By M. Marin
Real Estate – Conveniently Located for Commercial, industrial & Residential Use
Tejon Ranch Company (NYSE:TRC) is a real estate-development company that targets maximizing shareholder value by monetizing its land-based assets located near Los Angeles and Bakersfield, CA. Housing demand and need for the need for increased supply chain warehouse and distribution infrastructure in this region is high. At the same time, the availability of Class A properties is limited. TRC continues to move forward with its development plans.
Expanding relationship with Majestic Realty …
TRC is entering into strategic relationships with partners and customers as it advances its development plans. Importantly, in our view, the company has expanded an existing relationship with a development partner – notably one that has extensive experience in the real estate industry, particularly in California. We view the expansion of TRC's relationship with Los Angeles-headquartered Majestic Realty, one of the country's largest privately-held industrial developers, as a positive that underscores the strategic advantages of TRC's land holdings.
The company and Majestic are developing an industrial facility at the TRCC that is planned to be roughly 630,000-square-feet. The facility is expected to be completed in 3Q22. Proximity to nearby cities makes TRC's assets, including the TRCC, well-situated.
In 1Q22, TRC announced a new JV with Majestic to develop up to 495 apartment units and associated amenities located on approximately 22 acres adjacent to the Outlets at Tejon. In addition to providing much needed housing for TRCC employees and people employed nearby, the project also is expected to drive traffic at the TRCC retail outlets.
Like much of the state of California, Kern County is experiencing a severe housing shortage, including of apartment units. Construction is planned to commence toward the end of 2022 and the first apartment units are expected to become available at the end of 2023.
TRC and Majestic's initial partnership agreement was formed in 2016 to jointly purchase, own and manage an existing, fully leased, 651,909- square-foot building. The development projects noted above represent expansions and would seem to underscore, we believe, Majestic's positive view of TRC's development prospects.
… and growing interest in the TRCC…
TRC also recently announced the sale of about 12.2 acres of land on the west side of the TRCC to privately-held Dedeaux Properties, a logistics real estate firm in Southern California. Dedeaux cited the need for improved supply chain logistics in the greater Los Angeles area.
TRC also has an agreement with Indianapolis-based Scannell Properties, which had purchased 17.1 acres in the TRCC to construct a state-of-the-art manufacturing facility for its prefabricated multifamily and single-family housing units, Plant Prefab. The facility is expected to begin production in January 2023. It is expected to serve as Scannell's regional production hub. Scannell cited the attractive location of TRCC as one factor behind the site selection of TRCC.
… as TRCC is conveniently-situated
Proximity to nearby cities makes TRC's assets, including the TRCC, an attractive location. 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 company has noted that TRCC's existing industrial space is fully leased and occupied, but there are substantial opportunities to further develop TRCC to expand capacity. The company expects to have more industrial product available, as illustrated by the projects noted above, as demand for warehouse, distribution, and advanced manufacturing facilities in southern California rises. The TRCC also has "a proven ability to deliver" speedy turnaround on construction.
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