TRC counterpoint, from the MF Real Estate Board:
Far from being cheap, TRC has been bid to absolute insane levels in the aftermath of the Barron's article. Consider the following: Times Mirror, which had owned 30% of the company for years announced in January that J.P. Morgan had been hired to help sell its position. This assignment coincided with a study J.P Morgan was doing for TRC to help devise a long range plan to develop its land holdings. The availability of this block of stock, which
effectively amounted to a control position, was known about and actively shopped by Morgan for over six months before being sold to 3rd Ave. Funds about a month ago for $13.50. no one puzzled that a real estate entity, such as an opportunity fund, didn't show up? At $13.50 3rd Ave. made a good deal and probably can't get hurt, but with the exception of minute portions of TRC's land, development potential of any meaningful scale is at least a
decade away if ever.
Though you can come up with any value you want by assigning per/acreage figures to TRC's 270,000 acres, the vast majority of it is useless rural lands that is often not even practical for grazing. This type of land is worth $200 - $300 per acre -- TRC management will freely tell you this, which you can confirm by talking to CDX or NHL. Less than 5,000 acres is irrigated and actively farmed -- such acreage might be worth 3k-6k, but for less than 2% of the total. The commercial potential is limited to about 350 acres of highway frontage on I-5, something like 20 or 30 miles North of Valencia (Newhall's property). Though it might be suitable for an outlet center, its highest and best use is basically what its being used for today, which includes a truck stop, road side diners, etc. The pieces of "zoned" residential land referred to in the article have no entitlements, and even if they did, there is no population or employment anywhere near this property. For perspective, there is a national forest between the
southern border of TRC's land and the northern border of Newhall Ranch's land (which isn't exactly running out of undeveloped land, even where its entitled)
If the population reaches the Tejon Ranch sometime in the next century, a bet I wouldn't take, the environmental issues are at least as onerous as those that confronted Newall.
Meanwhile your talking about a comapany that cash flows $5 million in a good year -- at least until they start spending on entitlements and infrastructure.
Regards,
Soulard<<<
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