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Rayonier Rides High on Strong Portfolio: Should You Hold?


We updated our research report on Rayonier Inc. RYN on Oct 12, 2016. As of Jun 30, 2016, this Jacksonville, FL-based timberland real estate investment trust (“REIT”) owned or leased around 2.7 million acres of timberlands across the U.S. and New Zealand.

The timberland portfolio of Rayonier is located in some of the most productive timber-growing regions of the U.S. South, Pacific Northwest and New Zealand. Further, due to favorable demand-supply dynamics, the company is enjoying better pricing power.

Rayonier aims at augmenting its timberland base through disciplined business deals. In early May, to improve its Pacific Northwest timberland portfolio, Rayonier closed two separate transactions. The first one was the acquisition of Menasha Forest Products Corporation in partnership with Atlanta-based Forest Investment Associates (“FIA”) for $263 million. The second deal involved the disposition of 55,000 acres of pre-merchantable timberland in Washington to FIA for around $130 million.

However, Rayonier faces intense competition from various local and national players regarding the quality and the price of the timberland. Further, timberland business is monitored by federal rules and state forestry commissions. In other words, timberland REITs have to abide by strict regulatory requirements compared with other industries.

Over the past seven days, the current quarter estimates have remained stable at 14 cents per share. The estimates for 2016 and 2017 have also remained unchanged at 42 cents and 47 cents per share, respectively over the same time frame.

Rayonier currently carries a Zacks Rank #3 (Hold).



Some better-ranked stocks in the same space include Arbor Realty Trust Inc. ABR, Crown Castle International Corp. CCI and Seritage Growth Properties SRG, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Current quarter estimates for Arbor Realty Trust and Crown Castle International remained stable at 16 cents and $1.13 per share, respectively over the last month.

Seritage Growth Properties’ current quarter estimates have moved up 7.5% over the past one month to 57 cents.

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