The following post is an excerpt from the Q4 2025 Forisk Research Quarterly (FRQ).

 

October’s merger announcement between PotlatchDeltic and Rayonier made big news in the timberland world. The resulting company will comprise each firm’s roughly 2 million acres, PotlatchDeltic’s manufacturing assets and know-how, and Rayonier’s recently strengthened balance sheet. Benefits include more diversity in income generation and capital allocation options. With both firms trading at a discount to NAV when compared to NCREIF Timberland values, opportunities for private market timberland transactions have been challenging. The ability to expand the manufacturing side of the business provides another way to grow and capture additional value from the forest industry supply chain.

 

On October 14, 2025, the firms held an investor call to announce the merger. In response to a question regarding the two firms trading at a discount to NAV, PotlatchDeltic CEO, Eric Cremers stated that, “public market investors are very focused on the near term. And for our businesses, we’re really tied to the housing cycle at the end of the day. It’s all about saw log prices and to some extent lumber prices”. To evaluate the relationship between lumber prices and timber REITs, we compared the PPI Lumber Index to the Forisk Timber REIT (FTR) index for the last 10 years (Figure 1). Using monthly data, the correlation between these two series is 0.71. REIT equity values do indeed tend to track with lumber prices.