Timber REIT Sees Growing Demand for Pulp Wood

The demand for pulp wood has been strong in the first half of the year and growing ever since the economic downturn, according to Paul Boynton, chairman, president and CEO of Rayonier (NYSE: RYN).

In a video interview with REIT.com at REITWeek 2012: NAREIT's Investor Forum in New York, Boynton discussed the demand for the timber REIT's products. Rayonier has a market cap of $5.4 billion and owns and manages 2.7 million acres of property worldwide.

When the economic downturn became evident Boynton said the company recognized that the value for lumber was going to diminish. As a result the company decided to preserve its timber product and put more emphasis onto the pulp wood business.

Boynton said the southeast portion of the U.S.is typically a 50 percent lumber and 50 percent pulp wood type of market. However, he said as the demand for pulp wood continues to grow that 50/50 market has changed to reflect a 70 or 80 percent pulp wood market.

The company has a real estate business that consists of 200,000 acres of property stretching along the Interstate 95 corridor spanning from Savannah, Ga., to Daytona, Fla. It also has a performance fibers business. Boynton said Rayonier is the world's leading manufacturer of highly purified cellulose, which goes into commercial products like television screens and pharmaceuticals. The performance fibers operation continues to be a profitable business for Rayonier with "tremendous growth over the last five years," he said.

Rayonier is now planning a $300 million expansion to its Jesup, Ga., facility for the production of performance fibers.

"We will add 190,000 tons of incremental production. The great thing about this is it's already 85 percent sold, even though the expansion won't come on line until a year from now," Boynton said. "So, again, it's a tremendous business and exciting growth for us."