Rayonier Inc. (RYN) Earnings Call Transcript & Summary

Welcome to Citi's 2024 Global Property CEO Conference. I'm Anthony Pettinari with Citi Research. And we're pleased to have with us Rayonier and CEO elect, Mark McHugh. This session is for Citi clients only. So if media or other individuals are on the line, please disconnect now. Disclosures are available on the webcast and at the AV desk. And for those in the room or on the webcast, you can go to liveqa.com and enter code GPC24 to submit any questions. If you don't want to raise your hand. So Mark, I'll turn it over to you, to introduce your company and your team and provide any opening remarks and top investors, should buy your stock.

Thanks, Anthony, and I'm joined by Dave Nunes, our current CEO. We had a 3-hour Investor Day presentation last week, and then we did the 20-minute version of that in an investor conference yesterday. So perhaps I'll just hit some highlights that most recent Investor Day presentation, and then we can leave plenty of time for Q&A. So we have a presentation posted to our website, which is a short form version of the Investor Day presentation that we gave last week. So starting on Page 3, which is a brief snapshot of where we are today. Rayonier is 1 of 3 publicly traded timber REITs. But we like to think of ourselves as the only pure-play REIT. The company was founded in 1926 almost a 100-year history. Today, we own or lease roughly 2.7 million acres of timberlands that generate a sustainable yield of roughly 11 million tonnes annually. We define sustainable yield as the volume of timber that we harvested into perpetuity. It's really a concept of harvesting growth. We believe that this disclosure is an important part of our commitment to transparency and sustainability. The chart on the right shows our EBITDA breakdown in 2023. As you can see, roughly 70% of our EBITDA last year came from our timber segments with the balance of 30% coming from our Real Estate segment. And this has been pretty consistent over time. So next slide just hits on some of the key trends we're really seeing what we think is reshaping our industry. On high level, there are 2 key themes. The first is the low carbon economy transition. We really see this as a secular trend that's going to drive increased demand for land-based solutions as well as renewable wood-based products going forward. The second theme is the continued strength of the U.S. housing market. New home construction has proven to be remarkably resilient amid a higher interest rate environment. The housing sector remains significantly underbuilt. So we expect continued strength in this market particularly as mortgage rates begin to ease, which hopefully we'll see later this year. We also see very favorable migration and demographic trends that are benefiting our development projects in Northeast Florida and Southeast Georgia. So as these trends are really reshaping our industry, they're also reshaping how we think about our business. Increasingly, we've come to see ourselves as not just a timber company, but really more of a land resources company. As a land resources company, we're really looking at maximizing the value of our lands in a multitude of ways, again, including land-based solutions, including real estate development. And over time, we expect that a small portion of our lands will become much more valuable for these alternate uses. So next slide highlights why this matters and why we're excited about it. It illustrates the potential value uplift from transitioning an acre from timberland to one of these alternative uses. So for example, if you take an acre of U.S. South timberland that has a value of $2,000 to $3,000 per acre, and you're able to put a carbon capture and storage lease over that acre. That has the potential to lift the value of that acre up to 5x. If you're able to transition that acre into an improved development -- unimproved development use or a solar lease, it has the potential to lift the value of that acre up to 10 times. But if you were able to transition that acre into an improved development use, it has the potential to increase the value of that acre 15x or more. And so there were a very significant value creation opportunities that are emerging from these alternative land uses. And just to kind of put that in context, again, if we're able to convert just 1% of our lands to one of these higher-value uses that has a 10x or 15x value lift that obviously contributes to 10% to 15% value lift in the company. And we're really looking to convert much more than that over time. So it's really why we're excited about this and investing a lot of time and kind of building out these land-based solutions capabilities as well as our real estate development platform. So last week, during our Investor Day, we also rolled out a refreshed vision for Rayonier. We've long had a mission statement that was focused on generating industry-leading returns in our core timber business while, we absolutely still expect to focus on that objective. We also wanted to broaden the scope of how we think about our business to really match our new ambitions. And so our new vision for Rayonier is to realize the full potential of our land resources and meeting the needs of society. We intend to pursue this vision by focusing on 3 key pathways. The first is that we expect to continue to grow renewable force products to meet the world's growing need for wood-based materials. Secondly, we're going to deliver innovative land-based solutions, so we will contribute to decarbonizing the economy. And third, we're going to create inspirational places where people can live, work and recreate in a natural environment. And so our organization is very energized by this new vision, and we're eager to take it forward. So maybe I'll skip ahead now to Slide 15 that just touches on our development portfolio. So this slide provides a high-level overview of our development pipeline as well as the map of our holdings in Northeast Florida and Southeast Georgia. Rayonier's long had a large land position in this area as well as some very high-level entitlements. What we didn't have until 2016 was a comprehensive strategy to unlock value in this area. So what happened in 2016 is that we launched our Wildlight project. So the first phase of Wildlight was contemplated as a 300-acre village center with a 10-year development horizon. And it candidly came with a lot of questions in terms of why are we doing this, your forestry company do you really want to be in the real estate development business. And the reason was the scale of our holdings in this area. We own 25,000 acres within a 5-mile radius of that initial phase of Wildlight. We own 50,000 acres in a 10-mile radius. So our strategy was never really about the IRR that we are going to generate on that initial phase. So it's really about the value creation potential that those investments would have across a very large footprint that we own in that area. So fast forward almost 10 years. And this value potential is really starting to take shape. We've now dialed into a portfolio of roughly 50,000 acres. So we expect we'll have this development potential over the next 5 to 10 years as well as 70,000 acres that we expect we'll have longer-term development potential. So now let's dig into land-based solutions. So this chart on the left here on Slide 16, this is a global path to net 0 to limit global warming to 1.5 degrees. It seems a 50% reduction in emissions by 2030 and 90% reduction by 2050 with the balance of roughly 5 gigatons of emissions that seem to be offset with some form of negative emissions or carbon removals. So what this is really driving is significantly increased investment in decarbonization of the economy. So between 2020 and 2030, we expect to see 7x growth in solar -- utility scale solar capacity. And we expect to see 11x growth on carbon capture and storage, and we expect to see 6x growth in voluntary carbon markets. So it's a large landowner. This is really opening up some pretty significant opportunities for Rayonier. Slide 17 just lays out how we think about land-based solutions. And we tend to think of this as breaking down into 3 categories. So first is alternative and additional land use. And that would include things like leasing land for solar, wind farms or carbon capture and storage. The second bucket would be carbon markets. And that would include compliance markets like the emissions trading scheme in New Zealand that we participate in as well as the voluntary markets, which is primarily what we have in the U.S., and that's where corporations are buying carbon offsets to meet their net 0 claims. And the third bucket is fiber for bioenergy and biofuels. So I want to include things like using wood fire for Bioenergy with Carbon Capture and Storage or BECCS or using wood fiber for the production of biofuels, like sustainable aviation fuel or green methanol. Long term, we think that all of these land-based solutions are very promising. But we're really focused on solar and CCS in terms of seeing those as the most significant near-term opportunities for Rayonier. So just giving a deeper dive on solar and CCS for a moment. This next slide shows the utility scale solar capacity additions that are expected over the next decade. So we anticipate roughly 40 gigawatts of annual capacity additions and utility scale solar. This implies an annual land need of about 275,000 acres. So we expect significant demand for land coming from this utility solar sector. Our pipeline has grown significantly as a result of this. So we've gone from roughly 7,000 acres under solar option in 2021, and we expect to be up to 50,000 acres by the end of this year. We're likewise seeing significant growth in carbon capture and storage. The Inflation Reduction Act has really bolstered CCS development, and we're expecting a big ramp over the next several years in this business. So we've gone from 0 acres under CCS lease in 2021. We expect to be about 70,000 acres by the end of this year. So again, very excited about the growth opportunities that we're seeing in these various land-based solutions. And again, we think this pipeline will continue to grow from here. So maybe I'll pause there, Anthony, and we can open up to Q&A.

Can you talk a little bit about how we might see the solar and the cabin -- carbon capture show up? Is it going to be an asset -- increase in asset value per acre? Is it going to be earnings?

Well, it's going to be both. I mean when we've laid out some economics on a per acre basis in terms of, again, if you go from taking an acre of timberland, which in the U.S. South, for example, we've averaged -- last year, we averaged $80 per acre of EBITDA. And if you're able to transition that acre into a CCS lease, we expect that EBITDA can go up by 5x plus. On a solar lease, we expect that, that can go up by 10x plus. And so ultimately, this -- we view this as very high-quality cash flow in the sense that we're not investing our capital into the development of this. We're really just serving as a land lessor. And so it's essentially 100% EBITDA to free cash flow conversion. We expect that it would be a fairly high multiple EBITDA stream.

Does it take out the timber production on those acreage?

On the CCS, we will continue to operate the surface as timber. So you need a relatively small footprint for an injection well, but we will continue to operate that land as timberland. On a solar lease, you obviously have to clear the trees for the solar panels. So we consider CCS to be an additional land use. We consider solar to be an alternative land use.

And on a macro level, you're going to see a lot of land converted to solar. So we also see kind of depending on where it falls and incremental tensioning of the log markets because you're taking out a fair bit of land out of production for solar.

And I mean, what's the order of magnitude that this could add to. I don't know, revenues or FFO, if 2030 is kind of the goalpost you set out here from where we are today, how much earnings, you think comes in on a per share basis?

Well, we've laid out a 2030 adjusted EBITDA target for land-based solutions of $75 million and an interim 2027 target of $30 million. And the reason that we're expecting the significant ramp beyond 2027 is really due to the permitting timetable associated with these projects. We're building up that pipeline of solar options today as well as CCS leases, but it's roughly 3- to 5-year permitting timetable to take a solar option to a land lease for a solar farm. And it's a similar timetable to get that injection -- a classics injection well permit on CCS land. And so we're really kind of focused on building up the pipeline of the right land that's suitable for these alternatives. Then we expect that, that will start to convert and really start to lift the income stream kind of once you get past that permitting timetable.

So $75 million and what's the base EBITDA number?

I'm sorry.

What's the base EBITDA number?

Well, last -- I mean we're at -- it's $10 million that we're anticipating for 2024, and that's up.

No. I mean the overall Rayonier EBITDA.

So last year, our EBITDA was just under $300 million.

$300 million. Thank you.

And you combine what we're expecting there and what we see out of the real estate, it's in excess of $100 million. So a pretty meaningful lift from where we are today.

Mark, Dave, in terms of land-based solutions, you talked about solar, CCS, Forest Carbon, bioenergy biofuels. These are obviously in kind of different stages of maturity and adoption. I'm just wondering if you can kind of rank the opportunity set in terms of what inning are we in from an adoption standpoint? What are the sort of regulatory and/or technical limitations, what could accelerate adoption? What are the obstacles of adoption?

Yes, I'd say solar would rank as most matured in the sense that the cost of solar energy production has gotten very competitive with other forms of electricity generation. And so solar was already projected to grow significantly before the inflation reduction and that really supercharged the activity there. And so it's on a pretty steep trajectory and it doesn't really need much in the way of economic incentives. The limitations there are really just the availability of equipment as well as the availability of land that's suitable for solar development. CCS is also reasonably well advanced from a technology standpoint, but the actual deployment of carbon capture and storage in the U.S. is still in its relatively nascent stages. And you can see in some of the charts we have in our Investor Day presentation that's projected to go up by 10x over the course of the next 5 or 6 years. And so there's a lot of activity underway. This is where an area where the inflation Reduction Act has provided a pretty significant incentive of $85 per ton, tax incentive for Carbon, Capture and Storage. So again, a lot of activity, some very large oil and gas majors that are very well advanced in this business. The 59,000 acres that we announced a couple of weeks ago was under lease with ExxonMobil, who's really a leading player in this arena. So again, we think that the technology is reasonably well advanced there, but you just really need to get through that permitting process. And it's a fairly protracted process for these Class 6 injection wells. The voluntary carbon markets are, I'd say, evolving very rapidly. The demand is projected to grow significantly as we get to these kind of markers in time, where corporations have set these net 0 commitments or emission reduction commitments. But that -- there's still a lot that needs to happen just to kind of flush out some lower quality credits from that market. There's a lot of effort underway to bring greater standardization, to bring greater credibility to that market. So we absolutely expect to have opportunities there. But the pricing where it sits today, it hasn't been particularly compelling for us to wait into that market, recognize that most of our lands or all of our lands are major softwood producing geographies that have strong timber markets. And so kind of the hurdle price of carbon for us to get into voluntary carbon market projects. It's a bit higher than perhaps some other areas where those timber markets are not as robust. And I'd say the longest lead time is really a fiber for bioenergy and biofuels. These technologies exist, but there's still a fair amount of evolution that needs to occur as well as capital deployment to actually build facilities, permit facilities, build facilities, kind of get that technology to scale. So that's probably the fiber for bioenergy is probably more of a 5-plus years out in terms of starting to see -- see some real velocity there.

The only thing I'd add to that is I think on the solar side, I think you're going to see more of this done by utilities and less by kind of the merchant developers, who have dominated the initial options that we've seen out there. And that's part of the reason why the option conversion rate is a relatively modest 25% to 40%. I think as you progress through time, you're going to see better counterparties, actual developers on the other end of that, and that will improve that conversion rate.

And if I'm doing a CCS project or solar project, what does Rayonier kind of bring or what is your comparative advantage versus other landowners, maybe private landowners in the South?

Yes. I think it's differential depending on whether it's solar or CCS, but I think what's unique about Rayonier is really where our footprint is located. On the solar front, you recognized about half of the solar development that's projected over the next 5 years. Utility solar is projected to occur in the South, 2/3 of that is projected to occur in just 2 states, Texas and Florida. So roughly 30% of our lands are in those 2 states. So we have a much larger presence in that particular -- in those particular regions that we think are suitable for solar development. On the CCS front, you really need 3 things for CCS to work. You need a concentrated source of high purity emissions that can be cost effectively captured, you need suitable geologic storage capacity and you need pipeline infrastructure to get it from point A to point B from the point of capture to the point of storage. We have a lot of lands in Southeast Texas and Southwest Louisiana that kind of sit in an area with a lot of emission sources, suitable pipelines as well as geologic storage capacity. So again, we think that, that's really the core area for us in terms of a CCS opportunity. There's some longer-term opportunities in other regions as well where there's storage capacity, but we'll need to see pipeline infrastructure developed to actually see CCS development in some of these other areas.

And a lot of the initial focus was really on that geological storage capacity and not as much on access to emitters or access to pipelines. And that's -- those are 2 really key enabling pieces that you have to have.

On the solar piece, isn't there a lot of land that they could go on? I mean what's the competitive advantage you have and you got to take trees down to accommodate it.

Well, the competitive advantage, I'd say the timber owners in general have is just the large contiguous blocks of land. You're right. There's a lot of land, right? That can be used for solar development. There's less land that's in the sort of 500 to 1,000 acre blocks of Upland that's proximate to a transmission grid. And so we do think that our kind of market share capture will be higher than our market share of land in any particular state, just given the contiguous nature of some of our larger land holdings.

On the forest carbon side, the U.S. market is obviously voluntary in very early stage. We participate in the New Zealand market, which is very well developed. I'm wondering if you can just talk about that experience and then maybe just kind of trajectory of carbon -- forest carbon prices in New Zealand and how that's kind of played out in the time that you've been there?

Do you want me to take that? Yes, so the New Zealand emission trading scheme, we've been involved in that in a number of years. One of the keys with respect to carbon credits is the notion of additionality. Are you going to be doing something that is different from the past? And then I think as you look at the carbon credit market, there's a lot of sort of low-value credits out there that have had a fair bit of criticism because they have issues with that additionality. The way that New Zealand handled that is they kind of drew a line in the sand of 1990. So any forest that was established prior to 1990 essentially is not deemed additional, any forest established after 1990 is deemed additional. So for us, that's about 15% of our ownership there. And so there's a mechanism for carbon credits on that, and we have an inventory of those that we can sell into the market. That market has improved over where it was quite a number of years ago. In the early years of the New Zealand carbon market, you saw initially pretty high prices that were sort of in the mid-20s. It went down to sort of low- to mid-single digits. And then it kind of came back gradually today. It sits in New Zealand dollars at about roughly NZD 70 or in U.S., it's sort of ranged from $40 to $50. So higher than in the U.S. And we have kind of been in and out of that market opportunistically over the last couple of years. 3 years ago, we sold no carbon. We believe that the carbon pricing would go -- would improve. 2 years ago, we sold [ $20 million]. Last year, we sold [ $24 million ]. We expect to be in the market this year and -- but we're not sort of locked into volumes. We still try to treat that pretty opportunistically. One of the things that we think about when we think about the U.S. market is as it's a voluntary market, we do not believe there is a first-mover advantage. We think that there's a lot of low-quality credits that have to get kind of flushed out of the market. We need to see carbon prices kind of come back and for us, given that we have more of our lands in high-quality markets, the bar, frankly, is higher. We need to see a much higher carbon price for it to cause us to want to change our behavior and defer harvest. So that's kind of how we're thinking about it. What we've done is we've developed pilot projects in different regions where we can study -- do all the work required to -- there's a lot of measurement and review work that has to take place on a carbon credit project. So we've done a lot of that work. We have those projects kind of teed up, if we get the right kind of pricing environment. But right now, I think we have a view that we're going to be a follower, not a leader on that just because of where the pricing is today.

At the Analyst Day, I mean, other than land-based solutions, you also talked a lot about real estate development and I'm wondering if you can talk a little bit about Wildlight and Heartwood and sort of where those projects are? Are those maybe templates for future opportunities and how real estate development has kind of become real core competency for Rayonier?

Let me go back and talk about the evolution, and I'll let Mark talk a little bit about kind of where we are today. Keep in mind that when Mark and I arrived 10 years ago, Rayonier's approach to the market then was, look, we have 200,000 acres from Savannah to Daytona Beach and -- but there wasn't really a strategy or an organization in place. And so what we've done is we purposely swung that pendulum pretty hard to not talking about this opportunity until we had really flushed it out. And in the ensuing years, we had a 3,000-acre entitlement in Wildlight. And we have worked at building an organization and kind of honing that. We've shifted from taking a strategy that started with having to catalyze the market by building finished lots. So we took our own capital, put it at risk, built finished lots and try to attract builders. In the early days of Wildlight, we couldn't attract any national builders. We were basically dealing with local builders. We had 3 local builders, when we started. If you fast forward to where we are today, the progress on that project and the success of it, now we have national builders sort of knocking on the door all the time trying to get into that project, and we're not using any local builders. And so the entitlement that we received last November of 15,000 additional acres is it's 5x the original allocation. And we're now -- we feel like we now have a scale and a draw from a market standpoint to take -- to attract a lot of those builders. The Heartwood project south of Savannah started later in 2020. It had a different mix. It started with an industrial park. And when COVID hit the industrial park, which has rail access to the Port of Savannah, really helped encourage absorption. We essentially sold out of that entire project on the industrial side pretty quick. We had a new freeway interchange that the company had been working on for over a decade to get the entitlement. Once that opened up, we opened up the residential side. Similar to Wildlight, we started with the sale of finished lots that we constructed, and we've shifted into this idea of plot sales where we're selling a group of entitled, but unconstructed lots. The builder is using their capital. Both projects today sit essentially at that -- the bulk of that initial capital has essentially been recovered. And so we're -- we feel like it's time to kind of wave the flag a little bit at kind of where we are at the momentum that we've created going forward. And we're pretty bullish on both of those projects. And we spent a lot of time this last year really focusing on where else can we seek entitlements. We're actually getting communities that have approached us where we have land and a couple of instances say, "Can you do something in our community?" And the entitlement process is inherently a political one. You've got to be able to be viewed credibly and have something to offer. So we're pretty excited about where the real estate business is, and it's kind of a huge stride to where it was 10 years ago.

And given the kind of decarbonization of optionality in timberlands and the HBU optionality in timberlands as everybody is moving to the Southeast. Can you talk about the kind of current market for timberlands themselves, like what have high-quality Southern Timberland has been trading at? What do you see in terms of sort of volume, interest -- had these opportunities starting to creep into cap rates and just any general view?

We've definitely seen increased interest in the asset class. And I think that all of the reasons that you mentioned, the optionality. We're seeing that draw new capital into the asset class. We've seen a lot of European capital. We've seen a lot of family office capital pension funds as well as private equity. All of those players are coming in, and that's driving and compressing discount rates in a time, where we've seen rising interest rates, which is quite an interesting phenomenon to see and it's one of the reasons that when we announced our asset improvement plan in November, where we're going to be selling -- target selling $1 billion worth of timberlands is because that compression of the discount rate associated with all of that capital flowing into the space. We feel that that's not been reflected in the public market value of our stock. And so we're trying to both take advantage of that as well as prepare for a low interest rate environment or excuse me, a higher interest rate environment going forward.

And in terms of kind of the business outlook for 2024, in your log business. Can you talk about your '24 guidance and specifically sort of harvest volume assumptions, pricing assumptions that you laid out and maybe we can start in the South?

Yes. I mean we lay out detailed guidance in terms of our harvest volumes by region and our EBITDA by region as well as the assumptions we have around kind of pricing to realize those EBITDA levels. And so without getting into kind of detail on a segment-by-segment basis, that's all laid out in our most recent supplement. But yes, I think overall, we feel good about kind of the trajectory heading into 2024. Candidly, heading into 2023, markets felt much more challenged. We certainly feel as though markets kind of tailed off during the better part of 2023 and kind of bottomed in the back half of the year, and we felt much stronger trajectory heading into this year.

And in the South, view log prices is having kind of bottomed? Or if you had a lot of log price appreciation in the -- during the pandemic. You kind of gave some of that back last year. So where are we potentially in land side?

Yes. We certainly feel as though our log prices bottomed probably around mid-2023, and we've started to feel some improvement thereafter. So again, the overall trajectory feels -- felt much stronger heading into this year. Now recognize we will have a geographic mix differences as well as product mix differences. We are heavier to sawtimber kind of given some of the challenges that we're seeing in the pulpwood market last year. So we do expect more normalization in terms of our product mix and some geographic shifts kind of into 2024 that will kind of affect that weighted average pricing, but the overall on a sort of market-by-market basis, things feel they're much better.

It seems that we have record orders, at least for the homebuilders and then built all last year are expected to continue to build this year. We have record multifamily construction. We have record warehouse construction. I don't know how much wood is in the warehouse. But it would seem that last year should have been really strong. And maybe this year should be as well. Am I missing something on that?

Well, I'd say, kind of, as we started last year, I mean you kind of think back to where we were a year ago, and I think that the expectation for housing markets was much weaker than where we ultimately ended up. I think I recall even going into the beginning of last year, there were a number of forecasts for 1 million housing starts, and I think we ended the year closer to 1.4%. And so I think that the momentum certainly built during the year. On the pulpwood side, it was a very challenged market environment in 2023. We saw a big spike in containerboard demand, in particular, in the immediate wake of the pandemic. And then we went through a relatively painful destocking cycle for the better part of 2023. We now feel as though that's largely worked its way through and we're kind of, again, bouncing off of that bottom in the pulpwood markets. But you recognize in the U.S. South in particular, you kind of have this counterbalance between pulpwood markets and sawtimber markets where when sawmills are running very hard, they're spitting out a lot of woodchip residuals, which is competitive with our pulpwood product. So you have this kind of countercyclical effect between pulpwood and sawtimber. But despite I should say the dynamics were quite different between the 2 during the course of the year. And that's why we went heavier into sawtimber markets in 2023 and kind of pulled back some of the pulpwood harvest to the extent we can, recognizing that when you harvest a forest, there's going to be an inherent mix within that forest. But again, I feel like the trajectory in both markets feel stronger heading into this year.

Keep in mind as well that new housing is roughly 1/3 of the lumber market and about 40% of the lumber market is repair and remodel and our sense is that, that's been somewhat more interest rate sensitive from a demand standpoint. And then there's also another thing that we've seen over the last few years has increased European supply of imported lumber into the U.S., and that's tapered off recently, but that has played a role in sort of tamping down lumber prices in different markets.

Mark, David, we're coming up on time. But I'm just curious, you're in the South, you're in the Pacific Northwest or New Zealand. If you had $1 of capital to deploy, what region is maybe the most attractive. Sorry to ask you to name your favorite kid on the last question, but what...

Yes. I mean, look, I think we are all about maximizing the value of land through optionality. And clearly, we're seeing the most optionality in the south today. So I mean, I think that this is a story that's been playing out for a better part of a decade now. We're really seeing this optionality that we've always believed to exist in the south start to materialize and kind of very meaningful value creation opportunities. And so that's really, I'd say where our focus is on kind of harvesting these value creation opportunities on both land-based solutions as well as real estate development. Now to some extent, it's now being increasingly priced in other Southern markets. And so it ultimately comes down to where can you invest that capital on kind of most value-accretive basis, but we're clearly seeing the growth opportunities in the U.S. South right now.

And Anthony, I'd just go back to the deals we did at the end of 2022. That was the biggest cash transactions in a couple of decades. And that was driven by the same phenomenon that Mark is describing we had a big chunk in Texas that's had very strong land-based solutions overlay as well as improving markets and some really nice lands in Georgia as well and Alabama. And so that was very indicative of where we see a lot of opportunity and that we had to really stretch to get that. But I think today, we're pretty happy with it.

Great. Well, Dave, Mark thank you.