RELATED PARTIES

This note provides details about and our transactions with related parties. For the years presented, our related parties have consisted of:


•	Real Estate Development Ventures,


•	our Twin Creeks Venture, and


•	special-purpose entities (SPEs).

REAL ESTATE DEVELOPMENT VENTURE

WestRock-Charleston Land Partners, LLC (WR-CLP) is a limited liability company which holds residential and commercial real estate development properties, currently under development (Class A Properties) and higher-value timber and development lands (Class B Properties) (referred to collectively as the Real Estate Development Ventures). The company uses the equity method for both its Class A and Class B interests of 3 percent and 50 percent, respectively. Our share of the equity earnings is included in the net contribution to earnings of our Real Estate & ENR segment.

We are not the primary beneficiary of WR-CLP and we are not committed to make any material capital contributions during the remaining term of the venture, which expires in 2020. We do not intend to provide any additional sources of financing for WR-CLP.

The carrying amount of our investment in WR-CLP was $31 million at December 31, 2017. During 2018, all remaining capital invested in WR-CLP was returned through distributions. At December 31, 2018, we no longer carry an investment related to WR-CLP. Additionally, we had a $1 million gain on investment from the joint venture during 2018. We record our share of net earnings on the investment within "Interest income and other" in our Consolidated Statement of Operations in the period which earnings are recorded by the affiliates.

TWIN CREEKS VENTURE

Ownership Redemption, Agreement Termination and Sale Recognition

During October 2017, we redeemed our 21 percent ownership interest in the Twin Creeks Venture for $108 million in cash. We did not recognize a material gain or loss on the redemption of our ownership interest. The cash received was classified as a cash flow from investing activities in our Consolidated Statement of Cash Flows.

Effective December 31, 2017, we terminated the agreements under which we had managed the Twin Creeks timberlands. Following termination of these agreements, Weyerhaeuser has no further responsibilities or obligations related to the Twin Creeks Venture and our continuing involvement in the contributed timberlands ceased. In fourth quarter 2017, we recognized the sale of the original contribution of timberlands that occurred April 2016.

Changes in our deposit from contribution of timberlands to related party balance during 2017 were as follows:



DOLLAR AMOUNTS IN MILLIONS

Balance at December 31, 2016	$	426
Lease payments to Twin Creeks Venture	(8		)
Distributions from Twin Creeks Venture	2
Recognition of contributed timberlands	(420		)
Balance at December 31, 2017	$	—

Formation and Operations

On April 1, 2016, we contributed approximately 260,000 acres of our Southern timberlands with an agreed-upon value of approximately $560 million to Twin Creeks Timber, LLC (Twin Creeks Venture), in exchange for cash of approximately $440 million and a 21 percent ownership interest. The other members contributed cash of approximately $440 million for a combined 79 percent ownership interest.

In conjunction with contributing to the venture, we entered into a separate agreement to manage the timberlands owned by the Twin Creeks Venture, including harvesting activities, marketing and log sales activities, and replanting and silviculture activities. This management agreement guaranteed the Twin Creeks Venture an annual return equal to 3 percent of the contributed value of the managed timberlands in the form of minimum quarterly payments from Weyerhaeuser. This agreement also required us to annually distribute 75 percent of any profits earned by us in excess of the minimum quarterly payments. The management agreement was cancellable at any time by Twin Creeks Timber, LLC, and otherwise would expire on April 1, 2019.

The guaranteed return that the management agreement required Weyerhaeuser to provide to the Twin Creeks Venture constituted continuing involvement in the timberlands that we contributed to the venture. This continuing involvement prohibited the recognition of the contribution as a sale and required application of the deposit method to account for the cash payment received. By applying the deposit method to the contribution of timberlands to the venture:


•	Our receipt of $440 million proceeds from the contribution of timberlands to the venture was recorded as a noncurrent liability.


•	The contributed timberlands continued to be reported within the "Timber and timberlands at cost, less depletion charged to disposals" on our balance sheet as of December 31, 2016.


•	No gain or loss was recognized related to the formation or redemption in our Consolidated Statement of Operations.


•	Our balance sheet as of December 31, 2016 did not reflect our 21 percent ownership interest in the Twin Creeks Venture.

The receipt of $440 million in 2016 was classified as a cash flow from investing activities in our Consolidated Statement of Cash Flows. The cash proceeds from our contribution of timberlands were used for share repurchases.

Sale of Additional Timberlands to Twin Creeks

In conjunction with the redemption and termination discussed above, we also entered an agreement to sell 100,000 acres of Southern timberlands to Twin Creeks for $203 million. The sale, which included 80,000 acres of timberlands in Mississippi and 20,000 acres in Georgia, closed December 29, 2017. The sale resulted in a $99 million gain recognized during fourth quarter 2017.

SPECIAL-PURPOSE ENTITIES

From 2002 through 2004, we sold certain nonstrategic timberlands. As a result of these sales, buyer-sponsored and monetization special purpose entities (SPEs) were formed. We are the primary beneficiary and consolidate the assets and liabilities of the SPEs involved in these transactions.

The assets of the buyer-sponsored SPEs are financial investments which consist of bank guarantees. These bank guarantees are in turn backed by bank notes, which are the liabilities of the monetization SPEs. Interest earned from the financial investments within the buyer-sponsored SPEs is used to pay interest accrued on the corresponding monetization SPE’s note.

We have an equity interest in the monetization SPEs, but no ownership interest in the buyer-sponsored SPEs. The following disclosures refer to assets of buyer-sponsored SPEs and liabilities of monetization SPEs. However, because these SPEs are distinct legal entities:


•	Assets of the SPEs are not available to satisfy our liabilities or obligations.


•	Liabilities of the SPEs are not our liabilities or obligations.

Our Consolidated Balance Sheet as of December 31, 2018 includes:


•	Assets from our buyer-sponsored SPEs, which consist of:

– $253 million, due first quarter 2019 and

– $362 million, due first quarter 2020.


•	Liabilities from our monetization SPEs, which consist of:

– $302 million, due third quarter 2019.

During fourth quarter 2018, we paid $209 million related to liabilities from our monetized SPEs at maturity.

Our Consolidated Statement of Operations includes:


•	Interest income on buyer-sponsored SPE investments of:

– $34 million in 2018,

– $34 million in 2017 and

– $34 million in 2016.


•	Interest expense on monetization SPE notes of:

– $29 million in 2018,

– $29 million in 2017 and

– $29 million in 2016.

The weighted average interest rate on our buyer-sponsored SPEs was 5.5 percent during 2018 and 2017. The weighted average interest rate on our monetization SPEs was 5.6 percent during 2018 and 2017.