MSN Money - 4 stocks with real value in real estate - Jubak's Journal

I am adding to my positions in PCL and RYN.

"Plum Creek Timber (PCL, news, msgs) has hugely ambitious plans for its real estate. The company figures that about 1.4 million of its 8.1 million acres are better suited for something other than timber. Of those 1.4 million acres, the company has targeted 150,000 acres for current sale for development as home and commercial sites. The current book value per share of $12 clearly undervalues the company's developable land, but there's some danger here in the very ambitiousness of Plum Creek Timber's plans. The company wants to sell off half of those 1.4 million acres by the end of 2007. I just don't think that's possible, and there's a good likelihood that the company will have to scale back its plans, which would hurt the stock on Wall Street in the short run. Of course, in the long run any delay in selling the company's land just means that the company will receive a higher price for the acreage it does sell. To balance the risk of disappointment, investors are getting Plum Creek's land at a price of about $1,000 an acre. I'm going to hold off on adding this one to the portfolio until I see how the company's plans hold up as the year advances. Plum Creek is also a real estate investment trust and pays a dividend yield of 3.8%.

Rayonier (RYN, news, msgs) is still very much a timber company -- which is not a bad business to be in at all with net prices for timber climbing 18% in the Northwest and 12% in the Southeast in 2004. But to grow all those trees, the company owns 2.1 million acres of land that it has started to sell. Some of this -- the land nearest Seattle and the land that runs along the Georgia and Florida coasts -- is worth a lot more as sites for second homes, stores and office buildings than it is as timber. (Which makes the book value of $16 a share a tad understated.) For instance, the company is currently selling 20,000 acres outside Savannah, Ga., and Fernandino Beach, Fla. At current prices, by buying the stock an investor gets the company's land at about $1,150 an acre. The company is due to report earnings on Jan. 25. Rayonier converted to a real estate investment trust in January 2004. The shares pay a dividend yield of 4.7%. I'm adding the shares to Jubak's Picks with a target price of $53 a share by June 2005."