Shares of Rayonier, Inc. RYN have gained 9.6% in the past month against the industry’s decline of 2.5%.

This Timberland real estate investment trust (REIT), carrying Zacks Rank #3 (Hold), is poised to gain by unlocking the long-term value of its higher-and-better-use (HBU) development. Recent developments in biogenetics and cloning keep the company’s momentum going. Its healthy balance sheet bodes well for long-term growth.

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Let us decipher the possible factors behind the surge in the stock price.

Rayonier enjoys a solid timberland portfolio in some of the most productive timber-growing regions of the U.S. South, the Pacific Northwest and New Zealand. The company has emerged as the leading “Pure Play” timber REIT. As of Dec. 31, 2024, its portfolio included 1.75 million acres in the U.S. South, 308,000 acres in the U.S. Pacific Northwest and 412,000 gross acres in New Zealand. Over the past several years, lumber production and capacity in the U.S. South have grown considerably. With roughly 71% of the company’s Southern timberlands located in the top quartile markets, the company is well-poised to benefit from the favorable trend.

This month, Rayonier announced an agreement to sell its 77% New Zealand joint venture interest to a special purpose vehicle formed by Ents LP, an investment fund managed by The Rohatyn Group, for $710 million. The exit will allow the company to focus on core U.S. markets. The transaction is expected to close in 2025.

Rayonier constantly strives to find alternative uses of the timberlands for HBU. There are many attractive HBU opportunities across the U.S. South, mainly in the Florida and Georgia coastal corridors. The company remains focused on unlocking the long-term value of its HBU development and rural property portfolio in its Real Estate segment. It is encouraged by the continued strong demand and value realizations for HBU properties. Its current pipeline expects another solid year for both its rural land sales program and its improved development projects.

The company’s business has significantly benefited from the recent developments in the field of biogenetics and cloning, which have led to faster growth in trees, ensuring proper sizes for maximum extraction of wood.

Rayonier’s strategic measures have significantly strengthened its balance sheet position. The company reported cash and cash equivalents of $323.2 million in the fourth quarter of 2024. The weighted average maturity of its debt portfolio was approximately four years, with no significant debt maturities until 2026. With a well-staggered debt maturity profile, Rayonier has ample financial flexibility to navigate through any negative externalities and bank on growth scopes.

With the above-mentioned factors, we believe the rising trend in the stock is expected to continue in the near term.

Key Risks for RYN

Competition from national and local players and substitutes, as well as Pacific Northwest market headwinds, may hurt Rayonier. Tough compliance requirements and elevated interest rates add to its woes.

Stocks to Consider

Some better-ranked stocks from the broader REIT sector are Welltower WELL and Cousins Properties CUZ, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Welltower’s 2025 FFO per share is pegged at $4.90, which indicates year-over-year growth of 13.4%.

The Zacks Consensus Estimate for Cousins Properties’ full-year FFO per share is $2.79, which indicates an increase of 3.7% from the year-ago period.

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This article originally published on Zacks Investment Research (zacks.com).

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