May 07, 2009. /Lesprom Network/. The economic downturn continues to have negative impacts on TimberWest. With its harvest level tracking at less than half of historic average volume levels and lower real estate proceeds in the 1Q 2009, its distributable cash loss for the 1Q was $6.4 million, or $ 0.08 per stapled unit excluding refinancing charges of $8.9 million, company said in a statement received by Lesprom Network. Continuing problems with the US housing market, combined with increasing weakness in the company's domestic and Asian markets, resulted in log sales volumes and realizations remaining at historically low levels. Local real estate markets have also slowed with sales activity across Vancouver Island down 53% in the first two months of 2009. TimberWest's President and CEO, Paul McElligott, noted that "While the US housing market remains severely depressed, the positive news is that housing affordability has greatly improved, 30 year mortgage rates are at record lows, and the inventory of unsold homes is beginning to decline, all of which bode well for the eventual recovery." He also noted that so far this year currency is working in the Company's favour, helping to offset lower prices in the company's export markets. The Company noted that costs are basically in line with prior year and that TimberWest is busy implementing its new sub-divided contractor model on the BC coast, moving harvesting operations to smaller, mid-sized logging contractors. McElligott noted that cost savings of $10 million per year would materialize from sub-division once it is fully implemented and harvest volumes are back to normal levels. The Company expects the remainder of the year to be challenging and, in this environment, it plans to take concerted action to minimize costs, reduce production levels, and preserve value. The Company remains very bullish about the mid and long term future of both its real estate and timberland businesses. McElligott added, "With the superb asset base we own in a very desirable part of the world, the looming log shortage coming with the mountain pine beetle devastation in the interior of BC, uncertain Russian log supply, the growing demand for wood in Asia, and the eventual housing recovery in the US, the Company's prospects are very strong following this downturn."