CatchMark President and CEO Jerry Barag presented at the REITWeek: 2018 Investor Conference in NYC on 6/05/18.
Barag said the land was previously owned by Temple-Inland and sold to private equity about ten years ago.
I owned Temple-Inland back in 2007. Carl Icahn, who owned 8 percent of the company, urged the board to sell off assets. Campbell Group paid $2.38 billion for 1.55 million acres - about $1,535 per acre. As a result of the sale, shareholders received a $1.1 billion dividend.
CTT and its partners are now paying $1,264 per acre for land previously sold for $1,535 acre. This is a distressed sale.
Barag told the audience that the property is being acquired at a 30 to 35 discount to normal market prices today. The property has issues. The biggest issue is the that land has been “generally over-harvested” during the past ten years, which means the income potential is expected to be “severely impaired” over the next four to five years. The other investors in the partnership will pay an asset management fee to CTT to replace its income loss on the property over the next five years.
"Someone said it takes 30 years to be an instant success" - Gabriel Barbier-Mueller, CEO of Harwood International