ATLANTA (News release) -- CatchMark Timber Trust, Inc. announced its Triple T joint venture has reached a definitive agreement with a client of the Hancock Natural Resource Group, Inc., a Manulife Investment Management company, to sell 301,000 acres of prime East Texas timberlands for approximately $498 million in cash, or approximately $1,656 per acre. CatchMark serves as the asset manager and general partner of the venture on behalf of a consortium of institutional investors.
The property to be sold represents a portion of the 1.1 million acres in East Texas owned by Triple T, which was purchased in July 2018 for $1,264 per acre. The transaction is expected to close in the third quarter of 2021, subject to customary closing conditions. The proceeds of the sale will be used to reduce Triple T's leverage and to pay down a portion of the preferred partnership interests in the joint venture.
CatchMark Chief Executive Officer Brian M. Davis said: "Over the past three years, we have enhanced Triple T's financial performance and increased its per acre value. We have delivered value at the asset-level, as exemplified by the amended supply agreement negotiated with Georgia-Pacific last year, which enables Triple T to achieve market-based pricing on timber sales and expands its ability to sell timber and timberland parcels to other third parties. This transaction underscores our commitment to act decisively to pursue recapitalization opportunities for Triple T and we will continue to take further steps to unlock the value of the asset."
As of January 1, 2021, Triple T has increased its merchantable tons per acre by 16%, to nearly 41 tons per acre, and increased its site index by 7% as a result of improved silvicultural practices. Triple T increased annual revenue by 55% as compared to the year before the joint venture's inception in 2018 by not only successfully operating under its two market-based wood supply agreements, but also unlocking value through a robust land sale program.
Mr. Davis continued, "Today's announcement, as well as our recently announced agreement to sell our Oregon property, advances our strategy of prioritizing the growth of our core portfolio of prime timberlands in superior mill markets in the U.S. South. This is where we already operate a robust platform and see the greatest opportunity to support future growth. We believe that executing this strategy will enable us to deliver sustainable and predictable cash flows and maximize shareholder value."
Perella Weinberg Partners and Raymond James acted as financial advisors and Smith, Gambrell & Russell, LLP acted as legal advisor to the Triple T joint venture in the transaction.