Good morning. I'm Collin Mings, VP of Capital Markets and Strategic Planning here at Rayonier. I'm very excited to welcome you to our 2024 Investor Day. We appreciate you taking the time to join us this morning. I'd remind everyone that our presentation today includes forward-looking statements made pursuant to the safe harbor provisions of federal securities laws. Our Forms 10-K and 10-Q, filed with the SEC, list some of the factors that may cause actual results to differ materially from the forward-looking statements we may make. We will also discuss non-GAAP financial measures, which are defined and reconciled to the nearest GAAP measures in today's presentation materials. With that, here's a quick rundown of the morning ahead. I'd note we do have two sessions of Q and A to allow us to dig deeper into Land-Based Solutions and our Real Estate Development platform.
We will start with opening comments from our current CEO, Dave Nunes, as well as our incoming CEO, Mark McHugh. Then Doug Long will unpack opportunities associated with Land-Based Solutions, and Chris Corr will discuss our Real Estate Development platform. Following our first round of Q and A, focused on those specific growth opportunities, we'll then review our Timber business with Doug, discuss active portfolio management with Rhett Rogers, and review our commitment to prudent financial management with April Tice, our incoming CFO. Our entire team is really excited to be here with you today, and to get us started, I'll turn it over to Dave Nunes, our CEO. Thank you.
Thanks, Collin, and good morning, everybody. We are very excited to have you here and welcome you to our 2024 Investor Day. For those of you that have followed us, this is our first one that we've done since COVID. As we discussed in our Q4 2023 earnings call, we wanted to have this Investor Day really do a deeper dive into Land-Based Solutions, as well as Real Estate Development, and really help you understand those opportunities. We're also gonna spend some time talking about the leadership transition that Collin mentioned, and expose you to our expanded senior leadership team.
As I reflect on my 10 years at Rayonier, I liken it to building a foundation, a foundation that the new leadership team of the company can build upon to make Rayonier stronger, a foundation that is resilient to market changes, and a foundation that will stand the test of time. As I think back over that 10-year period, I think there are six things that I'd like to focus on in the context of setting this foundation. The first is the establishment of a new senior leadership team after the spin-off in 2014. Keep in mind that when we had the spin-off in 2014, the management team of Rayonier, for the most part, went with the spin-off company. We had folks that were new to their job, but were not new to the company.
We did have two new people join the company. Chris Corr had come not quite a year before the spin to head up the Real Estate business, and then Mark McHugh, our CFO, came in six months after the spin. I had known Mark for the better part of a decade prior to coming to Rayonier, and I'd always had a lot of respect for his understanding of the sector and as well, his, his understanding of what it meant to be a public REIT. So, I was really excited to bring his capital markets expertise into the company, and together, as a team, we all developed new norms, not only for our team, but for the company, and it really became a focal point for our, for our team. The next is a pure play, REIT, timber, timber REIT model.
The formative years of my career were spent in the forest products manufacturing side of the business, and I really got to see some of the way that timber was managed in order to meet the needs of mills. And I became a fervent believer back then of the power of a pure play timber platform. And so when I came to Rayonier, that was something that we as a team really wanted to lean into, because at the end of the day, we're all about trying to add as much value to every acre that we can as possible without feeling beholden to kind of the meeting the needs of in-house manufacturing facilities. So, that was important.
And another thing to keep in mind is the REIT dividend requirement, where you're essentially having to dividend out your income. You're limited in your ability to grow based on how efficient you are with your balance sheet management and your ability to issue equity. And we have been able to issue equity, and I'm very proud of the fact that we're the first timber REIT that's utilized the UPREIT structure when we acquired Pope Resources back in 2020. The next, I'd like to turn to active portfolio management. This is frankly one of the areas that attracted me to Rayonier when the opportunity came 10 years ago. I've always been a big believer in that, and I saw this as an opportunity to do it, frankly, on a larger scale across a larger portfolio.
It's something that we have really had a lot of passion around, and we have this mantra internally of never being satisfied with our portfolio. So we're always looking to improve it, either by adding higher quality acres or selling lower quality acres. And if you think about it, if you go back to that spin-off period versus today, we're essentially at the same amount of acres that we had during both times. And yet, because of the improvement in the portfolio, we've seen our sustainable yield go up 19% during that period of time to the current sustainable yield of 11 million tons. We've also seen our adjusted EBITDA go up 43%. We've seen our cash available for distribution go up 40%, and we've seen our dividend go up 15%.
All of those things would not have happened without the devotion that we've had to active portfolio management. I think it really helps translate into the alpha that I feel like our team has, has delivered. Next, I'd like to talk about the Real Estate Development business. And this is something that, you know, 10 years ago, we had some valuable entitlements in what we now call Wildlight, but we didn't have an organization. And so we built an organization around Chris Corr, and it's been very satisfying to see that organization prosper and to see that project mature to where it is today. And we've taken the learnings from that and the success from that. We've expanded it to our project in Georgia, Heartwood, which is south of Savannah.
More recently, we've added the higher and better use assets associated with Pope Resources. So today we have a very thriving Real Estate Development team. You'll hear more about that from Chris today. I think it's very fitting that this last year, we completed a very substantial entitlement in Wildlight of 15,000 acres. Keep in mind, that's five times the original 3,000 acres that was entitled 10 years ago, and we couldn't be more excited for what that means, and you'll hear more about that from Chris. The fifth item I'd like to talk about in this context of foundation is culture. You know, culture is very hard to change, and it's hard to change in a sustainable way.
As I think back to my arrival here at Rayonier, we had a very traditional forest products culture. It was very top-down, driven from a decision-making standpoint. And as we thought about our asset base, and you think about being spread across these three geographies that we have, and you have the natural variability in markets, topography, soil productivity, and species mix, you can't possibly make those decisions at a centralized level. You have to be able to be more nimble and push decision-making down deeper into the organization. So that was the fundamental element of our culture change, was to try to instill that ownership deeper down into the organization. And I think what it's had the byproduct of having us improving our ability to both attract and retain people within the company.
I'm very excited about kind of, you know, what that has done. And as we embarked on this, we knew it would take time. It didn't happen overnight, but it did happen. And I think today we have a very thriving culture that's very turned on. And I think that with... If you think about what we're doing now in expanding the Land-Based Solutions business and the Real Estate Development platform, I think that culture is gonna serve us well. And then lastly, I'd like to talk about the succession plan, Collin, that Collin mentioned a little bit ago.
This really started a couple of years ago, and one of the things that I brought with me from early in my career was this idea that, you know, you can't really judge the success of somebody or a management team until they're gone. And I really tried to kinda keep that in mind over the last number of years, you know, knowing that you can't do this job forever. And so, I set about with the board a goal of retiring, or as I like to say, graduating, in the summer of 2024. We started this two years ago. The board hired a consultant to help us go through this.
We were blessed in the sense that we had a very deep bench strength, and so we, we had the luxury of not having to go outside. And with the help of the consultant, we really, we not only made selection choices, but we, we had a very strong effort on development needs. And so all of the senior leadership team was exposed to some development opportunities, and it's been really fun to kinda watch that group grow. And the other thing that, that occurred during the course of this two years is we saw, we saw this big industry change that was taking place, and so we decided to to advance that in the context of succession.
So when we had our announcement in January 2023 about Mark stepping up into the President role, we also elevated Doug's role really with the intentionality around this Land-Based Solutions piece. And so I feel like the things that we've put in place have helped this leadership team, this new leadership team, prepare so that when I step aside, they're gonna be just ready to go. So I'd next like to talk to you about our board. We're really fortunate today to have seven of our nine independent directors with us. If you all wouldn't mind just standing real quick so the rest of the folks in the room can see who you are. Thank you. I'd encourage you all to speak to our board, you know, during breaks and at lunch.
This is a great group of folks. They're very engaged. We have a very strong group. You know, one of the things that I have always felt about boards is I think it's important to have industry expertise on your board, and I think it's also important to have supply chain knowledge on your board. I think that we're very fortunate that we have deep timber expertise on the board. We have a lot of board governance expertise, we have capital markets expertise, Real Estate Development expertise. You put all of those together, we have a tremendous breadth covered by our board, and we also have a really diverse perspectives in terms of people's backgrounds, where they're coming from.
You marry that with a fairly highly transparent model that we have working with the board and management, and I think it has led to very robust decisions and a very strong kind of chemistry between the board and the management. I'm really proud of the role that our board's played in the last 10 years in our growth.... Lastly, I'd like to talk about our senior leadership team. I couldn't be more proud of this team. I mean, it brings. As you can see from the statistics on this page, this team brings deep industry expertise. It brings extensive institutional knowledge of Rayonier. You know, when this team came together in 2014, we really set about changing the culture of the company.
And one of the things that you have to have in a leadership team is modeling, and this team couldn't have been better at modeling that behavior. And I think that's such a key piece of it. And so it's been fun. It's been fun to watch that take place and recently, with the change in the leadership, we've expanded our team to have three new players. April Tice, our incoming CFO, has joined the leadership team, along with Vernon Hyatt, and... Oh, I'm sorry, I'm drawing a blank. Thank you. So anyway, with that, let me turn it over to Mark, and we'll kick off the rest of the day.
All right, welcome. Thank you, everybody, for joining us today. My name is Mark McHugh, and I'm the President and CFO of Rayonier. And as Dave said, soon I'll be stepping into the CEO role. I wanna start by thanking Dave and congratulating him on his graduation, as he likes to put it. Dave's not only been a tremendous CEO, but he's also been a great mentor and friend to me and many others at the company. We would not be where we are today without Dave's leadership and dedication. And so while Dave is leaving behind a great legacy and very big shoes to fill, I believe he's also leaving us very well prepared for the future.
By way of background, I've been with Rayonier for just over nine years, but my relationship with the company actually dates back over 20 years. Prior to Rayonier, I was in investment banking for about 15 years, and my first foray into the forestry industry was actually working with Rayonier on its conversion from a C Corp to a REIT, back in 2003 as an investment banking advisor. I never really strayed too far from the company or the asset class thereafter, did quite a bit of advisory and financing work, for Rayonier, as well as a number of other forestry companies. I first came across Dave Nunes at his prior company, Pope Resources, and we established a great relationship over the years, worked on a number of different projects together.
When Dave joined Rayonier in 2014, he asked me to come join as the CFO. You know, I didn't have to think about it very long. Given the respect that I had for Dave, as well as the respect that I had for this organization, I thought it would be a great fit for me, and it absolutely has been. You know, so as I reflect back, it's a bit surreal to think that, you know, my first experience in this industry was working with Rayonier 20 years ago, and now to come full circle, and be about to step into the CEO role. But it's also been a very rewarding journey, and I feel very privileged to be working with this exceptional team that we have here at Rayonier.
So now that we've had that trip down memory lane, I, I wanna shift gears and talk about why we're here today, and there are four key messages that I wanna leave you with. The first is that the low-carbon economy transition is driving transformative value creation opportunities for timberland assets, and we believe that Rayonier is very well positioned to capture those opportunities. The second is that our Real Estate Development platform has really grown and matured over the last several years, and we now feel that we're poised to accelerate value realization in that business. And the third is that our core timber and HBU businesses remain best in class. And following a period of some pretty stiff market headwinds over the course of last year, we believe we're now positioned to benefit from favorable long-term trends going forward.
And finally, Rayonier's organization is very well aligned with the right culture, talent, and leadership to execute on our strategy. So with that, let's start with a brief snapshot of where we are today. Rayonier is one of three publicly traded timber REITs, but we like to think of ourselves as the only pure-play timber REIT. I'm gonna talk about what I mean by that and why we think it's important a little bit later. The company was founded in 1926, so almost a 100-year history. Today, we own or lease roughly 2.7 million acres of timberlands that generate a sustainable yield of roughly 11 million tons annually. We define sustainable yield as the volume of timber that can be harvested into perpetuity.
It's really the concept of harvesting growth, and we believe that this disclosure is an important part of our commitment to transparency and sustainability. The chart on the right shows our adjusted EBITDA breakdown in 2023. As you can see, roughly 70% came from our Timber segments, with the balance of 30% coming from our Real Estate segment. And that's been pretty consistent over time, with our Timber segments typically generating 70%-75% of adjusted EBITDA, with the balance coming from Real Estate. So that's a snapshot of where we are today, but we're gonna spend most of the next few hours talking about where we're headed in the future. And it starts with several key trends that we believe are reshaping this industry.
We're going to drill down onto each of these in some more detail today, but at high level, there are two key major, major themes. The first is the low-carbon economy transition. We see this as a secular trend that is going to drive increasing demand for Land-Based Solutions, as well as renewable wood-based materials going forward. The second theme is the continued strength of the housing market in the U.S. New home construction has proven to be remarkably resilient amid a higher interest rate environment. The housing sector remains significantly underbuilt, so we expect continued strength in housing, particularly as rates begin to ease. We also see very favorable migration and demographic trends that we believe are going to benefit our Real Estate Development projects long term.
So in sum, we expect that the confluence of these trends are going to drive increased demand for land and increased demand for timber for the foreseeable future. So as these trends reshape our industry, they're also reshaping how we think about our business. Increasingly, we've come to see ourselves as not just a timber company, but really more of a land resources company. And as a land resources company, we're now focused on maximizing the value of our lands in a multitude of ways. Now, to be clear, we still expect that timber and HBU are going to be the primary economic engine of this company for the foreseeable future. That said, we also expect that over time, a small portion of our lands will become much more valuable for Land-Based Solutions and Real Estate Development. So why does this matter?
This next slide illustrates why we're so excited about these new opportunities. What this chart shows is the potential value uplift per acre for these alternative uses. So for example, if you take an acre of U.S. South timberland that's worth $2,000-$3,000 per acre, and you're able to convert that to a carbon capture and storage lease, well, that has the potential to lift the value of that acre up to 5x . If you're able to convert that acre to a solar lease or an unimproved development use, that has the potential to lift the value of that acre by up to 10x . And if you're able to convert that acre to an improved development use, that has the potential to lift the value up to 15x . So we see significant value creation potential from optimizing our land use.
Now, I want to reiterate that only a small portion of our lands will ultimately be suitable for these alternative uses. But consider this, if we're able to convert just 1% of our lands to one of these higher value uses that has a value uplift of 10x-15x , well, that implies a 10%-15% value lift in the company. Now, imagine if we're able to convert 5% or even 10% of our lands to these alternative uses over time, it has the potential to really transform the value of this company. So again, we're really optimistic about the value potential that we see here, and we're going to spend much of the day talking about these new opportunities and how they're evolving for Rayonier.
So as we embark on this journey and strategy, we felt it was also time to rethink our vision and purpose. We've long had a mission statement at Rayonier that was focused on generating industry-leading returns in our core Timber business. And while this is still a very noble objective and one that we absolutely expect to continue to pursue, we felt we needed to broaden the spectrum of our vision to match our new ambitions. So today, we're rolling out Rayonier's new vision statement, and that is to realize the full potential of our land resources in meeting the needs of society. And we're going to pursue this vision by focusing on three key pathways. We're going to continue to grow renewable forest products to meet the world's growing need for wood-based materials. We're going to deliver innovative Land-Based Solutions that will contribute to decarbonizing the economy.
We're going to create inspirational places where people can live, work, and recreate in a natural environment. Now, this isn't a radical new direction for the company. Rather, it's a broadening of what we believe is possible with our land base. I know that our organization is very excited and energized by this new vision, and we're eager to take it forward. Now, let's move on to why we believe Rayonier is well-positioned to succeed, and it starts with our portfolio advantages. First, Rayonier has a best-in-class timberland portfolio concentrated in the most attractive timber markets globally. Second, we have a differentiated real estate platform with a pipeline of high-value development opportunities. And third, our portfolio is very well-positioned to capture these transformative Land-Based Solutions opportunities. Now, I want to drill down into each of these in some more detail.
Slide 17 provides an overview of our timberland holdings by region. We own or lease roughly 2.7 million acres in total, including roughly 1.9 million acres in the U.S. South, roughly 420,000 acres in the Pacific Northwest, and roughly 420,000 acres in New Zealand. Notably, all of our timberlands are located in major softwood-producing regions with strong timber demand and access to export markets. We don't own any timberlands in what we consider to be second-tier markets, like the Lake States or Northeast or Appalachia region, where both timber demand as well as timberland M&A markets are much thinner. Another key feature of our portfolio is our concentration in the strongest markets in the U.S. South.
As you can see on slide 18, over two-thirds of our timberlands are located in the U.S. South, and and 71% of our southern lands are located in top quartile markets, as measured by the TimberMart-South composite average pricing. This strong market positioning translates to superior EBITDA per acre generation. Over the past five years, our average EBITDA per acre has been over 35% higher than the NCREIF South Index average, which we believe to be representative of average quality U.S. South timberlands. So this chart really highlights the relative quality of our U.S. South portfolio, which is our largest holding and also where we see the most Land-Based Solutions and HBU upside over time. Next, I want to talk about our real estate platform, and I'll start by providing a high-level overview of our Real Estate business.
Slide 19 shows the range of real estate categories that we participate in. The first two, non-strategic and rural, these are really the bread and butter of our Real Estate business. What I often say is that when you're in the Timber business, you're also in the real estate business, because when you own millions of acres of land, invariably, some portion of those lands will be more valuable to somebody else than they're worth to us as timberlands, and we refer to those as HBU, or Higher and Better Use lands. We generally expect to sell roughly 1%-2% of our southern land base into these HBU markets annually, and we typically realize premiums in the range of 50%-100% above timberland value. This really forms the core of our HBU business.
The next two categories comprise our development business, and this is where we see the most significant growth opportunity. Unimproved development consists of properties where we've made minimal investments in development planning and entitlements, but where we haven't invested in any horizontal infrastructure improvements. These tend to be high value, but relatively isolated parcels, where we don't have a significant land holding in the immediate vicinity. The next category is improved development, and this is where we've made investments in entitlements, but we've also taken that next step and invested in horizontal infrastructure improvements to enhance the value of that land. These tend to be properties where we take this step, where we have a significant land holding in the surrounding region.
We do that so that the—that, again, that surrounding land holding can really benefit from those investments. So these are the major categories that comprise our real estate HBU business. Now I want to talk to you about our performance in the HBU business. The chart on the left shows our—how our HBU values and premiums have evolved since 2015. So as you can see, we generate a significant increase in our average HBU sales price per acre, going from roughly $2,800 per acre in 2015-2017, to roughly $4,100 per acre in 2021-2023. And we also generated a significant increase in the premium above the NCREIF index, which went from 55% to over 100% in this most recent three-year period.
Now, we've also seen a significant shift in our mix towards higher value development sales. Those development sales comprised just 15% of our real estate revenues in 2015-2017, but they increased to 44% in this most recent three-year period. What's really driving that mix shift is the momentum that we've gained in our Wildlight and Heartwood development projects. Slide 21 provides a high-level overview of our development pipeline, as well as a map of our holdings in Southeast Florida - I'm sorry, Southeast Georgia and Northeast Florida. Now let me take a step back. Rayonier has long held a large land position, as well as some very high-level entitlements in this area. What we didn't have until 2016 was a comprehensive strategy to unlock value. What happened in 2016 is that we launched Wildlight.
Now, the initial phase of Wildlight was contemplated as a 300-acre village center with a 10-year development horizon. And it came with a lot of questions, candidly. You know, "You're a forestry company. Do you really want to be in the real estate business? Why, why are you doing this?" And what we said at the time is that, the logic is really the scale of our holdings in the surrounding area. We own 25,000 acres in a 5-mile radius of Wildlight. We own 50,000 acres in a 10-mi radius of Wildlight, directly north of Jacksonville in the path of growth. So our strategy at Wildlight, it was never about the IRR that we expected to earn on that initial investment. It was really about the value creation potential that we had around our surrounding land base.
So fast-forward almost 10 years, and that value potential is really taking shape, and we're much more confident of the specific areas that have long-term development potential. We're no longer talking about the 200,000 acres in the Coastal Corridor that Rayonier owns. We're now dialed into roughly 50,000 acres that we believe has development potential over the next five-10 years, and another 70,000 acres that we believe has longer-term development potential. Now I want to shift gears and talk about Land-Based Solutions. We're all familiar with this chart on the left here. This is a global path to Net Zero to limit global warming to 1.5 degrees.
It assumes a 50% reduction in emissions by 2050, 2030, and a 90% reduction in emissions by 2050, with the balance of roughly 5 Gt of residual emissions assumed to be offset with some form of negative emissions or carbon removals. Now, the reality is, we don't know exactly what this path will look like over the course of the next 25 years. But what we do know is that there's significant global action currently underway to mitigate emissions and the negative impacts of climate change. Over 75% of countries and over 50% of the 2,000 largest global companies have made net zero commitments. And as a result, we're seeing tremendous amounts of capital flowing into this sector to decarbonize the economy.
For example, between 2020 and 2030, utility scale solar capacity is projected to grow 7x. Carbon capture and storage demand is projected to grow 11x, and voluntary carbon market issuance is projected to grow 6x. Now, as a large owner of timberlands, which also comprise a massive carbon sink, we believe that these trends represent significant opportunities for Rayonier. So when we talk about Land-Based Solutions, what exactly do we mean? Slide 23 provides an overview of how we broadly think about this business. We generally think of Land-Based Solutions as falling into three categories. The first is alternative and additional land use, and that would include things like leasing land for wind farms or solar farms, or leasing pore space for carbon capture and storage.
The second category is carbon markets, and that includes compliance markets like the New Zealand Emissions Trading Scheme that we participate in there, as well as voluntary markets, where corporations can purchase offsets to meet their net zero claims. This is primarily what we're dealing with here in the U.S. The third category is fiber for bioenergy and biofuels, and that includes things like using wood fiber for bioenergy with carbon capture and storage, or BECCS, or using wood fiber for the production of biofuels, like sustainable aviation fuel or green methanol. Long term, we think that all of these Land-Based Solutions are very promising, and we have active discussions ongoing with very credible counterparties within each of these different categories. That said, we really see solar and CCS as being the most significant near-term opportunities for Rayonier.
So let's do a deeper dive on solar and CCS to highlight what we're seeing here. As I noted earlier, we expect significant growth in both solar and CCS for the foreseeable future. Third-party forecasts point to annual utility solar capacity additions of roughly 40 GW over the next decade. This implies an annual land need of roughly 275,000 acres, so significant demand for land coming from utility solar. And we're seeing the impact of this in the ramp-up of our own solar option pipeline, which we expect to grow from 7,000 acres in 2021 to over 50,000 acres by the end of this year. We're likewise seeing a significant ramp in our CCS pipeline. The Inflation Reduction Act has really bolstered CCS development, and we're expecting it to grow significantly over the next several years.
We announced last week that we have 59,000 acres under CCS lease with ExxonMobil, and we expect to have over 70,000 acres under CCS lease by year-end. That's up from zero, three years ago. So again, we're very excited about the growth that we're seeing in both solar and CCS, and we're optimistic that our pipeline will continue to grow from here. So now that I've gone through our portfolio advantages, I also want to drill down into our organizational advantages, which I believe are equally powerful. There are three key advantages that I want, I wanna highlight. The first is our pure-play timber REIT structure and the flexibility that it affords us. The second is our nimble approach to capital allocation, including the initiatives to enhance shareholder value that we announced last November.
The third is our organizational culture, which I believe is very well aligned with our vision and strategy. Let's start with our pure-play structure. As I noted earlier, Rayonier is one of three publicly traded timber REITs, but we're the only pure-play timber REIT. What I mean by that pure-play is that we don't have any exposure to downstream wood products manufacturing. Now, we believe this provides a number of key benefits. First, much greater earning stability. Timber cash flows have historically been very stable over time, whereas wood product cash flows have tended to be more volatile. One of the hallmarks of timberland investing is the safety and stability of cash flows, and we believe that our pure-play structure is much better suited to provide this.
Second, our pure-play structure provides greater optionality in terms of how we manage our lands, because we're not beholden to feeding a mill infrastructure. This optionality applies both to how we manage our lands from an operational standpoint, as well as from a portfolio management standpoint. The third is that as a pure-play timber REIT, with over two-thirds of our assets in the U.S. South, we have greater relative upside potential around Land-Based Solutions and HBU because most of this is occurring in the U.S. South. Next, I want to talk about our approach to capital allocation. Our mantra around capital allocation has always been to be nimble and opportunistic, with a view towards building long-term value per share. We've often pivoted as we've seen different opportunities become available.
We've grown and improved our portfolio through acquisitions, but we've also not been afraid to sell assets when we felt that our capital could be better deployed elsewhere. We've bought back stock when we've seen a big disconnect between the underlying value of our assets and our stock price. But we've also issued stock through our ATM when we saw attractive opportunities to deploy that capital. We've increased our leverage to pursue strategic growth initiatives, but we, we've also carefully managed our balance sheet to maintain an investment-grade credit profile at a very low cost of debt. And of course, we recently announced a plan to execute on $1 billion of dispositions, which was designed to reduce leverage in a higher interest rate environment and capitalize on what we saw as an unprecedented disconnect between public and private market timberland values.
So again, we've been very nimble and opportunistic in our approach to capital allocation and balance sheet management. Next, I want to talk about our organizational culture, and it starts with our focus on sustainability. As a forestry company, sustainability isn't just a buzzword. It is truly ingrained in everything that we do. When we plant a seedling or when we make an investment in silviculture, we're generally not gonna realize the benefit of that investment for decades. So forestry is inherently very long-term in nature and practically synonymous with the concept of sustainable growth. Now, I want to highlight just a few aspects of our ESG profile that I believe are especially important, and it starts with our carbon footprint. Climate change is top of mind for most companies today. Fortunately, at Rayonier, we're not focused on solving a big emissions problem.
We're really focused on creating value from our massive carbon sink. Our trees sequester over 14 million tons of carbon annually, relative to emissions of only 300,000 tons. To put that in context, our forests sequester roughly one ton of carbon every two seconds. Since we started this presentation today, our forests have sequestered roughly 1,000 tons of carbon. So our business and our assets are already playing a vital role in climate change mitigation. On the social front, we've been at the forefront of contractor safety. You know, candidly, this is an area where our industry was lagging several years ago, but we made it a priority at Rayonier to focus not only on employee safety, but the safety of our contractor workforce as well, and we're seeing results. Last year, we saw a 50% year-over-year reduction in U.S. contractor recordable injuries.
So we've made significant strides here, and this is something that we're very proud of. Lastly, on governance, we're in a very strong place. We employ best-in-class governance practices across the organization, including with respect to board independence, board diversity, and executive compensation. I can tell you based on the number of directors we have in attendance today, we have a very, very engaged board. We also have a team and a culture at Rayonier that is very well aligned with our vision and strategy. I don't think that I ever truly appreciated the power of culture until I joined Rayonier. No offense to my former colleagues on Wall Street. This is an organization that really cares. We care about our lands, we care about the environment, we care about our communities, we care about each other.
We define our culture as One Rayonier, and the key principle is that we all work together to find the best outcome for the company and our stakeholders. Our corporate values form the TRUST acronym, and they revolve around working together as a team, serving as a responsible steward of our land and communities, unleashing empowerment so that our employees can grow and develop as the company grows and develops. Embracing safety as a way of life, so that we ensure that every single one of our employees and contractors goes home safely every night. And acting like an owner in how we make decisions and care for our land resources. I believe that our culture, our values, and the talent and dedication of our people position us very well for the future.
So putting all this together, we're executing a clear strategy to build long-term value per share and to realize the full potential of our land resources. This strategy focuses on optimizing our core timber operations to generate increased productivity and operational efficiencies across our land base. Growing our Land-Based Solutions business with a near-term focus on solar and CCS, and a longer-term focus on bioenergy and voluntary carbon markets. And leveraging our differentiated real estate platform to create unique and inspirational places that add value for our shareholders and other stakeholders. Having a technical difficulty here. We have a problem with the screens here. Apologize, we're having a technical issue here. I think we got it resolved. As we look to execute this strategy, we're also establishing long-term financial targets for both Land-Based Solutions and Real Estate Development.
In Land-Based Solutions, we're setting a 2030 adjusted EBITDA target of $75 million and an interim 2027 target of $30 million. Now, Doug will go into some more detail about why we see this, lift after 2027, but it's primarily due to the permitting timetable that we see for these projects. We're building up a significant pipeline of solar options and CCS leases currently, but it generally takes three-five years to get sites permitted. So we expect that the big ramp will occur as our solar options convert to leases and as our CCS leases convert to injection royalties over the next several years. Now, moving on to our Real Estate Development targets.
Given the lumpiness of Real Estate transactions, rather than establish a target at a single point in time, we've laid out our targets in five-year averages, and we're likewise expecting significant growth over the next several years. Specifically, we expect 2026-2030 average Real Estate Development adjusted EBITDA of $40 million, which is up 40% over the prior five-year period. In total, we expect that these two businesses combined will generate over $100 million of adjusted EBITDA for Rayonier by 2030, and that's up from essentially nothing six or seven years ago. So in closing, I just want to reiterate how excited we are about these new growth opportunities that we're seeing emerge for our timberland assets.
We look forward to doing a much deeper dive about each of these opportunities today, as well as, and we look forward to engaging with our shareholders during the course of the day. So with that, I'm gonna turn the mic over to Doug Long, our Chief Resource Officer, who's going to tell you more about our Land-Based Solutions business. Thank you.
Good morning. I'm the Chief Resource Officer for Rayonier, and somehow I've become the old guy in the company, I realize, with 29 years. I'm actually fifth generation in this industry, so I have about 50 years of experience working in the woods, so it goes way back in my blood. I went to forestry school, so I could be alone in the woods and not speak to big groups like yourselves. So please forgive me as we go through today, but I'll do my best. I've worked across many areas of our business. I've worked from the U.S. to New Zealand to Asia, and I've always loved what I do. But the initiatives I'm gonna share with you today are some of the most exciting I've seen over the course of my career.
Specifically, I'm excited to drill down a bit deeper into how we will deliver innovative Land-Based Solutions. There are three things I hope you'll take away from the presentation. First, we're building a diversified growth business by monetizing Land-Based Solutions we can provide, as Mark mentioned, in solar, carbon capture storage, carbon markets, and bioenergy. Second, we believe our footprint is a competitive advantage. Third, we intend to capture value from this strategy, as Mark shared. We have an incredible opportunity to play an integral role in energy transition in the United States, while also delivering significant financial returns. So let's dive in. There's more interest in our trees and land than I can remember in my 30 years with the company.... We're seeing growing demand for products from trees as alternatives to fossil fuel-intensive products in building construction, consumer goods, and energy.
In addition to those products, the recognition of the carbon sequestration benefits of our forests is now beginning to be valued by the market to offset the emissions. Beyond the trees, we're seeing unprecedented interest in how our land can help be a solution for renewable energy generation through solar, hydro, and wind, carbon capture and storage, and biodiversity. As always, we remain a strong proponent of protecting the value of our land as natural habitats. Our forests are becoming incredibly valued in the Net Zero transition. As Mark pointed out a few minutes ago, in the near term, our strategy is focused on immediate needs for land, for solar and carbon capture storage, where we believe there's a first-mover advantage, given our inventory of large tracts of land in rapidly developing areas. As we look out a little further, we see growing demand in carbon markets and bioenergy.
Based on our New Zealand experience with carbon markets over the past decade, and that forecasted growth in demand, roughly around 2030 that Mark shared with us, when net zero commits start to come true, we think there's, we think there's still value in letting these markets mature. Certainly, while exciting in the mid to long term, bioenergy demand will take some time to build. As these markets continue to evolve, we are building our capabilities to capitalize on these longer-term opportunities. But here's one thing I want you to remember from these slides today: we have a growing set of opportunities that will allow us to deliver meaningful value in the short term, while preserving our optionality to create even more value over the longer term. With that, let me unpack each of these opportunities in a bit more detail. Let's start with solar.
As we think about solar, the key point to me on this slide is that the cost of solar has dropped by 80% and is now cheaper than most fossil-based fuels, so it's being readily adopted at utility scale. As you can see on this graph, in green, the forecasted CAGR of 11% pre-IRA represents solid growth based on just the underlying financials alone, solar. But with the IRA incentives to recoup capital costs more quickly, that growth rate doubles to 22%. Either trajectory represents good future growth of this business, but the IRA is driving significant near-term demand for large tracts of suitable land. As one of the largest landowners in the areas of the country where these utility solar scale installations are developing, Rayonier is uniquely positioned to be a major player in ongoing solar development. Let's talk about why that's the case.
With utilities directly embracing solar at scale, the demand for large tracts of land is growing rapidly. As you can see here on the left, typically takes about 7 acres per megawatt of generation capacity, and utility-scale solar are usually in the 75 MW-200 MW size. So that's about 500 acres-1,500 acres of developable land. That's a large tract of land, a lot of land, which we happen to own a lot of. And going forward, between 2023 and 2028, there's predicted to be 180 GW of U.S. solar capacity additions. If you look at the graph on the right, and you look what that means, go out to 2028, in five years, you'll see that's 1.3 million acres of land. If you carry that forward on projections to 2033, that's 3 million acres of land.
That's a lot of land, no matter how you measure it. But where this gets really exciting and powerful story for Rayonier is when we look at where this growth is occurring. As you can see here on the left, much of that growth is projected for the U.S. South at 45%, with just two-thirds of that growth expected to happen in two states, Texas and Florida, where the sun is always shining and everybody's moving, if you believe the Chamber of Commerce. Based on the composition of our ownership, as you can see on the right side, we believe we are uniquely positioned.
If you have one takeaway today for solar, it's that rapid growth is in the South, it will be primarily met by just two states, Texas and Florida, where 30% of Rayonier's U.S. acres are directly in the path of solar expansion, and that creates an enormous opportunity for us, as Mark mentioned. So how does this translate into value? Let's take a look at this illustrative example. As you can see, over the first three-five years, there's an option period. During that option period, the developers are getting their feasibility studies done, construction, permitting, and access to the grids. And we typically, as a landowner, would receive equivalent to 1x EBITDA for that payment. The conversion rate is about 25%-40% based on industry intel from what we've, what we've seen so far.
So when something does convert, it goes a change of land use from being growing timber, where we're being paid both, to a new land use as alternative, as Mark mentioned. We get paid between 10% and 15% timber EBITDA over that point. 10x-15x EBITDA at that point in time. And those are long-term, inflation-adjusted for 25-40 years with high credible parties. So this is a step change in economics. We go from getting essentially 1x on timber, so 2x EBITDA, to 10x-15x EBITDA at that step change. So this is a very powerful, meaningful driver for us. We are executing on solar by recently spinning up a new team from our business development group, devoted to renewable energy solutions, being led by an experienced forest engineer.
We're investing in our internal capabilities to move beyond resourcing inbound inquiries, which is what we've done typically in the past, to proactively marketing and developing strategic relationships with utility companies, helping solve their problem of finding large tracts of suitable land. As you can see on the right, we've had significant growth over the last few years, and 2024 has started off very active. So we expect to have over 50,000 acres under option or lease by year-end. The best news is that we're just getting started. By aligning more closely with customers and becoming more integrated in their process, we feel we can improve that conversion rate I mentioned of 25%-40% to the higher end of that range. Now, let's shift to the second of our near-term opportunities, carbon capture and storage.
The trend towards decarbonization in the U.S. is still in the early stages, and carbon capture and storage is expected to accelerate exponentially as this trend plays out... You can see the forecasted demand to capture and store carbon emissions is on a 14x growth trajectory over the next 10 years, off a base of approximately 20 million tons per annum of carbon capture and use. This is significant growth, but all the storage requires the availability of large tracts of suitable land, and that's where we come in. While there's theoretically ample geologic storage capacity in the U.S., the near-term demand will be constrained by the factors you can see here on the right. The permitting process, as Mark mentioned, can take two-5+ years. Smaller tracts don't provide a lot of opportunity, not a lot of capacity.
So again, large landowners, large tracts of land, and where there's existing carbon dioxide capture and infrastructure. So these are some of the things that will constrain that. We'll talk about these next. I'll be sharing with you why we think we're poised to capitalize on this very powerful trend. Three of the key considerations in cost-effective carbon capture and storage are proximity to high-purity emission sources, geologic storage capacity, and access to pipelines and rights of way to move emissions from source to sink. As you can see on the left, the Texas and Louisiana Gulf Coast petrochemical complex is a rich source of high-purity emissions. Near large tracts of our land, that you can see in the middle here, have significant geologic storage capacity. And on the right, we can see access to infrastructure, with the red showing pipelines.
This is great news for us because we have over 400,000 acres of timberland in Southeast Texas and Southwest Louisiana that are well positioned to capture this opportunity while we continue to grow timber. So let's zoom in a little deeper on this map and look specifically at our areas. In blue, you can see our forests. These are the large tracts of land that we own. The little yellow dots that you can see, or orange dots, those are GHG emitters. Those are the greenhouse gas emitters. And then the red are the pipelines, well, the carbon dioxide pipelines that ExxonMobil now owns. So what you can see is that we have significant scale of large tracts that are either neighboring or very close to high-purity emission sources that have both storage capacity and either existing carbon dioxide lines or very short connections needed.
Typically, large tracts in this area are often accessed with existing pipelines and right of ways for other products, such as natural gas, that can either be converted or co-located with future carbon dioxide lines. We're experiencing strong interest in this area, but we also feel we have similar opportunities in southern Alabama and southeast Georgia. Much like solar, I believe we're uniquely positioned along this Gulf Coast petrochemical complex, and we are only in the early stages of monetizing this opportunity. So let's talk about how the economics of CCS actually work. In addition to participating in the efforts to slow down climate change, we also recognize considerable value, as you can see in this illustrative example. Unlike the step change of solar, where the land use changes, the carbon capture storage is more of a sliding scale that is additive to our timber crop.
The great thing is, is these are stackable. We can have one on top of the other. As you can see here on this graph on the right, similar, we have a two- to five-year period, construction, permitting, and during that time, pre-injection, the landowner receives approximately 1x-2x timber EBITDA. So we're growing our trees and receiving this extra. At the point of injection, once the permitting construction has been done, we typically receive a lender minimum injection payment that equals that first rent, but then for every additional ton of carbon dioxide that's sequestered underground, you receive a bonus payment. And that bonus payment is going to depend on the geologic storage capacity, as well as the projected injection rates that you have per well.
As you can see here in this green, what we're showing is it's not actually going to be a 45-degree angle like that, but it's going to vary by well as to what that can be. That's why there's a range of 3x-5x the timber EBITDA we believe you can receive. Again, this is stackable. It's on top of our timber, so these are added to as we go forward. We'll be helping store carbon underground while our trees sequester on the surface, which is a win-win for the climate as well as our investors. Let's talk about our strategy for capturing this value. Using similar skill sets and strategy to solar, we have also spun up a minerals team led by an experienced geologist to help build our internal capacity... Excuse me.
They'll help build our internal capacity to practically market again and develop strategic relationships with high-potential customers, with a goal to connect them to our large inventory of suitable tracts, allowing them to execute more quickly and at scale. Based on our recent announcement that Mark mentioned with ExxonMobil, we now have over 59,000 acres under lease and current negotiations with other customers. We expect to have over 70,000 acres under lease by year-end, with more in the pipeline. So before we shift gears to talk about our longer-term opportunities, I want to remind you of two things. First, we're in the early stages with significant runway ahead of us. And second, we're taking an intentional and proactive approach with the goal of delivering significant value. I'm equally excited about carbon sequestration markets and the benefits our forest can bring to bear.
As I mentioned earlier, these markets are still developing. This is something I've actually been waiting for since I was in college, so it's finally great to see this happening. As you can see on the left side of this slide, there are several drivers that give us confidence in the future growth of the U.S. carbon market. As many of you’ve seen, we're looking for, you know, basically, the net zero pledges continue to grow, as Mark showed on that graph, and higher quality. There's been, you know, some concerns in the past. We're very happy to see those move forward and really proactively, folks are looking to standardize carbon credits, and that gives us a lot of confidence in going forward.
Based on this projected growth and demand on the right that you can see, as folks have to meet their 2030 first milestones for net zero, and that experience I mentioned before in New Zealand, we believe that we will realize full potential value in the future. So in our New Zealand operations, when carbon markets first came out, we saw pricing in the NZD 20 for the first two years. That dropped down to the single digits, low single digits, after about three years. Then as the market matured and came back up, we've seen that move back up into the NZD 60-NZD 70 range. So there's been a lot of volatility in that market, but it did stabilize. It went out, and it took that opportunity for things to standardize, get credit, for everybody to understand the markets.
We think we're at that early part in the markets in the United States now, where things still need to work through, and there's a benefit in waiting until it's closer to 2030. Not to say we won't do something possibly sooner than that, but just that opportunity presents us. Especially true for Rayonier that, due to our highly competitive wood baskets, we have a higher hurdle rate, and so it's hard for us to overcome that right now with carbon pricing. We do look forward to that opportunity and believe it will come. Overall, we're building internal capacity as well as external customer relationships to understand how we can best meet the need for high-quality carbon credits moving forward. Our fossil economy is based on energy captured by photosynthesis millions of years ago.
Luckily, photosynthesis is still one of the most efficient ways to create energy, with the added benefit of converting carbon dioxide to clean oxygen. As society looks to decarbonize, our forests are poised to play a vital role in fueling us forward in our homes with bioenergy and carbon capture and storage, at the pump, and even in the air with sustainable aviation fuel. Yep, that's right. Someday you'll be flying in a plane that's fueled by pine trees. Our business development team is in active discussions with a wide range of potential new customers to understand their needs, such as those depicted on the map.
We're working with folks who are interested in bioenergy and carbon capture storage, liquid fuels, whether it be sustainable aviation fuel or green methanol for shipping, as well as biochar, which is a way to lock up carbon and use as soil amendment in agriculture. Our internal R and D team are evaluating how we best harvest, collect, and grow to meet these developing markets, which are still a few years off. But here's the one thing to remember as it relates to both the carbon markets and bioenergy. This added source of demand for our timber will allow us to further optimize returns from our timberlands as these markets mature. Let me reiterate that we are both excited and confident in all four of these Land-Based Solutions: solar, carbon capture storage, carbon markets, and bioenergy.
Each alone has potential to be a significant value driver for our company, and optimizing this value requires us to take into consideration multiple factors. The lenses through which we evaluate our lands and the trees we grow on them have never become more complex, but also significantly more profitable. As you can see here, we have to take into account proximity to the assets, to our partners, whether they be carbon capture storage, solar. Stackability, as mentioned before, can you put a solar lease on top of carbon capture storage opportunity? Can you put the carbon capture storage underneath timberland? Availability of the counterparties. We'll make sure we're working with those high-potential customers, and the relative value of the alternative use to growing timber, which has still been the foundation of our business for 97 years in a great business, as well as the decarb-decarbonization benefits that we have.
So as you can see, where the big decision was once just which species to plant, we now have to consider many factors to determine which business, or in some cases, where they're stackable businesses, will maximize our value. Now, before I wrap up, let's get a little more specific on what these opportunities mean in terms of longer-term financial targets. Based on the growing scale of these opportunities and our competitive positioning, we are setting Land-Based Solutions average annual EBITDA targets of $30 million in 2027 and $75 million in 2030. These will be underpinned by a diversified, long-term annuity stream from credible, high-quality customers. The specific makeup of this EBITDA will likely vary from year to year and shift over time as the markets for each of these solutions evolves.
But I hope by giving you these targets, we'll give you great confidence in the fact that we expect our Land-Based Solutions to be meaningful contributors to our EBITDA growth over the next few years. So hopefully, I was successful in helping you understand our vision for how delivering innovative Land-Based Solutions will increase our optionality and monetization opportunities for our land, and why we believe Rayonier is uniquely positioned given our footprint and scale in some of these rapidly growing areas. We're excited about these opportunities and the potential they have to generate meaningful and positive outcomes for society, as well as deliver significant value to our shareholders. And with that, we're going to play a short video as I invite Chris Corr to come up. Thank you.
I don't think there's anything more creative than to take an entire landscape and envision a new town, a whole place from the ground up. It's exhilarating. There's nothing like it. This was a story of grinding, dreaming it as one thing, and doing it as another. Wildlight's a vision for a master-planned community, a mix of uses, over a big, big area. It started because there was a business purpose. We created this premise that said, if we take lead over planning, over markets, over land use entitlements, over infrastructure, we can yield more value than some other strategy. I would say equally important and simultaneously, there was a community purpose. This company, you know, almost a hundred years old, has always been stewards over large environmental landscapes, right? Around the country, around the world.
And so there's an ethic and a responsibility for how you manage those things. We brought that same spirit to community development, and we said, "You know, look, we have an opportunity to create a higher standard, to be a model for others to emulate and do it in a way that really does give back to the community." So why start here? One is because of the market potential, and the other was because of the scale of our holdings here. We knew that if we started here, you know, we had the potential to create value over that landscape for a long, long period of time... There's power in community, right? I mean, incredible power.
You focus on education, and you realize if you do your community right, you're going to create a learning place where people actually learn because they lived in this place in a way that would be different if they lived somewhere else. I could do the same thing around health and community, technology, environment, outdoor recreation, friends, clubs, activities, all those things that create rich life. You can make a difference in people's lives if you create the place right and create an environment where all those things just flourish. That's what's happening here, and that's what makes me tick for sure.
State guy has hit the stage. That's how you create value in real estate. So if you're one of the only people sitting in a room in New York that hasn't bought real estate in Florida yet, come see me after the show. That's Wildlight. I checked. It's 70 degrees there. It's sunny right now. You can live 15 mi from the beach and 15 mi from an international airport. Come see me after the show, okay? Look, there's just no better way to convey the progress we've made than by seeing it. And by progress, I'm not just talking about the project, I'm talking about the business.
I've spent the better part of the last 10 years, creating and refining a strategy, for Real Estate Development at Rayonier and building a team with the capabilities and the expertise to, execute, and to do it in a reliable way at a very high level, and the results speak for themselves. I could be more proud of this team. I'm more excited about the future. We've built a platform, and now we're going to scale it. Pretty simple formula, really well-positioned land holdings, large, in the path to growth, valuable, getting more valuable. And now we have the proven capability, as you heard from both Dave and Mark, because of the work we've done over the past few years, to execute and to do it in a very reliable way. That's a winning formula, just those two things.
But what's really going to make a difference is in our approach, in the responsible way that we do this. Creating inspirational places is now fully embedded in the vision of Rayonier, and we're going to do this in a way that adds more market premiums because I've learned from experience, that when I came to Rayonier, I had over 25 years experience working on similar assets, converting agriculture, timberland to higher performing places. All of those now are earning market premiums. They earn better market share. It's where people live, work, and play, and thrive. When you do that, you make more money. You also make better places, better communities, win support in communities, which is really vital, for going and going for a long, long time. There's one core business on the left. I like to call the one on the right, the other core business.
That's the Chris Corr business. The growth business, as Mark said, that's what I'm talking about today. It's important to understand where we play on the Real Estate Development value chain. This is a simple illustration of what it takes to develop real estate from an undeveloped property to an actual community. Undeveloped land to the left, vertical development to the right. As you go left to right, time, complexity, capital, investment, risk goes up and so does value. How you manage at each one of those steps is very different, very technical, very political, requires selling a vision. In the undeveloped bucket there, that's rigor, that's analysis.
You got to understand that you've got a market, and you've got a program that can serve it before you step into the next box, which is entitlements, where you go in front of local governments and ask for an approval. You're saying, "Can you take this timberland and put development on it?" And then they got to face elections for the decisions that they make. You're selling a vision. You're committing to them that you can do something that makes the community better. That's politics. It's also regulatory because you win your permits here, highly technical, complying with codes, regulations. When you get those approvals, you've got an opportunity, and those entitlements are really, really valuable, and they can take you a long, long way. The next step is horizontal development.
This is another set of rigorous steps, civil engineering, planning, analysis across a landscape, really making sure that when you invest capital, you get it returned, you make money on it. It's about project management, discipline along a continuum, testing, retesting, bidding, rebidding, redesigning until you get in that budget. You know you can move all the way in a vertical development, buildings off to the right. The point of going through all of this is to say our sweet spot is right there in the middle. We aim to deliver an entitled pod of real estate within an inspired master plan that's been served by master infrastructure, horizontal infrastructure. By pod, I mean, it's still undeveloped. So the buyer comes in and finishes the landscape, the development, horizontal infrastructure, and builds buildings, homes, et cetera, within that pod.
This place on the continuum for us, we believe, is the best for us in terms of our risk profile. It's more capital light, but we can get a really big premium and a really big return when we execute this way. Because you deliver a buyer an entitled pod that's ready to go with infrastructure, they'll pay you a big financial premium for that. So look, we've learned from experience, and we've applied lessons here in a really methodical way. We knew that our industry didn't have a great track record, honestly, in executing in Real Estate Development. So along every step of this process, we've been very, very careful, you know, to make sure that we've applied lessons learned, learning from those mistakes.
Look, it's about some things that may sound real simple, but sometimes, look, honestly, it gets missed. I think it's because, in our industry, sometimes the folks just haven't taken the time to inbound the expertise with the experience required to execute. No disparaging of foresters, but, you know, they know a lot about silviculture and forestry and really important things, but maybe not real estate. I promise I can't run Doug's business. If you ever see that happening, do something. I can't do that. But I can do this. And so the first bit is then about the right experience. The other is keeping capital return in sync with capital investment. I think what happens a lot of times is people make mistakes. You get big appetites. These are raw tracts.
You can get a lot of capital in the ground before the return starts. You gotta be really, really careful there. And so it's about discipline, knowing you've got a market, knowing when you put it out there, that you're gonna have a buyer, you're gonna have a buyer quickly. You're gonna apply that experience. We have more than 25 years average experience across our team. We inbounded a very deep set of experienced professionals across a broad range of capabilities on this team. And I mention rigor. It's just always analysis, analysis, analysis, every step of the way, looking and relooking back and forth, financial, technical, all those things along the continuum.
At the end of the day, what really drives you is trust, because you've got—we've got to have the trust of the local governments we serve, of the markets we serve, of our buyers, home builders, and developers, and always maintaining those relationships and that credibility, really, really important. That headline is a true statement. This really is a unique and a competitive advantage for Rayonier, the market position, our scale, our reputation, our strong capabilities. Here's the size of the opportunity. This is 120,000 acres. I gotta stop for a minute. It's 120,000 acres for a Real Estate Development platform in Florida and Georgia, and then a smaller but really valuable set of assets out in the Pacific Northwest. That's an incredible platform for a Real Estate Development company.
I mentioned my experience. I've worked across Florida, Tampa Bay, Central Florida, Northwest Florida, across the Americas on many projects. This is an amazing set of assets for a Real Estate Development company. And so one of the things to know about this picture is it's activated, meaning it's not just a blob of acres. "Hey, here's some acres with Real Estate Development potential." Dave mentioned this, everything within this within this table has some kind of project against it. It's a, it's a set of projects. Some are further along in the pipeline, you know, they may be in development or in an entitlements process. Others are in analysis. But everything we've got here is activated. It's got attention on it. We're setting it up for the market in the future.
So drilling into our most significant opportunities, this is Northeast Florida and Southeast Georgia. Not a mistake that these are the most significant opportunities. It's where they're located. If you haven't checked, Florida is growing rapidly, 1,500 people a day, by most measures. Southeast Georgia, not too far behind. This is, looking at the map, it's 300 miles from the Orlando International Airport in Central Florida, probably most people know where that is, up to the Hilton Head Savannah International Airport, up into the north on this map. Everything on red there is land owned by Rayonier. Most of the people in this area, they live within 15 mi of the coast and 15 mi of an interstate. That's Interstate 95.
Look at where our land holdings are vis-à-vis those metro areas, that coast, that interstate, significant opportunity, and it's only growing over time. One of the other things to know about this is scarcity. I've lost track of how many people have come to me wanting to buy a big raw chunk of land for the wrong value. It's just, there's- land has just gotten more scarce, and the competition for it has gotten more fierce. And a lot of the land along these, these areas already, is already in public hands. It's owned by the federal, state government, local governments, been conserved. Some of it's water, lakes, rivers, streams. There are not many large tracts of land left for development, and that makes it even that much more valuable. Last slide on the portfolio and the potential. And I call this pace, okay?
The pace of growth and also the path, the path of growth. We benefit from both of those things. Pace, the bars off to the top there. Jacksonville, by these measures, is the sixth fastest-growing. Savannah metro area, the ninth fastest-growing. Markets by population growth, that's 2020 to 2022. For a measure of the national growth rate's about 0.4%. This is population. Those are very fast-growing markets, okay? And what's happened is they've grown. They're growing even more faster now than before COVID. Two trends, I think, are driving that. One is work from home. It's here to stay. You can work anywhere you wanna work. You wanna work here, near the beach, great climate. And the technology and the willingness of employers is here to stay, in my view.
It's driving a lot of migration to the South. The other one are the baby boomers. 65% of all baby boomers have now hit retirement age. Baby boomers retire to the South in big numbers, and that's just beginning. So put the boomers together with that, with that trend, the climate, the quality of life, the jobs in the South, we've just begun to see the growth here, that we expect to grow for a long, long time. Let me talk about the past for a minute. On Wildlight, what's happened over the years, for 30, 40 years, as I've been watching that market, growth in Northeast Florida has gone south of Jacksonville. So it starts at the beach, and it can't grow into the ocean. Starts at the beach, it comes inland, downtown, into the south of Jacksonville.
If you know that area, that's been some of the fastest growing real estate in Florida for a long, long time. So what happens when things grow fast? It gets congested. The roads are busy, the schools are overcrowded, housing prices go up, the markets start to look for more opportunity, and it's come looking. And one of the reasons we put the Wildlight project out there is because our qualitative or quantitative research, our ear to the ground, believed this was to be true, the market was coming north of Jacksonville. Where, as Mark said, within 10 mi of that, that green on the map is the first phase of Wildlight. We own over 50,000 acres. So now Wildlight's pulling the market. It was the market was pushing in our direction, now we're pulling it, and that's really turning on the velocity.
Same story in Savannah. Okay, Savannah and Hilton Head have grown together. They ran out of room to grow, they started going south. If you know that area around Pooler, if you ever drive I-95 through there, that's where the traffic stops. That's where it gets slow, because there's so much development in that area, and it's pushed it in our direction, which is Bryan County, Georgia. It's Richmond Hill. We own 20,000 acres within that 10-mi ring of where Heartwood is. This is also a market that's got a lot of organic growth, because the state and the local governments there have been so strong on economic development. The Port of Savannah is the largest, fastest growing container port in America.
It's responsible for one out of every ten jobs in this market, and I'll show you when we talk about Heartwood, we've got a very successful industrial project there as a result of that really, really strong market. So this is Wildlight. You saw a video. It's up and out of the ground, past that startup phase, performing really well, earning market premiums. We've been really pleased by the response in the market, really pleased by how it's impacting the community. It's attracted significant capital. So when you see the video, there's a lot of buildings in that video. We built one building. We built an office building for Rayonier, which was a really good move, by the way, because it told the market they're here to stay. It got us a lot of market credibility.
All those other buildings, four multifamily projects, single-family homes, UF Health at University of Florida put two pieces of hospital campus here, two schools, one private, one public, groceries, dining, restaurants, all that stuff came because they believed in our vision. They said, "Yep, we think you're right. This is gonna go." And it's been really gratifying and successful. Now, some of those buyers are coming back for more, certainly the home builders and other developers, too, and we've been able to bring some of them even up to the Heartwood project, that say, "We like the way you guys do this. We want to be with you at that project as well." We've got a really significant sales pipeline now, and a really proven concept. And so here's the best news of all. So Dave mentioned this.
We've got a big entitlement approval last year that will allow us to grow up to 15,000 more residential units, more non-residential here, over about 15,000 acres. On the map, Phase I's a little less than 3,000 acres. There's a couple of thousand homes there, some built, some under construction, that we've sold. And the market's wanting more. That goes to phase II, 5x the footprint. It's a plan that really sets up well for our sweet spot. So what'll happen through that phase II, there'll be a new major road that runs through it.
It's gonna be built by the special district that sits over Wildlight, that has the authority to sell tax-free bonds and build infrastructure, and pay it back by the residences that come into the community. So there'll be a road built by the district, and we'll sell pods to home builders off of it. And we one of the things about the way we structure our home builder transactions, and this has been something we've earned through the credibility of the project and the market, is we get paid two ways. One, on the front end, when the lot closes, and then on the back end, when the home sells. So we get paid a percentage of the final home sales price.
So when the builder does better, we get to participate in that as well. So the performance of the project really strong. We're excited about launching this. We're gonna be under construction here before mid-year. You know, everything we do, and Mark mentioned this, the reason we do it is because of all the rest of that land we own around it. Every time we invest here, you know, someone else invests capital, we just spread that halo value over the rest of that land, and you know, it creates optionality value for the business for a long, long time. This is Heartwood, similar to Wildlight. We replicated the model. We extended our capabilities here.
This is about 90 mi up the Interstate 95, a completely different market... like Wildlight, exceeding our expectations. The market response has been tremendous. It's transforming the asset values there, and the community that has received this in a really, really heartfelt, compelling way. And it's attracted significant capital as well. We've got three multifamily rental projects under construction here, more than 1,000 homes. Land for that many units has been sold. We've got a K-12 school campus here, one of the largest in the state of Georgia, that'll have over 7,500 students on it, integrated right into Heartwood. When people want to live in a community, they want to make sure there's a great school there. We've got a really great school here.
Last Friday, I was at the opening of the first phase of the healthcare campus here. Like University of Florida and Wildlight, we replicated that model, created a partnership with the longest-serving hospital in the region, St. Joseph's/ Candler. They opened their first phase on Friday. That's all their capital, okay, creating this place. And then there's the industrial side of this project, which is extraordinary. I mentioned the port, how this market thrives in that regard. We sold since the interchange opened here, which was a major catalyst for Heartwood. The interchange on Interstate 95, a new interchange, opened in 2021. Since that time, we sold 1,000 acres or so for industrial uses that'll support over 10 million sq ft of non-residential use.
There's about 5 million sq ft built with big logistics centers, like, for companies like Medline, Aalberts, Volvo, and Hyundai is under construction on a manufacturing facility here that'll open this year and employ about 1,500 people. Those are jobs. They need houses. They go to grocery stores. That's how you create value in real estate. So like Wildlight, significant part of our growth strategy, when you look at our EBITDA targets, will come from Heartwood. So here's the Pacific Northwest, acquired as part of Pope. Really interesting because not too dissimilar from the landscape in the Southeast, but even more so, land and private ownership in larger chunks of it, are really rare out here. You know, it's there just isn't much of it.
This is Kitsap County, North Kitsap, north of Bainbridge Island. It's an easy commute to Seattle with the ferry systems here. Beautiful property, scenic mountain views, water views. When the sun's shining in Seattle, it's a little different than Florida. We'll have strong market demand for these properties, and we can, you know, we can extend our expertise here, you know, we have, and optimize these opportunities. Let me talk for a minute about unimproved development. Unimproved development, as Mark mentioned, means that we're selling land after receipt of entitlements but short of investment in horizontal infrastructure. This works best for us when we have land with development potential, but we don't own land around it, so the best strategy for us is to monetize it.
Back to the prior page, look at the key transactions. We can earn significant premiums to the alternatives with this strategy. That sale in Kitsap County, on one of those Pacific Northwest properties at over $110,000 an acre, that's to national home builders. We got the entitlements. We thought we were going to have to develop lots and invest capital to sell this property. But during the process, the demand was so high, we sold it before and got a really, really great return. So when you secure entitlements, in some cases, when you help solve for infrastructure, you create opportunity to earn these type of premiums when the properties are, you know, when there's market demand in a very capital-like way.
So here's what we are prepared to deliver, from 0 to meaningful, to a meaningful contributor of growth, for Rayonier. I call that, 2016-2020 time frame, startup, and we're in the ramp-up phase now. So we've returned our capital. Cash is flowing. We're earning good returns on the investments we made. We've shifted our model to the pod sales, more capital light. We've earned that in the market, and we're making good money here. This is where we're headed, off to the right, to the $40 million average adjusted EBITDA by 2030. Here's how we're going to do it. We're going to develop phase II of Wildlight, as I mentioned before, 5x larger, quite significant.
A lot of this growth is going to come from Wildlight. We're going to accelerate opportunities at Heartwood, as turning on the Heartwood project and continuing to grow it will drive a lot of that EBITDA in the coming years. We're going to activate additional properties. I think there's at least one, maybe two, portfolios on the scale of a Wildlight or Heartwood in our markets. So we're going to be working with local governments to entitle, to prepare other land to come to the market as well, and we're going to grow our entitlements pipeline. Every time, like I said, we secure entitlements, we create the opportunity for value.
We're gonna grow that unimproved development business on certain assets with development potential, where we can really ring the cash register, you know, when we secure entitlements. So, Mark talked about our relentless focus on optimizing and unlocking value from our land portfolio. That's our focus, and I think of it in two ways. There's a lot of moving parts in development. Sometimes it helps to get real laser-like. You know, when I think about the value we're creating, I think of two things. One is the premiums we generate. Mark's always said, "It's all about the premium." The premium to timberland, the premium to alternatives. So one way to think about is that last bullet there, we're realizing bare land values of $25,000 or greater per gross acre, net of capital investment.
So financial premium, significant so, to the alternatives, and secondly, the increased asset value. It's at every move we make, every time someone else invests in our project, they put capital in, that value ripples across thousands of acres. I call it a halo effect. That halo is a huge part of how we create value in Real Estate Development as well. So I'll close with the message I opened with. We've got that formula now, well-positioned land holdings, large, valuable, getting more valuable, the proven capability to execute. And, the real way we'll add value is by our approach, doing this in a responsible way, earning greater market premiums, maintaining that trust, creating that runway to do this business for a long, long time in a reliable and successful way. Thank you.
Thank you, Chris. We're now gonna have Dave, Mark, Chris is gonna stay up here with us, as well as Doug, stay on stage to answer your questions specifically related to Land-Based Solutions as well as Real Estate Development. Please raise your hand, and we will bring you a mic, and then please state your name and company before asking your question. [inaudible]
Hey, Anthony Pettinari from Citi. Thanks for the presentation. I'm just curious on the credit market in the United States. You talk about kind of maturing that market or, you know, maybe creating a more stable market. What actually needs to happen from an exchange standpoint and a certification standpoint for that to occur? What's the timeline for that to happen? Like, what registries are you interacting with? Or, just help us understand how that process could play out, maybe, and the timeline, roughly, for that.
You can go first on that.
Yeah, no, I mean, it's a great question. Like Doug said, you know, we've been, I'd say, very deliberate and judicious in terms of wading into that market. Look, there's still a lot of activity that's underway in terms of, you know, standardization of markets, you know, quality criteria. You know, we often get asked: Well, at what price of carbon does it make sense to do a carbon project in your, in your forestry business? And the reality is, we tend to talk about this price of carbon, and there is no one price of carbon in the voluntary carbon market. There are carbon credits that trade for $1-$2 a ton, and there are carbon credits that trade well in excess of $100 or even $200 per ton for technology-based removals.
And so, you know, we really want to get to the point where, you know, a ton of carbon is a ton of carbon, is a ton of carbon, and it's priced accordingly. And we're just not there yet in the voluntary carbon market in the U.S. And there's been, obviously, a fair amount of criticism around certain projects that have gotten done. And like Doug said, you know, our entry into that business is somewhat been limited by the value of the assets that we own. We don't own assets in kind of, again, these second-tier geographies where you say: Well, there's not a robust timber market, so, you know, we'll do a carbon project there. You know, so we are very optimistic that we're moving in that direction.
Again, if you believe those forecasts around the trajectory of the carbon credit market and the demand for carbon credits going forward, and there is a lot of activity underway. There's a number of, you know, integrity initiatives that are bringing better standardization to this market. And so we're very optimistic that long term, there will be an opportunity here, but we haven't believed that there's a first-mover advantage. And so we've been much more measured in our entry into that business. Like Doug said, we have a number of pilot projects underway. We are actively evaluating a number of opportunities, and we feel that we're ready to wade in when we feel as though the economics make sense and that the, you know, the reputational risk around participating in that market has mitigated to some extent.
In terms of when that will be, you know, I expect that at some point over the next several years, we will engage in some form of carbon project, but we just haven't done it to date. But again, we're very busy, and I think that we have the resources internally to act very quickly there.
Yeah. What I would add to that is, as Mark says, we have worked with, you know, different organizations like Verra and American Carbon Registry, other folks like that, looking at how this goes. And in the last, you know, three-four months, we've seen some standardization happening and really getting that international standardization, I think, is important also. So it may be great that, you know, we have a market in the United States, but we do... This is global, you know, and so I think the important thing here is we're starting to see standardization across the globe. And when we see that, that's when I think we'll start to see meaningful value.
It's hard to compete when you have credits being generated for low single digits in some part of the world, and then comparing to technology, as Mark said, you may cost $1,000. And so we really do need to find that standardization. But, you know, where I think we're getting to a point is where those poor quality credits are starting to get recognized for what they are, and I think they'll be purged from the system, or they just won't be purchased. So I do think in the next, you know, year to two years, we're gonna start to see that maturity that we're looking for. So it's what's still out there, I don't think it's, you know, 10 years out.
I do think something, and what drives for me, and as I mentioned before, really it's important, is by 2030, all these thousands of companies that have made these commitments to Net Zero, have that first milestone. And, and so they're really pushing hard now to see that maturity happen, and I think that's an important part. You know, when, when the companies themselves are saying, "We need to get something we feel good about," that's when I think we'll see this. So I think it's, it's coming, but may still be a year or two out before we really see that, that opportunity grow.
Other, other questions for the team?
Hey, Jesse Barone with Seaport. I guess first, what kind of line of sight do you have to the targets you laid out for Land-Based Solutions for you? But like, how much more needs to happen, and how much is already kind of under discussion? And then secondly, on solar, I think you talked about kind of 25%-40% conversion. Why is it so low, and kind of what are you guys doing to get that towards the high end of the 40% rather than 25%? Thanks.
I'll maybe take the first part of that question, and then I'll turn it over to Doug for the second part. You know, we laid out a seven-year target, and we wouldn't have done that if we didn't have some conviction that we're moving in that direction. But there are certainly still things that need to happen. We feel very good about how our solar option pipeline is building, as well as how our CCS pipeline is building. But again, those solar options need to get converted to leases. Those CCS leases need to get to the point of injection royalties. And like I said earlier, there is a fairly protracted permitting timetable in order to get to that point.
And so, you know, what we're focused on now is building up that pipeline, and we do believe that the pipeline will ultimately realize that value as those options convert and as we get to injection royalties on those CCS leases. There is a near-term value. Again, we're receiving rental payments, we're receiving option payments, but the real trajectory occurs after that conversion happens. But again, you go back to how much capital is going into the space, the Inflation Reduction Act incentives, this is happening. I think it's more an issue of at what pace does it happen. So we feel very good that the trajectory there will be very strong. But in terms of, you know, getting to that target, we do have to see this activity really convert to...
You know, those projects get permitted and get those conversions happening.
Yeah, I'll comment on the range. I think part of that range is like any new business, you see a lot of people rush in and try to get into the business, basically. And so what we saw was pretty much a land rush, and sometimes those weren't by capable counterparties. And I'm not just talking about—this was industry at 25%-40%, not a Rayonier comment. That was an industry comment. And so you see that, and so I think a lot of things what happened was people went in, they locked up land, but they never really had the ability. They didn't have that backing of utility-scale solar at the time. And what's changed, we're seeing now is with that cost that I talked about going down by 80%, utility-scale solar is now saying, "This is cheaper than fossil fuels.
We're going after it." And so, you know, you asked how do we get to the far end, to the other end of that range? I think by aligning with the utilities themselves, we actually could see improvements better in that range, and we're working now to understand those lands and how to market those lands, as I mentioned, so being proactive. So we really do believe that that's an industry average, and that we may be able to work to the right side of that range or even improve that by having that direct relationship with those utility customers and working with them, identifying what do they need, where do we have that, how can we be that for them? So, because right now they're working through well, not right now. They're moving towards that. We're working with them on that.
If you fast-forward or go back three years, there was a lot of developers out there who were then trying to market to the utilities. So there was this middleman in the middle who was trying to play the game, and we've seen that kind of... They still exist. There's lots of people out there. I'm not saying we wouldn't work with some of them that are high quality, but we're really seeing a push towards the utility players themselves and how do we work with them. And I think that will help that conversion rate.
Jesse, if I could add to that, you know, we transitioned from a mode of thinking, oh, this is a kind of a free option that we can get, being an order taker, to recognizing that we have to be proactive on both of these. And so that's taken place by really seeking out who do we think has the highest probability of success, both on the solar as well as the carbon capture? And we've been sort of going after those relationships, and I think that was a key pivot point internally as we progress these options.
Next.
Thank you. A couple of questions for Chris. In the real estate portfolio, do we participate in some way as a landlord on a recurring, go-forward basis, maybe rent on the commercial spaces in some form like that? And then maybe a second question. You described a process of building up credibility. Does that improvement in credibility give us the chance to participate in greater economics of the value creation over time-
In that Real Estate Development, master planning business? Could you describe maybe-
Yeah.
-that journey?
Thanks for the questions. You know, on the first one, we don't anticipate we'll be in a place where we will own operating properties, but we're participating, as I mentioned, you know, in the ongoing home building business, by the way we structure, you know, those transactions with what we call a true-up payment when the home is sold. So we get a percentage of the final sales price. That's a negotiated number. It's a land payment, you know, because of the pods that we're transacting. And so that gives us sort of a recurring stream, you know, that comes from the success of the project. So that's part one. On part two, in terms of the credibility, the way I would answer that one is...
is what is happening is, other markets are have recognized the success of Wildlight and Heartwood. And so where we own land in other, counties, in other cities, they've come to us and invited us to come in, you know, and work with them, to plan. And essentially they're saying, "We want Wildlight in our community." And so I think what the credit in, in, in our paradigm, kind of the, the way we work in this land development, you know, portfolio that we have, that's what the credibility is gaining us. And in, in addition to be able to continue to operate our projects really successfully, it's getting us entrées sooner with great politics behind it into some other opportunities as well.
But we don't plan to get into the vertical development business anytime soon, just to be clear.
In terms of the CCS opportunities, how scalable are the existing projects in the pipeline right now? And then are there any longer-term environmental or remediation-type risks associated with them?
I'll take it.
Yeah, that's a great question. So as we mentioned, we are gonna have 70,000 acres, you know, by the end of this year, we believe, and we still think that pipeline's building. So we have over 400,000 acres in that Southeast Texas, Southwest Louisiana area, that have geologic storage capacity, basically. So we have a lot of opportunities still to grow, and we see that opportunity in front of us. And also, as I mentioned, really, the south, that southern part of Alabama, if you look there in the maps that we had there, it showed there's a lot of emissions in that area as well as capacity there and in Southeast Georgia. So we think we have quite a bit of room to grow in that area.
With respect to the, you know, the concerns around environmental, this is technology that has been around for a while, so it's not like this is brand new. It's been in other places in the world, and so this has technologies there. In Louisiana, the state has accepted, you know, the liability of folks injecting there already. And so they're drilling down a half mile to two miles down below a caprock. And so what's really important, and what we have are lands that don't have prior drill holes to them, 'cause each one of those is a straw where stuff could come out. And so really, an advantage we have is in areas that have not been heavily drilled for oil and gas, these are the areas with that capacity to have that good caprock storage.
So we feel good about that, and we're working with high-quality counterparties like ExxonMobil. And so this liability is with them in this process. They're accepting that as the owner of the carbon that's stored underground.
All right. Any additional questions? All right. Well, thank you. We'll now take a break and look to restart at approximately 10:55 AM. Thank you, everybody.
We're ready to get started again? All right, thank you, everybody. We're gonna start our next series of presentations with Doug, and he's gonna discuss our core Timber business. Thank you.
So the guy who wanted to hug trees gets to talk twice, so I'm not sure about that, but now, while we're excited about the growth that we see in our Land-Based Solutions and our Real Estate Development businesses, our 97 years of managing forests in great timber markets will still be the underlying core of our business, as Mark mentioned. But the focus on decarbonization, population growth, and under-built housing, we believe there are strong long-term secular tailwinds upon which to also grow this business. Speaking of growth, our foresters and research team are focused on adapting to changing climates and are utilizing advances in technology to organically grow our timber returns on each acre of our ownership. So let's take a deeper look into the high-quality forests that attracted me to Rayonier.
Our core Timber business is well positioned to meet growing demand for renewable forest products, with our high-quality forests concentrated in the top three softwood-growing regions in the world: in the U.S. South, Pacific Northwest, and New Zealand. As Mark mentioned before, in the U.S. South, we have about 1.9 million acres and a sustainable yield of around 7 million tons. Pacific Northwest, that area, we grow southern yellow pine, typically loblolly, and slash pine and longleaf pine. In the Pacific Northwest, we have about 420,000 acres, primarily of Douglas fir and hemlock, with a sustainable yield of around 1.35 million tons. In New Zealand, with also 420,000 tons, we grow highly versatile radiata pine and Douglas fir.
On that same 420,000 tons, we grow almost twice as much as in the Northwest, about 2.5 million tons-2.6 million tons of annual harvest. That just shows how productive those New Zealand forests are, because that's almost in half the time we grow in these Northwest operation. All of our forests provide the full spectrum of traditional products, but there are some nuances to our segments. With a 60% pulpwood harvest, our southern timberlands are more leveraged to strong pulpwood markets in GDP-related consumer consumption. To the Pacific Northwest, we're more leveraged to housing through lumber, with over 80% of our harvest being in sawtimber. And in New Zealand, to growing populations in the Indo-Pacific region through exports over 60% of our harvest.
The majority of our U.S. and New Zealand forests are proximal to ports that allow us to meet both domestic and global demand. As Mark said, there's value in being a pure-play timber REIT that is upstream in the value chain where there is less volatility. If you look at the bottom right chart, and you take out those COVID year run-up years, manufacturing has averaged single-digit EBIT margins, with some even, with even some years being negative. Compare that to the timber chart on the left, which has enjoyed relatively stable and high-yielding EBITDA margins, averaging 34% over the past two decades. While the species and geographic diversity require different management techniques, there are two things that are consistent across our portfolio. First, our commitment to sustainable forestry across all of our timberlands, and second, driving operational excellence through our market-driven precision forestry strategy.
As you can see on the left, our forests in North America are SFI certified, we're FSC in New Zealand, and then PEFC was a European-based standard. It's now become more international, that's recognized by both of those. And what does that mean when we talk about sustainable forest management and certification? So essentially, as we talked about before, as, as Dave mentioned, around sustainable forests, it's having that cut, this cut—we're harvesting growth. And we're doing that, meeting all of the water quality, requirements, biodiversity, adapting for climate change. There's hundreds of different criteria we have to meet, basically, to match that. But the goal is to assure everyone that the forest products they're getting from that have been managed well and sustainably.
If you look to the right, leveraging our in-house R and D team, working with our experienced field foresters, we use millions of data points combined with local knowledge to focus on the silviculture regime that will maximize the net present value of each stand, as Mark discussed. This is going to be based on soils, climates, genetics, and the markets, and many other factors. This chart on the right bottom, site index is a measure of the quality of a stand, and it's the average height of trees at a specific age. What we have here is, you can see on this chart, typical, in the U.S. South land might be a site index of 65, so trees be 65 ft tall at age 25.
We have the opportunity, through using those different techniques I mentioned, to maximize the abi- the ability to grow carbon and fiber on those sites up to, say, 85, site index 85. And as you see there, that's significant growth on that left side of, call it 3 tons-6 tons per acre of harvesting per year. We also have the ability, in that little yellow bar right there, to change the quality of the grade, which grade is a percentage of sawtimber, so we can change that and improve it. So essentially, through managing the land, you have the ability to improve your factory, to make more capacity, as well as make more profitable products. But this all must be done in the context of the costs and forecasted returns that you're looking at to maximize your net present value.
Otherwise, you can go bankrupt chasing that biological optimum on the right-hand side instead of the financial optimum. In the course of my career, I've seen several companies learn this the hard way, and they're no longer with us. While each market will have unique localized factors, there are generally three central forces at play: U.S. housing, the pulpwood markets and the strength of those, and export demand. Driving sawtimber pricing, in particular, is the pace of residential construction. As you can see on the graph on the left-hand side, there's a gap from 2006 to 2016 that was underbuilt. That gap between that blue line and the little gray line shows right there, that's about 5 million houses. Actually, more than 5 million houses that we need to have in the United States.
We really are looking for that opportunity and leverage the opportunity. Pulp demand is more closely tied to consumer spending and shopping habits, such as e-commerce, as well as the new users we talked about for bioenergy. We've kind of seen that post-COVID destocking correction, as you can see here on this middle chart, and the forecast is basically for improvements. I think that's happening, what we've seen is in our local markets. I'm encouraged that we've seen the first lumber price increases in almost two years. We really are starting to see that destocking and moving forward. Last but not least, access to ports and export demands and export demand provides market tension in the U.S. and is core to our New Zealand operations.
While not to its peak, as you can see on the right-hand side here, the China log imports are forecasted to improve over the next few years, with New Zealand poised to meet that demand. As Mark mentioned, timber made up 70% of our adjusted EBITDA last year, with the U.S. South making up the lion's share of that at 67%, followed by New Zealand and Pacific Northwest. Next, I'm going to discuss some of those drivers that are unique to each of these segments. Speaking of U.S. South, as a public investment, I don't believe you'll find a better allocation of forest properties with over 70% of our forest in the U.S. South in top quartile markets that are proximal to both ports and the domestic markets.
If you look at the map and the chart, these are made for forests like me. Actually, I made this first map on the left 20 years ago, so they were. They're not only made for forests like me, they were made by me. They're made to be like a traffic light, so very simple. Green is good and clear, red is a full stop. The amber in the middle is where you have taken multiple factors, and you think about as you approach that light. Sometimes it's great, sometimes you just stop and think a little bit, like, is there a cop sitting there watching you as you go through? As you can see, the manufacturing capacity in the past decade has really moved in that bottom right-hand quadrant in Florida, Georgia, and Alabama, where we have that bright green.
They've moved to be closer to the urbanizing growth. Chris mentioned the 1,500 people a day moving into Florida. Georgia is also seeing significant growth, so we see a lot of that capacity moving in there. And they also have access to the ports to export. So with that, we've got highly tensioned markets in the Atlantic coastal region. This portfolio didn't just happen by mistake. Rhett will share with us in the future, some intentional moves that we've made. Two important key facts on this graph. First, I'll take you to the middle there on the bar chart, is that the average lumber production cost in North America are cheapest in the U.S. South, at $312. So this is significantly cheaper than we look across.
What that's led to, if you look now to the left, is an increase in capacity in the U.S. South from 27% to 38% of North American lumber capacity is in the U.S. South, with a lot of that being in our operating area. And you can see that in that map I showed with those green areas being all good, all go. With the advantage they have in the transportation and the other things that we've seen there, we really are seeing significant capacity in this area. One thing is also, if you can see between that light shading capacity and then those dark green bars, is that the capital investments have been made, but we have yet to see market conditions that have unleashed the full potential of these mills and the associated sawlog demand.
So our largest Timber segment has the cheapest lumber production in North America and excess capacity, and one of the fastest-growing regions. For me, this is a winning recipe of success when the markets do turn. We have a well-diversified base harvest, with 69% of our pulpwood in markets, in containerboard and market pulp, leveraged to growth, e-commerce, and growing trends of substitution for plastics. And 13% in OSB, which is leveraged to housing growth. Growing interest by these new bioenergy entrants are also adding further competition, and we look forward to them in the future. If you look on the right, we really are seeing positive momentum in the current markets.
It appears that post-COVID destocking is largely behind us, and as I showed in that earlier graph, where you've seen that price increase start and demand, capacity has gone from roughly 80% to 90% in the boxboard market in the fourth quarter. So a lot of growth in this area. We've also seen rationalization to accommodate the recent recycled capacity additions that were added, and this is yielding those improved operating rates I mentioned. With strong public markets and the lowest lumber production costs, our top quartile markets continue to build on their strengths in the U.S. South. Now let's talk a bit about the main market drivers, Pacific Northwest.
With over 80% of our Pacific Northwest harvest comprised of sawlogs, we are heavily leveraged to lumber and the underdeveloped housing market, which obviously hasn't benefited from these high interest rates, but we do believe the demand is coming. That said, if you take a look at this graph and you look in the green, you can see the lumber pricing. Over the past few years, you can see the potential upside with logs in blue following. These are very tensioned markets and very well balanced. So as we see lumber price increases, we've seen a direct relationship with logs in these markets in the Pacific Northwest. Our top quartile Southern markets have very similar price elasticity.
An important driver that doesn't show up in this graph, to me, is the recent 2 billion board feet of capacity reductions that have happened in British Columbia, that have been announced over the last year or so. That should yield a more competitive advantage for our Washington sawmillers as the housing market improves. Having started exports in the 1960s to Asia, Rayonier is one of the leading exporters to this region. As I mentioned before, over 60% of our New Zealand harvest is destined for export markets, and they are primarily in China. I don't believe the China construction troubles are news to anyone in here, but what maybe you haven't heard and read in the headlines is the expanding markets in the rest of the Pacific.
As you can see here in the light blue, we're seeing tremendous growth in both population and the economies in places like India, Malaysia, Indonesia, the Philippines, and these areas are growing rapidly. What we've seen before, as the GDP of a country grows, so does demand for lumber and forest products. While individually, these countries may not be as large as China, their combined potential is growing, with India leading the way with an expected 5x growth in log imports during the 2020s. As you can see here on the right, that yellow dashed line in particular, that is the percent market share of China that New Zealand has captured over the last few years. It's now approaching 65%. As I shared with you before, on that large...
The three market driver slides, we are seeing a forecasted return, while not to its height, back to increased demand from China. But also, China's going to have to compete with these new users that I've mentioned in this developing area. So this sets up New Zealand for good opportunities for the future. In addition to log exports, the New Zealand government is in the process of implementing an industry transformation plan that will increase domestic and wood products manufacturing by 25%, roughly requiring an additional 3.5 million tons domestically. They're also encouraging the use of wood products in construction, like much of the rest of the world, so we expect demand to increase beyond that. In New Zealand, there's something unique that's going on.
Based on the planting in the past, they have a falling industry harvest, so there's an age class gap where the harvest is expected to fall in the medium term. Given our sustainable forestry management that I mentioned before, Rayonier's well-balanced and sustainable cut will be well-poised to help fill that gap, both domestically and abroad. With these changes, New Zealand is positioning itself to meet the growing Indo-Pacific region demand for both logs and finished products. Again, hopefully, I was successful helping you understand why we have confidence in our core markets, particularly in our core Timber business, which operates in some of the strongest markets, as we mentioned before, and globally. I'm excited about these long-term trends I've mentioned for our traditional forest products, as well as the new ones we were talking about before, in bioenergy and other ways to decarbonize.
With the underbuilt housing, the shift to e-commerce, substitution for plastics, and a growing global population, I think the outlook for our forest is very bright. To wrap up, I believe we have an excellent team of foresters, supported by a top-notch R and D team, biometricians, and technical support staff, that will allow us to organically grow our business on each and every acre. With that, I'd like to bring up Rhett Rogers. Thank you.
Good morning, everybody. My name is Rhett Rogers. I lead up our portfolio management team, responsible for acquisitions, disposition, our rural real estate sales program, and our land information services groups. I've been with the company approximately 23 years. Let me tell you, Rayonier has been a great place to make a career. I'm very optimistic about our future and believe in our new vision that we've casted out. Today, I'm gonna give you an overview of how we create value through our active portfolio management approach. I'll start by giving you a broad overview of our rural HBU sales program, and then I'll go into an overview of how we underwrite transactions, both on the acquisition and the disposition side. And I'll illustrate this through three case studies, three acquisitions that we've consummated in the last decade.
Then I'll provide a brief update on M&A markets and conclude with an update on our $1 billion planned disposition that we announced in November of last year. Well, what I want you to walk away with today is four key points. First, we have a disciplined approach that's multifaceted and a seasoned team of leaders that we use to underwrite transactions. We firmly believe in using a bottoms-up approach to vet and create assumptions in the underwriting process, as opposed to a top-down approach. Second, we have a proven track record of generating significant HBU premiums through our rural HBU sales program, something we've had in place for more than 20 years. Third, we've taken steps and positioned our portfolio to realize upside in some of the things that have been discussed today, including Land-Based Solutions, rural HBU, development, and other opportunities.
And then fourth, we've demonstrated a capacity and ability to take opportunistic actions as market conditions change by being a nimble decision maker. We create value through our active portfolio management in three primary ways. The first is by selling rural HBU at a premium above timberland value. It starts with us understanding what we own, so we identify the highest and best use of every acre that we own in a comprehensive land classification process. The second is by acquiring timberland that upgrades the quality of our portfolio. But here, we're looking at increasing our productivity and also our percent plantation, but also positioning us to be in better markets with assets that have more upside in terms of optionality to transition to higher values.
And the third way we create value is by divesting less strategic land and recycling that capital into higher-returning assets. Now, I'm gonna talk about our rural HBU sales program. It's a business, as I said before, we've had in place for more than 20 years, and it's different than the business that Chris discussed earlier, which is our improved development and unimproved development. We're seeing great demand across our land base in the areas where we have our rural HBU transactions. This has been driven by an uptick in demand since COVID, as people continually continue to realize the benefits of living a more rural lifestyle in terms of space, privacy, but also connection to nature and an opportunity to make memories with their loved ones. Rayonier has two primary platforms, which it creates value through its rural HBU sales program.
The first is our Rural Properties business. This is a business where we're selling mostly 25- 500+ acre tracts of land, primarily to high-net-worth individuals who are looking for both recreation, a chance to pass down a durable asset to their family, but also looking for investment. The second, the second line of business is our Rural Places business, something that we've had in place for about 10 years. This is a growth business for us. In this business, we're selling a smaller average parcel, generally between 1 acre-25 acres in size, at a much higher price point. We're investing a modest amount of capital, and in return for that, we're getting a significantly higher price per acre on the back end.
Now, this is one of our highest return on capital investments in the company, 'cause you just, you, you make a small, modest investment, and you realize an upside in price per acre. As Mark mentioned earlier in his presentation, we have a strong history of capturing HBU premiums, and here of late, we've seen increasing prices across all of our markets. We target around 1%-2% annually to sell. Generally, premiums are anywhere between 50%-100% when you compare them to the average timberland value as measured by NCREIF. This business generates around $50 million-$80 million a year in adjusted EBITDA for Rayonier. All right, let me shift gears now and give you a brief overview of our acquisition and disposition underwriting process, and then I'll go into the three case studies.
As you think about our acquisition and disposition framework, really, it comes down to three different questions you have to ask yourself. The first is, where do you play? Where can you be successful, and what aligns with your core competencies? Rayonier has had a strategy to be located in the premier softwood-growing regions in the world, in deep and diverse markets with strong domestic customers, but also with export optionality. We also look at markets that...
We also look at markets quite frequently in terms of which markets have the greatest supply-demand tension, and we do a lot of modeling around that to identify the markets that we believe are going to offer the most upside long term on price, as well as which markets have rural HBU land demand, and finally, which markets have a favorable business climate and a good regulatory environment. After you get that question answered, then it comes down to what assets do you want to buy and what assets do you want to sell? And in the case of that, we're really looking at buying to upgrade the portfolio and improve financial performance. We're looking to sell to actually improve the portfolio also and get rid of assets we believe we can generate a higher return on through investing in other assets.
When it comes to what to buy and sell, it really is situational. It's based on what opportunities are presented in the market. But generally speaking, we look at forest productivity as measured by site index, we look at operability, and then we also look at how each asset fits in with our existing ownership and how it can be managed with, to capture both synergies, but also be managed in terms of realizing lower overall incremental overhead. In terms of how we win or how we capitalize, we always look at total return. That's our key measure to make all of our decisions, but we also look at cash yield and CAD, our ability to fund the dividend.
We also look at how each acquisition or disposition can upgrade our portfolio in terms of improving our biological productivity, which I'll go over a little bit more in greater detail, but also how we can buy assets to position us for upside. We want to identify assets that have transition value long term. They may be timberland today, but we look at it and say, "There's a high probability this will transition to a higher use over time." We have a disciplined, data-driven, underwriting process. We have a stage-gating process that we've used now for more than a decade. It's well-known within the company. We have a seasoned team of leaders that have deep institutional and technical expertise that help us to develop good assumptions.
That's one of the key differences between Rayonier and others, I think, is one of the things that makes us unique in this respect: our team has been working on acquisitions together, the same people, for more than a decade. That really makes a big difference. They understand the process, they understand what's expected, and they understand their role in the process. In terms of valuation, we use - we triangulate value using three different valuation methodologies, with our ultimate buy, hold, sell analysis being predicated on our DCF analysis. We do use comparable sales to identify arbitrage opportunities. We also do sensitivity analysis on each acquisition or disposition to answer the question: What could go wrong? What did we miss? What's the upside?
Finally, we have a habit of looking in the mirror and identifying ways we can get better in our process, and we look at our acquisition results. We do a post-acquisition audit, internal audit, to identify, you know, what we got right and what we get better at in the future. We've taken steps to position our portfolio to capture a lot of optionality, much of which we've discussed here today. We've acquired significant acreage in coastal Atlantic markets in North Florida, Southeast Georgia, and South Carolina. We exited our Mississippi portfolio in 2020, selling 67,000 acres and using proceeds to recycle into the Pope acquisition. We've trimmed our Alabama portfolio by selling assets that were more distant from our core operations.
We scaled up our Southeast Texas portfolio by adding approximately 140,000 acres net in areas about two hours from Houston and Lake Charles, Louisiana. Then we've also scaled up our Washington portfolio through the Pope acquisition, and more recently, we decided to exit the Southwest Oregon area. Now, all these moves have really helped us help position us to be able to take advantage of what we believe are a lot of new opportunities that this asset class will realize that are discussed today: Land-Based Solutions, increasing amount of non-timber income, and HBU. Now, we've also been intentional about buying assets that are closer to major population centers. Most of what we own in Texas, and Florida, and coastal Georgia is within a two-hour drive of major metro areas, including Houston, Jacksonville, and Savannah.
On the West Coast, what we acquired through Pope, we got about 100,000 acres net that is within about a two-hour drive of the Seattle metro area. And this is a key driver in demand for non-timber income, HBU, rural HBU, development HBU, and then also our Land-Based Solutions business. And importantly, our pure-play timber REIT has provided us a lot of flexibility to make these moves and position us. Another important focus area for us is improving the biological factory as measured by sustainable yield. The chart right here on the far left shows our acquisition and disposition activities over the last decade. We've been an active buyer and seller. Over that same period, we had a relatively constant amount of acreage under management, at around 2.7 million acres.
Some of this is driven by the expiration of long-term leases in the South. However, over that 10-year period, as Dave mentioned at the beginning of his presentation, we've improved our sustainable yield by about 19%, from 9.2 million tons to 10.9 million tons. This will be an important source of recurring cash flow for the future that will help shareholders realize good value. So our active buying and selling, by buying land in better markets that's more productive and selling land that's less productive, but also the things that Doug discussed earlier around our productivity gains and our genetic improvements, have been a key reason we're seeing an increase in our sustainable yield. Okay, let me shift gears now and give you three case studies to illustrate our active portfolio management approach. The first is Pope Resources.
This is the acquisition of a publicly traded master limited partnership that we acquired in May of 2020, through an UPREIT structure for $656 million. Through the acquisition of Pope, we got 125,000 acres of high-quality Douglas fir timberlands in Western Washington, and strong domestic and export markets. We also got five development projects in the West Puget Sound area, and a 12% co-investment in three timber funds owning 141,000 acres. During the underwriting process, we took steps to integrate those assets before we even closed, and those steps positioned us to be successful to execute. We quickly integrated forestry and harvest operations to maximize synergies of a larger log sales program with greater scale.
We identified and developed new sources of non-timber income that generate recurring cash flow. We identified HBU through our land classification process that we wanted to position for future value accretion. We did a strategic review of our timber funds business and ultimately decided that business was not strategic to us, and we were able to sell that at a premium. And finally, as Chris mentioned earlier, we captured significant alpha through selling 350-odd acres of unimproved development for $40 million, or approximately $111,000 per acre. We're very pleased with our performance to date, and are on track to exceed our underwriting discount rate. We've also returned $237 million of cash, which is around 36% of the purchase price. The second case study is my favorite case study.
It's probably my favorite acquisition in my career. I worked on it for about 9 months. It was a lot of fun. We acquired 63,000 acres in East Texas from a family for $88 million. There were 27 individual owners. It was very fun. At that time, we did a deep dive on the portfolio, and we identified higher and better use land sales, opportunities to improve productivity through an intensive silviculture program, and also opportunities to generate cash flow from mineral resources. During the underwriting process, we identified about 10,000 acres that we thought we could sell for around $30 million. We have sold 16,000 acres to date, as of the end of last year, for $55 million, around $3,400 per acre. We beat our pro forma on pricing and absorption.
This, this represents around 63% of the original purchase price. In addition to that, we generated $10 million from easement income alone. We continue to manage the 47,000 residual... for 47,000-acre residual portfolio for intensive silviculture, HBU, non-timber income, and Land-Based Solutions. We've identified a significant number of CCS and solar opportunities on the residual portfolio. This is a great example of using our land classification process, being thorough in the underwriting process, executing and, and ultimately implementing a buy wholesale, sell retail strategy. The final case study involves a large U.S. South acquisition that we announced at the end of December 2022, involving 138,000 acres that we acquired from clients of Manulife for $454 million, or approximately $3,300 per acre.
These are exceptional assets, ones you don't see come on the market but once about every 15 years-20 years. We're very pleased we were able to acquire these strong assets, because they positioned us in better markets with better assets. They improved our percent plantation, our productivity, and they had significant near-term cash flow. For example, the harvest of around 725,000 tons per year is gonna generate approximately $166 per acre per year in EBITDA. Now, to put this in context, this is significantly higher than the overall South average on a large portfolio of assets, and about double what our U.S. South portfolio generated last year on an EBITDA per acre, per year basis.
In addition to that, the acquisition put us in markets that are very tensioned, but also assets that have optionality for some of the Land-Based Solutions that Doug mentioned today, in particular in East Texas, where we added 63,000 acres, in South Alabama and in coastal Georgia as well. We're excited about operating these assets, and after one year of ownership, we are on track to achieve our pro forma. In particular, we've seen great results on our coastal Georgia markets. Let me shift gears now and close the presentation by giving you a brief overview of the M&A markets right now, as well as our plans on our $1 billion disposition that we announced last year.... The M&A markets right now are fairly slow.
On average, over the last decade, about $3 billion is transacted in the U.S., in terms of transaction pace per year. We're seeing increased demand right now from new players coming into the market that we have not seen participate in bid sales in the past. In particular, we're seeing a lot of foreign ownership come into the asset class, chasing timberland. In addition, we're seeing a lot of domestic impact investors as well as high net worth individuals, chase timberland as well. Since 2014, we've actually seen a compression in discount rates. Why is that? We've seen increasing interest in the asset class, and that's only been buoyed here recently by nature-based solutions, carbon, and other opportunities.
We are at this. We've also seen the institutional investors that do own timberland be more disciplined in their selling process. We've seen a number of funds converted into evergreen funds. Now, all of that has had the effect of limiting supply of timberland that comes to the market. Demand's actually increased, and so that's one of the things that's pushing discount rates down. For example, in 2014, the average reported real discount rate was 5.5% based on the Sewall survey. The average discount rate last year was 4.25%, or 125 basis points lower. The U.S. South is the largest, most liquid market for timberland transactions in the world. You've seen an increased interest in the U.S. South from all parts of the world in terms of institutional investment in timberland.
This is driving strong capital appreciation in the asset class. Between 2000 and 2023, timberland went from $1,000 an acre on average to around $2,100 per acre, which is about a 3% CAGR. We've also seen timberland consistently trade at high multiples, specifically around a 40x multiple. Now, one... Now, why is that? Well, one of the things the EBITDA does not capture is the incremental components of return that are unique to the timberland asset class, some of which we discussed today: productivity, HBU, Land-Based Solutions. And so the EBITDA multiples, again, are not the incremental components of return are not captured in the EBITDA multiples. At the time that we made our $1 billion disposition, we were seeing a big disconnect between public and private values.
At that time, Rayonier's implied share price was equal to about a 23x multiple. Since then, it's traded up to around 26x, but it's still materially below what we think the market bears for on the private side. For example, if you look at the NCREIF US South EBITDA multiple around 35x, significantly higher than where we're trading right now, in the Northwest, around 55x. We still see a big gap in the public-private market. Concurrently with our announcement in November, we announced we had entered an agreement to sell 55,000 acres for $242 million, or approximately $4,400 per acre.
Shortly after our announcement, we closed in December of last year, and we were able to use proceeds from that transaction to pay off $150 million of high interest debt, as well as issue a special dividend to our shareholders of about $30 million. Since making our announcement, we've had significant interest in investors that have called us. More than 20 institutional investors have called us, interested in assets in every area where we have ownership. Key objectives of our $1 billion plan are reduced leverage and a higher-for-longer rate environment, and also to capitalize on the public-private valuation gap. However, we're gonna do this in a disciplined way. We want to continue to concentrate our capital in markets that have the strongest cash flow attributes and most favorable long-term prospects that we discussed today.
We're providing an update on our approach by region today. In the U.S. South, we've identified approximately 100,000 acres of less strategic timberland that we think are suitable for disposition. We're focused on maintaining HBU and Land-Based Solutions upside. In the U.S. Pacific Northwest, we've identified more than 100,000 acres of less strategic lands suitable for disposition. In the Northwest, we're focused on improving the residual quality of the portfolio in terms of age, class, and species mix, but also driving efficiencies within our operations. And in New Zealand, we're evaluating our joint venture structure and options to maximize long-term value. We anticipate a lengthier evaluation process due to the JV governance structure. We have clear actions in place and are confident in our ability to deliver on our $1 billion target.
In closing today, I hope you, I hope you have a greater sense for our active portfolio management approach. We have a disciplined, multifaceted approach and a seasoned team of leaders. We have a proven track record of generating premiums through our HBU sales program. We have and are positioning our portfolio to maximize optionality long term, and we've proven we have a demonstrated ability to take opportunistic actions as market conditions change. We're confident in our ability to deliver on our $1 billion plan. With that, let me turn it over to April Tice, our incoming CFO.
I'm gonna steal a water. Good morning. For those, I'm April Tice, Chief Accounting Officer and incoming CFO. For those of you I've not met before, I thought I'd give you some background. I started Rayonier almost 14 years ago, and before that, I was with Deloitte & Touche, and Rayonier was my main client, which means for nearly six years, I had a front-row seat into how Rayonier operated and to the employees that worked there... And I can tell you, I was impressed. I was so impressed that I actively pursued to join their team. And over the years, I've been a part of very-- of many meaningful transactions, including Rayonier's transformation into a pure-play timber REIT. But it will be in my new role as CFO, that I'm excited to partner with Mark and provide complementary skills that will grow our initiatives going forward.
Now, I think I fixed it. No. Collin's gonna fix our technical difficulty real quick. Please hold. Thank you. Okay, I think they fixed it. Okay. With that background, I'll dive right into our prudent financial management. So we started our morning with Dave talking about our solid foundation and how that is gonna allow us to build. We're gonna leverage our success as a pure-play timber REIT by delivering Land-Based Solutions and creating Real Estate Development opportunities. Our balance sheet supports our foundation, and we're going to continue to optimize it by executing our asset disposition plan and paying down our debt. And with our strength in our foundation, is with our nimble and opportunistic approach to capital allocation. And it is with that mindset and this very skilled team that you heard from today, that we can maximize shareholder value.
So let's talk about our foundation. How did we build it? Well, just like it says on the wall, we grow, we did it by growing renewable forest products, or as I like to say, timber. And we complemented that with real estate. Now, I recognize that capturing HBU premiums does create some variability, but the two of them really do work together to create stable and reliable sources of income that have been very successful in generating value over time. The EBITDA that is generated from our core operations has had a high conversion rate to free cash flow, and that has given us the flexibility to invest in our business, return capital to shareholders, or manage our balance sheet. We take a strategic approach to optimizing our balance sheet and managing our leverage.
On three occasions over the last eight years, we have taken on additional debt in order to facilitate a major acquisition, and each time we have brought that leverage down, either through organic cash flow or recycling capital through large dispositions. Our most recent example of this was in 2022, with the acquisition that Rhett just spoke about in the U.S. South. With that acquisition, we took on an additional $250 million of debt, which brought our net debt to adjusted EBITDA up to almost five times. Since then, we've taken steps to bring that back down. Rhett also mentioned that we paid down $150 million of our only variable rate debt, and that brought our net debt to adjusted EBITDA to 3.9x as of year-end.
By executing our shareholder value initiative plan, we expect to bring that down even further. So we have a track record of strategically managing our balance sheet, and S&P and Moody's has recognized that, the investment-grade ratings, and we're committed to maintaining that. We also have ongoing access to the Farm Credit System, and if you're not familiar with Farm Credit System, it is basically a financial cooperative that is tailored to the agricultural industry, but timberlands is included. So this provides us with competitive rates, favorable terms, and annual cash distributions known as patronage, all of which results in debt costs roughly 100 basis points lower than traditional lending.
As we stated in November, we established enhanced credit ratio targets, and we're focusing on net debt to adjusted EBITDA of less than or equal to 3x, and net debt to asset value of less than or 20%. These targets will strengthen our balance sheet and prepare us to allocate capital where it most enhances shareholder value, especially in an elevated interest rate environment. An environment that we are very well-positioned for. In 2021, before rates started to climb, we locked in our debt cost with interest rate swaps, resulting in our current weighted average cost of debt of 2.8%. We have a well-stacked maturity profile, and as debt and swaps come due, we expect to be able to repay that debt, and by doing so, maintain this very low cost of borrowing.
When it comes to capital allocation, flexibility is the key. We adjust our priorities based on the opportunities that become available, and that means we invest in our growth, either through advancing silviculture or pursuing acquisitions. We return capital to shareholders through dividends and share buybacks. Lastly, we manage our balance sheet with a priority of reaching our enhanced credit ratio targets. We've talked about our strong foundation, built on stable and reliable EBITDA returns. We strategically manage our balance sheet and reduce leverage in line with our targets, and we remain flexible in our capital allocation. All of this is to propel us to the main objective, which is maximizing shareholder value.
As Rhett detailed, we saw a disconnect, and we still do, between the private and public timberland markets, and in conjunction with a higher interest rate environment, we pivoted to a disposition and deleveraging plan. As we laid out in November, we are targeting $1 billion of total dispositions, and we'll use the proceeds to retire debt and return meaningful capital back to shareholders. Ten years ago, Dave challenged us with delivering best-in-class disclosures, and I see an opportunity to bring that to our new growth initiatives. This will allow shareholders to gauge our progress against these targets and also hold us accountable. We will provide detailed breakdown of our Land-Based Solutions, including contributions currently in non-timber income in our Timber segment. We will also provide more insight into our Wildlight and Heartwood projects, providing new financial metrics as well as qualitative disclosures.
So as newly appointed CFO, I'm building on an already strong financial foundation, but I do have three priorities, and the first one we just talked about. We're gonna maintain and build an open and transparent disclosure, incorporating Land-Based Solutions and Real Estate Development projects. Secondly, is enhancing our finance platforms for both our core business and our growth opportunities. We are data-driven, and enhancing these platforms will not only allow us to provide the right data to shareholders, but for our internal customers as well. And lastly, I'm committed to maintaining a top finance talent, and my expertise lies in financials, but I have a history of motivating teams and developing talent, and I will continue to do that as CFO. And so to sum up, we have a skilled team who's building our strong foundation by delivering Land-Based Solutions and creating Real Estate Development opportunities.
We are strategically managing our balance sheet, which will position us to be flexible with capital allocation. With all these priorities in place, we move forward, but always remembering our top priority, which is maximizing shareholder value. I thank you for your time today and indulging me in my introduction and my little tech problem. Right now, I will pass it over to Mark. Thank you.
All right, so I'll be brief in my closing remarks so we can allow ample time for Q and A. I hope you've gained an appreciation today for why we're so optimistic about these growth opportunities that we're seeing emerge from our timberland assets. I believe that we're entering a new era for this asset class. You know, commercial forestry has been in existence for well over a century, but you know, but the business model has essentially been the same. We grow trees, and we sell logs to paper and forest products mills. And while we've certainly gotten much better at growing trees over the years, the business model has been pretty static. Now, fast-forward to today, and we're looking at growing not one, but two major growth businesses within our core Timber businesses.
So this is a really exciting time for Rayonier, and it's a really exciting time for our industry more broadly. So before we go into Q and A, I want to reiterate why we believe that Rayonier is very well positioned to succeed, and it starts with our portfolio advantages. We have best-in-class timberland assets, we have a differentiated real estate platform with high-value development opportunities, and we have an outsized Land-Based Solutions opportunity based on where our assets are located. Our organization is also built for purpose. We operate within a pure-play structure that affords us a lot of flexibility. We employ a nimble approach to capital allocation, focused on building long-term value per share. And we have exceptionally talented and passionate team that is very much bought in to our vision and strategy. So in closing, I'll leave you with our refreshed vision for Rayonier.
Our team is ready and eager to realize the full potential of our land resources. Like Doug and Chris said earlier, we think we're just getting started. I've never been more optimistic than I am right now about the future of Rayonier, and I feel very honored and humbled to be leading this company forward.
Thanks to everybody who joined us today, as well as the folks who joined us by phone and online. This concludes our formal presentation, and we're now gonna open it up to Q and A.
Thanks, Mark. Thanks, Mark. Our team has been really excited to share this presentation with you today. We're now gonna bring all the presenters back up on stage, open it up for Q and A. Similar to the session earlier, please raise your hand, and we'll bring you a mic, and then please state your name and company for the webcast. Anthony?
Hey, Anthony Pettinari with Citi. I'm just wondering, you know, you have this slide where you talk about U.S. South EBITDA multiples, you know, historically being around 40x EBITDA, and it looks like Pacific Northwest and New Zealand would be even higher than that. And, you know, if I look at the stock over the last decade, it's traded at least what FactSet says, like, closer to 20x. And so this gap seems like it's persisted for, you know, a long period of time. And I'm just wondering if you can give us some context or, you know, is it a size discount? And in terms of being tactical about dispositions, I mean, if you can get, you know, twice the value in the private market, why not dial that up?
Or just, you know, if you could help us understand kind of how to reconcile that.
Yeah, I'll take that, Anthony. So yeah, so first, for a little bit of context on, on timber EBITDA multiples. We, we tend to look at the NCREIF index and the history there to assess, you know, at what multiple, these assets have traded at historically. You recognize when you compare that to Rayonier's overall multiple, that would include, you know, our real estate business as well. And so again, they're not necessarily apples to apples. What we attempted to do on that one slide was to, to more compare just our timber EBITDA, you know, to those, kind of private market benchmarks. Yeah, but recognize as well that multiples in this last period are also relatively elevated because we went, particularly in the Northwest and New Zealand, EBITDA was depressed.
It's not that Northwest assets have traded at higher multiples historically. It was just based on 2023, that multiple was elevated because the denominator was lower. But look, I mean, we are certainly focused on maximizing value for our shareholders and going about doing that in a number of different ways. As it relates to our shareholder value enhancement initiatives, the objectives of that were really twofold. One was we recognized that we were in a higher interest rate environment, and so we felt as though we needed to bring the leverage of the company down to basically prepare for that. We felt it was value destructive to take on 6%-7% debt within this asset class.
But obviously, part of that objective as well was to capitalize on what we saw as this unprecedented disconnect between public and private values. Because a public company, we're always going to be subject to the vagaries of the public capital markets. But I don't believe that there's any basis in the history of the capital markets to suggest that this asset is gonna trade at one price in the private market and another completely detached price in the public market. The benefit that we have as a public company is that we're able to arbitrage those opportunities when they exist. And that's what we did with the value enhancement initiatives, and that's what we intended to continue to do. Again, like I said earlier, we've been very nimble and opportunistic in how we've employed our capital allocation approach.
We've raised equity when we thought it made sense to do so. We've bought assets when we thought it made sense to do so. You know, we've sold assets and bought back stock and paid down debt when we thought that was the best opportunity for the company. An d so we've pivoted. We will continue to pivot, always with a view towards maximizing shareholder value.
Next question?
Hi, Graham Spence, JP Morgan Asset Management. I was at your 2016 Investor Day. I was curious. It's an interesting addition to put in these targets for real estate EBITDA that are, you know, directional, at least. How do you think about risk in the development pipeline? Because that was something you spoke to in 2016. It seems like a lot of the trends in your regions are bullish, but there's always cycles to things, and you're trying to manage your leverage down. So how do you think about capital at risk? How do you think about the size of the development pipeline as you look to grow?
Yeah, let me take that, and then I'll turn it over to, to Chris to add some more context. We actually think we're at a very favorable point in terms of that risk return balance, in the sense that we've made a lot of these upfront investments over the course of the last seven or eight years that have greatly de-risked the project. And so we think we're well beyond peak capital in both Wildlight and in Heartwood. And so from here, we're investing in these, you know, kind of the spine infrastructure, but we're really expecting to transition more towards pod sales and away from selling finished lots.
And so again, we think that relative to where we were seven or eight years ago, where this really was more of a, "Hey, we're gonna kind of, you know, go into this business with a view that we have this, you know, significant value creation opportunity, but it's gonna take some capital to do it. We're gonna have to put some capital at risk to do that." I now think we're in a much better place in terms of how that risk-return balance, in terms of where that is situated today. Chris, I don't know if you want to add.
Well, I would just say, you know, I think that answers the question, but when you see capital going into Real Estate Development of those projects, now there's revenue attached to it, right? It's, that's the benefit of having these projects mature. And in terms of just outlook, I mean, it's just, we always have to keep our ear to the ground and our eyes on the horizon, you know, watching markets, making sure that, you know, they're continuing to, you know, perform the way they have. We, we love where we're located, you know, for all the reasons I described. But, but sure, look, cycles, I've seen them. They'll be there, and, just making sure that we're timing things at the, you know, appropriately is really important.
... Next question?
Thank you. It's Andrew O'Neill with Central Securities. So this may be for, for Dave and Mark. You articulated the sustainable harvest rising about 19%. That's sort of a revenue number in the sense or a volume number. Over that same period, we have increased the share count by a comparable amount, I think. But I, but I think the portfolio pruning has improved, maybe EBITDA, and obviously some of these other optionalities in other areas. Could you maybe articulate your value creation algorithm on a per share basis, maybe a little more fully?
That's a lot to unpack in that question. Yeah, I think that the two key mantras that we've operated around have been nimble capital allocation and active portfolio management. And I really think that that is our formula. It's trying to capitalize on these, you know, disconnects that we see in markets from time to time. Rhett walked through three acquisition examples, kind of demonstrating where, you know, we bought an asset that we thought had outsized potential relative to our underwriting, and we were able to realize that. And so I think that's the special sauce. And then, you know, the capital allocation, it's really just not being afraid to pivot.
We don't go into any period of time with a, with a prescriptive rote approach of, you know, we're gonna go acquire, you know, $500 million of assets in the next three years. We don't know that, because we don't know what the M&A market is going to look like. We don't know where our stock price is gonna be, and if it's gonna make sense to be buying, private market assets at, at that point in time. And so I think if you look at our history over the last, you know, decade, since Dave and I joined the company, we've always employed that mindset of, of, A, never being satisfied with our portfolio and seeking to improve it through both addition and subtraction, and always being very flexible, nimble, and opportunistic around capital allocation.
That's how I think we really add value, long term.
Yeah, I'd just add a couple points. You know, if you think about creating alpha through the active portfolio management, that's certainly a piece. I think increasingly we view the real estate as having that same element of alpha. And internally, we've sort of driven home this message to all our employees of clipping basis points. Everybody's job is to find those really small increments of return, and so that's ingrained in the thinking all the way down, you know, to very low levels in the company, and they add up. I think the other thing that's not seen in that is the work that we've done from a quality portfolio standpoint is to de-risk where we've got capital at play.
So we're in substantially better markets today than we were 10 years ago. And so, yes, it's contributing to EBITDA today, but it's also de-risking the future because we're just in that much better market condition going forward.
Jesse?
Hey, Jesse with Seaport Global. Just turning back to the 2030 targets you outlined. First, how would you have us think about kind of the conversion from EBITDA to CAD? And then secondly, past 2030, how would you have us think about kind of the trajectory going from there for both of the businesses? Is it kind of more a steady state, or is there still kind of avenues for growth beyond that? Thanks.
Yeah, let me start, and then I'll turn it over to Doug to add any additional context. You know, in terms of... You know, one of the things that's really exciting for us around this Land-Based Solutions opportunity is its extraordinary EBITDA to free cash flow conversion. We're not investing capital in these businesses. These are businesses that are emerging from our legacy timberland assets, and so we expect that EBITDA to free cash flow conversion will essentially be 100%, because we're not putting any capital against it. So you know, that's very promising. And then, when we think long term beyond 2030, you know, look, we don't think that this business stops at 2030.
If you look at all of those trends that we talked about, regarding the Net Zero transition, negative emissions need for carbon removals, that's expected to just continue to grow. If you look at the forecast for solar, for CCS, for voluntary carbon markets beyond 2030, all of those things are projected to grow. What's not—what we won't have more of is land and timber, and so that's really gonna be the constraint to growing some of these opportunities, but that ultimately benefits us because the supply is constrained, the demand is on a steep upward trajectory.
Any, any additional questions? All right. Well, thank you, everyone, for joining us today in person and via the webcast. Have a great afternoon.