Weyerhaeuser has announced its intention to follow the example of other US forest product companies and convert itself into a real estate investment trust (REIT).
It is also selling its Warrenton lumber mill in Portland, Oregon to forest product firm Hampton Affilliates, which will idle the facility for 9-12 months while extensive machinery upgrades are carried out.
The REIT move, scheduled to take place during 2010, will give Weyerhaeuser certain tax breaks but requires the business to pass on earnings to shareholders resulting in fewer retained earnings and more dependence on capital markets.
“The conversion will position us to be more competitive in our timberlands business,” said Dan Fulton, Weyerhaeuser president and CEO.
“In addition, we are able to convert with our existing business mix of timberlands, wood products, cellulose fibres and real estate.”
A date has not yet been set for conversion, though it is likely to take place during 2010.
Weyerhaeuser said the state of the economic recovery, changes in tax policy and the distribution of earnings and profits required under tax laws would all be considered before determining the timing of REIT conversion.
Other US forest product firms that are already REITs include Plum Creek, Rayonier and Potlach.
Meanwhile, Hampton Affiliates said it was excited about its purchase of Weyerhaeuser’s Warrenton mill, due to the facility’s excellent log sourcing location and its reputation as a quality supplier.
