Rayonier to Buy 176,000 Acres of Timberland

Aug. 15, 2006 (Press Release) - Rayonier said today it has entered into agreements to purchase approximately 176,000 acres of timberland in six states for $160 million from funds managed by GMO Renewable Resources, LLC. The transaction is expected to close in the fourth quarter.

"These transactions have several positive attributes," said Lee Nutter, Chairman, President and CEO. "They fit our strategy of increasing both the size and geographic footprint of our timberland holdings. The timber is of high quality, enhances our product mix through the addition of several high-value hardwood species and is located in areas of strong demand."

The largest single block of fee timberland (75,000 acres), located in upstate New York, contains high-value hardwoods, including black cherry, sugar maple and yellow birch, and is near very strong hardwood and veneer markets in the U.S. and Canada. The remaining timberlands, which include 40,000 acres of timber deeds and leases, are in five Southern states with well-established sawtimber and pulpwood markets: Texas (31,000 acres), Oklahoma (30,000 acres), Arkansas (27,000 acres), Alabama (11,000 acres) and Louisiana (2,000 acres). The Southern properties are stocked primarily with loblolly pine.

Another significant attribute of these transactions is the tax benefits they provide. "By acquiring properties through tax-efficient 'like-kind exchanges,' we will be able to defer, and eventually eliminate, taxes on income from real estate sales," Nutter said.

GMO Renewable Resources, LLC, is an affiliate of Grantham, Mayo, Van Otterloo & Co., LLC (GMO), a global investment management firm.

With just over 2 million acres, Rayonier currently is the seventh largest holder of timberland in the U.S. with about 817,000 acres in Georgia, 459,000 acres in Florida, 371,000 acres in Washington and 358,000 acres in Alabama. This acquisition would increase the company's U.S. holdings to approximately 2.2 million acres. The company also holds a 40 percent equity interest in a joint venture in New Zealand, which owns about 350,000 acres of timberland, and acts as the manager of the joint venture.

SOURCE: Rayonier

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