Brian Davis, president and CEO of CatchMark Timber Trust, Inc. (NYSE: CTT), participated in a video interview in conjunction with Nareit’s REITweek: 2021 Investor Conference.
Davis discussed some of the factors behind the run up in lumber prices and how CatchMark is poised to benefit.
Davis noted that even though capacity in milling operations has grown 20% since 2018, it’s still under capacity relative to 2004-2006 levels. Other factors contributing to elevated lumber prices include the aging of the housing stock, low levels of housing supply, demand for homes from millennials, low interest rates, and work from home-related renovations.
Davis said he expects lumber prices to remain high for the next three to five years, probably not at their current levels, but “well above historical averages.” During the first quarter, CatchMark saw a 9% increase in its product pricing. “We anticipate keeping that,” he said.
Meanwhile, Davis commented on CatchMark’s efforts to shore up its capital position by reducing leverage and making share repurchases. He noted that the REIT has had a rather modest acquisition pipeline, but that opportunities are likely to pick up heading into 2022.