Island Timber, Canada
– High quality timberlands with access to export markets
Interest: 38%
Description
Island Timberlands owns approximately 634,000 acres of freehold timberlands, located principally on Vancouver Island with an estimated merchantable inventory of 58.0 million m3 that is primarily comprised of high value douglas fir, hemlock and cedar and with long-run sustainable yield of 1.8 million m3. Island Timberlands also owns approximately 33,000 acres of "higher and better use" lands.
Regulatory Environment
Operates in an unregulated environment
Cash Flow Profile
- By preserving the value of the timber by "warehousing," timberland owners can maximize the long-term value of the timberlands by matching harvest opportunities to market conditions.
- During periods of high prices, harvest levels are increased and, conversely, during weak pricing environments, timber harvests are curtailed.
Customer Base
Broad base of domestic and international customers.
Strategic Position
Due to its product mix as well as coastal access, its timberlands have significant flexibility to optimize the products that it harvests against market opportunities to enhance profitability.
Growth Opportunities
- We believe operating results will meaningfully improve following a recovery in new home construction in the U.S.
- Although it is difficult to predict the timing, we believe as a result of substantial surplus of merchantable inventory, we expect to increase harvest levels by 25% (relative to 2008 levels) and sustain this for a 10-year period before returning to the long-run sustainable yield.