Fitch Affirms Plum Creek Ratings at 'BBB-'.

CHICAGO -- Fitch has affirmed the 'BBB-' rating of Plum Creek Timber Company, Inc.'s senior unsecured privately placed debt and rated the company's bank debt 'BBB-'. The Rating Outlook is Stable.

Plum Creek is a real estate investment trust with 7.7 million acres of timberland under its control and the second largest private timberland owner in the U.S. The company will harvest nearly 19 million tons of trees this year, a far more stable source of cash flow than that of lumber, plywood, and fiberboard manufacturing, which account for about one-third of annual revenues but a significantly smaller portion of operating income. Operating income is supplemented by the sale of both nonstrategic and higher value lands. Plum Creek estimates that nearly 1.4 million acres in its portfolio have values higher than that of tree farming properties.

Plum Creek's operating margins in timber harvesting average around 36% of log sales. Fixed costs are low and variable margins high. Dividends paid by the company have recently averaged just over 70% of operating income. At times, dividends have exceeded operating income, and management has had to resize dollar payouts. Plum Creek recently raised its dividend by $.04 per share per year after second quarter operating income gained almost 12% on that of the same quarter in 2003.

Plum Creek's ratio of net debt ($1.9 billion in debt less $300 million in cash) to the aggregate last four quarters EBITDA was 2.9 times (x) at the end of the second calendar quarter. EBITDA covered interest 4.8x. Fitch estimates that the market value of its timberlands covers outstanding debt by 3.4x. Liquidity is provided by a five-year $650 million revolver, of which $178 million was available at the end of last June.

Plum Creek is a low business risk. Volatility in forestry returns is low, with both upside and downside potential limited. Financial risk increases when acreage is acquired with additional debt as a means of increasing equity returns. The company has done a good job in the past of sizing its debt portfolio to normalize cash flow, while maximizing shareholder payouts. Financial metrics reflect this and are in parity with other investment-grade real estate investment trusts.

Additional information on Plum Creek can be found on the Fitch Ratings web site at 'www.fitchratings.com'.