Jerry Richards - Vice President and CFO
Mike Covey - Chairman and CEO
Eric Cremers - President and COO
George Staphos, Bank - America, Merrill Lynch
Collin Mings - Raymond James
Chip Dillon - Vertical Research
Mark Weintraub - Buckingham Research
We announced this morning that we have sold 172,000 acres of timberlands in Central Idaho for $114 million. As many of you know, Central Idaho is our realized strategic timberland holding based on productivity and location.
This attractive sale provides the opportunity to take advantage of the dislocation in our public equity value. Our board is authorized to repurchase up to $60 million of our shares. Not only do we have a current opportunity to buy our shares at a discount in net asset value, we would get an immediate return of 4.4% which is the current dividend yield on our shares.
On Slide 5, you referenced that $2000 per acre appraisal for 350,000 acres of Northern Idaho Timberlands. Just curious, the teams thoughts about how appropriate or valid that appraisal, that data point would still be, given to your point about maybe hitting the lands more aggressively given the maturity profile of the acreage in Northern Idaho. How much comp is that or how much sense does that four-year old comp make at this point?
Now in that appraisal, I’m sure the forecast or the appraisal assume that lumber prices were going to be moving higher and log prices along with it, and that’s exactly what happened. But if I had the guess, I’d say that appraisal is still very accurate and if we had another appraisal done today, it would be very consistent with the appraisal that was done back in 2012.
When you look at the southern lands, I don't know if you would venture a guess here, but we saw recently, actually four state-pension plans step up and buy land across seven states. I am sure you are familiar with what I am talking about, at an implied value of $2150 per acre. Are there reasons why your lands in the South would be not comparable to those lands in terms of what you think the value would be?
Well every acre in the south of course is - markets are different, and productivity of the acres is different. I think collectively as we look at the property, that was transacted, I think it was about 250,000 acres in five states. The side index was slightly higher than some of our land in general. Stocking level were perhaps slightly higher, some of it in the Carolina's and Georgia probably is in better stronger market than say Mississippi or Alabama. But on average I think our properties fairly comparable, perhaps slightly less but not much I think certainly – we said southern timberland roughly is worth $2000 in acre and I think ours would stack up comparable to that.
And then last question is, as you've been involved with talking to folks involved in timberland, five years ago, our view was that, well it's inevitable that rates go up and the pension obligations need to be paid out, so there's going to be an overhang.
I'm not so sure about the pension obligations, but what we do see, of course, is, not only continued low rates, but even negative rates in other parts of the world which makes, obviously, the current return on timberland just a tremendous positive relative to being a German pension plan and getting basically 20 basis points in a 10-year bond. With that backdrop, would you say that looking at various sales situations, that it's a lot more active on the buyer's side in U.S. timberland than say 2 to 3 years ago? Are you seeing more interest and, therefore, that what's makes you more of a seller than a buyer at this point?
Well there’s two questions there. The reason that we are a seller is we felt that the best opportunity to buy timberlands was to buy our own trees that we think are dramatically undervalued when the stock went trading at in the $30 to $35 price range, when our net asset value is roughly $45 according to analysts. So the best opportunity for us is been to buy our own stock and in order to do that, we felt that it made sense to sell land.
In terms of the number of – there’s certainly a number of properties that are going to be coming on to the market as some of these TIMO funds mature. We think that there is ready capital there to be deployed. I don’t think there is any more today than there was 3 years ago. I think the amount has been fairly stable.