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Rayonier acquires timberlands in Washington, Oregon

Rayonier Inc.has executed two transactions aimed at improving its Pacific Northwest timberlandportfolio.

Jointly with Forest Investment Associates, the company acquiredall of the outstanding common stock of private timber REIT Menasha Forest ProductsCorp. In a separate transaction, Rayonier and Forest Investment Associates planto distribute the acquired timberlands to various entities. The deal is expectedto close in the second quarter, and Rayonier will have no association with ForestInvestment Associates following the distribution.

As a result of the deal, Rayonier will acquire 61,000 acres ofthe Menasha timberlands for about $263 million. It said the acquisition should increaseits sustainable yield by about 305,000 tons per year and boost its average annualharvest in the next five years by about 320,000 tons.

Rayonier also sold about 55,000 acres in Washington to ForestInvestment Associates for about $130 million. It said the sale evens out the age-classdistribution of its Pacific Northwest portfolio.

Further, Rayonier entered into a 10-year, $300 million incrementalterm loan, proceeds of which will be used to fund its portion of the Menasha purchasenet of the $133 million received from the Washington sale, to repay about $105 millionoutstanding on its revolving credit facility and for general corporate purposes.CoBank ACB is the administrative agent on the loan, which is provided by a syndicateof Farm Credit institutions.

Rayonier entered into an interest rate swap transaction to fixthe cost of $200 million of the term loan for its 10-year term. The remaining$100 million will have a variable rate. Based on the swap rate, Rayonier'scurrent leverage ratio and the pricing grid, the all-in cost of the fixed-rate portionof the term loan, net of estimated patronage payments, is expected to be approximately2.9%, and the cost of the floating-rate portion, net of estimated patronage payments,is expected to be LIBOR plus 1.33%.