Weyerhaeuser Company April 14, 2017 Stock pitch for Rivanna Investments by: Sanders Wommack

Why Invest in Timber? Diversification, relatively low risk, good returns Source: Campbell Global Timber Primer

Changing Forest TODAY #1. Weyerhaeuser 13 million acres #2 Hancock #2 REIT Rayonier 2.7 million acres

The rise of Timber Investment Management Organizations (TIMOs) Currently $100 billion in institutional funds in TIMOs Likely consequences of shift to TIMOs 1. Land fracture 2. Greater incentives for “short termism” Weyerhaeuser Timberlands in Western Oregon

One of the largest private timberland owners in the world ~13 million acres in U.S. ~14 million acres leased in Canada 300,000 acres in Uruguay $26 billion market capitalization Source: Slide 8, March 8, 2017 Weyerhaeuser Investor Presentation.

History of Weyerhaeuser Company Founded in 1900 with purchase of 900,000 acres from the Northern Pacific Railway By 1929, owned and operate world’s largest sawmill in Longview, Washington 1941: first replanting 1940’s-2000’s: geographic expansion and vertical integration Recently, the company has retrenched to focus on core operations

Recent Restructuring 2007: exited fine paper business 2008: exited containerboard packaging 2010: Grudgingly converts to a REIT, pays $5.6 billion dividend July 2014: Sells homebuilding operations to TRI Pointe for $2.8 B. November 2015: Merger with Plum Creek Timber (~6 million acres) announced in $8.4 billion transaction. Closed in February 2016. June 2016: Closes lumber mill in Montana June 2016: Sells liquid packaging board business to Nippon Paper for $285 million. October 2016: Announced the “exploration of strategic alternatives” for its 300,000 acres of timberlands and manufacturing operations in Uruguay November 1, 2016: Completes sale its paper printing business December 1, 2016: Completes sale of its seven Cellulose Fibers pulp mills to International Paper for $2.2 billion.

WY: Legacy Timberlands + Plum Creek: TIMO model of land management

2016 Merger between Weyerhaeuser and Plum Creek Timber Touted: $100 million in annual “hard dollar cost” synergies (since raised to $125 million) $130-$140 in annual “operational synergies” $2.5 billion repurchase to plan to help reduce float “Plum Creek’s expertise in real estate and optimizing land values” “[Plum Creek CEO, Rick] Holley says he wouldn’t have considered the merger five years ago because the cultures were so radically different. Now, he says, the two make a compelling combination, and ‘if you’re going to grow in the resource-management business, what better way to do it but this.’” ---“Sizing Up the Weyerhaeuser-Plum Creek Merger.” Barron’s, November 14, 2015.

Three Business Segments of Modern Post-Merger Weyerhaeuser Company

Timberlands: A Pretty Simple Business Source: Weyerhaeuser 2016 Annual Report

Timberlands: West vs. South 2016 stats: 52 years: average tree’s age harvested in 2016. 2% of land cut annually in the west 8.7 million tons of logs harvested $865 million in log sales Benefited by increasing trade with Asia 2016 Stats: Roughly 30 year growing cycle 3% of land cut annually in the South 15 million tons of logs harvested $566 million in log sales Source: Weyerhaeuser 2016 Annual Report

Real Estate & Energy and Natural Resources: “Ramping Up” in 2017 and Beyond Moving forward: Asset Value Optimization (AVO)—looks like ~10% to 15% of land going up for sale Energy & Natural Resources Aggregates and Minerals Oil & Natural Gas (Deep South & W.V.) Wind (ME, WA, N.C.) Management says this segment is “ramping up” in 2017 and beyond Projected EBITDA of $250 million, compared with $175 million in 2016 RE & ENR Segment Results 2016* 2015 2014 Real estate sales 172 75 72 Energy & natural resources 54 26 32 Total 227 101 104 Cost of products sold ($134) ($20) ($19) Operating Income 55 79 81 Real Estate Sales Breakdown 2016* 2015 2014 2013 2012 Acres sold 82,687 27,390 24,583 25,781 25,234 Average price/acre $2,072 $2,490 $2,428 $2,462 $2,123 *includes Plum Creek sales Source: Weyerhaeuser 2016 Annual Report

Wood Products Division: WY’staxable subsidiary 19 Lumber mills 6 Oriented strand board (OSB) mills 6 Engineered wood mills 6 Veneer/plywood mills 1 Medium density fiberboard mill 17 distribution facilities ($) Sales by product 2016 2015 2014 Structural Lumber 1839 1741 1901 Engineered solid section 450 428 402 Engineered I-joist 290 284 277 Oriented strand board 707 595 610 Softwood plywood 174 129 143 Medium density fiberboard 158 - Other products 201 189 176 Complementary building products 515 506 461 TOTAL $4,334 $3,872 $3,970 CONTRIBUTION TO PRETAX EARNINGS $512 $258 $327 Looking ahead: Realizing synergies with Plum Creek mills Riding the housing market recovery Source: Weyerhaeuser 2016 annual report

All together Source: Weyerhaeuser 2016 Annual Report

Catalyst #1: Demand Continued Strength in the Housing Market -Housing starts up 10.5% y/o/y (January 2017) -Expected growth of 2-3 billion board feet per year for U.S. lumber market from current 55 b.b.f.

Catalyst #2: Supply The Canada-U.S Softwood Lumber Dispute Since the early 1980’s, various groups have claimed that Canadian softwood lumber importers have an unfair trade advantage Lumber IV: Most recent (2006) Softwood Lumber Agreement between the two countries expired in October 2015 Expectation of renewed export duties! Decision on April 24.

Catalyst #3: Supply Mountain Pine Beetle Current outbreak 10 times larger than past 70% of British Columbia’s pine forests expected to be dead by this year.

Valuation Book value: DCF model Assets ~$17.50 Problems with β $4.84B Current and non-timber long-term assets $8.12B Plum Creek Timber fair value $6.18B book value of WY timberland $10.8B est. F.V. for western land $9.4B est. F.V. for South and Uru. Land TOTAL= ~$33B est. F.V. of assets Liabilities $10.063B current and long-term Book value=~$23 billion, ~$30 per share DCF model ~$17.50 Problems with β Changed company post –divesture and restructuring Aberrant price fluctuations $35? Under-valued assets