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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, 2020
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   o
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   o
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 April 30, 2020: 48,742,034 shares



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.
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
HBUHigher and Better Use
HLBVHypothetical Liquidation at Book Value
IPInternational Paper Company
LIBORLondon Interbank Offered Rate
LTCLong-Term Contract
LTIPLong-Term Incentive Plan
LTVLoan-to-Value
MBFThousand Board Feet
MPERSMissouri Department of Transportation & Patrol Retirement System
NYSENew York Stock Exchange
RabobankCooperatieve Centrale Raiffeisen-Boerenleenbank, B.A.
REITReal Estate Investment Trust
SECSecurities and Exchange Commission
SRPShare Repurchase Program
TRSTaxable REIT Subsidiary
TSRTotal Shareholder Return
U.S.United States
VIEVariable Interest Entity
WestRockWestRock Company


1

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, 2020 (unaudited) and December 31, 2019
Consolidated Statements of Operations for the Three Months Ended March 31, 2020 (unaudited) and 2019 (unaudited)
Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2020 (unaudited) and 2019 (unaudited)
Consolidated Statements of Equity for the Three Months Ended March 31, 2020 (unaudited) and 2019 (unaudited)
Item 2.
Item 3.
Item 4.
PART II. OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 5.
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 not guarantees of performance and 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 highly-predictable and stable cash flow from sustainable harvests, opportunistic land sales and asset management fees that comfortably cover our dividend throughout the business cycle; improved harvest mix and biological growth of our forests; our intent to create additional value through joint ventures; the impact of the new coronavirus (COVID-19) on our business and the businesses of our unconsolidated joint ventures; 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) and include, but are not limited to, statements about our ability to find a suitable replacement for former chief executive officer to serve as “key man” under our asset management agreement with the Triple T Joint Venture.

Forward-looking statements are based on 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 Part II, Item 1A. Risk Factors in this Quarterly Report on Form 10-Q, as well as in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2019. Accordingly, readers are cautioned not to place undue reliance 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 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, 2019. Our results of operations for the three months ended March 31, 2020 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
(in thousands, except for per-share amounts)
(Unaudited)
March 31, 2020
December 31, 2019
Assets:
Cash and cash equivalents$10,412  $11,487  
Accounts receivable5,374  7,998  
Prepaid expenses and other assets6,162  5,459  
Operating lease right-of-use asset (Note 7)
3,049  3,120  
Deferred financing costs
228  246  
Timber assets (Note 3):
Timber and timberlands, net606,461  633,581  
Intangible lease assets, less accumulated amortization of $949 and $948 as of March 31, 2020 and December 31, 2019, respectively
8  9  
Investments in unconsolidated joint ventures (Note 4)1,478  1,965  
Total assets$633,172  $663,865  
Liabilities:
Accounts payable and accrued expenses$6,739  $3,580  
Operating lease liability (Note 2)3,181  3,242  
Other liabilities34,745  10,853  
Notes payable and lines of credit, net of deferred financing costs (Note 5)432,326  452,987  
Total liabilities476,991  470,662  
Commitments and Contingencies (Note 7)    
Stockholders’ Equity:
Class A Common stock, $0.01 par value; 900,000 shares authorized; 48,747 and 49,008 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively
487  490  
Additional paid-in capital726,939  729,274  
Accumulated deficit and distributions(539,660) (528,847) 
Accumulated other comprehensive loss(32,754) (8,276) 
Total stockholders’ equity155,012  192,641  
Noncontrolling Interests1,169  562  
Total equity156,181  193,203  
Total liabilities and equity$633,172  $663,865  
See accompanying notes.
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CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per-share amounts)
 (Unaudited)
Three Months Ended March 31,
 20202019
Revenues:
Timber sales$18,166  $16,551  
Timberland sales4,779  2,090  
Asset management fees2,975  2,842  
Other revenues1,052  1,090  
26,972  22,573  
Expenses:
Contract logging and hauling costs7,277  7,356  
Depletion6,941  5,268  
Cost of timberland sales3,422  1,560  
Forestry management expenses1,834  1,734  
General and administrative expenses7,267  3,363  
Land rent expense124  142  
Other operating expenses1,636  1,644  
28,501  21,067  
Other income (expense):
Interest income46  30  
Interest expense(3,957) (4,622) 
Gain on large dispositions1,279    
(2,632) (4,592) 
Loss before unconsolidated joint ventures(4,161) (3,086) 
Loss from unconsolidated joint ventures (Note 4)(88) (27,309) 
Net loss$(4,249) $(30,395) 
Weighted-average common shares outstanding - basic and diluted48,989  49,063  
Net loss per share - basic and diluted$(0.09) $(0.62) 

See accompanying notes.
6


CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)
 (Unaudited)
Three Months Ended March 31,
 20202019
Net loss$(4,249) $(30,395) 
Other comprehensive loss:
     Market value adjustment to interest rate swaps(24,478) (3,941) 
Comprehensive loss$(28,727) $(34,336) 


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 InterestsTotal Equity
SharesAmount
Balance, December 31, 201949,008  $490  $729,274  $(528,847) $(8,276) $192,641  $562  $193,203  
Common stock issued pursuant to:
LTIP, net of forfeitures and amounts withheld for income taxes 91  1  215  —  —  216  691  907  
Dividends/distributions on common stock/limited partnership units ($0.135 per share/unit)
—  —  —  (6,564) —  (6,564) (84) (6,648) 
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  



Common StockAdditional Paid-In CapitalAccumulated Deficit and DistributionsAccumulated Other Comprehensive Income (Loss)Total Stockholders’ EquityNoncontrolling InterestsTotal Equity
SharesAmount
Balance, December 31, 201849,127  $492  $730,416  $(409,260) $8  $321,656  $  $321,656  
Common stock issued pursuant to:
LTIP, net of forfeitures and amounts withheld for income taxes92  1  292  —  —  293  —  293  
Dividends to common stockholders ($0.135 per share)
—  —  —  (6,578) —  (6,578) —  (6,578) 
Repurchase of common stock(136) (1) (1,003) (1,004) —  (1,004) 
Net loss—  —  —  (30,395) —  (30,395) —  (30,395) 
Other comprehensive loss—  —  —  —  (3,941) (3,941) —  (3,941) 
Balance, March 31, 201949,083  $492  $729,705  $(446,233) $(3,933) $280,031  $  $280,031  

See accompanying notes.
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CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 (Unaudited)
Three Months Ended March 31,
 20202019
Cash Flows from Operating Activities:
Net loss$(4,249) $(30,395) 
Adjustments to reconcile net loss to net cash provided by operating activities:
Depletion6,941  5,268  
Basis of timberland sold, lease terminations and other 3,276  1,807  
Stock-based compensation expense1,872  659  
Noncash interest expense707  250  
Other amortization51  208  
Gain on large dispositions(1,279)   
Income from unconsolidated joint ventures88  27,309  
Operating distributions from unconsolidated joint ventures  179  
Interest paid under swaps with other-than-insignificant financing element340    
Changes in assets and liabilities:
Accounts receivable1,619  1,363  
Prepaid expenses and other assets359  513  
Accounts payable and accrued expenses2,576  (1,109) 
Other liabilities(1,042) (805) 
Net cash provided by operating activities11,259  5,247  
Cash Flows from Investing Activities:
Capital expenditures (excluding timberland acquisitions)(2,712) (1,259) 
Distributions from unconsolidated joint ventures400  796  
Net proceeds from large dispositions20,863    
Net cash provided by (used in) investing activities18,551  (463) 
Cash Flows from Financing Activities:
Repayment of notes payable(20,850)   
Financing costs paid(30) (31) 
Interest paid under swaps with other-than-insignificant financing element(340)   
Dividends/distributions paid(6,648) (6,578) 
Repurchase of common shares(2,052) (1,004) 
Repurchase of common shares for minimum tax withholding(965) (365) 
Net cash used in financing activities(30,885) (7,978) 
Net change in cash and cash equivalents(1,075) (3,194) 
Cash and cash equivalents, beginning of period11,487  5,614  
Cash and cash equivalents, end of period$10,412  $2,420  

See accompanying notes.
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CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2020 (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 99.85% of its common partnership units. CatchMark LP Holder, LLC (“CatchMark LP Holder”), a Delaware limited liability company and wholly-owned subsidiary of CatchMark Timber Trust, is the sole limited partner of CatchMark Timber OP and owns 0.01% of its common partnership units. The remaining 0.14% of CatchMark Timber OP’s common partnership units are owned by current and former officers and directors of CatchMark Timber Trust as a result of CatchMark’s LTIP Unit compensation program (see Note 8 — Stock-based Compensation). In addition, CatchMark Timber TRS, Inc. (“CatchMark TRS”), a Delaware corporation formed as a wholly-owned subsidiary of CatchMark Timber OP in 2006, is our 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 impact of the COVID-19 pandemic on CatchMark’s business and that of its customers and contractors is highly uncertain and difficult to predict, as the response to the pandemic is in its incipient stages and information is rapidly evolving. Furthermore, capital markets and economies worldwide have also been negatively impacted by the COVID-19 pandemic, and it is possible that it could cause a local and/or global economic recession. Such economic disruption could have a material adverse effect on CatchMark’s business due to declines in sawtimber harvest volumes resulting from a deterioration in the housing market; a decline in production level at CatchMark’s customers' mills due to instances of COVID-19 among their employees or decreased demand for their products; the inability to complete timberland sales due to state and local government office closures limiting the ability of potential buyers to complete title searches and other customary due diligence; effects on 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. Policymakers around the globe have responded with fiscal policy actions to support the economy; however, the magnitude and overall effectiveness of these actions remains uncertain.

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 condensed 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

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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 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 footnotes included in CatchMark’s Annual Report on Form 10-K for the year ended December 31, 2019.

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 percentages. 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
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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 completed the impairment testing as of March 31, 2020 and has determined that there has been no impairment to its timber assets.

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 its operating segments into three reportable segments: Harvest, Real Estate and Investment Management. See Note 9 — Segment Information for additional information.

Recent Accounting Pronouncements

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which added new disclosure requirements, eliminated and modified existing disclosure requirements on fair value measurement to improve the effectiveness of ASC 820. ASU 2018-13 is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The adoption of ASU 2018-13 did not have a material effect on CatchMark's consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which removed certain exceptions for intra-period tax allocation, recognition of deferred tax liabilities, and calculation of income taxes in interim periods. This ASU also added guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. ASU 2019-12 is effective for public entities for fiscal years beginning after December 15, 2020, and interim periods therein. CatchMark is currently assessing the impact ASU 2019-12 will have on its consolidated financial statements.

In March 2020, the FASB issued ASU 2020-03, Codification Improvements to Financial Instruments, which provides clarifications on seven topics related to financial instruments in the ASC. The update became effective for CatchMark upon issuance and the adoption did not have a material impact on its consolidated financial statements.

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 companies with optional expedients and exceptions for applying GAAP to contract, 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. CatchMark has elected the optional expedients offered in this update. The amendments did not apply to any transaction in the current quarter and will be applied prospectively to all eligible contracts and hedging relationships.

3.  Timber Assets

As of March 31, 2020 and December 31, 2019, timber and timberlands consisted of the following, respectively:

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As of March 31, 2020
(in thousands)GrossAccumulated
Depletion or
Amortization
Net
Timber$280,265  $6,941  $273,324  
Timberlands332,779    332,779  
Mainline roads1,121  763  358  
Timber and timberlands$614,165  $7,704  $606,461  

As of December 31, 2019
(in thousands)GrossAccumulated
Depletion or
Amortization
Net
Timber$312,452  $28,064  $284,388  
Timberlands348,825    348,825  
Mainline roads1,106  738  368  
Timber and timberlands$662,383  $28,802  $633,581  

Timberland Sales

During the three months ended March 31, 2020 and 2019, CatchMark sold 3,000 and 900 acres of timberland for $4.8 million and $2.1 million, respectively. CatchMark's cost basis in the timberland sold was $3.2 million and $1.4 million, respectively.

Large Dispositions

During the three months ended March 31, 2020, CatchMark completed the sale of 14,400 acres of its wholly-owned timberlands located in Georgia for $21.3 million. CatchMark's total 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. CatchMark did not complete any large dispositions during the three months ended March 31, 2019.

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

Three Months Ended March 31,
Acres Sold In:20202019
South
     Timberland Sales
          Alabama1,600  500  
          Georgia1,200    
          North Carolina  400  
          South Carolina100    
          Tennessee100    
3,000  900  
     Large Dispositions
         Georgia14,400    
Total17,400  900  

Current Timberland Portfolio
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As of March 31, 2020, CatchMark directly owned interests in 415,400 acres of timberlands in the U.S. South and Pacific Northwest, 392,800 acres of which were fee-simple interests and 22,600 acres were leasehold interests. Land acreage by state is listed below:

Acres by state as of March 31, 2020 (1)
FeeLeaseTotal
South
Alabama68,400  1,800  70,200  
Florida2,000    2,000  
Georgia
232,400  20,800  253,200  
North Carolina
100    100  
South Carolina
71,600    71,600  
Tennessee
200    200  
374,700  22,600  397,300  
Pacific Northwest
Oregon
18,100    18,100  
Total392,800  22,600  415,400  
(1)Represents CatchMark wholly-owned acreage only; excludes ownership interest in acreage held by joint ventures.

4. Unconsolidated Joint Ventures

As of March 31, 2020, 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, 2020
Dawsonville Bluffs Joint VentureTriple T Joint Venture
Ownership percentage 50.0%21.6%
(1)
Acreage owned by the joint venture 1,092,000
Merchantable timber inventory (million tons)43.2
(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.

Triple T Joint Venture

During 2018, CatchMark formed a joint venture, 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, 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.

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
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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 10.25% 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:
As of
 (in thousands)March 31, 2020December 31, 2019
Triple T Joint Venture:
Total assets$1,560,622  $1,573,172  
Total liabilities$757,078  $751,655  
Total equity$803,544  $821,517  
CatchMark:
Carrying value of investment$  $  

Condensed income statement information for the Triple T Joint Venture is as follows:
Three Months Ended March 31,
(in thousands)20202019
Triple T Joint Venture:
Total revenues$35,281  $35,964  
Net loss$(5,727) $(4,281) 
CatchMark:
Equity share of net loss$  $(27,488) 

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

15

Three Months Ended March 31,
(in thousands)20202019
Triple T Joint Venture:
Net cash used in operating activities$(2,651) $(5,575) 
Net cash used in investing activities$(2,745) $(1,503) 
Net cash provided by (used in) financing activities$(4) $100  
Net change in cash and cash equivalents$(5,400) $(6,978) 
Cash and cash equivalents, beginning of period$39,614  $39,300  
Cash and cash equivalents, end of period$34,214  $32,322  

CatchMark had recognized cumulative HLBV losses of $200.0 million as of December 31, 2019 and did not recognize an additional equity loss in the Triple T Joint Venture during the three months ended March 31, 2020.

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, 2020, the Dawsonville Bluffs Joint Venture had a mitigation bank with a book basis of $2.6 million remaining in its portfolio. Condensed balance sheet information for the Dawsonville Bluffs Joint Venture is as follows:
As of
(in thousands)March 31, 2020December 31, 2019
Dawsonville Bluffs Joint Venture:
Total assets$3,023  $4,041  
Total liabilities$68  $111  
Total equity$2,955  $3,930  
CatchMark:
Carrying value of investment$1,478  $1,965  

Condensed income statement information for the Dawsonville Bluffs Joint Venture is as follows:
Three Months Ended March 31,
(in thousands)20202019
Dawsonville Bluffs Joint Venture:
Total revenues$  $1,413  
Net income (loss)$(175) $357  
CatchMark:
Equity share of net income (loss)$(88) $179  

Condensed statement of cash flow information for the Dawsonville Joint Venture is as follows:
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Three Months Ended March 31,
(in thousands)20202019
Dawsonville Joint Venture:
Net cash provided by (used in) operating activities$(210) $1,185  
Net cash used in financing activities$(800) $(1,949) 
Net change in cash and cash equivalents$(1,010) $(764) 
Cash and cash equivalents, beginning of period$1,441  $1,731  
Cash and cash equivalents, end of period$431  $967  

During the three months ended March 31, 2020 and 2019, CatchMark received cash distributions of $0.4 million and $1.0 million, respectively, from the Dawsonville Bluffs Joint Venture.

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 highly uncertain and difficult to predict, as the response to the pandemic is in its incipient stages and information is rapidly evolving. Capital markets and economies worldwide have also been negatively impacted by the COVID-19 pandemic, and it is possible that it could cause a local and/or global economic recession. 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

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. For management of the Triple T Joint Venture, CatchMark receives a fee equal to a percentage of the Acquisition Price multiplied by 78.4%, which represents the percentage of the total equity contributions made to the Triple T Joint Venture by the Preferred Investors. The percentage is currently 1%. In the event the Preferred Investors have not received a return of their capital contributions plus their preferred return, then the percentage decreases from 1% to 0.75% at October 1, 2021, and to 0.5% at October 1, 2022. The fee is also subject to deferment in certain circumstances. In addition, the asset management agreement with the Triple T Joint Venture includes a "key man" provision requiring CatchMark to find a suitable replacement for Jerry Barag, CatchMark's former Chief Executive Officer, within one year of his retirement, or by January 21, 2021. If CatchMark fails to find such suitable replacement within that time period, the Preferred Investors in the Triple T Joint Venture have the right to terminate the asset management agreement.

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 ended March 31, 2020 and 2019, CatchMark earned the following fees from these unconsolidated joint ventures:
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Three Months Ended March 31,
(in thousands)20202019
Triple T Joint Venture (1)
$2,828  $2,821  
Dawsonville Bluffs Joint Venture (2)
147  21  
$2,975  $2,842  
(1) Includes $0.1 million reimbursements of compensation costs for the three months ended March 31, 2020 and 2019, respectively.
(2)Includes $0.1 million of incentive-based promote earned for exceeding investment hurdles in 2020.

5. Notes Payable and Lines of Credit

Amended Credit Agreement

As of March 31, 2020, CatchMark was party to a credit agreement dated as of December 1, 2017, as amended on August 22, 2018, June 28, 2019 and February 12, 2020 (the “Amended Credit Agreement”), with a syndicate of lenders, including CoBank. 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 $200.0 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").

During the three months ended March 31, 2020, CatchMark paid down $20.9 million of its outstanding balance on the Multi-Draw Term Facility with proceeds from large dispositions. As of March 31, 2020 and December 31, 2019, CatchMark had the following debt balances outstanding: