Jerry Barag, president and CEO of CatchMark Timber Trust (NYSE: CTT), participated in a video interview at Nareit’s REITworld: 2018 Annual Conference in San Francisco.
Barag talked about the impact of Hurricane Michael in Georgia and South Carolina in October, noting that CatchMark only had about 400 acres affected out of more than 500,000 acres that the company owns.
“Hurricanes are a fact of life in the timberland industry,” he said. “The major impacts really come from wind damage, as opposed to flooding afterwards. The trees are more than likely to stand up to whatever residual flooding happens afterwards.”
Barag said that most of the impact from a hurricane on timberland happens within 15 to 25 miles of the coast, since the winds are the strongest as they come onshore. “Then they abate pretty rapidly and the trees themselves are able to withstand them,” he said. “That’s 90 percent of how you manage against hurricane risk in timberland.”
Barag said that CatchMark is committed to conscientious forest management, adding that the REIT and other responsible timberland owners subscribe to a certification process administered by the Sustainable Forestry Initiative.
“Timberland, as you might expect, is a heavily regulated industry,” he said. “Generally, those regulations happen at a state level and at a local level where timberland practices are much more dictated.”
Barag also talked about how CatchMark officially entered the Pacific Northwest in August when it acquired more than 18,000 acres of prime Oregon timberland.
“In the U.S. … there are really only two major operating regions: The U.S. South, where we’ve conducted all of our operations since the IPO five years ago; and the Pacific Northwest, which is the other major operating area,” he said.
Barag said the acquisition offers geographic diversification benefits in addition to a cash flow and customer concentration. He said he expects the Pacific Northwest operations to grow over time and become a “natural part of our business.”