CatchMark's Triple T joint venture and Georgia-Pacific amend wood supply agreement
June 25, 2020
TEXAS (News release) -- CatchMark Timber Trust, Inc. announced that its Triple T joint venture has amended its wood supply agreement with Georgia-Pacific WFS LLC intended to achieve market-based pricing on timber sales. CatchMark invests in 1.1 million acres of prime East Texas timberlands through Triple T and acts as the general partner of the venture on behalf of a consortium of institutional investors.
Under the amended supply agreement, Triple T also will be able to increase reimbursement for extended haul distances, sell timber to other third parties, and expand its ability to sell large timberland parcels to third party buyers. The supply agreement between Triple T and Georgia-Pacific has also been extended by two years from 2029 to 2031, with optimized harvest volume obligations to enhance and preserve long-term asset value. For these amendments to the agreement, Triple T paid Georgia-Pacific $145 million.
In connection with the Georgia-Pacific agreement, CatchMark also reported making an amendment to the Triple T joint venture agreement with its institutional partners to increase its asset management fee for the next two years, reflecting the impact of the Georgia-Pacific payment on the timberland investment. This amendment is immediately CAD accretive to CatchMark.
In July 2018, CatchMark invested $200 million in forming Triple T, which acquired the East Texas timberlands, subject to the Georgia-Pacific supply agreement, for approximately $1.39 billion. Its Triple T partners include BTG Pactual Timberland Investment Group, Highland Capital Management, Medley Management Inc., and British Columbia Investment Management Corporation.
The Triple T joint venture made the acquisition, intending to amend the Georgia-Pacific supply agreement and maximize asset value. The timberlands feature a rapidly improving inventory profile and above-average site index. The original transaction has met all operating benchmarks to date.