Adjusted EBITDA was $1.1 billion, a 68% increase over the fourth quarter of 2020 and a 167% increase compared to the year ago quarter.
This represents the highest quarterly adjusted EBITDA on record, surpassing the third quarter of 2020 by 48%.
Nancy brings more than 20 years of leadership and financial and operating roles across a broad range of industries.
First quarter housing starts averaged 1.6 million units on a seasonally adjusted basis, an improvement of 2% over the fourth quarter.
Activity dipped briefly in February, driven by severe winter weather, but March activity rebounded sharply March housing starts totaled 1.7 million units on a seasonally adjusted basis, the highest level since 2006.
Single family starts in March, reached the highest rate for any month since June of 2007 at nearly 104,000 units.
Additionally, housing permits in the first quarter average nearly 8 million units on a seasonally adjusted basis, surpassing last quarter by 10%, and surging to its highest quarterly average since before the great recession.
I'll begin the discussion with Timberlands on pages 6 through 8 of our earnings slides.
Timberlands contributed $108 million to first quarter earnings.
Adjusted EBITDA increased by $5 million, compared to the fourth quarter.
And as of the end of the first quarter, we've harvested approximately 40% of our planned salvage volume.
Southern Timberlands adjusted EBITDA increased $5 million compared with the fourth quarter.
Northern Timberlands adjusted EBITDA increased $1 million compared to the fourth quarter due to improved sales realizations for hardwood logs.
Turning to Real Estate Energy and Natural Resources, Pages 9 and 10.
Real Estate ENR contributed $66 million to first quarter earnings and $96 million to adjusted EBITDA.
First quarter adjusted EBITDA was $73 million higher than fourth quarter due to timing of transactions.
Wood products, Pages 11 and 12.
Wood Products contributed $840 million to first quarter earnings and $889 million to adjusted EBITDA.
First quarter adjusted EBITDA was 68% higher than the fourth quarter and surpassed by 45% the previous quarterly record, which was established in the third quarter of 2020.
Average lumber composite pricing increased 41% compared with the fourth quarter.
EBITDA for lumber increased $259 million compared with the fourth quarter, a more than 100% improvement.
Average sales realizations increased by 42%.
Sales volumes decreased by 5% compared with the fourth quarter as customer takeaway and supply chains in the South were temporarily disrupted following the severe winter weather.
Average OSB composite pricing increased 30% compared with the fourth quarter.
OSB EBITDA increased $80 million compared to the fourth quarter, a 36% increase.
Average sales realizations improved by 22%.
Engineered Wood Products EBITDA increased $5 million compared to the fourth quarter.
In distribution, EBITDA increased $15 million compared to the fourth quarter as strong demand drove sales volumes across all products and the business captured improved margins.
After exceeding our 2020 operational excellence target, we remain focused on opex in 2021, targeting another $50 million to $75 million across our businesses.
Today, we reported the closing of our previously announced acquisition of 69,000 acres of Alabama Timberlands.
I'll begin with the first quarter results for our unallocated items as summarized on page 13.
First quarter adjusted EBITDA for this segment improved by $7 million compared to fourth quarter 2020.
Turning now to our key financial items, which are summarized on Page 14 cash from operations totaled nearly $700 million for the first quarter.
This is our highest quarterly operating cash flow since fourth quarter 2006, and our highest first quarter cash flow on record.
However, operating cash flow improved by over $250 million compared with the fourth quarter, as these factors were more than outweighed by higher pricing for lumber and oriented strand board.
We reinvested a portion of this cash in our Timberlands and Wood Products businesses through capital expenditures, which totaled $53 million for the first quarter.
Adjusted funds available for distribution or FAD, for first quarter 2021, totaled $645 million as highlighted on Page 15.
In the first quarter, we returned $127 million to our shareholders through payment of our first-quarter base dividend of $0.17 per share.
As a reminder, we plan to target a total annual return to shareholders of 75% to 80% of our annual adjusted FAD.
We will deploy the remaining 20% to 25% of our annual FAD consistent with our stated priorities for opportunistic capital allocation.
Turning to the balance sheet, we ended our first quarter with over $1 billion of cash, an undrawn line of credit, and just under $5.5 billion of outstanding long-term debt.
As a reminder, we have cash earmarked to repay our $150 million 9% note, when it matures in the fourth quarter.
Our strong balance sheet position, in addition to our record EBITDA performance, has resulted in a net debt to adjusted EBITDA leverage ratio of 1.5 times.
Although our leverage ratio is significantly below our over the cycle target of 3.5 times net debt to EBITDA, we believe that's appropriate given the extremely strong commodity markets we're experiencing today.
Looking forward, key outlook items for the second quarter are presented on page 16.
Domestic average sales realizations are expected to be moderately lower compared with the first quarter.
In the second quarter, we will report a cash outflow of approximately $149 million for the 69,000 acre Alabama Timberlands acquisition that we completed this week.
We continue to expect full year 2021 adjusted EBITDA of approximately $255 million, although we now expect land basis as a percentage of real estate sales to be approximately 35% to 45% for the year due to the mix of properties sold.
Excluding the effect of changes in average sales realizations for lumber and oriented strand board, we expect second quarter adjusted EBITDA will be significantly higher than the first quarter.
Log costs are expected to be comparable to the first quarter.
For lumber, our quarter-to-date average sales realizations are approximately $105 higher and current realizations are approximately $130 higher than the first quarter average.
For OSB, our quarter-to-date average sales realizations are approximately $135 higher and our current sales realizations are approximately $185 higher than the first quarter average.
As a reminder for lumber, every $10 change in realizations is approximately $11 million of EBITDA on a quarterly basis.
For OSB, every $10 change in realizations is approximately $8 million of EBITDA on a quarterly basis.
Additionally, in March 2021, we announced a third increase, which ranges from 10% to 25% and will be captured over the next several quarters.
We continue to expect full year 2021 interest expense will be approximately $315 million.
Additionally, we continue to anticipate 2021 capital expenditures to total $420 million, with most large projects executing in the second half of the year.
Turning to taxes, we continue to expect our full-year 2021 effective tax rate will be between 18% and 22% before special items.
As previously discussed, the $90 million tax refund, associated with our 2018 pension contribution, remains in process.

Summary:
Domestic average sales realizations are expected to be moderately lower compared with the first quarter.
Excluding the effect of changes in average sales realizations for lumber and oriented strand board, we expect second quarter adjusted EBITDA will be significantly higher than the first quarter.
Log costs are expected to be comparable to the first quarter.