Douglas Long: Yes, the North American markets, those are still voluntary. So basically, not – and they still have a lot of standardization, I guess, what I would say. So there are a few obviously firms that are basically focused on getting that standardization. But we’ve seen as everyone is seeing some issues around people talking about green washing and different things. And so what I think is happening now is that the buyers are starting to figure out what is a valuable credit to them and looking for those. And so we’ve really seen pricing move around in the single digits to $20, $30 a ton depending on how it’s being produced. And so I think what we’re still waiting on in that market is for more standardization and for the market to realize what the value is and to possibly get rid of some of these lower value credits that are out there right now.
So we’ve got some projects in our back pockets, but we haven’t actually registered those yet because we feel like there’s still opportunity in that market yet before we do that.
Paul Quinn: Okay. And then just turning over overall, it looks like with your ’23 guidance, you’re expecting to slow down in North mark on the timberland side, that percentage of real estate of EBITDA – of your total EBITDA is kind of holding up a lot better than new timberlands business. Just wondering if that’s a lag and you expect a slowdown in ’24 as a result? Or maybe you could comment on that.
David Nunes: I think some of what you’re seeing, Paul, is that we have these two big projects, one that’s in the Jacksonville, Florida area, the other in Savannah, Georgia. And as they kind of pick up heads of steam, they have been running at more kind of regular levels. And so over the past number of years, we’ve seen that Wildlight project here in Florida growing larger and larger. And meanwhile, the project in Savannah is really just getting started, but we’re very encouraged by the developments that we’ve seen there and we’re leveraging a lot of the learnings that we’ve had here. And one of the things that we’re particularly excited about, there’s a large investment being made by Hyundai around electric vehicles and other aspects that’s going to bring substantial employment into the area right adjacent to our project.
And we think that’s going to translate into further demand. And one of the things that we’ve done in both our Florida and our Georgia projects is we’ve got a really nice mix of product types from developed lots to residential pods, to build-for-sale, to multifamily. All of those things, I think, are helping to propel the momentum on those two projects. And so I think that those two projects, as they exit kind of their beginning stages, are going to supply a more stable stream of cash flow going forward. And then shifting to our more rural product mix. That’s one that’s always been relatively stable. And I think as we’ve seen pressures on land values. You’ve seen that translate in terms of the types of values you’re getting. And we’re really focused on – on selling lands where we can get a good premium.
And so we’ve been happy with the progress that we’ve seen on the real estate side and don’t see that kind of tailing off as we go down the road.
Paul Quinn: Okay. That’s great. Thanks for that. And then just overall, I mean, one of your competitors mentioned that their expectation for 2023 timberland sales was more muted than what we saw in ’22. Do you have the same expectation? Or what is your view of the future on M&A?
David Nunes: Yes, I wouldn’t – I’m not sure I agree with that. And – but having said that, it’s a hard thing to peg. And so you have – increasingly, you have situations where a lot of the – a lot of the TMO downstream investment clients are controlling exits of sales and forcing that to occur through separate accounts. And as that occurs, you really have to kind of get into the mindset of those ultimate owners of those properties, and they’re all over the board. You’ve got some people that had a desire to sell during COVID that weren’t able to because you really couldn’t do much due diligence. And I think that contributed to some of the outsized volume that we saw last year, and I suspect there’s still maybe some of that at play.
I think another thing to keep in mind is as we’ve seen stronger pricing, we’ve seen NCREIF – the NCREIF Index is now over $2,000 an acre in the South and certainly on the higher-quality properties like the one that we completed in Q4, where you’re seeing really outsized cash flow generation, those are generating large values. And I think that’s going to have the potential of spurring additional volume on the market as the ultimate owners of those properties decide they want to cash in. The flip side of that, I think, is there’s a greater recognition that you’ve got optionality around ESG and carbon-related values. And I think some – there will be some owners that want to stick around and see if they can see that translate into their properties.
As we look across the three geographies that we’re in, I think we see more potential for stronger activity in the U.S. South than we do in the Northwest and New Zealand. I think we’ve seen much more tepid volume of offerings in those two geographies, and we expect that to continue.
Paul Quinn: All right. That’s all I had. Best of luck. Thanks.
Operator: Thank you. Our last question will come from Tousley Hyde with Raymond James. Your line is open.
Tousley Hyde: Hey, guys. Thank you for taking my questions. And Mark and Doug, congratulations on the new roles.
Mark McHugh: Thank you.
Tousley Hyde: The 2023 outlook for the saw and timber segment. I was hoping you could provide some additional colors to what your demand picture kind of looks like right now? And how much of an impact are you expecting that to have on log pricing? And also if there’s been any changes to the assumptions for the recent acquisition?
David Nunes: Yes. There are always moving pieces in kind of terms of our geographic mix and other factors, and we’re looking at it kind of year-over-year comparisons. And we have seen some decline for demand and particularly along the East Coast here of the U.S. And a lot of that – we’re in a drought situation right now, so there’s plentiful wood out there. But also, I think given the kind of macroeconomic uncertainty at the end of 2022, we have our customers, we’re trying to manage inventories quite closely, and they were reluctant to secure log volume by locking and pricing beyond Q1. But as we progress through the month of January, and we see more positive news on lumber pricing and homebuilder sentiment and things like that, we start to see increased interest by mills to secure forward volume.
So I think we’re cautiously optimistic that things are starting to move around and turn around in the market and those things. But we did factor that in as we thought about our guidance. With respect to Project D, the new acquisitions that we talked about, we take the combined acquisitions with our overall harvest plans. And then there’s always some changes we look to stay nimble with our operations based on how we see the current market conditions. And so we’re working those in as we think about them and basically take into account how we think about the market and where we should harvest and where we should maybe pull back and allow markets to regain strength. But overall, I’d say our estimates for that acquisition are largely intact. I don’t think anything has changed in terms of our 10 year outlook or certainly our harvest flows that we provided when we announced that acquisition.
