We got here throughout a bullish thesis on Rayonier Inc. (RYN) on Substack by Waterboy Investing. On this article, we are going to summarize the bulls’ thesis on RYN. Rayonier Inc. (RYN)’s share was buying and selling at $25.06 as of April sixteenth. RYN’s trailing and ahead P/E have been 10.49 and 44.05 respectively in response to Yahoo Finance.
Aerial view of Timberland Actual Property Funding Belief’s woodlands within the U.S. South and Pacific Northwest.
Rayonier (RYN), a timberland-focused REIT, presents a compelling funding alternative with important upside pushed by a deep low cost to its underlying asset worth, a transparent strategic route, and a number of long-term catalysts. The corporate owns 1.75 million acres within the U.S. South and 308,000 acres within the Pacific Northwest. In a current transfer aligned with its technique to unlock worth, Rayonier bought its 77% stake in a New Zealand three way partnership for $710 million, implying a $922 million complete valuation or $3,212.54 per acre. The sale marked a key step towards the corporate’s broader $1 billion asset sale purpose and brings complete cumulative disposition proceeds to $1.45 billion. Following this transaction, Rayonier’s internet debt was lowered to $132.7 million.
A back-of-the-envelope NAV calculation assigns $2,475 per acre to the U.S. South property and $3,500 per acre to the Pacific Northwest holdings, leading to an estimated $5.27 billion NAV versus a present market cap of $3.80 billion. This means a NAV per share of $33.77 versus a share worth of $24.38, reflecting a 27.8% low cost—or 38.5% potential upside. Administration seems assured on this valuation hole, having approved a $300 million inventory buyback program, equal to 7.9% of the market cap.
Whereas Rayonier generated roughly $230 million in timber-related money stream final 12 months (together with from New Zealand), it’s evolving past a pure-play timber enterprise. It’s remodeling right into a land assets firm with rising publicity to higher-and-better use (HBU) alternatives corresponding to photo voltaic growth, carbon seize and storage (CCS), and actual property. Based on CEO Mark McHugh, changing simply 1% of the corporate’s land into these higher-value makes use of with a ten–15x worth uplift might translate into a ten–15% enhance in general firm worth—rising exponentially with higher land conversion.
Rural HBU land values have surged, with common sale costs rising from $2,763 (2015–17) to $4,468 (2021–24), and premiums over timberland values rising from 55% to 117%. Rayonier ended 2024 with 39,000 acres underneath photo voltaic possibility agreements, up from 27,000 a 12 months prior. CCS leases expanded to 154,000 acres in 2024, up from 26,000 in 2023, together with a 59,000-acre lease with ExxonMobil. Moreover, the Wildlight and Heartwood growth initiatives surpassed $100 million every in cumulative income, with 26,700 entitled acres supporting 37,000 housing models and 44 million sq. ft of business growth.
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