Benzinga | Oct 15, 2021 07:09AM EDT

CatchMark Timber Trust Reports Deal With Joint Venture Partners In TexMark Timber Treasury On Redemption Of Common Equity Interest In Triple T For $35M In Cash

CatchMark Timber Trust, Inc. (NYSE:CTT) today announced that it reached a definitive agreement with its joint venture partners in TexMark Timber Treasury, L.P. (Triple T) on the redemption of its common equity interest in Triple T for $35 million in cash and closed the transaction upon signing. CatchMark also entered into an agreement pursuant to which it will continue to provide certain asset management services to the joint venture through the first quarter of 2022 in exchange for an additional $5 million services fee, which was also paid to CatchMark at the time of closing. The $40 million of proceeds will be used to pay down existing debt.



CatchMark Chief Executive Officer Brian M. Davis said: "One of our primary objectives over the last year and a half has been maximizing CatchMark's exit value from Triple T. This transaction was the best course to support long-term growth in light of CatchMark's position in the Triple T capital structure and the required per acre price increases needed to satisfy our partners' accruing preferred return. It is also another important step in delivering on our strategy of simplifying our business model to focus on our core portfolio, strengthening our balance sheet, and positioning the company for future growth."

Impact to Annualized Dividend Rate

CatchMark expects to pay a new annualized dividend rate of $0.30 per common share, beginning with the fourth quarter of 2021. This adjustment reflects the loss of asset management fee revenue from the Triple T joint venture. The company has declared a cash dividend of $0.075 per share for its common stockholders of record as of November 30, 2021, payable on December 15, 2021.

Douglas D. Rubenstein, Chairman of the Board for CatchMark said: "We believe the right-sizing of CatchMark's annualized dividend rate is a prudent decision that will enable the company to prioritize investing in the growth of its core portfolio which will ultimately enhance earnings growth and net asset value over time. In addition, the anticipated annualized dividend rate for 2022 should enable us to maintain our historical payout ratio of 75% to 85% of cash available for distribution."

Affirmation of 2021 Adjusted EBITDA Guidance

Given the continued strong performance from the execution of its core strategy, the company expects 2021 Adjusted EBITDA to be at the top-end of its previously announced guidance range.

Long-Term Growth Strategy Update

Davis continued: "Looking ahead, we see strong growth prospects for CatchMark. We continue to build a robust pipeline for acquisitions to grow our portfolio of prime timberlands in superior mill markets in the U.S. South, the nation's premier timber basket, and to further strengthen our industry-leading harvest EBITDA per acre while maintaining stable merchantable inventory per acre. We are focused on identifying and executing attractive acquisition opportunities that include a high allocation of pine plantations with strong site indices as well as above average operability. We will execute on acquisitions that either enhance our near-term timber revenue with high merchantable stocking levels with an older average age or complement our long-term portfolio objectives that will balance portfolio age class distribution and productivity."

CatchMark sees additional value creation opportunities from the following environmental initiatives that could represent up to 20% of future cash available for distribution:

* Carbon sequestration

* Wetlands mitigation banking

* Solar projects

Consistent with its strategy since inception, the company also intends to maximize long-term returns by achieving an optimum balance among biological timber growth, generation of current cash flow from harvesting, and responsible environmental stewardship. Beginning in 2022, CatchMark expects to:

* Deliver annual harvest volume in the range of 1.6 million tons to 1.8 million tons, excluding acquisitions. These harvest volumes are consistent with historical productivity on a per acre basis.

* Expand annual timberland sales targets, in light of unprecedented retail demand, from about 2% to approximately 3% of its fee timberland acreage, which could increase total land sales revenue to approximately $20 million next year compared to the $13 million to $15 million targeted for 2021.

Note: Cash available for distribution and Adjusted EBITDA are non-GAAP financial measures. See discussion below.