CatchMark's Triple T Joint Venture and Georgia-Pacific Amend Wood Supply Agreement (6/24/20)
ATLANTA, June 24, 2020 /PRNewswire/ -- CatchMark Timber Trust, Inc. (NYSE: CTT) announced today that its Triple T joint venture has amended its wood supply agreement with Georgia-Pacific WFS LLC (Georgia-Pacific) intended to achieve market-based pricing on timber sales. CatchMark invests in 1.1 million acres of prime East Texas timberlands through Triple T and acts as the general partner of the venture on behalf of a consortium of institutional investors.
Under the amended supply agreement, Triple T also will be able to increase reimbursement for extended haul distances, sell timber to other third parties, and expand its ability to sell large timberland parcels to third party buyers. The supply agreement between Triple T and Georgia-Pacific has also been extended by two years from 2029 to 2031, with optimized harvest volume obligations to enhance and preserve long-term asset value. For these amendments to the agreement, Triple T paid Georgia-Pacific $145 million.
CatchMark Chief Executive Officer Brian Davis said: "We expect this agreement with Georgia-Pacific to result in increased returns for all Triple T investors, including CatchMark, over the life of the joint venture. We expect these amendments to increase cash flows from timber sales at market-based prices based on customary pricing mechanisms, improve the value and marketability of the property for the long-term, and significantly enhance Triple T's ability to make opportunistic timberland sales as well as recapitalize our investment."
"Georgia-Pacific Building Products appreciates the partnership we have with Triple T," said Tim Chatlos, a spokesperson for Georgia-Pacific. "This agreement creates value for both our companies and allows us to continue our partnership into the future."
John Rasor, President of Triple T, said: "Georgia-Pacific has been and continues to be integral to the success of Triple T and we appreciate how they worked with us to achieve this mutually beneficial agreement."
Rasor added: "Our operations can now realize the full potential of Triple T's premier timberland holdings to optimize future cash flow and value. In particular, a rapidly improving inventory profile will result in enhanced harvest opportunities now with greater revenue growth."
In connection with the Georgia-Pacific agreement, CatchMark also reported making an amendment to the Triple T joint venture agreement with its institutional partners to increase its asset management fee for the next two years, reflecting the impact of the Georgia-Pacific payment on the timberland investment. This amendment is immediately CAD accretive to CatchMark.
In July 2018, CatchMark invested $200 million in forming Triple T, which acquired the East Texas timberlands, subject to the Georgia-Pacific supply agreement, for approximately $1.39 billion. Its Triple T partners include BTG Pactual Timberland Investment Group, Highland Capital Management, Medley Management Inc., and British Columbia Investment Management Corporation.
The Triple T joint venture made the acquisition, intending to amend the Georgia-Pacific supply agreement and maximize asset value. The timberlands feature a rapidly improving inventory profile and above-average site index. The original transaction has met all operating benchmarks to date.
Perella Weinberg Partners LP advised Triple T in the transaction.
About CatchMark Timber Trust, Inc.
CatchMark (NYSE: CTT) seeks to deliver consistent and growing per share cash flow from disciplined acquisitions and superior management of prime timberlands located in high demand U.S. mill markets. Concentrating on maximizing cash flows throughout business cycles, the company strategically harvests its high-quality timberlands to produce durable revenue growth and takes advantage of proximate mill markets, which provide a reliable outlet for merchantable inventory. Headquartered in Atlanta and focused exclusively on timberland ownership and management, CatchMark began operations in 2007 and owns interests in 1.5 million acres* of timberlands located in Alabama, Florida, Georgia, North Carolina, Oregon, South Carolina, Tennessee and Texas. For more information, visit www.catchmark.com.