In his 11-plus years at Plum Creek Timber, Tom Lindquist has run just about every piece of the Seattle-based company’s operations, from managing its 6.4 million acres of timberland to overseeing its real-estate development efforts and finding new markets for Plum Creek’s wood pulp and fiber.
On Tuesday, the company added the title of president to Lindquist’s current role as chief operating officer — an acknowledgment, CEO Rick Holley said, of his past accomplishments and importance for Plum Creek’s future.
“Tom has done a teriffic job for 11 years, and I think it’s time he stepped up to the next level,” said Holley, who had held the president’s title himself since 1994. “We want him here for a long time.”
Lindquist, 52, joined Plum Creek in 2001 from developer Trammell Crow. He had been executive vice president and chief operating officer since 2007.
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Plum Creek, which was spun off from Burlington Resources in 1989, operates as a real estate investment trust, or REIT. That means that as long as the company pays out 90 percent of its ordinary income in dividends to shareholders, it doesn’t have to pay taxes itself.
There are other limitations to being a REIT. Most of Plum Creek’s business has to involve owning and managing income-producing real estate; other businesses, such as wood-products manufacturing and real estate development, must be conducted through tax-paying subsidiaries and cannot constitute too much of Plum Creek’s overall business.
The effect, Holley and Lindquist said in a joint interview, is that Plum Creek concentrates on maximizing the value of its landholdings and generating cash to pay the required dividends.
“When you’re a REIT, you focus on the dividend,” Lindquist said. “This is a company that has a long-term focus on that dividend, and on developing businesses to create long-term value and long-term cash flow.”
One new business for which Holley and Lindquist have high hopes is biomass fuels. Last month, Plum Creek struck a 10-year deal with British power generator Drax to supply up to 770,000 tons of wood fiber, mainly from pulpwood trees cut during thinning as well as treetops and limbs unsuitable for lumber or other uses. Drax will convert the fiber into wood pellets and ship them to its U.K. power plant, which will burn them instead of coal.
Holley said the company has spoken with other European utilities about similar deals, and expects that eventually U.S. power producers will show interest too.
Biomass not only opens up a whole new customer base, Lindquist said, but “we don’t have to change a lot of what we do in the forest to take advantage of this opportunity.”