Potlatch looks past the trees

Potlatch Corp. is buying up $215 million worth of timberland near the resort community of McCall, Idaho.

The 179,000 acres of fir and pine trees once fed sawmills in the region, but the land is increasingly valued for its real estate potential. Potlatch will evaluate the acreage, deciding what to keep for timber production and what to sell for second homes.

“As always, Potlatch’s objective is to maximize value for its shareholders,” said Matt Van Vleet, company spokesman.

The acreage is located within a two-hour drive from Boise, near Tamarack Resort, a luxury ski and golf community in central Idaho. Potlatch will purchase the land from Western Pacific Timber LLC in two phases. The first sale of land will close later this month, with the remaining sale closing in January.

Spokane-based Potlatch owns 1.5 million acres of forestland in Idaho, the upper Midwest and Arkansas. Historically, Potlatch held onto its land, managing it for log production for its sawmills and pulp operations.

But since Potlatch’s conversion to a real estate investment trust, or REIT, nearly two years ago, the firm is acting more like a land broker.

Earlier this year, Potlatch announced that it would sell about 20 percent of its timber holdings over the next decade. An acre-by-acre review indicated that the land would generate a higher return in other uses, Mike Covey, Potlatch’s chief executive officer, said at the time.

Baby boomers’ demand for recreation property is driving the trend. In some cases, the land’s development values are four times higher than their timber-growing values, company officials said.

But even as Potlatch sells lands, it’s buying up new parcels as well, Van Vleet said. The central Idaho purchase will bring Potlatch’s Idaho land base to 840,000 acres, he said. The company is paying about $1,200 per acre for the land.

Few mills remain in the region, which means that the trees harvested from the 179,000 acres are trucked north to Grangeville or shipped to mills in Eastern Oregon. “But it’s still viable” to ship them that distance for processing, according to Van Vleet.

The land that Potlatch is buying was once part of Boise Cascade’s holdings. In 2005, Boise Cascade divested itself of its timberlands, selling off more than 2 million acres.