our timberland portfolio by increasing both our near-term harvest and long-term sustainable yield, improving our species mix, smoothing our age-class distribution, and diversifying our markets.

“Moreover, the acquisition of well-stocked timberland coupled with the disposition of predominantly pre-merchantable timberland will allow us to operate much closer to our long-term sustainable yield in the Pacific Northwest over the next several years and drive meaningful accretion to our CAD. We are very pleased to close both transactions with the assistance of Forest Investment Associates,” added Mr Nunes.

GWD Forestry spokesman James Barrett said: “It is no surprise that major brands across the globe are setting their sights on the forestry sector, as it offers sustainable, reliable returns in an otherwise uncertain economic climate. Timberland is beginning to play an ever more central role on the world investment stage and these two acquisitions look set to be the first of many made over the course of 2016 and in the years to come, as organisations look to expand their timber portfolios and reap the rewards of doing so.”

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