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TRC: Recent Updates Imply Strong Positives For Development Plans

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By M. Marin



Approval For Development To Help Address Housing Shortage

Tejon Ranch Company (NYSE:TRC) received approval earlier in 1Q21 to develop multi-family apartments within the Tejon Ranch Commerce Center (TRCC). The planned apartment development will help provide much-needed housing in the area. Like much of the state of California, Kern County has a severe shortage of housing, including of apartment units. In the greater Los Angeles metropolitan region overall, there is a shortage of housing. TRC is the only major area close to Los Angeles where infrastructure is possible and one of the few real estate development companies with scale.

The TRCC is a 20 million square foot development that is on both sides of Interstate 5. TRC has already developed almost six million square feet of industrial, commercial and retail space in the TRCC, and holds the leases for a number of distribution facilities for companies such as IKEA, Caterpillar Inc., Dollar General and others. The TRCC has 14 million square feet of available space and “a proven ability to deliver” speedy turnaround on construction.

Despite the area's need for new homes, the company has received opposition from several environmental groups over the years against its plans to develop a portion of its land holdings. The company entered into a conservation agreement with environmental groups and other opponents in 2008.

Grapevine: At Least 50% Renewable Energy Sources

A recent court ruling earlier this quarter in favor of TRC and Kern County mitigates a big stumbling block to moving forward on the company's Grapevine project, where at least 50% of the energy supply is expected to be produced on site by renewable sources.

Positive Takeaways

TRC is a real estate-development company that targets maximizing shareholder value through the monetization of its land-based assets. The recent updates discussed above increase the value of TRC’s land extensive land holdings, located approximately 60 miles north of Los Angeles and 25 miles south of Bakersfield, California, in our view.

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