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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549 
FORM 10-Q
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2021
OR
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from             to             

Commission File Number 001-36239

CATCHMARK TIMBER TRUST, INC.
(Exact name of registrant as specified in its charter)
Maryland20-3536671
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification Number)
5 Concourse Parkway, Suite 2650, Atlanta, GA
30328
(Address of principal executive offices)(Zip Code)

(855) 858-9794
(Registrant’s telephone number, including area code)
N/A
(Former name, former address, and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading SymbolName of exchange on which registered
Class A Common Stock, $0.01 Par Value Per Share CTTNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.                 Yes  x    No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).                                 Yes  x    No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer," “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).        Yes  ☐    No  

Number of shares outstanding of the registrant’s common stock, as of May 2, 2021: 48,903,731 shares



Table of Contents
GLOSSARY


The following abbreviations or acronyms may be used in this document and shall have the adjacent meanings set forth below:
AFMAmerican Forestry Management, Inc.
ASCAccounting Standards Codification
ASUAccounting Standards Update
CoBankCoBank, ACB
Common StockClass A common stock, $0.01 par value per share of CatchMark Timber Trust, Inc.
Common Unit
Common partnership unit of CatchMark Timber Operating Partnership, L.P.
CodeInternal Revenue Code of 1986, as amended
EBITDAEarnings before Interest, Taxes, Depletion, and Amortization
FASBFinancial Accounting Standards Board
FCCRFixed Charge Coverage Ratio
FRCForest Resource Consultants, Inc.
GAAPU.S. Generally Accepted Accounting Principles
GPGeorgia-Pacific WFS LLC
HBUHigher and Better Use
HLBVHypothetical Liquidation at Book Value
IPInternational Paper Company
LIBORLondon Interbank Offered Rate
LTIPLong-Term Incentive Plan
LTIP UnitLimited partnership unit of CatchMark Timber Operating Partnership, L.P.
LTVLoan-to-Value
MBFThousand Board Feet
MPERSMissouri Department of Transportation & Patrol Retirement System
NYSENew York Stock Exchange
REITReal Estate Investment Trust
SECSecurities and Exchange Commission
SRPShare Repurchase Program
TRSTaxable REIT Subsidiary
TSR
Total Shareholder Return
U.S.United States
VIEVariable Interest Entity
WestRockWestRock Company


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FORM 10-Q

CATCHMARK TIMBER TRUST, INC.

TABLE OF CONTENTS
 
Page No.
PART I. FINANCIAL INFORMATION
Item 1.
Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020
Item 2.
Item 3.
Item 4.
PART II. OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 6.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report on Form 10-Q of CatchMark Timber Trust, Inc. and subsidiaries (“CatchMark,” “we,” “our,” or “us”) may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition, CatchMark, or its executive officers on CatchMark's behalf, may from time to time make forward-looking statements in other reports and documents CatchMark files with the SEC or in connection with written or oral statements made to the press, potential investors, or others. We intend for all such forward-looking statements to be covered by the applicable safe harbor provisions for forward-looking statements contained in the Securities Act and the Exchange Act.
 
Forward-looking statements can generally be identified by our use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue,” or other similar words. However, the absence of these or similar words or expressions does not mean that a statement is not forward-looking. Forward-looking statements are based on certain assumptions, discuss future expectations, describe plans and strategies, contain projections of results of operations or of financial condition or state other forward-looking information.

Forward-looking statements in this report, include, but are not limited to, that we manage our operations to generate predictable and stable cash flow from sustainable harvests, opportunistic land sales and asset management fees to provide recurring dividends to our stockholders throughout the business cycle; that we are bolstered by our delivered wood model and fiber supply agreements, which provide a steady source of demand from reliable counterparties; that COVID-19 and actions taken in response thereto could adversely impact our business and the businesses of our unconsolidated joint ventures; that after our balance sheet strengthening in 2019 and 2020, we believe we are well-positioned to weather additional economic turmoil; property performance and anticipated growth in our portfolio; expected uses of cash generated from operations, debt financings and debt and equity offerings; expected sources and adequacy of capital resources and liquidity; our anticipated distribution policy; change in depletion rates, merchantable timber book value and standing timber inventory volume; anticipated harvest volume and mix of harvest volume; and other factors that may lead to fluctuations in future net income (loss). Forward-looking statements in this report also relate to the Triple T Joint Venture (as defined herein), including the expected benefits of the amended wood supply agreement between the Triple T Joint Venture and GP, including market-based pricing on timber sales, increased reimbursement for extended haul distances, the ability for the Triple T Joint Venture to sell timber to other third parties, the increased ability to sell large timberland parcels to third-party buyers, and an extended term with optimized harvest volume obligations to enhance and preserve long-term asset value.

Forward-looking statements are based on currently available information and a number of assumptions involving judgments and are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from our historical experience and our present expectations. Such risks and uncertainties related to us and the Triple T Joint Venture include those discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2020 and our subsequent reports filed with the SEC. Accordingly, readers are cautioned not to rely on our forward-looking statements, which speak only as of the date that this report is filed with the SEC. We do not intend to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.




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PART I    FINANCIAL INFORMATION

ITEM 1.    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The information furnished in the accompanying consolidated balance sheets and related consolidated statements of operations, comprehensive income (loss), equity, and cash flows reflects all adjustments, consisting solely of normal and recurring adjustments, that are, in management’s opinion, necessary for a fair and consistent presentation of the aforementioned financial statements.

The accompanying consolidated financial statements should be read in conjunction with the condensed notes to our consolidated financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2020. Our results of operations for the three months ended March 31, 2021 are not necessarily indicative of the operating results expected for the full year.
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CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except for per-share amounts)
March 31, 2021December 31, 2020
Assets:
Cash and cash equivalents$12,656 $11,924 
Accounts receivable6,867 8,333 
Prepaid expenses and other assets6,646 5,878 
Operating lease right-of-use asset (Note 7)
2,755 2,831 
Deferred financing costs
147 167 
Timber assets (Note 3):
Timber and timberlands, net569,258 576,680 
Intangible lease assets
4 5 
Investments in unconsolidated joint ventures (Note 4)2,124 1,510 
Total assets$600,457 $607,328 
Liabilities:
Accounts payable and accrued expenses$5,387 $4,808 
Operating lease liability (Note 7)2,919 2,988 
Other liabilities15,787 32,130 
Notes payable and lines of credit, net of deferred financing costs (Note 5)437,754 437,490 
Total liabilities461,847 477,416 
Commitments and Contingencies (Note 7)  
Stockholders’ Equity:
Class A Common stock, $0.01 par value; 900,000 shares authorized; 48,904 and 48,765 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively
489 488 
Additional paid-in capital728,616 728,662 
Accumulated deficit and distributions(579,580)(572,493)
Accumulated other comprehensive loss(12,238)(27,893)
Total stockholders’ equity137,287 128,764 
Noncontrolling Interests1,323 1,148 
Total equity138,610 129,912 
Total liabilities and equity$600,457 $607,328 

See accompanying notes.
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CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except for per-share amounts)

 Three Months Ended March 31,
 20212020
Revenues:
Timber sales$20,149 $18,166 
Timberland sales3,357 4,779 
Asset management fees3,118 2,975 
Other revenues1,062 1,052 
27,686 26,972 
Expenses:
Contract logging and hauling costs8,731 7,277 
Depletion7,725 6,941 
Cost of timberland sales2,155 3,422 
Forestry management expenses1,887 1,834 
General and administrative expenses3,600 7,267 
Land rent expense113 124 
Other operating expenses1,713 1,636 
25,924 28,501 
Other income (expense):
Interest income1 46 
Interest expense(2,928)(3,957)
Gain on large dispositions 1,279 
(2,927)(2,632)
Loss before unconsolidated joint ventures(1,165)(4,161)
Income (loss) from unconsolidated joint ventures (Note 4)614 (88)
Net loss(551)(4,249)
Net loss attributable to noncontrolling interest (1) 
Net loss attributable to common stockholders$(550)$(4,249)
Weighted-average common shares outstanding - basic and diluted48,796 48,989 
Net loss per common share - basic and diluted$(0.01)$(0.09)

See accompanying notes.
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CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
(in thousands)

 Three Months Ended March 31,
 20212020
Net loss$(551)$(4,249)
Other comprehensive income (loss):
Market value adjustment to interest rate swaps15,685 (24,478)
Comprehensive income (loss)15,134 (28,727)
Comprehensive income (loss) attributable to noncontrolling interest30  
Comprehensive income (loss) attributable to common stockholders$15,104 $(28,727)




See accompanying notes.

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CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)
(in thousands, except for per-share amounts)



Common Stock
Additional
Paid-In
Capital
Accumulated
Deficit and Distributions
Accumulated Other Comprehensive Income (Loss)Total
Stockholders’
Equity
Noncontrolling InterestTotal Equity
SharesAmount
Balance, December 31, 202048,765 $488 $728,662 $(572,493)$(27,893)$128,764 $1,148 $129,912 
Issuance of common stock pursuant to:
LTIP, net of forfeitures and amounts withheld for income taxes 139 1 (46)— — (45)174 129 
Dividends on common stock ($0.135 per share)
— — — (6,537)— (6,537)— (6,537)
Distributions to noncontrolling interest— — — — — — (28)(28)
Net loss— — — (550)— (550)(1)(551)
Other comprehensive income— — — — 15,655 15,655 30 15,685 
Balance, March 31, 202148,904 $489 $728,616 $(579,580)$(12,238)$137,287 $1,323 $138,610 




Common StockAdditional Paid-In CapitalAccumulated Deficit and DistributionsAccumulated Other Comprehensive Income (Loss)Total Stockholders’ EquityNoncontrolling InterestTotal Equity
SharesAmount
Balance, December 31, 201949,008 $490 $729,274 $(528,847)$(8,276)$192,641 $562 $193,203 
Issuance of common stock pursuant to:
LTIP, net of forfeitures and amounts withheld for income taxes91 1 215 — — 216 691 907 
Dividends on common stock ($0.135 per share)
— — — (6,564)— (6,564) (6,564)
Distributions to noncontrolling interest— — — — — — (84)(84)
Repurchase of common stock(352)(4)(2,550)— — (2,554)— (2,554)
Net loss— — — (4,249)— (4,249) (4,249)
Other comprehensive loss— — — — (24,478)(24,478) (24,478)
Balance, March 31, 202048,747 $487 $726,939 $(539,660)$(32,754)$155,012 $1,169 $156,181 



See accompanying notes.
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CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
 
Three Months Ended March 31,
 20212020
Cash Flows from Operating Activities:
Net loss$(551)$(4,249)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depletion7,725 6,941 
Basis of timberland sold, lease terminations and other 1,966 3,276 
Stock-based compensation expense619 1,872 
Noncash interest expense585 707 
Noncash lease expense5 10 
Other amortization43 41 
Gain on large dispositions (1,279)
(Income) loss from unconsolidated joint ventures(614)88 
Interest paid under swaps with other-than-insignificant financing element1,407 340 
Changes in assets and liabilities:
Accounts receivable489 1,619 
Prepaid expenses and other assets215 359 
Accounts payable and accrued expenses658 2,576 
Other liabilities(955)(1,042)
Net cash provided by operating activities11,592 11,259 
Cash Flows from Investing Activities:
Capital expenditures (excluding timberland acquisitions)(2,317)(2,712)
Distributions from unconsolidated joint ventures 400 
Net proceeds from large dispositions 20,863 
Net cash provided by (used in) investing activities(2,317)18,551 
Cash Flows from Financing Activities:
Repayment of notes payable (20,850)
Financing costs paid(4)(30)
Interest paid under swaps with other-than-insignificant financing element(1,407)(340)
Dividends/distributions paid(6,565)(6,648)
Repurchase of common shares(78)(2,052)
Repurchase of common shares for minimum tax withholding(489)(965)
Net cash used in financing activities(8,543)(30,885)
Net change in cash and cash equivalents732 (1,075)
Cash and cash equivalents, beginning of period11,924 11,487 
Cash and cash equivalents, end of period$12,656 $10,412 

See accompanying notes.
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CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021 (UNAUDITED)

1.    Organization

CatchMark Timber Trust, Inc. ("CatchMark Timber Trust") (NYSE: CTT) owns and operates timberlands located in the United States and has elected to be taxed as a REIT for federal income tax purposes. CatchMark Timber Trust acquires, owns, operates, manages, and disposes of timberland directly, through wholly-owned subsidiaries, or through joint ventures. CatchMark Timber Trust was incorporated in Maryland in 2005 and commenced operations in 2007. CatchMark Timber Trust conducts substantially all of its business through CatchMark Timber Operating Partnership, L.P. (“CatchMark Timber OP”), a Delaware limited partnership. CatchMark Timber Trust is the general partner of CatchMark Timber OP, possesses full legal control and authority over its operations, and owns 99.81% of its Common Units. CatchMark LP Holder, LLC (“CatchMark LP Holder”), a Delaware limited liability company and wholly-owned subsidiary of CatchMark Timber Trust, is a limited partner of CatchMark Timber OP and owns 0.01% of its Common Units. The remaining 0.18% of CatchMark Timber OP’s common units are owned by current and former officers and directors of CatchMark Timber Trust. In addition, CatchMark Timber Trust conducts certain aspects of its business through CatchMark Timber TRS, Inc. (“CatchMark TRS”), a Delaware corporation formed as a wholly-owned subsidiary of CatchMark Timber OP in 2006. CatchMark TRS is a taxable REIT subsidiary. Unless otherwise noted, references herein to CatchMark shall include CatchMark Timber Trust and all of its subsidiaries, including CatchMark Timber OP, and the subsidiaries of CatchMark Timber OP, including CatchMark TRS.

Risks and Uncertainties

CatchMark is subject to risks and uncertainties as a result of the COVID-19 pandemic. The extent of the future impact of the COVID-19 pandemic on CatchMark’s business and that of its customers and contractors is uncertain and difficult to predict. The rapid spread of the outbreak caused significant disruptions in the U.S. and global economies and capital markets in 2020, and the impact is expected to continue to be significant during 2021. The COVID-19 pandemic has not had a significant impact on CatchMark’s overall results and CatchMark experienced an increase in timber sales during the three-months ended March 31, 2021 compared to the prior year period. However, such on-going economic disruption could have a material adverse effect on CatchMark’s business due to a decline in demand for CatchMark's timber as a result of a decline in production levels at CatchMark’s customers' mills, including due to instances of COVID-19 among their employees; effects on CatchMark's key employees, including operational management personnel and those charged with preparing, monitoring and evaluating CatchMark’s financial reporting and internal controls; and market volatility and market downturns negatively impacting the trading of CatchMark’s common stock.

The severity of the impact of the COVID-19 pandemic on CatchMark’s business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic and the extent and severity of the impact on CatchMark’s customers, all of which are uncertain and cannot be predicted. CatchMark’s future results of operations and liquidity could be adversely impacted by uncertain customer demand and the impact of any initiatives or programs that CatchMark may undertake to address financial and operational challenges faced by its customers. As of the date of issuance of these consolidated financial statements, the extent to which the COVID-19 pandemic may materially impact CatchMark’s financial condition, liquidity, or results of operations is uncertain. See Note 5 — Notes Payable and Lines of Credit for additional information on CatchMark’s outstanding indebtedness and debt covenants.

2.    Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The consolidated financial statements of CatchMark have been prepared in accordance with the rules and regulations of the SEC, including the instructions to Form 10-Q and Article 10 of Regulation S-X and do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the financial statements for the unaudited interim periods presented include all adjustments, which are of a normal and recurring nature, necessary for a fair and consistent presentation of the results for such periods. Results for these interim periods are not necessarily indicative of results for a full year.

CatchMark’s consolidated financial statements include the accounts of CatchMark and any VIE in which CatchMark is deemed the primary beneficiary. With respect to entities that are not VIEs, CatchMark's consolidated financial
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statements also include the accounts of any entity in which CatchMark owns a controlling financial interest and any limited partnership in which CatchMark owns a controlling general partnership interest. In determining whether a controlling interest exists, CatchMark considers, among other factors, the ownership of voting interests, protective rights, and participatory rights of the investors. All intercompany balances and transactions have been eliminated in consolidation. For further information, refer to the audited financial statements and notes included in CatchMark’s Annual Report on Form 10-K for the year ended December 31, 2020.

Investments in Joint Ventures

For joint ventures that it does not control but exercises significant influence, CatchMark uses the equity method of accounting. CatchMark's judgment about its level of influence or control of an entity involves consideration of various factors including the form of its ownership interest; its representation in the entity's governance; its ability to participate in policy-making decisions; and the rights of other investors to participate in the decision-making process, to replace CatchMark as manager, and/or to liquidate the venture. Under the equity method, the investment in a joint venture is recorded at cost and adjusted for equity in earnings and cash contributions and distributions. Income or loss and cash distributions from an unconsolidated joint venture are allocated according to the provisions of the respective joint venture agreement, which may be different from its stated ownership percentage. Any difference between the carrying amount of these investments on CatchMark’s balance sheets and the underlying equity in net assets on the joint venture’s balance sheets is adjusted as the related underlying assets are depreciated, amortized, or sold. Distributions received from unconsolidated joint ventures are classified in the accompanying consolidated statements of cash flows using the cumulative earnings approach under which distributions received in an amount equal to cumulative equity in earnings are classified as cash inflows from operating activities and distributions received in excess of cumulative equity in earnings represent returns of investment and therefore are classified as cash inflows from investing activities.

CatchMark evaluates the recoverability of its investments in unconsolidated joint ventures in accordance with accounting standards for equity investments by first reviewing each investment for any indicators of impairment. If indicators are present, CatchMark estimates the fair value of the investment. If the carrying value of the investment is greater than the estimated fair value, management assesses whether the impairment is “temporary” or “other-than-temporary.” In making this assessment, management considers the following: (1) the length of time and the extent to which fair value has been less than cost, (2) the financial condition and near-term prospects of the entity, and (3) CatchMark’s intent and ability to retain its interest long enough for a recovery in market value. If management concludes that the impairment is "other than temporary," CatchMark reduces the investment to its estimated fair value.

For information on CatchMark’s unconsolidated joint ventures, which are accounted for using the equity method of accounting, see Note 4 Unconsolidated Joint Ventures.

Impairment Testing

ASC 360-10 requires impairment testing to be completed whenever events or changes in circumstances indicate the asset's carrying value may not be recoverable. Examples of such circumstances for CatchMark include, but are not limited to, a significant decrease in market price of the timber assets, a significant adverse change in the extent or manner in which timber assets are being used, or a significant adverse change in legal factors or in the business climate that could affect the value of the timber assets. CatchMark monitors such events and changes in circumstances, and when indicators of potential impairment are present, evaluates if the carrying amounts of its timber assets exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposal of its timber assets (the "Recoverable Amount") and if the carrying amount exceeds the timber assets' fair value. The Recoverable Amount and fair value are estimated based on the following information in order of preference, dependent upon availability: (i) recently quoted market prices, (ii) market prices for comparable assets, or (iii) the present value of undiscounted cash flows, including estimated salvage value, using data from one harvest cycle. CatchMark has determined that there has been no impairment to its timber assets as of March 31, 2021.

Segment Information

CatchMark primarily engages in the acquisition, ownership, operation, management, and disposition of timberland properties located in the United States, either directly through wholly-owned subsidiaries or through equity method investments in affiliated joint ventures. CatchMark defines operating segments in accordance with ASC Topic 280, Segment Reporting, to reflect the manner in which its chief operating decision maker, the Chief Executive Officer, evaluates performance and allocates resources in managing the business. CatchMark has aggregated those
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operating segments into three reportable segments: Harvest, Real Estate and Investment Management. See Note 9 — Segment Information for additional information.

Recent Accounting Pronouncements

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides entities with optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform if certain criteria are met. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848), which refines the scope of Topic 848 and clarifies some of its guidance to reduce diversity in practice related to accounting for (1) modifications to the terms of affected derivatives and (2) existing hedging relationships in which the affected derivatives are designated as hedging instruments. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into on or before December 31, 2022. CatchMark has elected the optional expedients, which will be applied to all eligible contracts and hedging relationships as reference rate replacement activities occur.

3.     Timber Assets

As of March 31, 2021 and December 31, 2020, timber and timberlands consisted of the following, respectively:

As of March 31, 2021
(in thousands)GrossAccumulated
Depletion or
Amortization
Net
Timber$250,876 $7,725 $243,151 
Timberlands325,710  325,710 
Mainline roads1,256 859 397 
Timber and timberlands$577,842 $8,584 $569,258 

As of December 31, 2020
(in thousands)GrossAccumulated
Depletion or
Amortization
Net
Timber$278,361 $29,112 $249,249 
Timberlands327,089  327,089 
Mainline roads1,176 834 342 
Timber and timberlands$606,626 $29,946 $576,680 

Timberland Sales

During the three months ended March 31, 2021 and 2020, CatchMark sold 1,800 and 3,000 acres of timberland for $3.4 million and $4.8 million, respectively. CatchMark's cost basis in the timberland sold was $1.9 million and $3.2 million, respectively.

Large Dispositions

CatchMark did not close any large dispositions during the three months ended March 31, 2021. During the three months ended March 31, 2020, CatchMark completed the sale of 14,400 acres of its wholly-owned timberlands for $21.3 million. CatchMark's cost basis was $19.6 million. Of the total net proceeds, $20.9 million was used to pay down CatchMark's outstanding debt balance on the Multi-Draw Term Facility.

Timberland sales and large dispositions acreage by state is listed below:

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Three Months Ended March 31,
Acres Sold In20212020
South
     Timberland Sales
          Alabama1,100 1,600 
          Georgia700 1,200 
          South Carolina 100 
          Tennessee 100 
1,800 3,000 
     Large Dispositions
         Georgia 14,400 
 14,400 
Total1,800 17,400 

Current Timberland Portfolio

As of March 31, 2021, CatchMark directly owned interests in 400,200 acres of timberlands in the U.S. South and Pacific Northwest, 384,700 acres of which were fee-simple interests and 15,500 acres were leasehold interests. Land acreage by state is listed below:

Acres by state as of March 31, 2021 (1)
FeeLeaseTotal
South
Alabama66,300 1,800 68,100 
Florida500  500 
Georgia
230,100 13,700 243,800 
South Carolina
69,700  69,700 
366,600 15,500 382,100 
Pacific Northwest
Oregon
18,100  18,100 
Total384,700 15,500 400,200 
(1)Represents CatchMark wholly-owned acreage only; excludes ownership interest in acreage held by joint ventures.

4.    Unconsolidated Joint Ventures

As of March 31, 2021, CatchMark owned interests in two joint ventures with unrelated parties: the Triple T Joint Venture and the Dawsonville Bluffs Joint Venture (each as defined and described below).

As of March 31, 2021
Dawsonville Bluffs Joint VentureTriple T Joint Venture
Ownership percentage 50.0%22.0%(1)
Acreage owned by the joint venture 1,080,500
Merchantable timber inventory (million tons)43.3(2)
LocationGeorgiaTexas
(1)Represents our share of total partner capital contributions.
(2)The Triple T Joint Venture considers inventory to be merchantable at age 12. Merchantable timber inventory does not include current year growth.

CatchMark accounts for these investments using the equity method of accounting.

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Triple T Joint Venture

During 2018, CatchMark formed TexMark Timber Treasury, L.P., a Delaware limited partnership (the "Triple T Joint Venture"), with a consortium of institutional investors (the "Preferred Investors") to acquire 1.1 million acres of high-quality East Texas industrial timberlands (the “Triple T Timberlands”), for $1.39 billion (the “Acquisition Price”), exclusive of transaction costs. The Triple T Joint Venture completed the acquisition of the Triple T Timberlands in July 2018. CatchMark invested $200.0 million in the Triple T Joint Venture, equal to 21.6% of the total equity contributions at that time, in exchange for a common limited partnership interest. CatchMark, through a separate wholly-owned and consolidated subsidiary, is the sole general partner of the Triple T Joint Venture.

On June 24, 2020, CatchMark invested an additional $5.0 million of equity on the same terms and conditions as its existing investment in the Triple T Joint Venture in connection with amendments to the joint venture agreement and asset management agreement. The amended asset management agreement designated Brian M. Davis, Chief Executive Officer and President of CatchMark, as the “Key Man” and increased the asset management fee payable to CatchMark as described below in Asset Management Fees. The amended joint venture agreement increased the 10.25% cumulative return on the preferred investors’ interests in the Triple T Joint Venture’s subsidiary REIT by 0.5% per quarter, subject to a maximum increase of 2.0% and subject to decreases in other circumstances. The proceeds of CatchMark’s additional $5.0 million investment, along with the proceeds from $140.0 million of borrowings under the Triple T Joint Venture’s secured, non-recourse credit facility, were used to make a payment of $145.0 million to GP in connection with an amendment to a wood supply agreement between the Triple T Joint Venture and GP. This amendment was intended to achieve market-based pricing on timber sales, increase reimbursement for extended haul distances, provide the ability for the Triple T Joint Venture to sell sawtimber to other third parties, and expand the Triple T Joint Venture’s ability to sell large timberland parcels to third-party buyers. The supply agreement between the Triple T Joint Venture and GP was also extended by two years from 2029 to 2031.

CatchMark uses the equity method to account for its investment in the Triple T Joint Venture since it does not possess the power to direct the activities that most significantly impact the economic performance of the Triple T Joint Venture, and accordingly, CatchMark does not possess the first characteristic of a primary beneficiary described in GAAP. CatchMark has appointed three common board members of the Triple T Joint Venture, including its Chief Executive Officer, Chief Resources Officer and Vice President - Acquisitions, which provides CatchMark with significant influence over the Triple T Joint Venture. Accordingly, pursuant to the applicable accounting literature, it is appropriate for CatchMark to apply the equity method of accounting to its investment in the Triple T Joint Venture.

The Triple T Joint Venture agreement provides for liquidation rights and distribution priorities that are significantly different from CatchMark's stated ownership percentage based on total equity contributions. The Preferred Investors are entitled to a minimum cumulative return on their equity contributions, plus a complete return of their equity contributions before any distributions may be made on CatchMark’s common limited partnership interest. As such, CatchMark uses the hypothetical-liquidation-at-book-value method (“HLBV”) to determine its equity in the earnings of the Triple T Joint Venture. The HLBV method is commonly applied to equity investments in real estate, where cash distribution percentages vary at different points in time and are not directly linked to an investor's ownership percentage. For investments accounted for under the HLBV method, applying the percentage ownership interest to GAAP net income in order to determine earnings or losses would not accurately represent the income allocation and cash flow distributions that will ultimately be received by the investors.

CatchMark applies HLBV using a balance sheet approach. A calculation is prepared at each balance sheet date to determine the amount that CatchMark would receive if the Triple T Joint Venture were to liquidate all of its assets (at book value in accordance with GAAP) on that date and distribute the proceeds to the partners based on the contractually-defined liquidation priorities. The difference between the calculated liquidation distribution amounts at the beginning and the end of the reporting period, after adjusting for capital contributions and distributions, is CatchMark's income or loss from the Triple T Joint Venture for the period.

Condensed balance sheet information for the Triple T Joint Venture is as follows:

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As of
 (in thousands)March 31, 2021December 31, 2020
Triple T Joint Venture
Total assets$1,540,970 $1,547,344 
Total liabilities$760,874 $763,715 
Total equity$780,096 $783,629 
CatchMark
Carrying value of investment$ $ 

Condensed income statement information for the Triple T Joint Venture is as follows:
Three Months Ended March 31,
(in thousands)20212020
Triple T Joint Venture
Total revenues$31,883 $35,281 
Net loss$(6,533)$(5,727)
CatchMark
Equity share of net loss$ $ 

Condensed statement of cash flow information for the Triple T Joint Venture is as follows:

Three Months Ended March 31,
(in thousands)20212020
Triple T Joint Venture
Net cash provided by (used in) operating activities$4,859 $(2,651)
Net cash used in investing activities$(1,987)$(2,745)
Net cash used in financing activities$ $(4)
Net change in cash and cash equivalents$2,872 $(5,400)
Cash and cash equivalents, beginning of period$35,321 $39,614 
Cash and cash equivalents, end of period$38,193 $34,214 

As of December 31, 2020, CatchMark had recognized cumulative HLBV losses of $205.0 million, reducing the carrying value of its investment to zero. CatchMark does not expect to recognize any additional losses from the Triple T Joint Venture as CatchMark has not guaranteed obligations of the venture and is not otherwise committed to provide it additional financial support.

Dawsonville Bluffs Joint Venture

During 2017, CatchMark formed the Dawsonville Bluffs Joint Venture with MPERS, and each owns a 50% membership interest. CatchMark shares substantive participation rights with MPERS, including management selection and termination, and the approval of material operating and capital decisions and, as such, uses the equity method of accounting to record its investment. Income or loss and cash distributions are allocated according to the provisions of the joint venture agreement, which are consistent with the ownership percentages for the Dawsonville Bluffs Joint Venture.

As of March 31, 2021, the Dawsonville Bluffs Joint Venture had a mitigation bank with a book basis of $2.1 million remaining in its portfolio. Condensed balance sheet information for the Dawsonville Bluffs Joint Venture is as follows:
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As of
(in thousands)March 31, 2021December 31, 2020
Dawsonville Bluffs Joint Venture
Total assets$4,416 $3,059 
Total liabilities$169 $39 
Total equity$4,247 $3,020 
CatchMark
Carrying value of investment$2,124 $1,510 

Condensed income statement information for the Dawsonville Bluffs Joint Venture is as follows:

Three Months Ended March 31,
(in thousands)20212020
Dawsonville Bluffs Joint Venture
Total revenues$1,629 $ 
Net income (loss)$1,227 $(175)
CatchMark
Equity share of net income (loss)$614 $(88)

Condensed statement of cash flow information for the Dawsonville Joint Venture is as follows:

Three Months Ended March 31,
(in thousands)20212020
Dawsonville Joint Venture
Net cash provided by (used in) operating activities$566 $(210)
Net cash used in financing activities$ $(800)
Net change in cash and cash equivalents$566 $(1,010)
Cash and cash equivalents, beginning of period$559 $1,441 
Cash and cash equivalents, end of period$1,125 $431 

CatchMark did not receive any cash distributions in the current quarter from the Dawsonville Bluffs Joint Venture. During the three months ended March 31, 2020, CatchMark received cash distributions of $0.4 million.

Risks and Uncertainties Related to Unconsolidated Joint Ventures

CatchMark’s unconsolidated joint ventures, most notably the Triple T Joint Venture, are subject to risks and uncertainties as a result of the COVID-19 pandemic. The extent of the impact of the COVID-19 pandemic on the Triple T Joint Venture’s business and that of its customers and contractors is uncertain and difficult to predict. The rapid spread of the outbreak has caused significant disruptions in the U.S. and global economies and capital markets, and the impact is expected to continue to be significant during 2021. Such economic disruption could have a material adverse effect on the Triple T Joint Venture’s business due to the same reasons discussed in Note 1 — Organization with respect to CatchMark. The severity of the impact of the COVID-19 pandemic on the Triple T Joint Venture’s business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic and the extent and severity of the impact on the Triple T Joint Venture’s customers, all of which are uncertain and cannot be predicted. As of the date of issuance of these condensed consolidated financial statements, the extent to which the COVID-19 pandemic may materially impact the financial condition, liquidity, or results of operations of CatchMark’s unconsolidated joint ventures is uncertain.

Asset Management Fees

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CatchMark provides asset management services to the Triple T Joint Venture and the Dawsonville Bluffs Joint Venture. Under these arrangements, CatchMark oversees the day-to-day operations of these joint ventures and their properties, including accounting, reporting and other administrative services, subject to certain major decisions that require partner approval.

On June 24, 2020, in connection with its additional $5.0 million equity investment in the Triple T Joint Venture, CatchMark entered into an amended and restated asset management agreement with the Triple T Joint Venture. Prior to this amendment, for management of the Triple T Joint Venture, CatchMark received a fee equal to 1% of the Acquisition Price multiplied by 78.4%, which represented the percentage of the original equity contributions made to the Triple T Joint Venture by the Preferred Investors. In the event the Preferred Investors had not received a return of their capital contributions plus their preferred return as described above, then the asset management fee percentage would have decreased from 1% to 0.75% at October 1, 2021, and to 0.50% at October 1, 2022. The amended asset management agreement provides that, effective June 24, 2020, CatchMark earns an asset management fee equal to 1% of (a) the sum of the Acquisition Price and the $145.0 million paid to GP, multiplied by (b) 78.4%, and in the event the Preferred Investors have not received a return of their capital contributions plus their preferred return, then the asset management fee percentage decreases from 1% to 0.75% at October 1, 2021, and to 0.25% at July 1, 2022. The fee is also subject to deferment in certain circumstances.

For management of the Dawsonville Bluffs Joint Venture, CatchMark receives a percentage fee based on invested capital, as defined by the joint venture agreement. Additionally, CatchMark receives an incentive-based promote earned for exceeding investment hurdles.

During the three months March 31, 2021 and 2020, CatchMark earned the following fees from these unconsolidated joint ventures:

Three Months Ended March 31,
(in thousands)20212020
Triple T Joint Venture (1)
$3,112 $2,828 
Dawsonville Bluffs Joint Venture (2)
6 147 
$3,118 $2,975 
(1)Includes $0.1 million of reimbursements of compensation costs for the three months ended March 31, 2021 and 2020, respectively.
(2)Includes $0.1 million of incentive-based promote earned for exceeding investment hurdles for the three months ended March 31, 2020.

5.    Notes Payable and Lines of Credit

Amended Credit Agreement

As of March 31, 2021, CatchMark was party to a credit agreement dated as of December 1, 2017, as amended on August 22, 2018, June 28, 2019, February 12, 2020, and May 1, 2020 (the "Amended Credit Agreement"), with a syndicate of lenders, including CoBank, which serves as the administrative agent. The Amended Credit Agreement provides for borrowing under credit facilities consisting of the following:

a $35.0 million five-year revolving credit facility (the “Revolving Credit Facility”);
a $150.0 million seven-year multi-draw term credit facility (the “Multi-Draw Term Facility”);
a $100.0 million ten-year term loan (the “Term Loan A-1”);
a $100.0 million nine-year term loan (the “Term Loan A-2”);
a $68.6 million ten-year term loan (the “Term Loan A-3”); and
a $140.0 million seven-year term loan (the "Term Loan A-4").

As of March 31, 2021 and December 31, 2020, CatchMark had the following debt balances outstanding:

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 (dollar amounts in thousands)
Current Interest Rate (1)
Outstanding Balance as of
Credit FacilityMaturity DateInterest Rate March 31, 2021December 31, 2020
Term Loan A-112/23/2024
LIBOR + 1.75%
1.86%$100,000 $100,000 
Term Loan A-212/1/2026
LIBOR + 1.90%
2.01%100,000 100,000 
Term Loan A-312/1/2027
LIBOR + 2.00%
2.11%68,619 68,619 
Term Loan A-48/22/2025
LIBOR + 1.70%
1.81%140,000 140,000 
Multi-Draw Term Facility12/1/2024
LIBOR + 2.20%
2.31%34,086 34,086 
Total principal balance$442,705 $442,705 
Less: net unamortized deferred financing costs(4,951)(5,215)
      Total$437,754 $437,490 
(1)For the Multi-Draw Term Facility, the interest rate represents weighted-average interest rate as of March 31, 2021. The weighted-average interest rate excludes the impact of the interest rate swaps (see Note 6 — Interest Rate Swaps), amortization of deferred financing costs, unused commitment fees, and estimated patronage dividends.

As of March 31, 2021, CatchMark had $150.9 million of borrowing capacity remaining under its credit facilities, consisting of $115.9 million under the Multi-Draw Term Facility and $35.0 million under the Revolving Credit Facility.

Borrowings under the Revolving Credit Facility may be used for general working capital, to support letters of credit, to fund cash earnest money deposits, to fund acquisitions in an amount not to exceed $5.0 million, and for other general corporate purposes. The Revolving Credit Facility bears interest at an adjustable rate equal to a base rate plus between 0.50% and 1.20% or a LIBOR rate plus between 1.50% and 2.20%, in each case depending on CatchMark's LTV ratio, and will terminate and all amounts outstanding under the facility will be due and payable on December 1, 2022.

The Multi-Draw Term Facility may be used to finance timberland acquisitions and associated expenses, to fund investment in joint ventures, to fund the repurchase of CatchMark's common stock, and to reimburse payments of drafts under letters of credit. The Multi-Draw Term Facility, which is interest only until its maturity date, bears interest at an adjustable rate equal to a base rate plus between 0.50% and 1.20% or a LIBOR rate plus between 1.50% and 2.20%, in each case depending on CatchMark's LTV ratio, and will terminate and all amounts outstanding under the facility will be due and payable on December 1, 2024.

CatchMark pays the lenders an unused commitment fee on the unused portions of the Revolving Credit Facility and the Multi-Draw Term Facility at an adjustable rate ranging from 0.15% to 0.35%, depending on the LTV ratio. For the three months ended March 31, 2021 and 2020, CatchMark recognized $0.1 million and $0.2 million of unused commitment fees as interest expense on its consolidated statements of operations.

CatchMark’s obligations under the Amended Credit Agreement are collateralized by a first priority lien on the timberlands owned by CatchMark’s subsidiaries and substantially all of CatchMark’s subsidiaries’ other assets in which a security interest may lawfully be granted, including, without limitation, accounts, equipment, inventory, intellectual property, bank accounts and investment property. In addition, the obligations under the Amended Credit Agreement are jointly and severally guaranteed by CatchMark and all of its subsidiaries pursuant to the terms of the Amended Credit Agreement. CatchMark has also agreed to guarantee certain losses caused by certain willful acts of CatchMark or its subsidiaries.

Patronage Dividends

CatchMark is eligible to receive annual patronage dividends from its lenders (the "Patronage Banks") under a profit-sharing program made available to borrowers of the Farm Credit System. CatchMark has received a patronage dividend on its eligible patronage loans annually since 2015. The eligibility remains the same under the Amended Credit Agreement. Therefore, CatchMark accrues patronage dividends it expects to receive based on actual patronage dividends received as a percentage of its weighted-average eligible debt balance. For each of the three months ended March 31, 2021 and 2020, CatchMark accrued $0.9 million as patronage dividends receivable on its consolidated balance sheets and as an offset against interest expense on the consolidated statements of operations.

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In March 2021, CatchMark received patronage dividends of $4.1 million on its patronage eligible borrowings. Of the total patronage dividends received, $3.1 million was received in cash and $1.0 million was received in equity of the Patronage Banks.

As of March 31, 2021 and December 31, 2020, the following balances related to the patronage dividend program were included on CatchMark's consolidated balance sheets:

(in thousands)As of
Patronage dividends classified as: March 31, 2021December 31, 2020
Accounts receivable$885 $3,597 
Prepaid expenses and other assets (1)
4,311 3,335 
Total$5,196 $6,932 
(1)Represents cumulative patronage dividends received as equity in the Patronage Banks.

Debt Covenants

The Amended Credit Agreement contains, among others, the following financial covenants, which:

limit the LTV ratio to 50% at any time;
require maintenance of a FCCR of not less than 1.05:1.00 at any time; and
limit the aggregated capital expenditures to 1% of the value of the timberlands during any fiscal year.

The Amended Credit Agreement permits CatchMark to declare, set aside funds for, or pay dividends, distributions, or other payments to stockholders so long as it is not in default under the Amended Credit Agreement. However, if CatchMark has suffered a bankruptcy event or a change of control, the Amended Credit agreement prohibits CatchMark from declaring, setting aside, or paying any dividend, distribution, or other payment other than as required to maintain its REIT qualification. The Amended Credit Agreement also subjects CatchMark to mandatory prepayment from proceeds generated from dispositions of timberlands or lease terminations, which may have the effect of limiting its ability to make distributions to stockholders under certain circumstances.

CatchMark was in compliance with the financial covenants of the Amended Credit Agreement as of March 31, 2021. See Note 1 Organization for discussion of uncertainties and risks to CatchMark’s financial position, liquidity and results of operations, including impacts of the global COVID-19 pandemic.

Interest Paid and Fair Value of Outstanding Debt

During the three months ended March 31, 2021 and 2020, CatchMark made the following cash interest payments on its borrowings:
Three Months Ended March 31,
(in thousands)20212020
Cash paid for interest$2,300 $4,100 

Included in the interest payments for the three months ended March 31, 2021 and 2020, were unused commitment fees of $0.1 million and $0.2 million, respectively.

As of March 31, 2021 and December 31, 2020, the weighted-average interest rate on CatchMark's borrowings, after consideration of its interest rate swaps (see Note 6 — Interest Rate Swaps), was 3.23% and 3.25%, respectively. After further consideration of expected patronage dividends, CatchMark's weighted-average interest rate as of March 31, 2021 and December 31, 2020 was 2.43% and 2.45%, respectively.

6.     Interest Rate Swaps

CatchMark uses interest rate swaps to mitigate its exposure to changing interest rates on its variable rate debt instruments. As of March 31, 2021, CatchMark had two outstanding interest rate swaps with terms below:
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(dollar amounts in thousands)Notional Amount
Interest Rate SwapEffective DateMaturity DatePay RateReceive Rate
2019 Swap - 10YR
11/29/201911/30/20292.2067%one-month LIBOR$200,000 
2019 Swap - 7YR
11/29/201911/30/20262.0830%one-month LIBOR$75,000 
$275,000 

As of March 31, 2021, CatchMark’s interest rate swaps effectively fixed the interest rate on $275.0 million of its $442.7 million variable-rate debt at 3.98%, inclusive of the applicable spread and before consideration of expected patronage dividends. The 2019 swaps contain an other-than-insignificant financing element and, accordingly, the associated cash flows are reported as financing activities in the accompanying consolidated statements of cash flows.

All of CatchMark's outstanding interest rate swaps during the three months ended March 31, 2021 and 2020 qualified for hedge accounting treatment.
Fair Value and Cash Paid for Interest Under Interest Rate Swaps

The following table presents information about CatchMark's interest rate swaps measured at fair value as of March 31, 2021 and December 31, 2020:

(in thousands)Estimated Fair Value as of
Instrument TypeBalance Sheet ClassificationMarch 31, 2021December 31, 2020
Derivatives designated as hedging instruments:
Interest rate swapsOther liabilities$(14,641)$(30,029)

During the three months ended March 31, 2021 and 2020, CatchMark recognized a change in fair value of its interest rate swaps of $15.7 million and $24.5 million, as other comprehensive income and comprehensive loss, respectively.

CatchMark paid $1.4 million and $0.3 million during the three months ended March 31, 2021 and 2020, respectively. All amounts were included in interest expense in the consolidated statements of operations.

During the three months ended March 31, 2021 and 2020, CatchMark reclassified $0.3 million and $0.5 million from accumulated other comprehensive loss to interest expense related to the off-market swap value at hedge inception.

As of March 31, 2021, CatchMark estimated that approximately $6.4 million will be reclassified from accumulated other comprehensive loss to interest expense over the next 12 months.

7.     Commitments and Contingencies

Mahrt Timber Agreements

In connection with its acquisition of timberlands from WestRock in 2007, CatchMark entered into a master stumpage agreement and a fiber supply agreement (collectively, the “Mahrt Timber Agreements”) with a wholly-owned subsidiary of WestRock. The master stumpage agreement provides that CatchMark will sell specified amounts of timber and make available certain portions of our timberlands to CatchMark TRS for harvesting. The fiber supply agreement provides that WestRock will purchase a specified tonnage of timber from CatchMark TRS at specified prices per ton, depending upon the type of timber product. The prices for the timber purchased pursuant to the fiber supply agreement are negotiated every two years but are subject to quarterly market pricing adjustments based on an index published by TimberMart-South, a quarterly trade publication that reports raw forest product prices in 11 southern states. The initial term of the Mahrt Timber Agreements is October 9, 2007 through December 31, 2032, subject to extension and early termination provisions. The Mahrt Timber Agreements ensure a long-term source of supply of wood fiber products for WestRock in order to meet its paperboard and lumber production requirements at specified mills and provide CatchMark with a reliable customer for the wood products from its timberlands.

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WestRock can terminate the Mahrt Timber Agreements prior to the expiration of the initial term if CatchMark replaces FRC as the forest manager without the prior written consent of WestRock, except pursuant to an internalization of the company's forestry management functions. CatchMark can terminate the Mahrt Timber Agreements if WestRock (i) ceases to operate the Mahrt mill for a period that exceeds 12 consecutive months, (ii) fails to purchase a specified tonnage of timber for two consecutive years, subject to certain limited exceptions or (iii) fails to make payments when due (and fails to cure within 30 days).

In addition, either party can terminate the Mahrt Timber Agreements if the other party commits a material breach (and fails to cure within 60 days) or becomes insolvent. In addition, the Mahrt Timber Agreements provide for adjustments to both parties' obligations in the event of a force majeure, which is defined to include, among other things, lightning, fires, storms, floods, infestation and other acts of God or nature.

For 2021, WestRock is required to purchase a minimum of 380,800 tons and we are committed to make available for purchase by WestRock a minimum of 443,200 tons of timber under the Mahrt Timber Agreements. For the three months ended March 31, 2021, WestRock purchased 80,200 tons under the Mahrt Timber Agreements, which represented 9% of CatchMark's net timber sales revenue.

Timberland Operating Agreements

Pursuant to the terms of the timberland operating agreement between CatchMark and FRC (the "FRC Timberland Operating Agreement"), FRC manages and operates certain of CatchMark's timberlands and related timber operations, including ensuring delivery of timber to WestRock in compliance with the Mahrt Timber Agreements. In consideration for rendering the services described in the timberland operating agreement, CatchMark pays FRC (i) a management fee based on the actual acreage that FRC manages, which is payable monthly in advance, and (ii) an incentive fee based on timber harvest revenues generated by the timberlands, which is payable quarterly in arrears. The FRC Timberland Operating Agreement, as amended, is effective through March 31, 2022, and is automatically extended for one-year periods unless written notice is provided by CatchMark or FRC to the other party at least 120 days prior to the current expiration. The FRC Timberland Operating Agreement may be terminated by either party with mutual consent or by CatchMark with or without cause upon providing 120 days’ prior written notice.

Pursuant to the terms of the timberland operating agreement between CatchMark and AFM (the "AFM Timberland Operating Agreement"), AFM manages and operates certain of CatchMark's timberlands and related timber operations, including ensuring delivery of timber to customers. In consideration for rendering the services described in the AFM Timberland Operating Agreement, CatchMark pays AFM (i) a management fee based on the actual acreage AFM manages, which is payable monthly in advance, and (ii) an incentive fee based on revenues generated by the timber operations, which is payable quarterly in arrears. The AFM Timberland Operating Agreement is effective through November 30, 2021 for the U.S. South region and December 31, 2021 for the Pacific Northwest region, and is automatically extended for one-year periods unless written notice is provided by CatchMark or AFM to the other party at least 120 days prior to the current expiration. The AFM Timberland Operating Agreement may be terminated by either party with mutual consent or by CatchMark with or without cause upon providing 120 days’ prior written notice.

Obligations under Operating Leases

CatchMark's office lease commenced in January 2019 and expires in November 2028 and qualifies as an operating lease under ASC 842. As of January 1, 2019, CatchMark recorded an operating lease right-of-use (“ROU”) asset and an operating lease liability of $3.4 million on its balance sheet, which represents the net present value of lease payments over the lease term discounted using CatchMark's incremental borrowing rate at commencement date. CatchMark’s office lease contains renewal options; however, the options were not included in the calculation of the operating lease ROU asset and operating lease liability as it is not reasonably certain that CatchMark will exercise the renewal options. CatchMark recorded $110,400 and $108,400 of operating lease expense for the three months ended March 31, 2021 and 2020, respectively. For the three months ended March 31, 2021 and 2020, CatchMark paid $105,000 and $98,000, respectively, in cash for its office lease, which was included in operating cash flows on its consolidated statements of cash flows.

CatchMark had the following future annual payments for its operating lease as of March 31, 2021 and December 31, 2020:

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As of
(in thousands)
March 31, 2021December 31, 2020
Required payments
2021$309 412 
2022424 424 
2023435 435 
2024447 447 
2025459 459 
Thereafter1,414 1,414 
$3,488 $3,591 
Less: imputed interest(569)
Operating lease liability$2,919 
Remaining lease term (years)7.7
Discount rate4.58 %

CatchMark holds leasehold interests in 15,500 acres of timberlands under a long-term lease that expires in May 2022 (the “LTC Lease”). The LTC Lease provides CatchMark access rights to harvest timber as specified in the LTC Lease, which is, therefore, a lease of biological assets, and is excluded from the scope of ASC 842.

As of March 31, 2021, CatchMark had the following future lease payments under the LTC Lease:

(in thousands)Required Payments
2021$309 
2022250 
$559 

Litigation

From time to time, CatchMark may be a party to legal proceedings, claims, and administrative proceedings that arise in the ordinary course of its business. Management makes assumptions and estimates concerning the likelihood and amount of any reasonably possible loss relating to these matters using the latest information available. CatchMark records a liability for litigation if an unfavorable outcome is probable and the amount of loss or range of loss can be reasonably estimated. If an unfavorable outcome is probable and a reasonable estimate of the loss is a range, CatchMark accrues the best estimate within the range. If no amount within the range is a better estimate than any other amount, CatchMark accrues the minimum amount within