Right. I'm just going to do a quick introduction for the Rayonier team. For those who haven't met me before, my name is Buck Horne. I'm the Raymond James Timber REIT analyst, as well as home building, multifamily, single-family rental, all things housing. Really be able to introduce to you the Rayonier team. Mark McHugh , long time friend of the firm, and as well as Collin and April Tice. And so, well, plenty to talk about with timber these days. There's a lot of interesting new topics coming out of what's happening policy-wise in D.C. So I'm sure we can get into that. But in the meantime, I think Rayonier has been doing quite a few interesting things with a portfolio. I'm going to turn it over to Mark, and then we'll have some time for Q&A at the end. All right. Thanks.
Great. Thanks, Buck.
All right. So, I'm just going to provide a high-level overview of Rayonier for those that are less familiar with the story, and then, we'll leave some time for Q&A at the end. So let's start with a brief snapshot of where we are today. So Rayonier is one of three publicly traded timber REITs, but we tend to think of ourselves as the only pure-play timber REIT and that we have no exposure to downstream wood products manufacturing. And that's really contributed to the relative stability of our cash flows over time. The company was founded in 1926, almost a 100-year history. Today we own or lease roughly 2.5 million acres of timberlands and generate a sustainable yield of roughly 10 million tons annually. The chart on the right there shows our adjusted EBITDA breakdown in 2024.
As you can see, roughly 70% of our EBITDA was generated from our timber segments, with a balance of 30% coming from our real estate segment. And that mix has been pretty consistent over time. So that's a snapshot of where we are today. But I want to spend the next few minutes talking about how we see our business evolving into the future. And it starts with a couple of key trends that we think are really reshaping our industry. The first is the energy transition. The need for renewable power and decarbonization solutions continues to grow, you know, especially with the rapid development of AI and the power-hungry data centers that support this technology. We see this as a secular trend that we think is going to continue to drive demand for our land-based solutions going forward.
The second trend is the favorable long-term outlook for U.S. housing. New home construction has proven to be pretty resilient, amid a higher interest rate environment. The U.S. housing sector remains pretty significantly underbuilt. So, you know, despite the current financing backdrop, it remains pretty challenging. We think the longer-term trends in housing are quite positive. We also see favorable demographic and migration trends that we think are going to benefit our development projects going forward. So as these trends reshape our industry, they're also reshaping how we think of ourselves as a company. 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 really looking to maximize the value of our portfolio, in a multitude of different ways.
In particular, we expect that over time, a significant portion of our lands could become much more valuable, for alternative uses such as land-based solutions or real estate development. So why does this matter? This next slide highlights why we're so excited about these land use conversion opportunities. And so, you know, what this shows is the value uplift that we think can be achieved by transitioning land use. And so if you take an acre of core southern timberland, it's worth, say, $2,000-$3,000 per acre, and you're able to transition that acre into a carbon capture and storage lease, that has the potential to increase the value of that acre, by up to 5x .
If you're able to take that acre and you're able to convert it into a solar lease or an unimproved development use, that has the potential to increase the value of that acre by up to 10x . And if you're able to transition that acre into an improved development use, that has the potential to increase the value of that acre by up to 15x . So we see significant value creation potential from optimizing our land use, especially as we grow the number of acres that we think would be suitable for conversion into these higher value uses over time. So moving on to page seven, we've laid out our vision for Rayonier. Now, you know, as we've expanded our ambitions and expanded the way we think about portfolio optimization, we felt it was also time to refresh the vision for the company.
So last year at our investor day, we rolled out a refreshed vision for Rayonier, and that is to realize the full potential of our land resources and meeting the needs of society. I know that our organization is very energized by this new approach, and our teams are working quite hard to really realize these new emerging growth opportunities. So let's move on to why we think Rayonier is uniquely well-positioned to succeed over the long- term. And it really starts with these portfolio advantages. First, Rayonier has a best-in-class timberland portfolio, concentrated in some of the most attractive timber markets globally. Second, we have a differentiated real estate platform with a growing pipeline of these higher value development opportunities. And third, our portfolio is very well-positioned to capture these transformative land-based solutions opportunities.
Now, so now let's drill down into each of these in a bit more detail. So Slide 9 provides an overview of our timberland holdings by region. As I noted earlier, we own or lease roughly 2.5 million acres, across various softwood growing markets, in the world. So that includes about 1.8 million acres, in the U.S. South, about 310,000 acres in the Pacific Northwest, and about 410,000 acres in New Zealand. Another key feature of our portfolio is our concentration in some of the best markets in the U.S. South. As you can see on Slide 10, over 70% of our timberlands are located in the U.S. South, and the majority of these lands are located in top quartile markets, as measured by TimberMart-South composite average pricing. So this favorable market positioning, translates to superior EBITDA per acre generation.
Over the past six years, our average EBITDA per acre in the South has been over 40% higher than the NCREIF South Index. We think of the NCREIF South Index as being a broad-based index that's reasonably reflective of average quality lands in the U.S. South. Again, this chart really highlights that relative quality differential of our southern portfolio. Now turning to our real estate platform, Slide 11 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. Historically, we've sold, on average, 1%-2% of our southern land base annually, generally at premiums ranging from 50%-100% above timberland value. This really forms, again, the core of that HBU business.
The next two categories, unimproved development and improved development, this is where we really see the most significant growth opportunity. Unimproved development consists of properties where we've invested in some entitlements and land use planning, but where we haven't invested in horizontal infrastructure improvements. And these are primarily lands that are high value, but relatively isolated where we don't have significant adjacent land holdings. Improved development are properties where we've likewise invested in those entitlements and land use planning, but we've actually taken that next step and invested in horizontal infrastructure improvements as well. We generally only do this in very select areas where we have large adjacent land holdings that stand to benefit from those catalytic investments. And so these are the major categories of our real estate business. So now moving on to our performance in the HBU business.
The chart on the left shows our HBU values and the premiums that we've realized over the last decade. So as you can see, we generated a significant increase in our average HBU sales price per acre, going from about $2,800 per acre in that period from 2015 to 2017, up to about $4,500 per acre in this most recent four-year period from 2021 to 2024. We also generated a significant increase in the premium above the NCREIF Index. So, you know, that premium went from 55% to over 100% over those same time periods. In addition, we've seen a significant shift in our mix towards these higher value development sales. Those development sales comprised just 15% of our real estate revenue in 2015 to 2017, and that increased to 44% in this most recent period.
What's really driving that mix shift is this momentum that we've gained in our Wildlight and our Heartwood development projects. Slide 13 provides a high-level overview of our development pipeline, as well as a map of our holdings in northeast Florida and southeast Georgia. You know, as we discussed on the prior page, we only pursue improved development projects in areas where we have both strong demand and significant adjacent land holdings. The two primary areas where we've done this are around our Wildlight project north of Jacksonville, Florida, and our Heartwood project south of Savannah, Georgia. You know, for example, in Wildlight, we own 25,000 acres within a five-mile radius and about 50,000 acres within a 10-mile radius of the epicenter of that project.
So again, our strategy here is really to create that catalyst for value creation across a very large footprint of land. Now let's shift gears and talk about land-based solutions. Slide 14 illustrates the global path to net zero to limit global warming to one and a half degrees. It assumes a 50% reduction in carbon emissions by 2030 and a 90% reduction by 2050 with the balance of about five gigatons of emissions assumed to be offset with some form of carbon offsets or negative emissions. You know, the reality is the world is not currently on this path. And I think we don't know exactly what this path is ultimately going to look like over the next 25 years, especially given the current political and regulatory uncertainty in the world.
That said, what we do know is that there's significant global action underway to decarbonize the economy and to mitigate the impacts of climate change. Over 70% of countries and over 50% of the 2000 largest global companies have made net zero commitments, and as a result, there's a tremendous amount of capital being put to work to decarbonize the economy and to develop renewable sources of energy, so for example, between 2020 and 2030, utility-scale solar capacity is projected to grow by seven times. CCS demand is projected to grow by 11 x. Voluntary carbon market issuance is projected to grow by 6x , so as a large owner of timberlands, which also comprise a massive carbon sink, we believe that these trends represent a very compelling opportunity for our company, so when we talk about land-based solutions, what exactly do we mean by this?
Slide 15 provides an overview of how we broadly think about this business. We generally think of land-based solutions as falling into three different categories. The first is alternative and additional land use, and so that would include things like leasing land for solar farms or wind farms or leasing pore space, subsurface pore space, for carbon capture and storage. The second category would include carbon markets, and that would include regulated carbon markets like the New Zealand Emissions Trading Scheme that we participate in there, as well as voluntary markets where corporations are buying carbon offsets to meet their net zero claims. And that's primarily what we're dealing with here in the U.S., and that third category is fiber for bioenergy and biofuels.
And so that would include things like using wood fiber for BECCS, which is Bioenergy with Carbon Capture and Storage, or using wood fiber for the manufacturing of sustainable aviation fuels or green methanol. Long-term, we think that all of these land-based solutions could be quite promising. That said, we really see solar and CCS as being the most significant near- to medium-term opportunities for Rayonier. So let me spend a few minutes talking about those opportunities and how we see those developing in the coming years. Slide 16 highlights the growth that's projected for utility solar development, as well as the underlying land use map. So it's important to note that the cost of utility solar has dropped considerably over the last 15 years, and it's now very competitive with other forms of fossil fuel-based electricity generation.
And because of this, utility solar was already forecasted to grow at a pretty rapid pace, even before the introduction of the Inflation Reduction Act. Of course, with these IRA incentives now in place, we've seen a significant acceleration of that growth, which translated, as you can see, into this step change in utility solar development over the last couple of years. Looking ahead, utility solar development is forecasted to continue at this current pace of about 30 GW-35 GW of new capacity additions annually. And to put this in context, as to land use map, you need about seven acres of land per MW of utility solar generation capacity.
And so that 30 GW-35 GW annually translates into about 200,000-250,000 acres of land that would be needed for utility solar annually over this next seven or eight years, or about 1.5 million acres in total by 2030. So again, we think that this represents a very compelling opportunity for large landowners like Rayonier. So now let's talk about solar economics for the landowner on Slide 17. As you can see, there's a significant step change in the EBITDA per acre that occurs on lands that are leased for solar development. And that can translate into an up to ten times lift relative to what we would otherwise earn on those lands operating them as for timber harvesting.
And it's really this big step change in cash flow per acre that's driving that increase in value per acre that I talked about earlier. So moving on to Slide 18, here you can see how our pipeline of solar options has evolved over the past few years. In 2021, we finished the year with about 7,000 acres under option for solar development. At the end of 2024, that number had grown by 6x to about 39,000 acres. So we feel really good about how this pipeline is developing. And we expect meaningful cash flow growth as some of these options start to convert into leases over the course of the next few years. So now let's shift gears and talk about carbon capture and storage. Slide 19 highlights a projected growth trajectory of CCS demand. So, as you can see, CCS demand in the U.S.
Is projected to grow from about 25 million tons today to over 300 million tons over the next decade, and of course, this is going to require a lot of land and pore space to achieve this. This is really the opportunity for us. On Slide 20, we highlight that the key considerations for cost-effective CCS. So essentially, you need three things for CCS to work. You need a concentrated source of high-purity emissions. You need suitable geologic storage capacity, and you need pipeline infrastructure to move the stored carbon from point A to point B. As you can see on this slide, Rayonier has significant ownership that checks all three of these boxes. You know, the initial interest in our land base was primarily focused in Texas and Louisiana, but we've more recently seen that expand to Georgia and Alabama as well.
So again, we feel really good about the interest level in our lands for carbon capture and storage. Slide 21 lays out the economics of CCS for the landowner. Suffice it to say, CCS leases can be quite varied in their terms, but the overall structure typically starts with a base rental payment for a period of time, and then it converts to a per-ton injection royalty once permits are secured and injection activity begins. Over the long- term, the income potential of our CCS leases will largely be driven by the outcome of that permitting process, as well as how much injection volume can ultimately be achieved on those lands. So, you know, again, while there are quite a few variables at play here, the long-term income potential can be quite significant. And we calculated that it is up to five times timber EBITDA.
It's also worth noting that CCS is a use that we consider an additional use because we generally continue operating the surface for timber production. Slide 22 shows how our CCS leases have grown over the last couple of years. This is something that we're very encouraged by. Over the last two years, we've gone from having zero acres under CCS lease in 2022 to finishing 2024 with over 150,000 acres under CCS lease. Again, we're very encouraged by the interest we've seen in our land base for carbon capture and storage and the long-term income potential of this business for us. In the interest of time, I won't go into too much detail on carbon markets and bioenergy. Suffice it to say, we see you know significant long-term potential here as well.
With respect to carbon markets, you know, this is an area where we've spent a lot of time and we're really monitoring developments in this space. We haven't undertaken a carbon project yet, but we have a number of pilot projects underway. So we do expect to be active in this space in the coming years. But again, we're primarily focused on CCS and solar for the time being. So moving on to Slide 23, you know, now that I've gone through some of our portfolio advantages, I also want to spend a few minutes talking about what I see as some of our organizational advantages. And there are really three key advantages that I'd highlight. The first is our pure play timber REIT structure and the flexibility that we think that affords us.
The second is our nimble approach to capital allocation, including the initiatives to enhance shareholder value that we announced in late 2023, and the third is our culture and our sustainability profile, which we think is very well aligned with our vision and our strategy, so 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, and again, we don't have that exposure to downstream wood products manufacturing operations. We think this provides us with a number of key benefits. First is much greater earnings stability. You know, timber cash flows have historically been relatively stable versus wood products manufacturing cash flows, which have been, you know, quite volatile. We think one of the hallmarks of timberland investing is that safety and stability of cash flows.
So we really like our pure play structure, and the relative stability that that affords us. The second is our pure play structure provides greater optionality in terms of how we manage our land base because we're not beholden to feeding a mill infrastructure. And the third is a pure play, with over two-thirds of our assets in the U.S. South. We think we have, you know, stronger relative upside potential around land-based solutions because we recognize that most of this activity around land-based solutions is focused in the U.S. South. So moving ahead to Slide 26, I'll touch briefly on our capital allocation philosophy. Our mantra around capital allocation has always been to be nimble and opportunistic with a view towards building long-term value per share. And we've pivoted over time as we've seen different opportunities become available.
You know, we've grown our portfolio through acquisitions, but we've also not been afraid to sell assets when we saw better opportunities to deploy capital. And that's certainly what we've done here, of late, with our asset disposition plan. We've bought back stock when we've seen a big disconnect between our stock price and NAV. We've also issued stock through our ATM program. We saw, you know, strong opportunities to deploy that capital. We've increased our leverage to pursue acquisitions. We've also very carefully managed our balance sheet to maintain an investment-grade credit profile and a very attractive cost of debt. And again, like I said, you know, this past year we've been very focused on executing our asset disposition program, because we thought we saw a significant disconnect between public and private timberland values.
And we also saw the opportunity to really reduce our leverage in light of the higher interest rate environment. So again, we've been very nimble and opportunistic in our approach to capital allocation over time. I just want to touch briefly on some of the key results that we've been able to realize through our asset disposition program. You know, overall, we've been very pleased with the success of this program, you know, particularly with respect to the values that we've been able to achieve on the properties that we've sold. To date, we've completed roughly $740 million worth of dispositions at a weighted average multiple of about 44 times, which is roughly double our current trading multiple on timber-only EBITDA. So again, we've captured a significant arbitrage opportunity here. We've also generated significant CAD and NAV accretion in the process.
Slides 29 and 30 provide some highlights on our balance sheet and credit profile. In 2024, our net debt to adjusted EBITDA was about 2.8x , and our net debt to enterprise value is about 17%. We have a weighted average cost of debt of about 2.5%, 100% fixed, and our weighted average maturity is about four years. So again, overall, we feel very good about our balance sheet positioning, in light of the recent dispositions that we've completed. So moving on to Slide 31, I'll just touch briefly on a few aspects of our ESG profile that I believe are important. It really starts with our carbon footprint. Climate change is top of mind for most companies today. You know, fortunately at Rayonier, we're not focused on solving a big carbon emissions problem.
And we're really focused on optimizing and maximizing the value of what is essentially a big carbon sink. And again, we think that that's something that's very unique to our company and our industry. On the social front, we've been very focused on safety and prioritizing safety, both for our employees and our contractors. And we've really seen this translate to strong safety metrics in recent years. And lastly, on the governance front, I think we're in a really good place. We employ best-in-class governance practices, with respect to board independence, board diversity, executive compensation. So again, you know, very strong posture on the governance front. So putting all this together, you know, I believe we're executing a clear strategy to build long-term value per share and again to optimize the value of our land resources.
This strategy focuses on optimizing our core timber operations to generate increased productivity and operating efficiencies across our land base, growing our land-based solutions business with a near-term focus on CCS and solar and a longer-term focus on the carbon credit markets and bioenergy and leveraging our differentiated real estate platform to maximize those HBU premiums that we can achieve in our real estate business. That's a quick flyover of our business as well as these growth opportunities that we're seeing emerging. I'll open it up to Q&A.
Let me jump in on one thing. Is there this process. I'm sorry to steal the mic from you. Maybe talk a little bit about conversations, what's happening with the new executive order.
There's some confusion, I guess, as to what risks that may or may not pose to, for those not familiar, the new administration's proposing that we free up a lot more federal land for timber harvesting to try to protect the American lumber industry against Canadian imports. So the theory being that we've got plenty of trees growing on federal land, which could be opened up and harvested. What are the risks and/or feasibility or logistics around doing that? Or how do you think about, you know, what that could mean for Rayonier?
Yeah, sure. That's a great question. And it's, you know, certainly been a flurry of activity here in the last few days around that.
Yeah, I guess I'd start by saying that, you know, it's still early innings on this, and I think the devil's always in the details in terms of how these types of policies get implemented, but you know, I'd just start by making a few observations, and so the executive order that Buck referred to, you know, essentially, like he said, it's designed to unlock harvesting on federal lands to support the lumber industry in the U.S., you know, but so a few observations, you know, first of all, I'd say that this impact is largely contained to the Pacific Northwest. If you just look at the relative federal ownership in different areas, there's not a lot of competitive federal ownership of timberlands in the U.S. South.
And so, you know, again, as we think about the potential impact longer term to the West, you know, I think it's important to recognize that, you know, a lot of these lands, these federal lands, haven't really been managed to optimize commercial timber production in a number of years. And so, you know, you don't have that investment in road infrastructure, that investment in road engineering or in inventory on those stands. And so, you know, I think to say we're going to unlock timber, then to actually get to the point where you're able to harvest timber, are two different things.
You know, I also think it's worth noting that, you know, a lot of the timber on these federal lands, you know, particularly old growth lands, are not the right piece size relative to how the mill infrastructure is set up. Again, a lot of these larger diameter logs are just very difficult to process with the way the current mills are set up. So that would be another obstacle to how, you know, that timber could actually flow into the market. And I'd say the third point I make is, you know, you have a lot of regulatory restrictions that could hinder the implementation of this, at least in the near term. And so, you know, again, I think that, you know, certainly it's something that we've paid attention to, certainly something that, you know, could impact timber markets.
But I counterbalance that by saying if the overall objective is to bring more lumber production into the U.S., I think net-net that should benefit our industry longer term. And I don't really see a flood of new timber volume opening into the market, without a lot of process steps along the way to free that up.
Makes a lot of sense. And then the other corollary to that, of course, is tariff policy. Now, obviously, you guys don't have direct manufacturing exposure to, you know, lumber production. If the 25% tariff on lumber does go into effect, we're wondering, you know, what that means or how long it lasts, whatnot.
But typically, when you see movements in lumber pricing, how correlated or how long does that take to flow through to getting some traction with your log pricing in the South versus the Northwest? Or, you know, how sensitive are those markets?
Yeah. So I guess, you know, a couple observations on the prospect of new tariffs. You recognize that the softwood lumber duty is already widely expected to roughly double around August, September of this year. And so there, there's already an expectation that there will be an elevated tariff, so to speak, on lumber imports from Canada that will go into effect later this year. And so, you know, I think, you know, in terms of whether or not there is a tariff put in place in the meantime is really probably more of a timing impact than anything else.
I mean, certainly if tariffs got put in place on Canadian imports or as we see this softwood lumber duty increase after mid-year, you know, we certainly think that that will translate to higher lumber prices as well as increased lumber production in the U.S. market. In terms of how that then flows into log prices, you know, I think it's probably a different story whether we're talking about the U.S. South versus the Pacific Northwest. The Pacific Northwest tends to be, you know, 80%-85% of the volume there is going into solid wood products markets. So it tends to be more correlated to what's going on in lumber markets and lumber market pricing. You know, the U.S. South recognizes pretty balanced between saw timber and pulpwood.
You actually have something of an inverse correlation to some extent between pulpwood prices and saw timber prices. When saw mills are running very hard because lumber markets are strong, they're spitting out a lot of wood chip residuals, which are competitive with roundwood pulpwood. And so, you know, there are some puts and takes there. But, you know, overall, we expect that in a market where lumber prices are going up and more lumber production is moving into the U.S., that on balance, that's going to have a positive impact on saw timber prices and on timber cash flows. Yeah, I guess we don't really see the tariff situation as it is in the U.S. is likely impacting our New Zealand market meaningfully. You know, we recognize that in New Zealand, you know, upwards of two-thirds of the volume there is going into the China market.
Much of that is being used in China, both for construction markets as well as for industrial markets. There could certainly be a knock-on effect, you know, for example, if you know, furniture markets were impacted by tariffs on China imports into the U.S. But you know, for the most part, that market operates somewhat independently of the U.S. Yeah. So the question is on the differential between this disconnect that we've talked about between public and private timberland values, and you know, that's quite simply what we see is the values that are being ascribed to timberland assets in the private market, you know, versus the value that we see being ascribed to our assets and our public market valuation.
And so part of the impetus for this asset disposition program that we announced in late 2023 was really to capture that arbitrage opportunity to monetize assets at private market values, use those proceeds to buy back stock, you know, delever. And we've really, you know, seen the opportunity to generate NAV and CAD accretion through that process over the course of last year. And that continues to persist. You know, like I showed on that chart, you know, those dispositions have come at an average EBITDA multiple of about 44 x, which is roughly double where our stock is currently trading relative to timber EBITDA.
All right. I'll leave it there. Thank you, Mark. Thank you, guys.
Thank you.
Appreciate everybody. Downstairs for a break.