REAL ESTATE NEWS

PotlatchDeltic and Rayonier are merging to become leaders in both lumber manufacturing and land resources. The two REITS are expected to combine for an enterprise value of $8.2 billion ($1.1 billion of net debt) and a market capitalization of $7.1 billion, according to a statement released by the firms. As of PotlatchDeltic’s stock price at the close of October 10, the merger represents an 8.25 percent premium.

The new company, which will rebrand to a new name, will be roughly 54 percent controlled by Rayonier's shareholders, with PotlatchDeltic holding the remaining 46 percent.

The entity, which will be based in Atlanta, will manage a timberland portfolio that spans roughly 4.2 million acres in total, most of which (3.2 million) is located in the South region of the U.S, with the rest (931,000) in the Northwest. Also, the companies will combine for one plywood mill and six lumber mills that can hold a capacity of 1.2 billion board feet.

And importantly, the two companies specialize in maximizing value from real estate projects in rural areas in states including Georgia, Florida and Arkansas.

"We are excited to announce this strategic merger of equals, combining two exceptional land resources companies to deliver enhanced value for our shareholders and other stakeholders," Mark McHugh, president and CEO of Rayonier, said in a statement.

"Rayonier and PotlatchDeltic share a commitment to sustainability and a legacy of excellence in delivering land resources to their highest and best use. We look forward to completing the transaction, and we are confident that the merger will generate meaningful value creation.”

The new entity is expected to result in Net Debt to Enterprise Value of less than 15% and Net Debt to LTM Adjusted EBITDA coming in at about 2.5x. Plus, annual synergies are projected at roughly $40 million.

With the deal subject to closing conditions, the merger is anticipated to be completed during the first half of 2026.

Source: GlobeSt/ALM