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NORCROSS, GA-Wells Timberland REIT has reached an agreement to acquire approximately 228,000 acres of forestland in Georgia and Alabama and long-term leaseholds on another 95,000 acres for $400 million. This is the first acquisition by the timberland real estate investment trust, which was launched by locally based Wells Real Estate Funds Inc. in May with $750 million.

The seller of the land was MeadWestvaco, which announced its intention in January to auction more than 300,000 acres surrounding its Mahrt, AL paper mill. Wells Timberland REIT was selected from a number of bidders to acquire the property. The land the company acquired is located in Stewart, Marion, Quitman and Randolph counties in Georgia and in Russell, Barbour and Chambers counties in Alabama. The land tracts include an estimated 13.5 million tons of merchantable timber, with significant amounts of sawtimber and pulpwood. Most of the timber is pine.

“This property is a great example of investment-quality timberland,” says Wells Timberland Investment Management Organization president Jess Jarratt. “It is well-managed, stocked with a wide diversity of timber and it’s located in one of the most productive growing areas in the country.”

Under the business model for the Timberland REIT, the company will generate revenue and income for the fund through the sale of timber-harvesting rights, as well as by leasing land-use rights. Under the acquisition, the REIT and MeadWestvaco have agreed to a long-term fiber supply arrangement to support MeadWestvaco’s paperboard mill operations.

When Wells launched the REIT, the company said it plans to produce a total return over a seven- to 10-year period in the 10% to 12% range. There is approximately 500 million acres of commercial timberland in the country with approximately an additional 250 million acres of wild land and other forestland that is not of a commercial nature. Of the commercial timberland, roughly half is owned by “private non-industrial individuals,” “a large chunk” is owned by the federal government and “industry and institutional investors own the rest.”

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