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DEBT | 12 Months Ended
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Dec. 31, 2020
Debt Disclosure [Abstract] |
DEBT | DEBT Our debt consisted of the following at December 31, 2020 and 2019:
| 2020 |  | 2019
Debt, excluding Timber Funds: |  |  |
Term Credit Agreement borrowings due 2028 at a variable interest rate of 1.8% at December 31, 2020 | $350,000 |  |  | $350,000 |
Senior Notes due 2022 at a fixed interest rate of 3.75% | 325,000 |  |  | 325,000 |
Incremental Term Loan Agreement borrowings due 2026 at a variable interest rate of 2.1% at December 31, 2020 | 300,000 |  |  | 300,000 |
2020 Incremental Term Loan Facility borrowings due 2025 at a variable interest rate of 2.0% at December 31, 2020 | 250,000 |  |  | — |
Revolving Credit Facility borrowings due 2025 at an average variable interest rate of 1.7% at December 31, 2020 | — |  |  | 82,000 |
New Zealand subsidiary noncontrolling interest shareholder loan due 2025 at a fixed interest rate of 2.95% | 24,903 |  |  | — |
Northwest Farm Credit Services Credit Facility with quarterly interest-only payments, collateralized by Core Timberlands, with the following tranches (a) |  |  |
Due 2025 at a fixed interest rate of 6.1% | 11,601 |  |  | — |
Due 2028 at a fixed interest rate of 4.1% | 12,018 |  |  | — |
Due 2033 at a fixed interest rate of 5.3% | 19,430 |  |  | — |
Due 2036 at a fixed interest rate of 5.4% | 9,868 |  |  | — |
Total debt, excluding Timber Funds | 1,302,820 |  |  | 1,057,000 |
Less: Current maturities of long-term debt | — |  |  | (82,000) |
Less: Deferred financing costs, excluding Timber Funds | (2,484) |  |  | (1,871) |
Long-term debt, net of deferred financing costs, excluding Timber Funds | 1,300,336 |  |  | 973,129 |
Debt, Timber Funds: |  |  |
Fund II Mortgages Payable, collateralized by Fund II timberlands with quarterly interest payments, as follows: (a) |  |  |
Due 2022 at a fixed interest rate of 2.0% | 11,000 |  |  | — |
Due 2022 at a fixed interest rate of 2.0% | 14,000 |  |  | — |
Fund III Mortgages Payable, collateralized by Fund III timberlands with quarterly interest payments, as follows (a): |  |  |
Due 2023 at a fixed interest rate of 5.1% | 19,563 |  |  | — |
Due 2024 at a fixed interest rate of 4.5% | 15,626 |  |  | — |
Total debt, Timber Funds | 60,189 |  |  | — |
Less: Deferred financing costs, Timber Funds | (10) |  |  | — |
Long-term debt, net of deferred financing costs, Timber Funds | 60,179 |  |  | — |
Long-term debt, net of deferred financing costs | $1,360,515 |  |  | $973,129 |
(a) See the section below labeled “Long-Term Debt Assumed in the Pope Resources Merger” for additional details. Principal payments due during the next five years and thereafter are as follows:
| Excluding Timber Funds |  | Timber Funds |  | Total
2021 | — |  |  | — |  |  | — |
2022 | 325,000 |  |  | 25,000 |  |  | 350,000 |
2023 | — |  |  | 17,980 |  |  | 17,980 |
2024 | — |  |  | 14,400 |  |  | 14,400 |
2025 | 284,903 |  |  | — |  |  | 284,903 |
Thereafter | 685,000 |  |  | — |  |  | 685,000 |
Total debt | $1,294,903 |  |  | $57,380 |  |  | $1,352,283 |
TERM CREDIT AGREEMENT In August 2015, we entered into a credit agreement with CoBank, ACB, as administrative agent, and a syndicate of Farm Credit institutions and other commercial banks to provide $550 million of new credit facilities, including a nine-year $350 million term loan facility. In April 2020, the maturity date of the Term Credit Agreement was extended from August 5, 2024 to April 1, 2028. In connection herewith, we recorded deferred financing costs in the amount of $0.5 million which are being amortized over the term of the Term Credit Agreement. The periodic interest rate on the term loan facility is subject to a pricing grid based on our leverage ratio, as defined in the credit agreement. As of December 31, 2020, the periodic interest rate on the term loan facility was LIBOR plus 1.600%. Monthly payments of interest only are due on this loan through maturity. Following the closing of the term loan, we entered into several interest rate swap transactions to fix the cost of the term loan facility over its nine-year term. The term credit agreement allows us to receive annual patronage payments, which are profit distributions made by a cooperative to its member-users based on the quantity or value of business done with the member-user. We estimate the effective interest rate on the term loan facility to be approximately 3.2% after consideration of the interest rate swaps and estimated patronage refunds. For additional information on the our interest rate swaps see Note 16 — Derivative Financial Instruments and Hedging Activities. 3.75% SENIOR NOTES ISSUED MARCH 2012 In March 2012, Rayonier Inc. issued $325 million of 3.75% Senior Notes due 2022, guaranteed by certain subsidiaries. Semi-annual payments of interest only are due on these notes through maturity. INCREMENTAL TERM LOAN AGREEMENT In April 2016, we entered into an incremental term loan agreement with CoBank, ACB, as administrative agent, and a syndicate of Farm Credit institutions to provide a 10-year, $300 million incremental term loan. The periodic interest rate on the incremental term loan agreement is subject to a pricing grid based on our leverage ratio, as defined in the credit agreement. As of December 31, 2020, the periodic interest rate on the incremental term loan was LIBOR plus 1.900%. Monthly payments of interest only are due on this loan through maturity. Following the closing of the incremental term loan, we entered into several interest rate swap transactions to fix the cost of the facility over its 10-year term. We estimate the effective interest rate on the incremental term loan facility to be approximately 2.8% after consideration of the interest rate swaps and estimated patronage payments. For additional information on our interest rate swaps see Note 16 — Derivative Financial Instruments and Hedging Activities. 2020 INCREMENTAL TERM LOAN AGREEMENT In April 2020, we entered into an Incremental Term Loan Agreement, which provided for the advancement of a five-year $250 million senior unsecured incremental term loan facility. In connection herewith, we recorded deferred financing costs in the amount of $0.8 million which are being amortized over the term of the 2020 Incremental Term Loan Facility. The proceeds from the 2020 Incremental Term Loan Facility were used to fund our acquisition of Pope Resources. As of December 31, 2020, the periodic interest rate on the incremental term loan was LIBOR plus 1.850%. Monthly payments of interest only are due on this loan through maturity. Following the closing of the incremental term loan, we entered into an interest rate swap transaction to fix the cost of the facility over its 5-year term. We estimate the effective interest rate on the incremental term loan facility to be approximately 2.3% after consideration of the interest rate swap and estimated patronage payments. For additional information on our interest rate swaps see Note 16 — Derivative Financial Instruments and Hedging Activities. REVOLVING CREDIT FACILITY In April 2020, we amended our Revolving Credit Facility, originally entered into in 2015, with two amendments to the credit agreement: the first amendment increased the limit on the Revolving Credit Facility from $200 million to $250 million and extended its maturity date from August 5, 2020 to April 1, 2025, and the second amendment further increased the limit to $300 million. In connection herewith, we recorded deferred financing costs in the amount of $1.2 million which are being amortized over the term of the Revolving Credit Facility. The periodic interest rate on the revolving credit facility is subject to a pricing grid based on our leverage ratio, as defined in the credit agreement. As of December 31, 2020, the periodic interest rate on the revolving credit facility was LIBOR plus 1.500%, with an unused commitment fee of 0.175%. Monthly payments of interest only are due on this loan through maturity. During the year ended December 31, 2020, we made borrowings of $70.0 million and repayments of $152.0 million on our Revolving Credit Facility. At December 31, 2020, we had available borrowings of $299.1 million under the Revolving Credit Facility, net of $0.9 million to secure our outstanding letters of credit. NEW ZEALAND SUBSIDIARY DEBT In April 2013, we acquired an additional 39% interest in our New Zealand subsidiary, bringing our total ownership to 65%, and as a result, the New Zealand subsidiary’s debt was consolidated effective on that date. On March 3, 2016, as a result of a capital contribution, our ownership interest in the New Zealand subsidiary increased to 77%. See Note 6 - Noncontrolling Interests for further information. WORKING CAPITAL FACILITY In June 2020, the New Zealand subsidiary renewed its NZ$20 million working capital facility for an additional 12-month term. The NZ$20 million working capital facility is available for short-term operating cash flow needs of the New Zealand subsidiary. This facility holds a variable interest rate indexed to the 90-day New Zealand Bank Bill rate (“BKBM”). The margins are set for the term of the facility. During the year ended December 31, 2020, the New Zealand subsidiary made no borrowings and repayments on its working capital facility. At December 31, 2020, there was no outstanding balance on the working capital facility. SHAREHOLDER LOAN In September 2020, the New Zealand subsidiary made a capital distribution to its partners on a pro rata basis in order to redeem certain equity interests. A portion of this capital distribution was reinvested by the partners in shareholder loans to the New Zealand subsidiary. Our capital distribution and portion of the shareholder loan are eliminated in consolidation. The capital distribution to the minority shareholder and its reinvestment in the shareholder loan resulted in the recording of a noncontrolling interest share redemption of $5.1 million and a loan payable by the New Zealand subsidiary in the amount of $23.3 million due in 2025 at a fixed interest rate of 2.95%. As of December 31, 2020, the outstanding balance on the shareholder loan is $24.9 million. Except for changes in the New Zealand foreign exchange rate, there have been no adjustments to the carrying value of the shareholder loan since its inception. LONG-TERM DEBT ASSUMED IN THE POPE RESOURCES MERGER Northwest Farm Credit Services Credit Facility We assumed five tranches of a credit facility payable to Northwest Farm Credit Services (the “NWFCS Credit Facility”) totaling $45.0 million. Quarterly payments of interest only are due on the NWFCS Credit Facility through the respective maturity of each tranche. The NWFCS Credit Facility is collateralized by a portion of the Pacific Northwest timberlands acquired in the merger with Pope Resources. The NWFCS Credit Facility allows us to receive annual patronage payments, which are profit distributions made by a cooperative to its member-users based on the quantity or value of business done with the member-user. The pertinent details of each tranche of the NWFCS Credit Facility we assumed are as follows:
Tranche | Stated Fixed Interest Rate |  | Effective Fixed Interest Rate (a) |  | Stated Principal Amount |  | Est. Fair Value at Merger Date (b)
Tranche 2 (Due 2025) | 6.1 | % |  | 4.8 | % |  | $10,000 |  |  | $11,838 |
Tranche 4 (Due 2028) | 4.1 | % |  | 3.1 | % |  | 11,000 |  |  | 12,108 |
Tranches 6 & 7 (Due 2033) | 5.3 | % |  | 4.2 | % |  | 16,000 |  |  | 19,609 |
Tranche 8 (Due 2036) | 5.4 | % |  | 4.3 | % |  | 8,000 |  |  | 9,947 |
Total NWFCS Credit Facility assumed |  |  |  |  | $45,000 |  |  | $53,502 |
(a)Estimated effective fixed interest rates as of December 31, 2020 after consideration of estimated patronage refunds. (b)The fair market value premium will be amortized as a benefit to interest expense over the maturity term of each tranche. Fund II Mortgage Payable We assumed Fund II's two mortgages payable (the “Fund II Mortgages Payable”) to MetLife totaling $25.0 million. Quarterly payments of interest only are due on the Fund II Mortgages Payable through their respective maturities. The Fund II Mortgages Payable are collateralized by Fund II Timberlands and do not have any recourse to the Company or the Operating Partnership. On September 1, 2020, we entered into an agreement to extend the maturity date of the Fund II Mortgages Payable from September 2020 to September 2022. Additionally, the fixed interest rates on both the $11 million tranche and the $14 million tranche were changed to 2.0%, from 4.9% and 3.8%, respectively. Beginning January 1, 2021, this fixed rate will transition to a variable rate of 3-month LIBOR plus 1.700%. The pertinent details of the Fund II Mortgages Payable are as follows:
Maturity Date |  | Stated Fixed Interest Rate (a) |  | Stated Principal Amount |  | Est. Fair Value at Merger Date (b)
September 2022 |  | 2.0 | % |  | $11,000 |  |  | $11,061 |
September 2022 |  | 2.0 | % |  | 14,000 |  |  | 14,023 |
|  |  |  | $25,000 |  |  | $25,084 |
(a)Beginning January 1, 2021, this will transition from a fixed to a variable interest rate of 3-month LIBOR plus 1.700%. (b)The fair market value premium has been amortized as a benefit to interest expense over the original maturity term of each mortgage. Fund III Mortgage Payable We assumed Fund III’s two mortgages payable (the “Fund III Mortgages Payable”) to NWFCS totaling $32.4 million. Quarterly payments of interest only are due on the Fund III Mortgages Payable through their respective maturities. The Fund III Mortgages Payable are collateralized by Fund III Timberlands and do not have any recourse to the Company or the Operating Partnership. The pertinent details of the Fund III Mortgages Payable are as follows:
Maturity Date |  | Stated Fixed Interest Rate |  | Effective Fixed Interest Rate (a) |  | Stated Principal Amount |  | Est. Fair Value at Merger Date (b)
December 2023 |  | 5.1 | % |  | 3.9 | % |  | $17,980 |  |  | $19,915 |
October 2024 |  | 4.5 | % |  | 3.2 | % |  | 14,400 |  |  | 15,844 |
|  |  |  |  |  | $32,380 |  |  | $35,759 |
(a)Estimated effective fixed interest rates as of December 31, 2020 after consideration of estimated patronage refunds. (b)The fair market value premium will be amortized as a benefit to interest expense over the maturity term of each mortgage. DEBT COVENANTS — EXCLUDING TIMBER FUNDS In connection with our $350 million Term Credit Agreement, $300 million Incremental Term Loan Agreement, $250 million 2020 Incremental Term Loan Agreement and $300 million Revolving Credit Facility, customary covenants must be met, the most significant of which include interest coverage and leverage ratios. The covenants listed below, which are the most significant financial covenants in effect as of December 31, 2020, are calculated on a trailing 12-month basis:
| Covenant Requirement |  | Actual Ratio |  | Favorable
Covenant EBITDA to consolidated interest expense should not be less than | 2.5 to 1 |  | 9.20 to 1 |  | 6.70
Covenant debt to covenant net worth plus covenant debt shall not exceed | 65 | % |  | 47 | % |  | 18 | %
In connection with our $45 million NWFCS Credit Facility, customary covenants must be met, the most significant of which include interest coverage and debt-to-capitalization ratios. The covenants listed below, which are the most significant financial covenants in effect as of December 31, 2020, are calculated on a trailing 12-month basis:
| Covenant Requirement |  | Actual Ratio |  | Favorable
Covenant loan-to-appraised value shall not exceed | 50% |  | 12% |  | 38 | %
Covenant EBITDA to consolidated interest expense should not be less than | 2.5 to 1 |  | 9.20 to 1 |  | 6.70
Covenant debt to covenant net worth plus covenant debt shall not exceed | 65 | % |  | 47 | % |  | 18 | %
In addition to these financial covenants listed above, the 2022 Notes, Term Credit Agreement, Incremental Term Loan Agreement, 2020 Incremental Term Loan Facility, Revolving Credit Facility, and NWFCS Credit Facility include customary covenants that limit the incurrence of debt and the disposition of assets, among others. At December 31, 2020, we were in compliance with all applicable covenants. DEBT COVENANTS — TIMBER FUNDS The Fund II Mortgages Payable to MetLife contains a requirement to maintain a loan-to-value ratio of less than 50%, with the denominator defined as fair market value of the timberland pledged as collateral. The Fund III Mortgages Payable to NWFCS contain a requirement to maintain a minimum interest coverage ratio of 1.5:1, minimum working capital of $500,000, and a loan-to-value ratio of less than 50%, with the denominator defined as fair market value. Both Timber Funds are in compliance with their respective debt covenants as of December 31, 2020.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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