12/15/2009 | By Allen Kenney
By Allen Kenney
Forest products purveyor Weyerhaeuser Company announced Dec. 15 that it intends to elect REIT status.
The conversion likely won't come until 2010 "based on circumstances as we know them today," according to Chuck Williamson, Weyerhaeuser's chairman. When determining the proper time to convert, the company's board will factor in the economic climate, any potential changes to tax policy and its distribution of earnings and profits, Weyerhaeuser said in its announcement.
"Our company will be enhanced by the REIT structure," said Dan Fulton, the company's president and chief executive officer. "This conversion will position us to be more competitive in our timberlands business. In addition, we are able to convert with our existing business mix of timberlands, wood products, cellulose fibers and real estate."
Paul Latta, an analyst who covers the timber industry for McAdams Wright Ragen Inc., said Weyerhaeuser made the move to enhance its tax efficiency. He pointed out that Weyerhaeuser actually is the last major timber company to elect REIT status, so the announcement may be the last the sector sees for an extended period of time.
"Most of Weyerhaeuser's peers in the timber business are set up as REITs," Latta said.
Weyerhaeuser is projecting earnings and profits to total just under $6 billion in 2010. The company has a total market capitalization of roughly $9 billion, which would make it one of the 10 largest REITs on the market.