Potlatch's Moves May Hasten Go Private Process: Analyst

NEW YORK (TheStreet) -- With Potlatch (PCH), the real estate investment trust and timberland owner, cutting its quarterly dividend 39% to 31 cents a share and reducing its harvest, Stifel Nicolaus analyst Joshua Barber said the moves might speed up Potlatch's chances of going private.

Barber noted that Potlatch has no mills or other operating businesses and is small enough to be taken over; the dividend and harvest changes might hasten a deal for the Spokane, Wash. company.

The REIT is reducing its harvest by 15% until demand improves.

Potlatch's dividend reduction wasn't surprising as Barber noted the company has been selling land for a while to maintain its dividend. UBS estimates that Potlatch's dividend cut will save the company $30 million a year.

By comparison, Potlatch's competitors -- Rayonier (RYN), Weyerhaeuser (WY) and Plum Creek Timber (PCL) -- haven't trimmed their dividends and Rayonier actually increased its third-quarter dividend 11.1% to 40 cents. Rayonier also completed its acquisition of 250,000 acres from Joshua Timberlands and Oklahoma Timber on Nov. 29.

Barber said Potlatch's saw log business is highly correlated to housing starts; the consensus estimate for a better outlook in that market is around 2014 or 2015, he added.

Barber has a hold rating on Potlatch, and buy ratings on Plum Creek and Rayonier as he considers these two among the most defensive companies in the sector. They both have strong management teams and the lowest amount of forward-looking risk as they own pulp wood businesses that leave them less tied to housing starts, Barber added. His price target for Plum Creek is $45; for Rayonier it's $48.

Potlatch shares were down 4% to $30.01 in trading Monday.

--Written by Alexandra Zendrian in New York.



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