Welcome, and thank you for joining Rayonier's fourth quarter and year-end 2022 teleconference call. At this time, all participants are in a listen-only mode. During the question-and-answer session, please press star one on your telephone keypad. Today's conference is being recorded. If you have any objections, you may disconnect at this time. Now, I will turn the meeting over to Mr. Collin Mings, Vice President, Capital Markets and Strategic Planning.
Thank you and good morning. Welcome to Rayonier's Investor Teleconference covering fourth quarter earnings. Our earnings statements and financial supplement were released yesterday afternoon and are available on our website at rayonier.com. I would like to remind you that in these presentations, we include forward-looking statements made pursuant to the safe harbor provisions of federal securities laws. Our earnings release in 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. They are also referenced on page two of our financial supplement. Throughout these presentations, we will also discuss non-GAAP financial measures, which are defined and reconciled to the nearest GAAP measures in our earnings release and supplemental materials. With that, let's start our teleconference with opening comments from David Nunes, our CEO. David?
Thanks, Collin. Good morning, everyone. First, I'll make some high-level comments before turning it over to Mark McHugh, President and Chief Financial Officer, to review our consolidated financial results. We'll ask Doug Long, Executive Vice President and Chief Resource Officer, to comment on our U.S. and New Zealand Timber results. Following the review of our timber segments, Mark will discuss our real estate results as well as our outlook for 2023. We are pleased with our overall financial performance in 2022, particularly given the challenging macroeconomic backdrop that developed during the course of the year. For the full year, we generated GAAP earnings per share of $0.73, pro forma earnings per share of $0.62, and Adjusted EBITDA of $314 million.
Notably, our three timber segments generated total Adjusted EBITDA of $275 million, representing the highest ever result for the company and roughly 8% above the previous record achieved in 2021. Despite deteriorating market conditions toward the end of 2022 in response to rising interest rates, growing macroeconomic uncertainty, and a slowing U.S. housing market, we still achieved record full-year Adjusted EBITDA in both our Southern and Pacific Northwest timber segments. We believe this underscores the relative strength of our timber markets and the ability of our team to navigate an ever-evolving operating environment. The strong full-year results in our U.S. timber operations were partially offset by lower Adjusted EBITDA versus the prior year in our New Zealand timber segment, which contended with slower economic activity in China as well as higher operating costs.
Meanwhile, in our real estate segment, we achieved solid results that were generally in line with our expectations entering the year, reflecting our continued focus on optimizing the value of our portfolio through the sale of rural and recreational properties, land entitled for development, and non-strategic holdings. As Mark McHugh will discuss in greater detail later in the call, we are providing full year 2023 Adjusted EBITDA guidance of $280 million-$320 million. This is a wider range than we've historically provided for full year Adjusted EBITDA guidance, which reflects heightened macroeconomic uncertainty as well as log pricing headwinds entering the year.
That said, we've seen some recent signs of end market improvement, including increased wood products pricing, a more stable interest rate environment, and improving home builder sentiment, which suggests that timber market conditions may be poised to rebound to some extent, which is reflected in the higher end of our guidance range. Stepping back to the fourth quarter, we generated Adjusted EBITDA of $68 million and pro forma earnings per share of $0.11. Fourth quarter Adjusted EBITDA increased 36% versus the prior year quarter as stronger results in our Pacific Northwest and New Zealand Timber segments, as well as a higher contribution from our real estate segment more than offset a slightly lower contribution from our Southern Timber segment.
Drilling down deeper, further on our operating segments, our Southern Timber segment generated Adjusted EBITDA of $33 million in the fourth quarter, which was 1% below the prior year period. While weighted average net stewardship realizations increased by 7% versus the prior year quarter, this was more than offset by an 11% decrease in harvest volumes. In general, our Southern Timber segment continued to benefit from our concentration in some of the most tensioned log markets across the U.S. South, although both demand and pricing were impacted late in the fourth quarter as market conditions deteriorated. In our Pacific Northwest Timber segment, we achieved fourth quarter-Adjusted EBITDA of $16 million, up 18% from the prior year quarter. The year-over-year increase was attributable to 17% higher weighted average log prices and a 3% increase in harvest volumes.
Our operations in the region continued to benefit throughout the fourth quarter from favorable supply-demand dynamics as domestic lumber markets, export markets, and pulpwood markets competed for a limited supply of logs. Turning to our New Zealand Timber segment, fourth quarter Adjusted EBITDA of $14 million increased 39% from the prior year period due to increased carbon credit sales and 7% higher harvest volumes, which more than offset lower log pricing amid continued export market headwinds. In our real estate segment, we generated Adjusted EBITDA of $14 million in the fourth quarter, up significantly from $3 million in the prior year period. The improved results were driven by increased sales in the Wildlight development project north of Jacksonville, Florida, as well as a higher number of rural acres sold and higher per acre value realizations versus the prior year period.
Despite the increase in interest rates as compared to a year ago, demand for rural land remains strong as we enter 2023, and we continue to be pleased by the favorable momentum in both our Wildlight and Heartwood development projects. As previously announced, in the fourth quarter, we also completed the acquisition of approximately 137,800 acres of high-quality commercial timberlands located in Texas, Georgia, Alabama, and Louisiana for an aggregate purchase price of $454 million from Manulife Investment Management, a leading timberland investment manager. The acquired properties are well-stocked and highly productive timberlands located in some of the strongest timber markets in the U.S. South. We are pleased to have successfully integrated these properties into our portfolio and have been encouraged by the customer response to our initial timber sales from these assets.
Looking ahead, we're very excited about managing these timberlands for long-term value creation. With that, let me turn it over to Mark, for more details on our fourth quarter financial results.
Thanks, Dave. Let's start on page five with our financial highlights. Sales for the fourth quarter totaled $245 million, while operating income was $44 million and net income attributable to Rayonier was $33 million or $0.22 per share. On a pro forma basis, net income was $16 million or $0.11 per share. Pro forma items in the fourth quarter included $16.6 million of income from large dispositions and a $0.4 million favorable adjustment to a timber write-off taken in the third quarter. Adjusted EBITDA was $68 million in the fourth quarter, up from $50 million in the prior year period. On the bottom of page five, we provide an overview of our capital resources and liquidity.
Our cash available for distribution or CAD for the full year was $189 million versus $208 million in the prior year period. The decrease was primarily driven by lower Adjusted EBITDA, higher cash taxes, and higher capital expenditures, partially offset by lower cash interest paid. As previously discussed, cash taxes were elevated in 2022 due to the required timing of estimated tax payments for our New Zealand subsidiary following the full utilization of its NOLs. A reconciliation of CAD to cash provided by operating activities and other GAAP measures is provided on page eight of the financial supplement. During the fourth quarter, we closed on the previously announced five-year, $250 million incremental term loan through the Farm Credit System to partially fund the US South acquisitions that Dave discussed.
The company also entered into an interest rate swap agreement to fix $100 million of the term loan at an all-in effective cost of approximately 4.6% net of as-estimated patronage refunds. Additionally, in the fourth quarter, we replaced our prior at-the-market or ATM equity offering program with a new $300 million ATM program. During the quarter, we raised approximately $30 million through the new ATM program at an average price of $35.51 per share. We continue to view the ATM as a cost-effective tool to opportunistically raise equity capital and fund capital allocation priorities. In sum, we closed the fourth quarter with $114 million of cash and $1.5 billion of debt.
At year-end, our weighted average cost of debt was approximately 3%, and the weighted average maturity on our debt portfolio was approximately six years, with no significant debt maturities until 2026. Our net debt of approximately $1.4 billion represented 22% of our enterprise value based on our closing stock price at the end of the year. I'll now turn the call over to Doug to provide a more detailed review of our timber results.
Thanks, Mark. Good morning. Let's start on page nine with our Southern Timber segment. Adjusted EBITDA in the fourth quarter of $33 million was 1% below the prior year quarter, driven by lower harvest volumes, largely offset by higher net stumpage pricing, lower leased land reforestation costs, and higher non-timber income. Volume decreased 11% versus the prior year quarter as macroeconomic headwinds led to softer demand in certain markets, particularly for pulpwood. Average sawlog stumpage pricing was $34 per ton, an 11% increase compared to the prior year period. The improved pricing reflected healthy demand from sawmills across most of our operating areas, despite a significant decline in lumber prices relative to the prior year period.
Meanwhile, pulpwood net stumpage pricing decreased 1% to roughly $21 per ton versus the prior year quarter, primarily due to weaker end market demand and an increase in available supply as a result of drier weather conditions. Overall, weighted average stumpage prices in the fourth quarter improved 7% versus the prior year quarter to nearly $26 per ton. Entering 2023, we have seen some decline in both sawtimber and pulpwood pricing compared to the fourth quarter as our customers are approaching the new year cautiously, given the slowdown in residential construction activity and other macroeconomic challenges. Notwithstanding these near-term headwinds, we believe that the longer-term outlook for Southern Timber prices remains favorable.
Specifically, we expect that lower lumber pricing will lead to additional sawmill curtailments in British Columbia, which should allow the U.S. South to continue to capture a greater market share of North American lumber production. Importantly, we also anticipate that the Southern timber markets with more favorable supply-demand dynamics and corresponding price elasticity will benefit disproportionately from this transition relative to the U.S. South as a whole. Moving to our Pacific Northwest Timber segment on page 10, Adjusted EBITDA of $16 million was 18% higher than the prior year quarter. The year-over-year increase was driven by the sale of a timber reservation to a conservation group. Higher net stumpage realizations, lower costs, and higher volumes, partially offset by lower non-timber income.
Volume increased 3% in the fourth quarter as compared to the prior year period, primarily due to labor strikes in the region, causing a reduction in the supply of pulpwood and residuals on the market. Turning to pricing, at nearly $112 per ton, our average delivered solid price in the fourth quarter was up 14% from the prior year period, primarily driven by strong demand from domestic lumber mills, as well as a favorable species mix with a higher proportion of Douglas fir volume. Meanwhile, fourth quarter pulpwood pricing of $66 per ton increased 80% over the prior year quarter, reflecting strong end market demand coupled with supply constraints due to fewer residuals and increased competition from mills for limited supply of smaller-sized logs.
However, similar to the U.S. South, in the Pacific Northwest, we have seen declines in both sawtimber and pulpwood pricing in early 2023 as compared to the relatively strong pricing realizations we achieved throughout 2022. A slowdown in residential construction activity has weighed lumber prices and, in turn, sawtimber prices, while pulpwood pricing has retreated from the exceptionally high levels achieved at the end of 2022 due to softening demand as well as the temporary curtailment of a mill in the region. Although current market conditions are more challenging, we believe our nimble approach to operational decision-making, the relative strength of our markets, and the optionality offered by our export market capabilities position us well to adapt to ongoing changes in the operating environment. Moving to New Zealand. Page 11 shows results and key operating metrics for our New Zealand Timber segment.
Adjusted EBITDA in the fourth quarter of $14 million was $4 million above the prior year quarter. The increase in Adjusted EBITDA compared to the prior year quarter was driven by increased carbon credit sales and higher harvest volumes, partially offset by lower net stumpage realizations and unfavorable foreign exchange impacts. Average delivered export sawtimber prices of $111 per ton declined 16% as compared to the prior year quarter, reflecting reduced demand from China. While our New Zealand export business faced a number of headwinds last year, we're optimistic that the recent relaxation of COVID-19 containment measures and fiscal support of the property sector by the Chinese government will lead to a gradual increase in export log demand and pricing versus the prior year.
In addition, Chinese port inventories were at relatively normalized levels heading into the Lunar New Year, which coupled with ongoing supply-side constraints, including a reduced flow of European salvage logs into China and the ongoing Russian log export ban, provide us with further optimism that the export market will gradually improve as the year progresses. On the cost side, we expect the decline in freight rates versus the elevated levels seen in 2022 should contribute to improved margins year-over-year. Shifting to the New Zealand domestic market, fourth quarter average delivered sawlog prices declined 20% from the prior year period to NZD 65 per ton, largely driven by a sharp decline in the New Zealand dollar-U.S. dollar exchange rate.
Excluding foreign exchange impacts, domestic sawtimber prices decreased 5%, reflecting weaker domestic market demand due to reduced competition from export markets, as well as higher mortgage rates negatively impacting the demand for construction materials. Domestic pulpwood prices in New Zealand were likewise impacted by foreign exchange rates, declining 24% on a U.S. dollar basis compared to the prior year quarter. Excluding foreign exchange impacts, domestic pulpwood prices declined 9%, reflecting less competition from export markets for lower quality logs. While log markets in New Zealand remained challenging in the fourth quarter, non-timber income in New Zealand, which primarily reflects carbon credit sales, continued to bolster our financial results, generating $9.1 million of revenue in the quarter. Going forward, we plan to remain opportunistic in our sale of carbon credits, depending on carbon credit market conditions and our pricing outlook.
Lastly, in our trading segment, we posted a slight operating profit in the fourth quarter. As a reminder, our trading activities typically generate low margins and are primarily designed to provide additional economies of scale to our fee timber export business. I'll now turn it over to Mark to cover our real estate results.
Thanks, Doug. As detailed on page 12, our real estate segment delivered strong results in the fourth quarter. Real estate sales totaled $57 million on roughly 13,100 acres sold, which included a large disposition in Washington consisting of roughly 11,000 acres sold to a conservation-oriented buyer for approximately $30 million. Excluding this transaction, fourth quarter sales totaled $27 million on roughly 2,100 acres sold at an average price of over $13,700 per acre. Real estate segment Adjusted EBITDA in the fourth quarter was $14 million.
Drilling down, sales in the improved development category totaled $17 million, including $15 million of sales from our Wildlight development project north of Jacksonville, Florida, $700,000 for an industrial use parcel in Kitsap County, Washington, and $400,000 from our Heartwood development project south of Savannah, Georgia. Sales in Wildlight included a $7.3 million sale of 87 acres to an industrial park developer and a $3 million sale of 16 acres for a senior housing community.
On the residential side, we also sold a 74 lot residential pod to a national home builder for $4.3 million and 13 developed lots for $800,000 at an average base price of $65,000 per lot. Sales in our Heartwood development project consisted of 10 developed residential lots at an average base price of roughly $43,000 per lot. While Heartwood is still in its early stages, we are excited about the 2 new Hyundai facilities that have been announced in Bryan County, Georgia. With an estimated 9,500 jobs being created within a 30-minute drive from Heartwood, we believe the project is well-situated to capture incremental demand from these facilities, as well as the ancillary suppliers they are likely to attract.
Overall, our Wildlight and Heartwood development projects continue to benefit from favorable migration and demographic trends, relatively affordable price points, and a diverse mix of residential, commercial, and industrial end uses that each help to catalyze demand for one another. Turning to the rural category, fourth quarter sales totaled $12 million, consisting of approximately 2,000 acres at an average price of roughly $6,200 per acre. Key transactions included the sale of 615 acres in Nassau County, Florida for $3.8 million, or roughly $6,300 per acre, and the sale of 290 acres of former Pope Resources property in Jefferson County, Washington for $4.1 million, or $14,200 per acre. Moving on to our outlook for 2023.
Page 14 shows our financial guidance by segment. Schedule G of our earnings release provides a reconciliation of our guidance from net income attributable to Rayonier to Adjusted EBITDA. For full year 2023, we expect to achieve Adjusted EBITDA of $280 million-$320 million, net income attributable to Rayonier of $52 million-$73 million, and EPS of $0.36-$0.50. As noted in our earnings release, we generally expect the results in the first half of the year will be meaningfully lower than results in the second half of the year as end market demand continues to normalize following the rapid rise in interest rates and associated market volatility.
We further expect that year-over-year net income attributable to Rayonier and EPS will be impacted by increased depletion rates in our Southern Timber segment following the completion of the U.S. South acquisition that Dave discussed earlier. With respect to our individual segments, in our Southern Timber segment, we expect full year harvest volumes of 6.7 million to seven million tons. The anticipated increase relative to the prior year reflects the additional volume associated with the acquisition of 137,800 acres in Texas, Georgia, Alabama, and Louisiana. We also anticipate higher non-timber income for the full year 2023 as compared to 2022. However, we expect that these positive variances will be largely offset by lower weighted average stumpage realizations in 2023 relative to 2022 due to softer demand as well as higher cut-and-haul costs.
Overall, we expect full year Adjusted EBITDA in our Southern Timber segment of $145 million-$160 million. In our Pacific Northwest Timber segment, we expect full year harvest volumes of 1.5 million-1.6 million tons. The anticipated decrease relative to the prior year reflects recent land sales activity, a more muted domestic demand outlook, and an ongoing mix shift towards Douglas fir, which has a lower MBF to ton conversion ratio. Furthermore, we expect weighted average pricing in 2023 to decline relative to full year 2022 due to weaker macroeconomic conditions and lower lumber prices. Overall, we expect full year Adjusted EBITDA in our Pacific Northwest Timber segment of $42 million-$52 million. In our New Zealand Timber segment, we expect full year harvest volumes of 2.5 million-2.7 million tons.
As Doug discussed, we're optimistic that export market conditions will continue to improve as the operating environment in China normalizes following the COVID-related disruptions that persisted throughout 2022. We further expect that favorable carbon credit pricing and volumes will contribute to improved results in 2023. Overall, we expect full year Adjusted EBITDA in our New Zealand Timber segment of $58 million-$64 million. In our Real Estate segment, we are encouraged by the continued interest in both our development projects and rural properties, despite the higher interest rate environment. Overall, we expect full year Adjusted EBITDA of $68 million-$77 million. We anticipate the real estate activity in 2023 will be significantly weighted to the second half of the year, with the first quarter in particular being relatively light. I'll now turn the call back to Dave for closing comments.
Thanks, Mark. As I reflect on 2022, I'm pleased with how our team was able to work together to deliver strong financial performance while contending with considerable challenges during the year. These challenges included significant inflationary pressures, which were exacerbated by the Russia-Ukraine war, a slowdown in U.S. housing activity driven by a dramatic increase in interest rates, and a challenging export environment due to COVID-related disruptions in China. Nevertheless, our team was able to adapt quickly amid a very volatile business environment to deliver strong results throughout the year. While our products and markets are certainly not immune from the macroeconomic headwinds facing the broader economy, I believe that the dedication of our talented employees, the geographic diversity of our portfolio, and the tensioned log markets in which we operate position us well to build long-term value for our shareholders across economic cycles.
On the capital markets front, following a very active 2021, we entered 2022 with our balance sheet in an excellent position to deploy capital if the right growth opportunities emerged. To this end, we were pleased to close on 7 transactions totaling 140,000 acres for $458 million during the year, which was primarily driven by the large acquisition in the U.S. South that we closed in the fourth quarter. While we are very excited about these acquisitions, our active portfolio management strategy also remained focused on addition through subtraction. As we completed a large disposition of nearly 11,000 acres of less strategic holdings during the fourth quarter for over $30 million.
In sum, over the past year, we improved our portfolio through acquisitions that will further bolster our competitive positioning, recycled less productive capital toward uses with a better risk return profile, and opportunistically raised capital through our ATM program to fund growth opportunities. In addition to our focus on achieving important financial goals and ongoing portfolio management objectives, we also continued to advance initiatives related to nature-based solutions throughout the year. We made great strides in advancing various opportunities in solar energy, carbon capture and storage, and voluntary carbon markets. We move forward, we believe we are well-positioned to capitalize on these nascent business opportunities, and we'll continue allocating resources as these markets develop.
All said, I'm confident that the operational flexibility afforded by our pure-play timber REIT model, the ongoing improvements to our portfolio, and the resiliency of our team will enable us to stay focused on long-term value creation as we continue to navigate the uncertainty facing the US housing market and broader economy in 2023. Before turning the call back over to the operator, I'd also like to congratulate Mark and Doug on their recent promotions. In late January, we announced that Mark has been appointed to the additional position of President. Mark has been a valued partner to me over the last several years, and we're pleased to be expanding his leadership role within the company. In addition to his current duties as CFO, Mark will be taking on a greater role in leading our strategic planning efforts, as well as participating in broader operational and personnel decision-making.
Additionally, we announced that Doug has been promoted to the position of Executive Vice President and Chief Resource Officer. In this expanded role, Doug will continue to oversee our global forestry operations while also devoting more time toward developing business opportunities around nature-based solutions. We believe these announcements underscore our commitment to continuously developing talent, including our senior leaders, our thoughtful approach to succession planning, and our continued focus on allocating resources to the emerging opportunities for timberland owners in a low carbon e-economy. This concludes our prepared remarks. I'll now turn it back over to the operator for questions.
Thank you. We will now begin the question-and-answer session. If you would like to ask a question, please press star one, unmute your phone, and record your name clearly. If you need to withdraw your question, press star two. Again, to ask a question, please press star one. Our first question will come from Mark Weintraub with Seaport Research Partners. Your line is open.
Thank you. Thanks for all the details, Dave, Mark. First, just a couple questions if I could. One, the more tensioned wood baskets in the South, which help you when things are good, does that mean that things soften a bit more when things are weak, and then you get more upside when they tighten again in the future, kinda similar to how in the Pacific Northwest there's a bit more volatility or not necessarily? What's your view on that?
Good morning. This is Doug. I'll take a swing at that one first. I think you've kinda categorized that correctly. You know, for example, some of the highest priced baskets that we saw the biggest year-over-year improvements in 2022. While we're seeing some, you know, decline relative to those levels reached last year, the absolute pricing level in majority of our markets is still very favorable compared to the South as a whole, and we're still seeing weighted average total pricing seeing 21 levels. I think that price elasticity you point out is exactly right, that when there's tension, we see prices really ramp up, but then we also can see them, you know, slowly come back down off of those sometimes.
I think it's also worth noting, Mark, that, you know, the overall pricing is quite a bit higher in those tension markets. You know, again, we saw, you know, very significant lifts in 2021 and then again in 2022 in some of those more tension markets, whereas, you know, bottom quartile markets really saw relatively flat pricing or very modest increases. You know, again, while we have seen prices come off those, you know, extraordinary highs we saw in 2022, the absolute pricing level in those markets is still considerably higher.
Understood. Then second, in New Zealand, if I kinda look back last seven, eight years, EBITDA range from $55 million, I think, to, you know, $100 million plus. Your guidance for next year is obviously towards the low end of what we've seen. Can you talk about kinda what you think the medium, the longer term, right type of normalized level is, and how important is China to where, you know, when we start seeing higher profitability there? Then any more color you can provide about, you know, the changes in the China property market initiatives and et cetera, as to how that might factor into the timing of when the improvement might develop.
Yeah, sure, Mark. This is Mark. I'll take that. I mean, in terms of a normalized EBITDA there, you know, again, we to your point, I mean, we've seen EBITDA as low as you know, the $30s, you know, back a number of years ago and sort of peaking, you know, probably in the $90s. New Zealand has always been more volatile, and that's really driven by the much more heavy reliance on export markets, just the cost structure there. A lot of the land is leased. You've got a much higher cost component in terms of delivering wood in the export market.
Obviously, you know, headline price volatility translates to greater margin volatility in New Zealand, certainly relative to, say, the U.S. South. Where we're a lot of our sales are stumpage, and so, you know, it's a very high EBITDA margin on those stumpage sales. Yeah, I certainly don't think that New Zealand is gonna retreat to levels that we saw in, you know, 2013, 2014, 2015. You know, but obviously we've normalized kind of off of the levels that we saw, you know, three, four years ago as well. I think, you know, as it relates to China, you know, obviously China was very challenged in 2022, given the COVID containment measures, as well as some challenges in the property sector there.
I'd say we're very optimistic that now that China is reopening, you know, we've already seen, you know, some bounce back in export pricing there. You know, just as the supply chain in general has loosened up, we've seen some relaxation of export freight costs there. Obviously carbon has been a bright spot in New Zealand as well. You know, a lot of moving pieces. You know, I'd be reluctant to kinda, you know, characterize what we see as a normalized EBITDA. You know, certainly we're hopefully trending back towards that type of level here as we move into 2023.
Mark, this is Dave. Just a couple things I'd add to that is keep in mind that, you know, a lot of, a lot of the drivers are also around relative, you know, supply from other regions. You've had historically a lot of wood going into China from Russia as well as Australia. You know, those two sources are essentially done. What really overwhelmed the last number of years was a flow of salvage wood from Europe, which took Europe's market share from, you know, essentially next to nothing to right behind New Zealand. I think where we have a lot of optimism is, you know, that is tapering off as they've essentially gone through that wood. We feel like New Zealand is very well positioned going forward.
We expect to see, you know, less volatility, certainly than we had over the last year in things like shipping costs. You know, notwithstanding, some of the headwinds in 2022, we remain pretty optimistic about how that's positioned. It shows in our cash flow generation on a per acre basis is superior to all of our other regions.
Right. I guess, and I recognize you're juggling lots of variables coming up with your various outlooks by regions. I noticed kind of the range you had for New Zealand is actually maybe less wide than you had it for some of the U.S regions, which I guess surprised me a little bit given, you know, the uncertainties of exactly when and how China plays out, as well as the historical greater volatility. I don't know if that's communicating something specific or again, it's really just a function of you're juggling lots of variables and coming up with your best assessments and that's the way it came out. Any color on that?
Yeah. This is Doug again. I'll take the start of this one. You know, I think what that shows is we really are having some optimism around what's happening in China as they come out of their COVID restrictions. Prior to the Lunar New Year, we saw demand really pick up. It, you know, the headline numbers only averaged 55,000 cubes per day, which doesn't sound that amazing. Really what we saw was a real pickup towards the right before the Lunar New Year. As mentioned by, I think it was Mark, you know, we've seen a trend where the log brokers have additional confidence now to hold inventories because they're forecasting higher demand and pricing after the holidays. We're seeing some, you know, potential really green shoots in that area.
With, you know, I think you mentioned there that the property markets, we've seen quite a bit, you know, policymakers and local governments have pledged quite a bit of money to restart construction in the areas, we're seeing that start to flow back through into demand also. The People's Bank of China recently launched a 200 billion CNY relending program, quite a few of the regional banks have also kind of matched that. Kind of what we're hearing, you know, kind of on the ground is that expecting property sales to stabilize at, you know, lower levels obviously in these coming months, to rebound gradually from the second quarter onward, that's really being helped with that reopening of China.
Okay. Promise you last one just on the same thing is. I guess what I'm trying to understand is if things play out as you are kind of seeing, is that particular New Zealand, is that one region where maybe if we look into next year, you can really get an outsized increase relative to what one might expect in North America? Is that not necessarily a right avenue to be thinking about at this point? Again, I apologize because that's looking quite far out.
I mean, it's certainly possible, Mark. You know, again, if you look at where New Zealand EBITDA has been, you know, last year and kind of what we're forecasting for 2023, it's generally kind of below the level that we've averaged for the last five years. You know, 2022 was obviously very challenging. We're, we're expecting to see some recovery in 2023. To your point, if that trajectory continues, we're obviously not providing 2024 guidance, but you could certainly see some outsized gains there.
Okay.
I would just add one more thing that's kind of probably not as appreciated, a little more in the details. Due to some fumigant issues that we've had being banned in New Zealand, the India market has not been an option for us for most of last year. We're seeing discussions between India and the New Zealand officials basically around that. We think that that market to India could also open up for us in this current year and the next year. Some more optimism around that.
I think another, lastly Mark, I think another thing to think about is, you know, historically carbon credit sales have not been a very big factor in New Zealand. You know, that market has really evolved to a point where, you know, it's making meaningful contributions, the last year. You know, we expect that's gonna play a role going forward as well.
Appreciate all the details. Thanks a lot.
Thank you. Once again, if you would like to ask a question at this time, you can press star one and record your name when prompted. Our next question comes from Paul Quinn with RBC Capital Markets. Your line is open.
Yeah, thanks very much. Morning, guys. Just following up, Dave, on your comment on carbon markets. You know, I saw that $21 million in sales in New Zealand in 2022, you know, versus kind of just over $1 million that you did in 2021. Maybe you could give us a background of what those, you know, how you achieved that and what your expectation is for 2023?
I'll start on that. I'll let Doug provide a little bit more color. Keep in mind that, you know, historically, the carbon credit market there had been at a fairly low pricing level. We had sort of taken a very opportunistic approach. It was one of the reasons that we really didn't have much in the way of sales two years ago. That market really took off, and they conduct quarterly auctions by the government where they release carbon credits out onto the market. We watch that pretty carefully. That started giving us confidence that the market was going to head up.
some of that's also predicated on prices that the government sets where they will release incremental carbon credits onto the market, and those prices tended to lead the market up. It gave us a lot of confidence to bring more volume forward last year of our credits. Doug can provide a little bit more color as to, you know, where we stand on the credits as we enter this year. It's definitely playing a bigger role in how we think about those that region.
Yeah. Thanks, Dave. I think, you know, as Dave mentioned, with those auctions, the government does set these, Cost Containment Reserve prices that, basically at that point if the price is reached, they'll release some more credits into the market. They often kind of do tend to set a, I wouldn't say a floor, but that's where targeting seems to be towards. You know, we saw, kind of the current one is around $80, we saw pricing last year in the $70-$80 range. As Dave said, it's markedly up, you know, from years before where it's been as low as single digits to, probably more recently in the $30-$40 range.
We saw a pretty drastic step up and the opportunity to execute on those as we said be opportunistic around that.
Those are all New Zealand dollars.
Oh, sorry, all New Zealand dollars. Yes. Thanks, Dave, for correcting on that. You know, as we go into this year, we're building new units as we go, growing them up, but we also come in with roughly around 1.6 million NZUs that we had. We do have to surrender units as we harvest. Then we also gain units as we grow timber.
As we go through the year, we have the opportunity to sell some more and can be somewhere, don't wanna really give out our exact, you know, what our plans are to the market, but, you know, exceed at the end of the year over two million units type of thing, and potentially more than that, just depends on how we see the pricing flow through the year and how we decide to execute.
Okay. If I could compare that to what you're seeing in North American markets on the carbon side?
Yeah. The North American markets, you know, those are still voluntary, so basically not. They still have a lot of standardization, I guess is what I would say. You know, there are a few obviously firms that are basically focused on getting that standardization. But we've seen, you know, as everyone's seeing some issues around people talking about greenwashing and different things. What I think is happening now is that the buyers are starting to figure out what is a valuable credit to them and looking for those. We've really seen pricing move around in the single digits to, you know, $20-$30 a ton depending on how it's being produced.
I think what we're still waiting on in that market is for more standardization and for the market to realize what the value is and to possibly get rid of some of these lower value credits that are out there right now. We've got some projects in our back pockets, but we haven't actually registered those yet 'cause we feel like there's still opportunity in that market yet before we have to do that.
Okay. Just turning it over overall, it looks like, you know, with your 2023 guidance, you're expecting to slow down in North Mark on the timberlands side. That percentage of real estate of EBITDA of your total EBITDA is kind of holding up a lot better than your timberlands business. Just wondering if that's a lag, and you expect to slow down in 2024 as a result? Or, you know, maybe you could comment on that.
You know, I think some of what you're seeing, Paul, is that we have these two big projects, one that's in the Jacksonville, Florida area, the other in Savannah, Georgia. As they kind of pick up heads of steam, they have been running at more kind of regular levels. Over the past number of years, you know, we've seen that Wildlight project here in Florida, growing larger and larger. Meanwhile, the project in Savannah is really just getting started, but we're very encouraged by the developments that we've seen there. We're leveraging a lot of the learnings that we've had here.
You know, one of the things that we're particularly excited about, there's a large investment being made by Hyundai around electric vehicles and other aspects that's gonna bring, you know, substantial employment into the area right adjacent to our project, and we think that's gonna translate into further demand. One of the things that we've done in both our Florida and our Georgia projects is we've got a really nice mix of product types from, you know, developed lots to residential pods, to build for sale, to multifamily. All of those things, I think are helping to propel the momentum on those two projects.
I think that those two projects as they, as they exit kind of their beginning stages, are going to supply a more stable stream of cash flow going forward. You know, shifting to our more rural product mix, you know, that's one that's always been relatively stable. I think as we've seen, you know, pressures on land values, you've seen that translate in terms of the types of values that we're getting. You know, we're really focused on selling lands where we can get a good premium.
You know, we've been happy with the progress that we've seen on the real estate side and, you know, don't see that kind of tailing off, as we go down the road.
Okay. That's great. Thanks for that. Just overall, I mean, one of your competitors mentioned that their expectation for 2023 timberland sales was more muted than what we saw in 2022. Do you have the same expectation, or what is your view of the future on M&A?
You know, I wouldn't, I'm not sure I agree with that. But having said that, it's a hard, hard thing to peg. You have, you increasingly you have situations where a lot of the a lot of the TIMO, you know, downstream investment clients are controlling the exits of sales and forcing that to occur through separate accounts. As that occurs, you really have to kind of get into the mindset of those ultimate owners of those properties. They're all over the board. You've got some people that had desired to sell during COVID that weren't able to because you really couldn't do much due diligence.
I think that contributed to some of the outsized volume that we saw last year. I suspect there still may be some of that at play. I think another thing to keep in mind is as we've seen, as we've seen stronger pricing, we've seen, you know, NCREIF, the NCREIF index is now, you know, over $2,000 an acre in the South. Certainly, on the, on the higher quality properties like the one that we completed in Q4, where you're seeing really outsized cash flow generation, you know, those are generating large values. I think that's going to have the potential of spurring additional volume on the market as the, the ultimate owners of those properties, you know, decide they wanna cash in.
The flip side of that, I think is there's a greater recognition that you've got optionality around ESG and carbon-related values. I think there'll be some owners that wanna stick around and see if they can see that translate into their properties. As we look across the three geographies that we're in, I think we see more potential for strong, stronger activity in the U.S. South than we do in the Northwest and New Zealand. I think we've seen much more tepid volume of offerings in those two geographies, we expect that to continue.
All right. That's all I had. Best of luck. Thanks.
Thank you. Our last question will come from Telsey Hyde with Raymond James, your line is open.
Hi, guys. Thank you for taking my questions. Mark and Doug, congratulations on the new roles.
Thank you.
Looking at the 2023 outlook for the Sawmill Timber segment, I was hoping you could provide some additional color as to what your demand picture kind of looks like right now, and how much of an impact you're expecting that to have on log pricing, and also if there have been any changes to the assumptions for the recent acquisition?
Yeah. There are always moving pieces in kind of terms of our geographic mix and other factors, we're looking at it, you know, kind of year-over-year comparisons. We have seen some decline for demand and particularly along the East Coast here of the U.S. A lot of that we're in a drought situation right now, so there's plentiful wood out there. Also I think given the kind of macroeconomic uncertainty at the end of 2022, many of our customers were trying to manage inventories quite closely, and they were reluctant to secure log volume by locking in pricing beyond Q1.
As we progress through the month of January and we see more positive news on lumber pricing and home builder sentiment and things like that, we start to see increased interest by mills to secure forward volume. I think we're, you know, we're cautiously optimistic that things are starting to move around and turn around in the market and those things. We did factor that in as we thought about our guidance. You know, with respect to Project D, the new acquisitions that we talked about, you know, we take the combined acquisitions with our overall harvest plans. Then there's always some changes we look to stay nimble with our operations based on how we see the current market conditions.
We're working those in as we think about them and basically take into account how we think about the markets and where we should harvest and where we should maybe pull back and allow markets to regain strength. Overall, I'd say our estimates for that acquisition are largely intact. I don't think anything's changed in terms of our, you know, our tenure outlook or certainly our harvest flows that we provided when we announced that acquisition.
Absolutely correct.
Okay. Thank you. That's pretty helpful. Just to follow up on that, you noted that you're seeing increases in costs. I'm just trying to get a little better gauge as to how significant these increases may be. Should we expect something similar to year-over-year growth in 2022, or do you think it's gonna come in a little higher?
We've actually seen costs moderate over the last couple of quarters. Really, while they're, you know, really more folks are on diesel now, labor seems to have settled down and equipment starting to work through the chain, supply chain, things like that. I would say that, you know, we still see increased costs, but they're not near what they were kind of going from 21 into 22.
Okay, great. Thank you, guys.
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