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AUSTIN-Temple-Inland Inc. will spin off its real estate and financial services operations while retaining the corrugated packaging and building operations. Also planned as part of its self-named “transformation process” is the move of the company’s 100,000 acres of timberland to the new arm, Forestar Real Estate Group, which will immediately bring the land to market.

According to a statement released by Kenneth M. Jastrow II, chairman and chief executive officer of Temple-Inland, the timber holdings consist of nearly 1.8 million acres in Texas, Louisiana, Alabama and Georgia. Along with the timberland are mineral rights on 388,000 acres in Texas and Louisiana and 351,000 acres in Alabama and Georgia. The plan is to use sale proceeds, in part, as the basis for capital structures for the stand-alone businesses, which includes Guaranty Bank and its retail network, while returning the bulk of the gain to shareholders.

Temple-Inland is overseeing 85 commercial real estate projects in 12 markets in eight states–and will continue to do so. The company had development plans for 236,000 acres of single-family, commercial, mixed-use and multifamily uses.

“We have currently identified over 215,000 acres of high-value land located in growth corridors, thus providing the opportunity to create value through entitlement and real estate development,” Jastrow said in a press release. An estimated 205,000 acres of the land bank is located in the Greater Atlanta area.

“This is a significant real estate portfolio,” Jastrow said during a conference call about the breakup plan. “And, we believe Forestar is uniquely positioned to accelerate creation of shareholder value.”

Jastrow told analysts and shareholders that the breakup and timberland sales should be completed by the end of this year. “Going forward, we believe that all the businesses are well-positioned in terms of driving shareholder value,” he added. “We believe market conditions are in a position where it’s a good time to do this transformation.”

Goldman, Sachs & Co. and Citigroup Global Markets Inc. are financial advisers on the spin-off. Skadden, Arps, Slate, Meagher & Flom is the legal counsel. Calls to Temple-Inland were not returned by press time.

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