REIT sells 172,000 acres to Southern Pine Plantations

The REIT, Potlatch, has sold the "less productive" Idaho timberland, and is likely to record a $36m loss on the sale.

Real estate investment trust (REIT) Potlatch has sold 172,000 acres of Idaho timberland to the real estate sales agents and managers Southern Pine Plantations (SPP) for $114 million, according to the REIT’s annual report.

The property is likely to result in a $36 million book loss on the sale after taxes, to be recorded by Potlatch in the second quarter of this year. The land was first bought in 2007 to take advantage of a strong market for rural recreation in central Idaho at the time. But the owners of the nearby Tamarack Resort, a ski and outdoor activity community built in 2004 filed for bankruptcy in 2008.

“The attractive offer for our less productive central Idaho timberlands frees up our capital without having to wait for the real estate market to rebound,” Mike Covey, chairman and chief executive officer at Potlatch, said in a statement. “This will allow us to take advantage of our low public market valuation by repurchasing shares, as well as reduce our leverage by retiring debt.”

Potlatch’s board has approved a $60 million share repurchase programme from the sale proceeds, which will also be used for debt retirement. The REIT owns and operates about 1.4 million acres of timberland in Alabama, Arkansas, Idaho, Minnesota and Mississippi, according to its website.

SPP was founded in 1984, and manages over 150,000 acres of timberland in Florida, Georgia, Montana, South Carolina, Tennessee, Texas and Virginia, generating revenue from timber recreational opportunities and carbon sequestration. The firm also bought 4,002 acres from Williams and Parker this year, and purchased over 40,000 acres from Plum Creek, Mutual Land, Campbell, Hobcaw and CF last year. The cmpany also owns 40,000 acres of mineral rights in East Texas.