Backcourt
As March approaches, much of the nation gets excited for basketball madness. At Forisk, March also marks a time to review the previous year. This time last year, we noted that timberland transactions bounced back in 2021. For context, total sales jumped more than a million acres in 2021, rising 61% from 2020 to just under 2.8 million acres. At the time, this represented the largest single-year change since 2016. Much of this sales volume (~45%) took place in the U.S. West. The South accounted for 38% and the Northern U.S. comprised the balance. By all accounts, 2021 was a rebound year for timberland transactions.
Frontcourt
Although, if 2021 was a rebound, 2022 volumes set us on the fast break. Over 4.4 million acres closed in 2022, an increase of roughly 1.7 million acres. This represents a growth of 61%, matching the growth number for 2021. This sales volume represents the highest single year total since 2016, when Weyerhaeuser and Plum Creek merged (see Figure). Regionally, most of the acreage was in the U.S. South, accounting for 57% of the total volume. The Northern U.S. comprised 33% while the West accounted for the balance.
A handful of large transactions drove the year-over-year increase. Notably, Blue Source Sustainable Forests Company (BSSFC), a subsidiary of Anew Climate, purchased 1.7 million acres from the Forestland Group for $1.8 billion. The properties spread across 17 states and consist of primarily hardwood forests. According to BSSFC, they plan to generate most of their revenue from carbon deals. Whereas logging comprised 80-90% of revenue before, new targets are much smaller, about 10-20%[1].
Other notable transactions include the redemption transaction between Ontario Teacher’s Pension Plan (OTPP) and Resource Management Service and merger of PotlatchDeltic and Catchmark. The former saw OTPP assume direct ownership of more than 870,000 acres across the U.S. South[2]. Meanwhile, the Potlatch-Catchmark merger resulted in PotlatchDeltic picking up 350,00 thousand acres across Alabama, South Carolina, and Georgia[3]. These and other large transactions helped push 2022 volumes to the second highest level in more than a decade. Let’s hope to ‘carry’ this momentum into 2023. Forgive the pun, it was an easy lay-up (okay maybe we are a little excited for basketball too).
[1] https://carboncredits.com/1-8-billion-bet-on-the-forest-carbon-markets/
[2] https://www.otpp.com/en-ca/about-us/news-and-insights/2022/ontario-teachers–investment-vehicle-assumes-ownership-of-870-00/
[3] https://investors.potlatchdeltic.com/news-and-events/news-releases/press-release-details/2022/PotlatchDeltic-and-CatchMark-to-Combine-to-Create-a-Leading-Integrated-Timber-REIT/default.aspx
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Tyler, does Forisk also track transaction count data? The number of timberland transactions that happened during 2023. It appears 65% of the 2022 acres sold were accounted for in 3 transactions mentioned above. I would be curious how the count compares to 2018, 2019, and 2021
Thanks Kyle. That is a fair point. Forisk does track the number of deals in addition to details about underlying timberland transactions. That said, year-over-year comparisons will depend on what type of transactions in which you are interested. Assuming you might be interested in industrial tracts (e.g. larger than 10,000 acres), the number of transactions was slightly below counts for 2018-2019 and 2021 but still comparable. On the other hand, 2020 was much lower by comparison.