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What changed in TEJON RANCH CO's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of TEJON RANCH CO's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+358 added−353 removedSource: 10-K (2025-03-06) vs 10-K (2024-03-06)

Top changes in TEJON RANCH CO's 2024 10-K

358 paragraphs added · 353 removed · 283 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

97 edited+22 added−30 removed51 unchanged
Biggest changeAll of these efforts are supported by diverse revenue streams generated from other operations including: farming, mineral resources, ranch operations, and our various joint ventures. 6 7 Percentage of Total Revenue 1 by Segment: 1 Charts present segment revenues and equity in earnings of unconsolidated joint ventures, which has been included in real estate, while other income components are excluded. 8 Note: Our Resort Residential reporting segment did not report revenues in the periods reported herein. 9 The following table shows the revenues from continuing operations, segment profits and identifiable assets of each of our continuing segments for the last three years: FINANCIAL INFORMATION ABOUT SEGMENTS (Amounts in thousands of dollars) Year Ended December 31, 2023 2022 2021 Revenues and Other Income Real Estate—commercial/industrial $ 11,758 $ 40,515 $ 19,476 Mineral resources 14,524 21,595 20,987 Farming 13,950 13,001 11,039 Ranch operations 4,507 4,106 4,111 Segment revenues 44,739 79,217 55,613 Investment income 2,557 634 57 Revenues and other income 47,296 79,851 55,670 Equity in earnings of unconsolidated joint ventures 6,868 7,752 9,202 Total revenues and other income (1) $ 54,164 $ 87,603 $ 64,872 Segment Profits (Losses) and Net Income Real Estate—commercial/industrial $ 3,705 $ 24,159 $ 7,523 Real Estate—resort/residential (1,528) (1,629) (1,723) Mineral resources 5,839 8,626 7,428 Farming (1,307) (6,810) (3,077) Ranch operations (536) (918) (568) Segment profits (2) 6,173 23,428 9,583 Investment income 2,557 634 57 Other (loss) income (138) 1,088 164 Corporate expenses (9,872) (9,699) (9,843) (Loss) income from operations before equity in earnings of unconsolidated joint ventures and income tax expense (1,280) 15,451 (39) Equity in earnings of unconsolidated joint ventures 6,868 7,752 9,202 Income before income taxes 5,588 23,203 9,163 Income tax expense 2,323 7,393 3,821 Net income 3,265 15,810 5,342 Net income (loss) attributable to non-controlling interest — 2 (6) Net income attributable to common stockholders $ 3,265 $ 15,808 $ 5,348 Identifiable Assets by Segment (3) Real Estate—commercial/industrial $ 73,105 $ 74,292 $ 82,397 Real Estate—resort/residential 321,216 312,956 305,818 Mineral resources 52,068 48,780 52,440 Farming 52,094 45,814 47,160 Ranch operations 2,072 1,945 2,079 Corporate 76,968 83,004 56,142 Total assets $ 577,523 $ 566,791 $ 546,036 (1) Refer to Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations for additional detail on segment revenues.
Biggest changeTerra Vista at Tejon 6 7 Percentage of Total Revenue 1 by Segment: 1 Charts present segment revenues and equity in earnings of unconsolidated joint ventures, which has been included in real estate, while other income components are excluded. 8 Note: Our Resort Residential reporting segment did not report revenues in the periods reported herein. 9 The following table shows the revenues from continuing operations, segment operating results and identifiable assets of each of our continuing segments for the last three years: FINANCIAL INFORMATION ABOUT SEGMENTS (Amounts in thousands of dollars) Year Ended December 31, 2024 2023 2022 Revenues Real estate - commercial/industrial $ 12,552 $ 11,758 $ 40,515 Mineral resources 10,214 14,524 21,595 Farming 13,925 13,950 13,001 Ranch operations 5,195 4,507 4,106 Segment revenues 41,886 44,739 79,217 Segment Operating Results Real estate - commercial/industrial $ 15,523 $ 10,573 $ 31,911 Real estate - resort/residential (2,615) (1,528) (1,629) Mineral resources 3,162 5,839 8,626 Farming (3,626) (1,307) (6,810) Ranch operations 331 (536) (918) Segment operating results 1 12,775 13,041 31,180 Reconciling items: Investment income 2,273 2,557 634 Other (loss) income (292) (138) 1,088 Corporate expenses (11,092) (9,872) (9,699) Income before income taxes 3,664 5,588 23,203 Identifiable Assets by Segment 2 Real estate - commercial/industrial $ 98,185 $ 73,105 $ 74,292 Real estate - resort/residential 330,513 321,216 312,956 Mineral resources 54,658 52,068 48,780 Farming 54,478 52,094 45,814 Ranch operations 2,658 2,072 1,945 Corporate 67,506 76,968 83,004 Total assets $ 607,998 $ 577,523 $ 566,791 1 Segment operating results are comprised of revenues and equity in earnings of unconsolidated joint ventures, less segment expenses, excluding investment income, other income (loss), corporate expenses, and income taxes. 2 Identifiable Assets by Segment include both assets directly identified with those operations and an allocable share of jointly used assets.
The commercial/industrial segment also includes activities related to communications leases, a power plant lease, and landscape maintenance fees. At the heart of our real estate commercial/industrial segment is TRCC, a 20 million square foot commercial/industrial development on Interstate 5 just north of the Los Angeles basin.
The real estate commercial/industrial segment also includes activities related to communications leases, a power plant lease, and landscape maintenance fees. At the heart of our real estate commercial/industrial segment is TRCC, a 20 million square foot commercial/industrial development on Interstate 5 just north of the Los Angeles basin.
When attracting, developing and retaining talent, we seek individuals who hold varied experiences and viewpoints and embody our core values to create an inclusive and diverse culture and workplace that allows each employee to do their best work and drive our collective success.
When attracting, developing and retaining talent, we seek individuals who hold varied experiences and viewpoints and embody our core values to create an inclusive culture and workplace that allows each employee to do their best work and drive our collective success.
We have three major resort/residential communities within this segment: • Mountain Village at Tejon Ranch • Centennial at Tejon Ranch • Grapevine at Tejon Ranch The entitlement process precedes the regulatory approvals necessary for land development and routinely takes several years to complete.
We have three major resort/residential communities within this segment: • Mountain Village at Tejon Ranch • Centennial at Tejon Ranch • Grapevine at Tejon Ranch • Grapevine North The entitlement process precedes the regulatory approvals necessary for land development and routinely takes several years to complete.
He is a member of the National Association of Real Estate Investment Trusts, International Council of Shopping Centers, and the American Institute of Certified Public Accountants. Mr. McMahon joined the Company in November 2001 as Director of Financial Analysis. In 2008, Mr.
He is a member of the National Association of Real Estate Investment Trusts, International Council of Shopping Centers, and the American Institute of Certified Public Accountants. 27 Mr. McMahon joined the Company in November 2001 as Director of Financial Analysis. In 2008, Mr.
Caterpillar’s distribution center in TRCC utilizes a ground-based solar array to reduce its energy usage. 25 • The Company is also working with Calpine Energy, a power generating company, to complete the development of a 600-acre industrial-sized solar field.
Caterpillar’s distribution center in TRCC utilizes a ground-based solar array to reduce its energy usage. • The Company is also working with Calpine Energy, a power generating company, to complete the development of a 600-acre industrial-sized solar field.
All of our employees must adhere to a Code of Business Conduct and Ethics that sets standards for appropriate behavior, and all employees must also complete required internal training on respect in the workplace and diversity to further enhance our cultural behaviors.
All of our employees must adhere to a Code of Business Conduct and Ethics that sets standards for appropriate behavior, and all employees must also complete required internal training on respect in the workplace to further enhance our cultural behaviors.
McMahon became Vice President of Commercial/Industrial Development and in December of 2014, was promoted to Senior Vice President of Commercial/Industrial Development and elected as an officer of the Company. In 2015, he was promoted to Executive Vice President. Mr. McMahon's title was subsequently changed to Executive Vice President, Real Estate. Mr.
McMahon became Vice President of Commercial/Industrial Development and in December of 2014, was promoted to Senior Vice President of Commercial/Industrial Development and elected as an officer of the Company. In 2015, he was promoted to Executive Vice President. Mr. McMahon's title was subsequently changed in 2017 to Executive Vice President, Real Estate. Mr.
The royalty revenues we receive under this arrangement are based upon the amount of product produced at these sites. The Granite site has reached the end of its economic life and began restoration activities during 2023.
The royalty revenues we receive under this arrangement are based upon the amount of product produced at these sites. The Granite site reached the end of its economic life and began restoration activities during 2023.
The following table summarizes total entitlements for TRCC as of December 31, 2023: (in square feet) Industrial Commercial Retail Total entitlements received 19,300,941 956,309 Total entitlements used 8,201,864 674,246 Entitlements available 11,099,077 282,063 We believe we are well positioned for long-term value creation as we continue with our current development plans at TRCC.
The following table summarizes total entitlements for TRCC as of December 31, 2024: (in square feet) Industrial Commercial Retail Total entitlements received 19,300,941 956,309 Total entitlements used 8,201,864 674,246 Entitlements available 11,099,077 282,063 We believe we are well positioned for long-term value creation as we continue with our current development plans at TRCC.
Water sales opportunities each year are impacted by rain and snowfall volume along with California State Water Project, or SWP, allocations. The current SWP allocation, is at 15% of contract amounts with an expectation that the allocation may increase. In 2015, we entered into a water sale agreement with PEF, our current lessee under a power plant lease.
Water sales opportunities each year are impacted by rain and snowfall volume along with California State Water Project, or SWP, allocations. The current SWP allocation is at 35% of contract amounts with an expectation that the allocation may increase. In 2015, we entered into a water sale agreement with PEF, our current lessee under a power plant lease.
Grapevine is entitled for 12,000 homes, 5.1 million square feet for commercial development, and more than 3,367 acres of open space and parks. The 4,643 acres designated for mixed-use development will include housing, retail, commercial, and industrial components. See Note 14 (Commitments and Contingencies) of the Notes to Consolidated Financial Statement for further discussion.
Grapevine is entitled for 12,000 homes, 5.1 million square feet for commercial development, and more than 3,367 acres of open space and parks. The 4,643 acres designated for mixed-use development will include housing, retail, commercial, and industrial components. See Note 13 (Commitments and Contingencies) of the Notes to Consolidated Financial Statement for further discussion.
The multi-family apartment community will be located on a 27-acre site located immediately north of the Outlets at Tejon. Terra Vista at Tejon will be the first residential community at TRCC and for the Company, providing an ideal housing option for the thousands of employees currently working at the various distribution centers, retailers, hotels and fast-food restaurants at TRCC.
The multi-family apartment community will be located on a 22-acre site immediately north of the Outlets at Tejon. Terra Vista at Tejon will be the first residential community at TRCC and for the Company providing an ideal housing option for the thousands of employees currently working at the various distribution centers, retailers, hotels and fast-food restaurants at TRCC.
Litigation by environmental and other special interest groups has been a primary cause of delays and increased costs for our real estate development projects as well as other projects in California. For discussion on legal matters pertaining to our developments, see Note 14 (Commitments and Contingencies) of the Notes to Consolidated Financial Statements.
Litigation by environmental and other special interest groups has been a primary cause of delays and increased costs for our real estate development projects as well as other projects in California. For discussion on legal matters pertaining to our developments, see Note 13 (Commitments and Contingencies) of the Notes to Consolidated Financial Statements.
We create value by securing entitlements for our land, facilitating infrastructure development, strategic land planning, monetization of land through development and/or sales, and conservation in order to maximize the highest and best use for our land. We are involved in eight joint ventures that either own, develop, and/or operate real estate properties.
We create value by securing entitlements for our land, facilitating infrastructure development, strategic land planning, monetization of land through development and/or sales, and conservation in order to maximize the highest and best use for our land. We are involved in nine joint ventures that either own, develop, and/or operate real estate properties.
The Company utilizes external labor contractors, as necessary, for large projects, such as pruning and harvesting, as a way to manage our labor needs. From a broader inflationary standpoint, the Company is seeing and will continue to see an increase in production costs, most notably chemicals such as herbicides and pesticides, and fuel costs.
The Company utilizes external labor contractors, as necessary, for large projects, such as pruning and harvesting, as a way to manage our labor needs. From a broader inflationary standpoint, the Company is seeing and expects to continue to see an increase in production costs, most notably chemicals such as herbicides and pesticides, and fuel costs.
The Los Angeles industrial market is the largest in the country by most measures, sitting at the center of a 2 billion square-foot Southern California industrial market. It has been characterized by some of the highest asking rents and lowest vacancy rates of any market in the nation.
The Los Angeles industrial market is the largest in the country by many measures, sitting at the center of a 2 billion square-foot Southern California industrial market. It has been characterized by some of the highest asking rents and lowest vacancy rates of any market in the nation.
TRCC sits on both sides of Interstate 5, giving distributors immediate access to the west coast’s principal north-south goods movement corridor. 12 TRCC has a Foreign Trade Zone, or FTZ, designation, of approximately 1,094 acres, which allows a user within the FTZ to secure the many benefits and cost reductions associated with streamlined movement of goods in and out of a trade zone.
TRCC sits on both sides of Interstate 5, giving distributors immediate access to the west coast’s principal north-south goods movement corridor. 12 TRCC has an FTZ designation, of approximately 1,094 acres, which allows a user within the FTZ to secure the many benefits and cost reductions associated with streamlined movement of goods in and out of a trade zone.
Centennial is designed to include electric vehicles, through vehicle purchase incentives, and the installation of 30,000 EV chargers located within both residential and commercial sections of the community, at TRCC, and within disadvantaged communities in Southern California.
Centennial is designed to include electric vehicles, through vehicle purchase incentives, and the installation of 30,000 EV chargers located within both residential and commercial sections of the community, at TRCC, and within qualifying communities in Southern California.
As of December 31, 2023, our industrial portfolio, through our joint venture partnerships, consisted of 2.8 million square feet of gross leasable area, or GLA, and our TRCC commercial portfolio consisted of 620,907 square feet of GLA. As of December 31, 2023, our industrial portfolio was 100% leased and our commercial portfolio was 96% leased.
As of December 31, 2024, our industrial portfolio, through our joint venture partnerships, consisted of 2.8 million square feet of gross leasable area, or GLA, and our TRCC commercial portfolio consisted of 620,907 square feet of GLA. As of December 31, 2024, our industrial portfolio was 100% leased and our commercial portfolio was 96% leased.
We also expect continued legislation and regulatory development in the area of climate change and greenhouse gases. It is unclear, as of this date, how any such developments will affect our business. Enactment of new environmental laws or regulations, or changes in existing laws or regulations or the interpretation of these laws or regulations, might require expenditures in the future.
We also expect continued legislation and regulatory development in the area of climate change and GHG. It is unclear, as of this date, how any such developments will affect our business. Enactment of new environmental laws or regulations, or changes in existing laws or regulations or the interpretation of these laws or regulations, might require expenditures in the future.
TRCC's attractiveness as a commercial/industrial location is further enhanced by the Economic Development Incentive Policy, or EDIP, adopted by the Kern County Board of Supervisors. The EDIP is aimed to expand and enhance the County's competitiveness by taking affirmative steps to attract new businesses and to encourage the growth and resilience of existing businesses.
TRCC's attractiveness as a commercial/industrial location is further enhanced by AdvanceKern, formerly known as the Economic Development Incentive Policy, or EDIP, adopted by the Kern County Board of Supervisors. AdvanceKern is aimed to expand and enhance the County's competitiveness by taking affirmative steps to attract new businesses and to encourage the growth and resilience of existing businesses.
We currently lease land to two auto service stations with convenience stores, 11 fast-food operations, one service diner-style restaurant, a motel, an antique shop, and a post office.
We currently lease land to two auto service stations with convenience stores, 12 fast-food operations, one service diner-style restaurant, a motel, an antique shop, and a post office.
For example, the Company installed a solar-covered parking structure at the Outlets at Tejon. The structure covers 1.85 acres and is projected to reduce by approximately 83% the center’s electricity consumption needs for shared spaces and produce approximately 1,076,000 kWh of clean energy every year.
For example, the Company installed a solar-covered parking structure at the Outlets at Tejon. The structure covers 1.85 acres and is projected to reduce by approximately 83% the center’s electricity consumption needs for shared spaces and produce approximately 1,076,000-kilowatt hour, or kWh, of clean energy every year.
We also have a royalty arrangement with Granite Construction tied to land previously owned by the Company that began operations in 2021 and is now paying royalty payments, which will more than offset the payments received from the old Granite site.
We also have a royalty arrangement with Granite Construction tied to 703 acres of land previously owned by the Company that began operations in 2021 and is now paying royalty payments, which will more than offset the payments received from the old Granite site.
The term of this lease expires in 2026, however National has options to extend the lease until 2095. 23 We also lease 521 acres to Granite Construction and Griffith Construction for the mining of rock and aggregate product that is used in construction of roads and bridges.
The term of this lease expires in 2026, however National has options to extend the lease until 2095. 23 We also lease 277 acres to Granite Construction and 244 acres to Griffith Construction for the mining of rock and aggregate product that is used in construction of roads and bridges.
See Note 14 (Commitments and Contingencies) of the Notes to Consolidated Financial Statement for further discussion. 21 Grapevine at Tejon Ranch Grapevine is a mixed-use master planned community encompassing 8,010 acres of our lands within Kern County located on the San Joaquin Valley floor, adjacent to TRCC.
See Note 13 (Commitments and Contingencies) of the Notes to Consolidated Financial Statements for further discussion. 21 Grapevine at Tejon Ranch Grapevine is a mixed-use master planned community encompassing 8,010 acres of our lands within Kern County located on the San Joaquin Valley floor, adjacent to TRCC.
The Ports of Los Angeles and Long Beach are the primary industrial drivers and are responsible for over 40% of all inbound containers into the U.S.
The Ports of Los Angeles and Long Beach are the primary industrial drivers and are responsible for over 30% of all inbound containers into the U.S.
Corporate assets consist of cash and cash equivalents, refundable and deferred income taxes, land, buildings, and improvements. 10 Real Estate Development Overview Our real estate operations consist of the following activities: real estate development, commercial land sales and leasing, land planning and entitlement, and conservation.
Corporate assets consist of cash and cash equivalents, refundable and deferred income taxes, land, buildings, and improvements. Commercial/Industrial also includes buildings and improvements. 10 Real Estate Development Overview Our real estate operations consist of the following activities: real estate development, commercial land sales and leasing, land planning and entitlement, and conservation.
On May 26, 2023, we filed a Notice of Appeal, thereby appealing the Superior Court’s decision to the Second District of the California Court of Appeal. On June 27, 2023, CBD/CNPS cross-appealed the Superior Court’s ruling. During the appeal process the Superior Court’s order of the rescission of project approvals was placed on hold.
On May 26, 2023, we filed a Notice of Appeal, thereby appealing the Superior Court’s decision to the Second District of the California Court of Appeal. On June 27, 2023, CBD/CNPS cross-appealed the Superior Court’s ruling. During the appeal process the Superior Court’s order of 5 the rescission of project approvals have been placed on hold.
Our share of production, based upon average royalty rates during the last three years, has been 34, 36, and 29 barrels of oil per day for 2023, 2022, and 2021, respectively. There are 305 active oil wells located on the leased land as of December 31, 2023. Royalty rates on our leases averaged approximately 13% of oil production in 2023.
Our share of production, based upon average royalty rates during the last three years, has been 31, 34, and 36 barrels of oil per day for 2024, 2023, and 2022, respectively. There are 302 active oil wells located on the leased land as of December 31, 2024. Royalty rates on our leases averaged approximately 13% of oil production in 2024.
The EDIP provides incentives such as assistance in obtaining state tax incentives, building supporting infrastructure, and workforce development. Recent Developments For a discussion of business developments that occurred in 2023, see “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations” later in this report. Certain summarized highlights are contained below.
AdvanceKern provides incentives such as assistance in obtaining state tax incentives, building supporting infrastructure, and workforce development. Recent Developments For a discussion of business developments that occurred in 2024, see “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations” later in this report. Certain summarized highlights are contained below.
We believe that a diverse workforce possesses a broader array of perspectives that businesses need to remain competitive in today’s economy. We maintain employment policies that comply with federal, state and local labor laws and promote a culture of fairness and respect.
We believe that an experienced and varied workforce possesses a broader array of perspectives that businesses need to remain competitive in today’s economy. We maintain employment policies that comply with federal, state and local labor laws and promote a culture of fairness and respect.
Its receipt and review by each employee are documented and verified quarterly. None of our employees are covered by a collective bargaining agreement. Diversity, Equity and Inclusion Our policies are designed to promote fairness, equal opportunities, and diversity within the Company.
Its receipt and review by each employee are documented and verified quarterly. None of our employees are covered by a collective bargaining agreement. 26 Our policies are designed to promote fairness and equal opportunities within the Company.
Any document we file with the Securities and Exchange Commission, or SEC, may be inspected, without charge, at the SEC’s website: http://www.sec.gov. Information about our Executive Officers The following table shows each of our executive officers and the offices held as of March 6, 2024, the period the offices have been held, and the age of the executive officer.
Any document we file with the SEC may be inspected, without charge, at the SEC’s website: http://www.sec.gov. Information about our Executive Officers The following table shows each of our executive officers and the offices held as of March 6, 2025, the period the offices have been held, and the age of the executive officer.
This is evident in the 151% increase in land prices over a six-year period starting with $3.50 per square foot in 2017. Industrial rents have increased 236% over the same six year period starting at $0.25 per square foot in 2017.
This is evident in the 157% increase in land prices achieved over a seven-year period starting with $3.50 per square foot in 2017. Industrial rents have increased 236% over the same seven-year period starting at $0.25 per square foot in 2017.
In addition, the Company leases several microwave repeater locations, radio and cellular transmitter sites, fiber optic cable routes, and 32 acres of land to Pastoria Energy Facility, L.L.C., or PEF, for an electric power plant. 13 The following table summarizes information with respect to lease expirations for our consolidated entities as of December 31, 2023.
In addition, the Company leases several microwave repeater locations, radio and cellular transmitter sites, fiber optic cable routes, and 32 acres of land to PEF for an electric power plant. 13 The following table summarizes information with respect to lease expirations for our consolidated entities as of December 31, 2024.
MV will compete generally for discretionary dollars that consumers will allocate to recreational and residential homes. 22 The following is a summary of the Company's residential real estate developments as of December 31, 2023: Community: Mountain Village Centennial Grapevine Resort Location: Kern County Los Angeles County Kern County Residential Project Status 1 : Entitled Entitled Entitled Total Entitlement Area (acres): 26,417 12,323 8,010 46,750 Housing Units: 3,450 19,333 12,000 34,783 Commercial Development (sqft) 2 : 160,000 10,100,000 5,100,000 15,360,000 Open Areas (acres): 21,335 5,624 3,367 30,326 Costs to Date 3 : $155,168 $119,788 $40,716 $315,672 (1) Estimated completion anticipated to be 25 years, or longer, from commencement of construction.
MV will compete generally for discretionary dollars that consumers will allocate to recreational and residential homes. 22 The following is a summary of the Company's residential real estate developments as of December 31, 2024: Community: Mountain Village Centennial Grapevine Resort Location: Kern County Los Angeles County Kern County Residential Project Status 1 : Entitled Entitled 4 Entitled Total Entitlement Area (acres): 26,417 12,323 8,010 46,750 Housing Units: 3,450 19,333 12,000 34,783 Commercial Development (sqft) 2 : 160,000 10,100,000 5,100,000 15,360,000 Open Areas (acres): 21,335 5,624 3,367 30,326 Costs to Date 3 : $158,348 $124,136 $42,456 $324,940 1 Estimated completion anticipated to be 25 years, or longer, from commencement of construction.
For Mountain Village, the Company has funded the replacement of outdated agricultural engines to help mitigate air emissions for the initial phase of development. • Two decades ago, the Company helped establish and has continued to support Valley Clean Air Now, or ValleyCAN, a non-profit, 501(c)(3) public charity that advances quantifiable and voluntary solutions addressing air pollution in California’s San Joaquin Valley, a region with some of the worst air quality and highest poverty levels in the United States.
Additionally, for the initial phase of development at Mountain Village, the Company has contributed funding to support the replacement of outdated agricultural engines, which is expected to reduce certain air emissions in the region. • Two decades ago, the Company helped establish and has continued to support Valley Clean Air Now, or ValleyCAN, a non-profit, 501(c)(3) public charity that advances quantifiable and voluntary solutions addressing air pollution in California’s San Joaquin Valley, a region with some of the worst air quality and highest poverty levels in the United States.
Note: Grapevine North's entitlement efforts have not yet begun, the Company continuously assesses its long-term growth strategy and capital resources when determining the start of this additional development. 11 Reporting Segments Real Estate - Commercial/Industrial A primary focus of the Company is our real estate commercial/industrial segment that includes: planning and permitting of land held for development; construction of infrastructure; the construction of pre-leased buildings; the construction of buildings to be leased or sold; and the sale of land to third parties for their own development.
The Company regularly assesses its long-term growth strategy and capital resources when determining when to start this additional development. 11 Reporting Segments Real Estate - Commercial/Industrial A primary focus of the Company is our real estate commercial/industrial segment that includes: planning and permitting of land held for development; construction of infrastructure; the construction of pre-leased buildings; the construction of buildings to be leased or sold; and the sale of land to third parties for their own development.
We do not engage in any oil exploration or extraction activities. As of December 31, 2023, 12,015 acres were committed to producing oil and gas leases from which the operators produced and sold approximately 94,780 barrels of oil and 62,000 MCF (each MCF being 1,000 cubic feet) of dry gas during 2023.
We do not engage in any oil exploration or extraction activities. As of December 31, 2024, 12,015 acres were committed to producing oil and gas leases from which the operators produced and sold approximately 83,411 barrels of oil and 20,480 MCF (each MCF being 1,000 cubic feet) of dry gas during 2024.
In 2023, we sold 41% of our grape crop to one winery, 37% to a second winery and the remainder to two other customers. These sales are under contracts ranging from one to eight years. In 2023, our almonds were sold to various commercial buyers, with the largest buyer accounting for 35% of our crop.
In 2024, we sold 44% of our grape crop to one winery, 33% to a second winery and the remainder to two other customers. These sales are under contracts ranging from one to eight years. In 2024, our almonds were sold to various commercial buyers, with the largest buyer accounting for 29% of our crop.
Although we believe that we are in material compliance with these requirements, there can be no assurance that we will not incur costs, penalties, and liabilities, including those relating to claims for damages to property or natural resources, resulting from our operations. Environmental liabilities may also arise from claims asserted by adjacent landowners or other third parties.
There can be no assurance that we will not incur costs, penalties, and liabilities, including those relating to claims for damages to property or natural resources, resulting from our operations. Environmental liabilities may also arise from claims asserted by adjacent landowners or other third parties.
During the first quarter of 2024, we began construction on Terra Vista at Tejon, a new multi-family apartment community located immediately adjacent to the Outlets at Tejon at TRCC. Terra Vista at Tejon is our first residential development. This development will also begin TRCC’s transition to a mixed-use master-planned community.
Construction During the first quarter of 2024, we began construction of the first phase of a multi-family community, Terra Vista at Tejon, within TRCC. The development is located on a 22-acre site immediately north of the Outlets at Tejon. Terra Vista at Tejon is our first residential development. This development will also begin TRCC’s transition to a mixed-use master-planned community.
Immediately northeast of Grapevine is Grapevine North, a 7,655-acre development area, which is currently used for agricultural purposes. Identified as a development area in the Tejon Ranch Conservation and Land Use Agreement, Grapevine North presents a significant opportunity for future development.
Immediately northeast of Grapevine is Grapevine North, a 7,655-acre development area, which is currently used for agricultural purposes. Identified as a development area in the RWA, Grapevine North presents a significant opportunity for future development.
Farming Operations In the San Joaquin Valley, we farm permanent crops including the following acreage: wine grapes— 1,036 (all in production); almonds—2,108 (1,652 in production and 456 under development); and pistachios—932 (all in production).
Farming Operations In the San Joaquin Valley, we farm permanent crops including the following acreage: wine grapes— 1,036 (all in production); almonds—2,116 (1,357 in production and 759 under development); and pistachios—935 (all in production).
Landscaping at the Outlets at Tejon consists of drought-tolerant, native planting material. • Each of the Company’s master planned, mixed-use residential communities will feature state-of-the-art water conservation measures, reclaimed water for irrigation, stormwater capture, and drought-tolerant landscaping. • The Company’s agricultural operations use highly efficient drip irrigation to water its orchards and vineyards. • We are involved in water storage and water recharge programs in the water basins in which we have operations.
Landscaping at the Outlets at Tejon consists of drought-tolerant, native planting material. • Each of the Company’s master planned, mixed-use residential communities will feature state-of-the-art water conservation measures, reclaimed water for irrigation, stormwater capture, and drought-tolerant landscaping. • The Company’s agricultural operations utilize highly efficient automated and drip irrigation systems to water its orchards and vineyards.
We are unable to determine anticipated completion dates for our real estate development projects with certainty because the time for completion is heavily dependent on the regulatory approvals necessary for land development. Also, as a real estate developer, we are cognizant of the micro- and macro-economic factors that have a significant influence on the real estate sector.
We are unable to determine anticipated completion dates for our real estate development projects with certainty because the time for completion is heavily dependent on the regulatory approvals necessary for land development. Beyond regulatory factors, we remain highly aware of both micro- and macroeconomic conditions that have a significant influence on the real estate sector.
The project is being developed by Centennial Founders, LLC, a consolidated joint venture in which we have a 93.46% ownership interest as of December 31, 2023. Centennial is envisioned to be an ecologically friendly community that will achieve a job-housing balance.
The project is being developed by Centennial Founders, LLC, a consolidated joint venture in which we have a 93.65% ownership interest as of December 31, 2024. Centennial is envisioned to be an ecologically friendly community that will achieve a job-housing balance. Centennial had entitlements approved in 2019 by the Los Angeles County Board of Supervisors.
We focus significant attention on attracting and retaining talented and experienced individuals to manage and support our operations. To attract and retain top talent, we have designed our compensation and benefits programs to provide a balanced and effective reward structure. Our short and long-term incentive programs are aligned with key business objectives and are intended to motivate strong performance.
To attract and retain top talent, we have designed our compensation and benefits programs to provide a balanced and effective reward structure. Our short and long-term incentive programs are aligned with key business objectives and are intended to motivate strong performance.
As a developer, one would be at an economic disadvantage to bring product to market with no willing or able buyers. This ebb and flow of the economy also plays into the timing of our completion date.
As a developer, one would be at an economic disadvantage to bring product to market with no willing or able buyers. This ebb and flow of the economy also plays into the timing of our completion date. Additionally, costs fluctuate over the life of these projects due to labor, raw material expenses, and shifting economic conditions.
We believe that we would not be adversely affected by the loss of any or all of these buyers, because of the markets for these commodities, the large number of buyers that would be available to us, and the fact that the prices for these commodities do not vary based on the identity of the buyer or the size of the contract. 24 At this time, the State Department of Water Resources has announced that the estimated water supply for 2024 will be at 15% of full entitlement.
We believe that we would not be adversely affected by the loss of any or all of these buyers, because of the markets for these commodities, the large number of buyers that would be available to us, and the fact that the prices for these commodities do not vary based on the identity of the buyer or the size of the contract.
We also face competition within Northern Los Angeles, which is comprised of the San Fernando Valley and Santa Clarita Valley along with areas north of us in the San Joaquin Valley of California. Strong demand for large distribution facilities is driving development farther east in the search for large, entitled parcels.
We also face competition within Northern Los Angeles, which is comprised of the San Fernando Valley and Santa Clarita Valley along with areas north of us in the San Joaquin Valley of California.
See discussion of water contract entitlement and long-term outlook for water supply under Item 2, “Properties.” Also see Note 6 (Long-Term Water Assets) of the Notes to Consolidated Financial Statements for additional information regarding our water assets. Ranch Operations Our ranch operations segment consists of game management revenues and ancillary land uses, such as grazing leases and filming.
See discussion of water contract entitlement and long-term outlook for water supply under Item 2, “Properties.” Also see Note 6 (Long-Term Water Assets) of the Notes to Consolidated Financial Statements for additional information regarding our water assets.
Approximately 256,000 acres are used for two grazing leases, which account for 36% of total revenues from ranch operations at December 31, 2023. Game management offers a wide variety of guided big game hunts, including trophy Rocky Mountain elk, deer, turkey and wild pig. We offer guided hunts and memberships for both the Spring and Fall hunting seasons.
Game management offers a wide variety of guided big game hunts, including trophy Rocky Mountain elk, deer, turkey and wild pig. We offer guided hunts and memberships for both the Spring and Fall hunting seasons. At December 31, 2024, game management accounted for 38% of the total revenue from ranch operations.
Pricing for nut and grape crops is particularly sensitive to the size of each year’s world crop, prior year inventory carry forward, and demand for those crops. The U.S. almond industry projects 2023 yields to be about 2.40 billion pounds compared to 2.57 billion pounds during the previous year.
Pricing for nut and grape crops is particularly sensitive to the size of each year’s world crop, prior year inventory carry forward, and demand for those crops. The almond industry projected 2024 yields to be about 2.6 billion pounds, down from the previous report of over 3.0 billion pounds.
Brown has worked exclusively in the real estate industry, both with public and privately held companies, as well as Real Estate Investment Trusts. Mr. Brown earned a Bachelor of Science, Accountancy, from Northern Illinois University.
Brown served as Chief Financial Officer at PREP Property Group, a commercial real estate company. Over the course of more than three decades, Mr. Brown has worked exclusively in the real estate industry, both with public and privately held companies, as well as Real Estate Investment Trusts. Mr. Brown earned a Bachelor of Science, Accountancy, from Northern Illinois University.
Centennial at Tejon Ranch, or Centennial, had entitlements approved in 2018, and received legislative approvals in 2019 from the Los Angeles County Board of Supervisors.
The Grapevine at Tejon Ranch, or Grapevine, has approved entitlements for 12,000 units and 5 million square feet of commercial development. Centennial at Tejon Ranch, or Centennial, had entitlements approved in 2018, and received legislative approvals in 2019 from the Los Angeles County Board of Supervisors.
As we embark on our mixed-use master planned communities, we understand that it can take up to 25 years, or longer, to complete from commencement of construction. The entitlement process for development of property in California is complex, lengthy (spanning multiple years) and costly, involving numerous federal, state, and county regulatory approvals.
As we embark on our mixed-use master planned communities, we expect that full build out may take 25 years or longer from the start of construction. The entitlement process for development of property in California is inherently complex, lengthy (often spanning multiple years) and costly, requiring approvals at federal, state, and county levels.
Some vacancy was returned to the market, and the overall vacancy rate in the San Fernando Valley increased by 30 basis points to 1.2%, while in Ventura County, it decreased by 60 basis points to 2.0%.
Some vacancy was returned to the market, and the overall vacancy rate in the San Fernando Valley increased by 60 basis points to 2.5% and remained unchanged at 2.2% in Ventura county, while net absorption was negative in the Valley and positive in Ventura County.
On May 26, 2023, we filed a Notice of Appeal, thereby appealing the Superior Court’s decision to the Second District of the California Court of Appeal. On June 27, 2023, CBD/CNPS cross-appealed the Superior Court’s ruling.
On May 26, 2023, we filed a Notice of Appeal, thereby appealing the Superior Court’s decision to the Second District of the California Court of Appeal. On June 27, 2023, CBD/CNPS cross-appealed the Superior Court’s ruling. Briefing at the Court of Appeal is complete and the Court of Appeal has calendared an April 4, 2025 hearing date for this matter.
At Centennial, at least 50% of the energy supply is intended to be produced by on-site renewable sources, and natural gas use in the community will be limited to essential commercial uses only. • At Grapevine, like Centennial, 50% or more of its energy supply is intended to be produced on site by renewable sources, and natural gas will not be installed in homes. • All homes in Mountain Village will feature roof-top photovoltaic solar arrays and battery energy storage systems, where required by code.
At Centennial, at least 50% of the energy supply is intended to be produced by on-site renewable sources, and natural gas use in the community will be limited to essential commercial uses only. • At Grapevine, like Centennial, 50% or more of its energy supply is intended to be produced on site by renewable sources, and natural gas will not be installed in homes. • All homes in MV will feature roof-top photovoltaic solar arrays and battery energy storage systems, where required by code. 25 Air Quality • The Company has contracted with the San Joaquin Valley Unified Air Pollution Control District, or SJVUAPCD, to pre-mitigate air emissions including GHG emissions related to the Company’s current development at TRCC-East and future development at MV and Grapevine.
Velasquez Senior Vice President, Chief Accounting Officer 2022 57 Michael R.W. Houston Senior Vice President, General Counsel & Secretary 2023 49 A description of present and prior positions with us, and business experience is given below. Mr. Bielli has been employed by the Company since September 2013. Mr.
Houston Senior Vice President, General Counsel & Secretary 2023 50 A description of present and prior positions with us, and business experience is given below. Mr. Bielli has been employed by the Company since September 2013 and, as previously disclosed, will retire on March 31, 2025. Mr.
The uncertainty of estimated costs to completion is compounded by the potential impact of inflation, which will fluctuate with the equally uncertain completion dates for our projects. 18 19 Mountain Village at Tejon Ranch MV is planned to be an exclusive, low-density, resort-based community that will provide its owners and guests with a wide variety of recreational opportunities, lodging and spa facilities, putting greens, a range of housing options, and other exclusive services and amenities that are designed to distinguish MV as the resort community of choice for the Southern California market.
We have obtained entitlements on MV and prevailed in litigation in 2012, and Grapevine was reapproved unanimously by the Kern County Board of Supervisors in 2019 and prevailed in litigation in 2021. 18 19 Mountain Village at Tejon Ranch MV is planned to be an exclusive, low-density, resort-based community that will provide its owners and guests with a wide variety of recreational opportunities, lodging and spa facilities, putting greens, a range of housing options, and other exclusive services and amenities that are designed to distinguish MV as the resort community of choice for the Southern California market.
Brown served as Executive Vice President, Chief Financial Officer, and Treasurer at Alexander & Baldwin, Inc., a commercial real estate company, from May 2019 to November 2022. From February 2018 to May 2019, Mr. Brown served as Chief Financial Officer at PREP Property Group, a commercial real estate company. Over the course of more than three decades, Mr.
Mr. Brown has been employed by us since May 2023 as Executive Vice President and Chief Financial Officer. Prior to joining the Company, Mr. Brown served as Executive Vice President, Chief Financial Officer, and Treasurer at Alexander & Baldwin, Inc., a commercial real estate company, from May 2019 to November 2022. From February 2018 to May 2019, Mr.
Year of Lease Expiration Number of Expiring Leases Rentable Square Footage of Expiring Leases Annualized Base Rent 1 Percentage of Annual Minimum Rent 2024 3 6,810 $266 3.83% 2025 5 61,708 552 7.95% 2026 8 65,367 536 7.72% 2027 3 1,201 225 3.24% 2028 6 90,131 458 6.59% 2029 2 1 1,394,000 4,403 63.40% 2030 3 2 — 68 0.98% 2031 — — 0 —% 2032 1 3,750 152 2.19% 2033 1 125,453 82 1.18% 2034 1 1,801 76 1.09% Thereafter 2 64,004 127 1.83% 1 - Annualized base rent is calculated as monthly base rent (cash basis) per the lease, as of the reporting period, multiplied by 12.
Year of Lease Expiration Number of Expiring Leases Rentable Square Footage of Expiring Leases Annualized Base Rent 1 Percentage of Annual Minimum Rent 2025 9 68,518 $902 12.49% 2026 8 65,367 $542 7.51% 2027 3 1,201 $232 3.21% 2028 6 90,131 $461 6.39% 2030 2 3 1,394,000 $4,645 64.34% 2032 1 3,750 $152 2.11% 2033 1 125,453 $82 1.14% 2034 1 1,801 $76 1.05% Thereafter 2 64,004 $127 1.76% 1 Annualized base rent is calculated as monthly base rent (cash basis) per the lease, as of the reporting period, multiplied by 12.
Name Office Held since Age Gregory S. Bielli President and Chief Executive Officer, Director 2013 63 Allen E. Lyda Executive Vice President and Chief Operating Officer 2022 66 Brett A. Brown Executive Vice President & Chief Financial Officer 2023 59 Hugh McMahon Executive Vice President, Real Estate 2014 57 Robert D.
Name Office Held since Age Gregory S. Bielli President and Chief Executive Officer, Director 2013 64 Matthew Walker Chief Operating Officer 2025 54 Brett A. Brown Executive Vice President & Chief Financial Officer 2023 60 Hugh McMahon Executive Vice President, Real Estate 2014 58 Robert D. Velasquez Senior Vice President, Chief Accounting Officer 2022 58 Michael R.W.
The commercial component of the project is the 160,000 square foot commercial center that we call Farm Village (shown above). Farm Village will serve as the commercial center and community gathering place for MV residents and visitors, as well as the gateway to MV.
Farm Village will serve as the commercial center and community gathering place for MV residents and visitors, as well as the gateway to MV.
TRCC Entitlements The following is a summary of the Company's commercial, retail and industrial real estate developments as of December 31, 2023: ($ in thousands) Project Cost to Date Estimated Cost to Complete Total Estimated Cost at Completion Estimated Completion Date Tejon Ranch Commerce Center $ 101,421 $ 98,206 $ 199,627 TBD Less: Reimbursements from TRPFFA 1 86,276 45,546 131,822 TBD TRCC Development Costs, net $ 15,145 $ 52,660 $ 67,805 1 The Tejon Ranch Public Facilities Financing Authority, or TRPFFA, is a joint powers authority formed by Kern County and Tejon-Castac Water District, or TCWD, to finance public infrastructure within the Company’s Kern County developments.
The TRCC/Rock Outlet Center LLC operates the Outlets at Tejon. 14 TRCC Entitlements The following is a summary of the Company's commercial, retail and industrial real estate developments as of December 31, 2024: ($ in thousands) Project Cost to Date Estimated Cost to Complete Total Estimated Cost at Completion Tejon Ranch Commerce Center $ 112,841 $ 82,277 $ 195,118 Less: Reimbursements from TRPFFA 1 98,761 33,061 131,822 TRCC Development Costs, net $ 14,080 $ 49,216 $ 63,296 1 TRPFFA is a joint powers authority formed by Kern County and TCWD to finance public infrastructure within the Company’s Kern County developments.
We have approximately 2,000 acres under lease to National for the purpose of manufacturing Portland cement from limestone deposits found on the leased acreage. National owns and operates a cement manufacturing plant on our property with a production capacity in excess of 1,000,000 tons of cement per year.
National owns and operates a cement manufacturing plant on our property with a production capacity in excess of 1,000,000 tons of cement per year. The amount of payment that we receive under the lease is based upon shipments from the cement plant.
General Environmental Regulation Our operations are subject to federal, state, and local environmental laws and regulations, including laws relating to water, air, solid waste, and hazardous substances.
In addition, the Ranch Operations segment manages, and includes the expenses for the upkeep, maintenance, and security, of all 270,000 acres of land. General Environmental Regulation Our operations are subject to federal, state, and local environmental laws and regulations, including laws relating to water, air, solid waste, and hazardous substances.
The first tentative tract map for the project, which includes 752 residential lots, was approved by Kern County in 2017. The first final map for the project consisting of 401 residential lots and parcels for hospitality, amenities, and public uses was approved by Kern County in December 2021.
The first final map for the project consisting of 401 residential lots and parcels for hospitality, amenities, and public uses was approved by Kern County in December 2021. The commercial component of the project is the 160,000 square foot commercial center that we call Farm Village (shown above).
This allows us to combine our resources with other real estate companies and gain greater access to capital, share in the risks of real estate developments and share in the operating expenses. More importantly, it allows us to better manage the deployment of our capital for entitlement and litigation efforts, and increase our leasing portfolio.
Joint Ventures We use joint ventures to advance our development projects at TRCC. This allows us to combine our resources with other real estate companies and gain greater access to capital, share in the risks of real estate developments and share in the operating expenses.
Terra Vista at Tejon In 2021, the Kern County Board of Supervisors approved a Conditional Use Permit (CUP) which authorizes the development of a multi-family apartment complex within TRCC.
Annualized base rent shown in thousands. 2 This amount includes 32 acres of the PEF ground lease. For the year ended December 31, 2024, we had three lease renewals. Terra Vista at Tejon In 2021, the Kern County Board of Supervisors approved a Conditional Use Permit (CUP) which authorizes the development of a multi-family apartment complex within TRCC.
We have additional water resources, such as groundwater and surface sources, and those of the water districts we are in that allow us to have sufficient water for our farming needs. It is too early in the year to determine the impact of 2024 water supplies on 2024 California crop production for almonds, pistachios, and wine grapes.
It is too early in the year to determine the impact of 2025 water supplies on 2025 California crop production for almonds, pistachios, and wine grapes.
We have obtained entitlements on MV and the first approved final map for the project consisting of 401 residential lots and parcels for hospitality, amenities, and public uses. The Grapevine at Tejon Ranch, or Grapevine, has approved entitlements for 12,000 units and 5 million square feet of commercial development.
Our mixed-use master planned residential developments have been approved to collectively include up to 35,278 housing units, and more than 35 million square feet of commercial space. We have obtained entitlements on MV and the first approved final map for the project consisting of 401 residential lots and parcels for hospitality, amenities, and public uses.
However, the abundant rain and snow has vastly improved the water situation, while shipping logistics continue to improve. We will not know the impact of current weather conditions on 2024 production until the early summer of 2024. Labor costs, both internal and through labor contractors, continue to increase and the Company expects this trend to continue over the foreseeable future.
The timing of the rains also increased cultural costs within grapes to fight higher levels of mildew in the vineyards. We will not know the impact of current weather conditions on 2025 production until summer of 2025. Labor costs, both internal and through labor contractors, continue to increase and the Company expects this trend to continue over the foreseeable future.
A key element of our strategy is to entitle and then develop large-scale mixed-use master planned residential and commercial/industrial real estate projects to serve the growing populations of Southern and Central California. Our mixed-use master planned residential developments have been approved to collectively include up to 35,278 housing units, and more than 35 million square feet of commercial space.
A key element of our strategy is to entitle and then develop large-scale mixed-use master planned residential and commercial/industrial real estate development projects to serve the growing populations of Southern and Central California. An active example of this strategy is the TRCC mixed-use development, which was entitled and prevailed in litigation in 2007.
Such factors include litigation and a changing regulatory environment.
Such factors include litigation and a changing regulatory environment. Note: Grapevine North's entitlement efforts have not yet begun.
Customers Our PEF power plant lease accounted for 11% of total revenues in 2023, 6% in 2022 and 8% in 2021. No other recurring customer represents 5% or more of our revenues in 2023, 2022 and 2021.
Customers Our PEF power plant lease accounted for 11% of total revenues in 2024, 11% in 2023 and 6% in 2022. No other recurring customer represented 5% or more of our revenues in 2024, 2023 and 2022. Organization Tejon Ranch Co. is a Delaware corporation incorporated in 1987 to succeed the business operated as a California corporation since 1936.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeSTRATEGIC RISKS Strategic risk relates to the Company's future business plans and strategies, including the risks associated with the macro- and micro- environment in which we operate, including the demand for our products and services, the success of investments in our real estate development, technology and public policy. 28 Adverse changes in economic conditions in markets where we conduct our operations and where prospective purchasers of our future homes and commercial products live could reduce the demand for our products and, as a result, could adversely affect our business, results of operations, and financial condition.
Biggest changeSTRATEGIC RISKS Strategic risk relates to the Company's future business plans and strategies, including the risks associated with the macro- and micro- environment in which we operate, the demand for our products and services, the success of investments in our real estate development, technology and public policy.
Adverse changes in employment levels, job growth, consumer confidence, interest rates, and population growth, or an oversupply of product for sale or lease may reduce demand and depress prices and cause buyers to cancel their purchase agreements. This, in turn, could adversely affect our results of operations and financial condition.
Adverse changes in employment levels, job growth, consumer confidence, interest rates, and population growth, or an oversupply of product for sale or lease may reduce demand, depress prices, and cause buyers to cancel their purchase agreements. This, in turn, could adversely affect our results of operations and financial condition.
Our ability to develop our current industrial development has in the past and may in the future be adversely affected by circumstances beyond our control, including: work stoppages, labor disputes and shortages of qualified trades people; changes in laws relating to union organizing activity; and shortages, delays in availability, or fluctuations in prices of building materials (including as a result of inflation).
Our ability to develop our current industrial development has in the past and may in the future be adversely affected by circumstances beyond our control, including: work stoppages, labor disputes and shortages of qualified trades people; changes in laws relating to union organizing activity; and shortages, delays in availability, or fluctuations in prices of building materials (including as a result of inflation or tariffs).
Even if client tenants decide to renew or lease space, the terms of renewals or new leases, including the cost of any tenant improvements, concessions, and lease commissions, may be less favorable to us than current lease terms. Consequently, we could generate less cash flow from the affected properties than expected, which could negatively impact our business.
Even if tenants decide to renew or lease space, the terms of renewals or new leases, including the cost of any tenant improvements, concessions, and lease commissions, may be less favorable to us than current lease terms. Consequently, we could generate less cash flow from the affected properties than expected, which could negatively impact our business.
Any downturn in the economy or consumer confidence can also be expected to result in reduced housing demand and slower industrial development, which would negatively impact the demand for land we are developing. We are subject to various land use regulations and require governmental approvals and permits for our developments that could be denied .
Any downturn in the economy or consumer confidence can also be expected to result in reduced housing demand and slower industrial development, which would negatively impact the demand for land we are developing. 28 We are subject to various land use regulations and require governmental approvals and permits for our developments that could be denied .
Governmental policies affecting the agricultural industry, such as taxes, trade tariffs, duties, subsidies, import and export restrictions on commodities and commodity products, can influence industry profitability, the planting of certain crops, the location and size of crop production, whether unprocessed or processed commodity products are traded, and the volume and types of imports and exports.
Governmental policies affecting the agricultural industry, such as taxes, trade 32 tariffs, duties, subsidies, import and export restrictions on commodities and commodity products, can influence industry profitability, the planting of certain crops, the location and size of crop production, whether unprocessed or processed commodity products are traded, and the volume and types of imports and exports.
We cannot be certain that our client tenants will be able to bear the full burden of costs, such as real estate taxes, insurance, utilities, common area and other expenses that we pass along through our leases, or that such increased costs will not lead them, or other prospective client tenants, to seek space elsewhere.
We cannot be certain that our tenants will be able to bear the full burden of costs, such as real estate taxes, insurance, utilities, common area and other expenses that we pass along through our leases, or that such increased costs will not lead them, or other prospective tenants, to seek space elsewhere.
We may have to divert cash flow generated by other properties to meet our debt service payments, if any, or to pay other expenses related to owning the affected properties. We may experience increased operating costs, which may reduce profitability to the extent that we are unable to pass those costs on to client tenants.
We may have to divert cash flow generated by other properties to meet our debt service payments, if any, or to pay other expenses related to owning the affected properties. We may experience increased operating costs, which may reduce profitability to the extent that we are unable to pass those costs on to tenants.
The loss of key personnel could materially and adversely affect our results of operations, financial condition, or our ability to pursue land development. Our success will also depend in part on our ability to attract and retain additional qualified management personnel. 31 Volatile oil and natural gas prices could adversely affect our cash flows and results of operations.
The loss of key personnel could materially and adversely affect our results of operations, financial condition, or our ability to pursue land development. Our success will also depend in part on our ability to attract and retain additional qualified management personnel. Volatile oil and natural gas prices could adversely affect our cash flows and results of operations.
If a client tenant experiences a downturn in its business or other types of financial distress, it may be unable to make timely payments under its lease. Also, if our client tenants terminate early or decide not to renew their leases, we may not be able to re-lease the space.
If a tenant experiences a downturn in its business or other types of financial distress, it may be unable to make timely payments under its lease. Also, if our tenants terminate early or decide not to renew their leases, we may not be able to re-lease the space.
In addition, the registration and sale of any significant number of additional shares of our Common Stock will have the immediate effect of increasing the public float of our Common Stock and any such increase may cause the market price of our Common Stock to decline or fluctuate significantly. ITEM 1B. UNRESOLVED STAFF COMMENTS None. 34
In addition, the registration and sale of any significant number of additional shares of our Common Stock will have the immediate effect of increasing the public float of our Common Stock and any such increase may cause the market price of our Common Stock to decline or fluctuate significantly. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
We may also encounter unforeseen technical or other difficulties, which could result in cost increases with respect to our water resources. Moreover, our profitability is significantly affected by changes in the market price of water.
We may also encounter unforeseen technical or other difficulties, which could result in cost increases with respect to our water resources. 31 Moreover, our profitability is significantly affected by changes in the market price of water.
Moreover, oil and natural gas prices depend on factors we cannot control, such as: changes in foreign and domestic supply and demand for oil and natural gas; weather; political conditions in other oil-producing countries, including the possibilities of insurgency or war in such areas; prices of foreign exports; domestic and international drilling activity; price and availability of alternate fuel sources; the value of the U.S. dollar relative to other major currencies; the level and effect of trading in commodity markets; and the effect of worldwide energy conservation measures and governmental regulations.
Moreover, oil and natural gas prices depend on factors we cannot control, such as: changes in foreign and domestic supply and demand for oil and natural gas; weather; political conditions in other oil-producing countries, including the possibilities of insurgency or war in such areas; prices of foreign exports; domestic and international drilling activity and related policies; price and availability of alternate fuel sources; the value of the U.S. dollar relative to other major currencies; the level and effect of trading in commodity markets; and the effect of worldwide energy conservation measures and governmental regulations.
We are subject to environmental regulations and opposition from environmental groups that could cause delays and increase the costs of our development efforts or preclude such development entirely .
We are subject to environmental regulations and opposition from environmental groups that cause delays and increase the costs of our development efforts or preclude such development entirely .
Our failure, or perceived failure, to achieve these goals and objectives on a timely basis, or at all, could adversely affect our reputation, stock price, operations, financial performance and growth, and expose us to increased scrutiny from the investment community, as well as enforcement authorities.
Our pursuit of, or our failure or perceived failure to achieve, these goals and objectives on a timely basis, or at all, could adversely affect our reputation, stock price, operations, financial performance and growth, and expose us to increased scrutiny from the investment community, as well as enforcement authorities.
Credit risk is the risk of financial loss arising from a customer or counterparty failure to meet its contractual obligations. We face credit risk in our industrial businesses, as well as in our investing and leasing activities and derivative financial instruments activities.
Credit risk is the risk of financial loss arising from a customer or counterparty failure to meet its contractual obligations. We face credit risk in our commercial businesses, as well as in our investing and leasing activities and derivative financial instruments activities.
From time to time, we experience shortages or increased costs of labor and supplies or other circumstances beyond our control that cause delays or increased costs within our industrial development, which can adversely affect our operating results.
From time to time, we experience shortages or increased costs of labor and supplies or other circumstances beyond our control that cause delays or increased costs within our commercial development, which can adversely affect our operating results.
In addition, any changes to income tax laws that would reduce or eliminate tax deductions or incentives to homeowners, such as a change limiting the deductibility of real estate taxes or interest on home mortgages, could make housing less affordable or otherwise reduce the demand for housing, which in turn could reduce future sales.
In addition, any changes to federal or state income tax laws that would reduce or eliminate tax 29 deductions or incentives to homeowners, such as a change limiting the deductibility of real estate taxes or interest on home mortgages, could make housing less affordable or otherwise reduce the demand for housing, which in turn could reduce future sales.
The real estate development industry is cyclical and is significantly affected by changes in general and local economic conditions, including: • Employment levels 30 • Availability of financing • Interest rates • Consumer confidence • Demand for the developed product, whether residential or industrial • Supply of similar product, whether residential or industrial The process of a project's development begins, and financial and other resources are committed long before a real estate project comes to market, which could occur at a time when the real estate market is depressed.
The real estate development industry is cyclical and is significantly affected by changes in general and local economic conditions, including: • Employment levels • Availability of financing and insurance • Interest rates • Consumer confidence • Demand for the developed product, whether residential or commercial • Supply of similar product, whether residential or commercial • Climate and weather conditions The process of a project's development begins, and financial and other resources are committed long before a real estate project comes to market, which could occur at a time when the real estate market is depressed.
Federal and state environmental laws also govern the construction and operation of our projects and require compliance with various environmental regulations, including analysis of the environmental impact of our projects and evaluation of our reduction in the projects’ carbon footprint and greenhouse gas emissions.
Federal and state environmental laws also govern the construction and operation of our projects and require compliance with various environmental regulations, including analysis of the environmental impact of our projects and evaluation of our reduction in the projects’ carbon footprint and GHG emissions.
As of March 6, 2024, directors and members of our executive management team beneficially owned or controlled approximately 22.6% of our Common Stock. Investors who purchase our Common Stock may be subject to certain risks due to the concentrated ownership of our Common Stock.
As of March 6, 2025, directors and members of our executive management team beneficially owned or controlled approximately 21.6% of our Common Stock. Investors who purchase our Common Stock may be subject to certain risks due to the concentrated ownership of our Common Stock.
A failure to comply with these requirements could allow the lending bank to terminate the availability of funds under our revolving credit facility and/or cause any outstanding borrowings to become due and payable prior to maturity. MARKET RISKS Market risk relates to the functioning of the marketplace.
A failure to comply with these requirements could allow the lending bank to terminate the availability of funds under our revolving credit facility and/or cause any outstanding borrowings to become due and payable prior to maturity. MARKET RISKS Market risk relates to the functioning of the New York Stock Exchange.
In addition, adverse decisions arising from any litigation increase the costs and length of time to obtain ultimate approval of a project and could adversely affect the design, scope, plans and profitability of a project.
In addition, adverse decisions arising from any litigation have increased and may again increase the costs and length of time to obtain ultimate approval of a project and could adversely affect the design, scope, plans and profitability of a project.
We have in the past and may in the future encounter other difficulties in developing our land, including: • Difficulty in securing adequate water resources for future developments; • Natural risks, such as geological and soil problems, earthquakes, fire, heavy rains and flooding, and heavy winds; • Shortages of qualified trades people; • Reliance on local contractors, who may be inadequately capitalized; • Shortages of materials; and • Increases in the cost of materials.
We have in the past and may in the future encounter other difficulties in developing our land, including: • Difficulty in securing adequate water resources for future developments; • Natural risks, such as geological and soil problems, earthquakes, fire, heavy rains and flooding, and heavy winds; • Shortages of qualified trades people; • Reliance on local contractors, who may be inadequately capitalized or have limited availability; • Shortages of materials; and • Increases in the cost of materials, including as a result of tariffs or a trade war.
Natural and man-made disasters, public health crises, political instability, and other potentially catastrophic events may have an adverse impact on our business and operating results and could decrease the value of our assets.
Natural and man-made disasters, public health crises, political instability, global conflicts, including trade wars, and other potentially catastrophic events may have an adverse impact on our business and operating results and could decrease the value of our assets.
Catastrophic events occurring anywhere in the world may result in declining economic activity, which could reduce the demand for, and the value of, our properties. To the extent that catastrophic events impact our client tenants, their businesses similarly could be adversely affected, including their ability to continue to honor their lease obligations.
Catastrophic events occurring in California, the United States, or globally may result in declining economic activity, which could reduce the demand for, and the value of, our properties. To the extent that catastrophic events impact our tenants, their businesses similarly could be adversely affected, including their ability to continue to honor their lease obligations.
ITEM 1A. RISK FACTORS The risks and uncertainties described below are not the only ones facing the Company. If any of the following risks occur, our business, financial condition, results of operations or future prospects could be materially adversely affected. Our strategy, focused on more aggressive development of our land, involves significant risk and could result in operating losses.
ITEM 1A. RISK FACTORS The material risks and uncertainties described below make investing in our securities risky. If any of the following risks occur, our business, financial condition, results of operations or future prospects could be materially adversely affected. Our strategy, focused on more aggressive development of our land, involves significant risk and could result in operating losses.
The issues most commonly cited in opponents’ public comments include the poor air quality of the San Joaquin Valley air basin, potential impacts of projects on the California condor and other species of concern, the potential for our lands to function as wildlife movement corridors, potential impacts of our projects on traffic and air quality in Los Angeles County, emissions of greenhouse gases, water availability and criticism of proposed development in rural areas as being “sprawl.” In addition, California has a specific statutory and regulatory scheme intended to reduce greenhouse gas emissions in the state and efforts to enact federal legislation to address climate change concerns could require further reductions in our projects’ carbon footprint in the future. 29 Until final permits are received, litigation is complete, and final maps are received, we will have a limited inventory of real estate .
The issues most commonly cited in opponents’ public comments include the poor air quality of the San Joaquin Valley air basin, potential impacts of projects on the California condor and other species of concern, the potential for our lands to function as wildlife movement corridors, potential impacts of our projects on traffic and air quality in Los Angeles County, GHG emissions, water availability and criticism of proposed development in rural areas as being “sprawl.” In addition, California has a specific statutory and regulatory scheme intended to reduce GHG emissions in the state and any efforts to enact federal legislation to address climate change concerns could require further reductions in our projects’ carbon footprint in the future.
The land use approval processes we must follow to ultimately develop our projects have become increasingly complex. Moreover, the statutes, regulations and ordinances governing the approval processes provide third parties the opportunity to challenge the proposed plans and approvals.
The land use approval processes we must follow to ultimately develop our projects have become increasingly complex. Moreover, the statutes, regulations and ordinances governing the approval processes provide third parties the opportunity to challenge the proposed plans and approvals, and we have repeatedly experienced such legal challenges related to our real estate development projects.
Each of our four current and planned real estate projects, TRCC, Centennial, MV, and Grapevine involve obtaining various governmental agency permits, local government permits, such as building permits, overcoming litigation, and receiving final maps from local jurisdictions.
Until final permits are received, litigation is complete, and final maps are received, we will have a limited inventory of real estate . Each of our four current and planned real estate projects, TRCC, Centennial, MV, and Grapevine involve obtaining various governmental agency permits, local government permits, such as building permits, overcoming litigation, and receiving final maps from local jurisdictions.
However, we cannot provide assurance that a security breach, cyber-attack, data theft or other significant systems failure will not occur in the future, and such occurrences could have a material and adverse effect on our consolidated results of operations or financial position. 32 Increased cybersecurity requirements, vulnerabilities, threats and more sophisticated and targeted computer crime could pose a risk to our systems, networks, products, solutions, services and data.
However, we cannot provide assurance that a security breach, cyber-attack, data theft or other significant systems failure will not occur in the future, and such occurrences could have a material and adverse effect on our consolidated results of operations or financial position.
If our client tenants fail to make rental payments under their leases, our financial condition and cash flows would be adversely affected. Our inability to renew leases or re-lease space on favorable terms as leases expire may significantly affect our business. Some of our revenues are derived from rental payments and reimbursement of operating expenses under our leases.
Our inability to renew leases or re-lease space on favorable terms as leases expire may significantly affect our business. Some of our revenues are derived from rental payments and reimbursement of operating expenses under our leases.
Our reserves and production will decline from their current levels. The rate of production from oil and natural gas properties generally decline as reserves are produced. Any decline in production or reserves could materially and adversely affect our future cash flow, liquidity and results of operations. Water delivery and water availability continues to be a long-term concern within California.
Any decline in production or reserves could materially and adversely affect our future cash flow, liquidity and results of operations. Water delivery and water availability continues to be a long-term concern within California.
The Revolving Credit Facility requires compliance with three financial covenants: (a) total liabilities divided by tangible net worth not greater than 0.55 to 1.00 at each year end; (b) a debt service coverage ratio not less than 1.50 to 1.00 as of each year end on a rolling four quarter basis; and (c) a liquidity ratio not less than 2.00 to 1.00 at each year end.
The factors that affect our ability to generate cash can also affect our ability to raise additional funds for these purposes through the addition of debt, the sale of equity, refinancing existing debt, or the sale of assets. 33 Our revolving credit facility requires compliance with three financial covenants: (a) total liabilities divided by tangible net worth not greater than 0.55 to 1.00 at each year end; (b) a debt service coverage ratio not less than 1.50 to 1.00 as of each year end on a rolling four quarter basis; and (c) a liquidity ratio not less than 2.00 to 1.00 at each year end.
In addition, in California, third parties have the ability to file litigation challenging the approval of a project, which they usually do by alleging inadequate disclosure and mitigation of the environmental impacts of the project. Certain groups opposed to development have made clear they intend to oppose our projects vigorously, so litigation challenging their approval is expected.
In addition, in California, third parties have the ability to file litigation challenging the approval of a project, which they usually do by alleging inadequate disclosure and mitigation of the environmental impacts of the project.
Ultimately, our ability to sell or lease lots may decline as a result of weak economic conditions or restrictive regulations. We have in the past and may in the future encounter other risks that could impact our ability to develop our land .
Ultimately, our ability to sell or lease lots may decline as a result of weak economic conditions or restrictive regulations. Risks and challenges we have faced and may continue to face in land development .
Substantial or extended decline in the price of oil and gas could have a negative impact on our business, liquidity, financial condition and results of operations. Substantial or extended declines in future natural gas or crude oil prices could have an adverse effect on our future business, liquidity, financial condition and results of operations.
Substantial or extended decline in the price of oil and gas, future natural gas, or crude oil price could have a negative impact on our business, liquidity, financial condition and results of operations. Our reserves and production will decline from their current levels. The rate of production from oil, natural gas, and mining properties generally decline as reserves are produced.
Any slowdown in the economy could negatively impact our access to credit markets and may limit our sources of liquidity in the future and potentially increase our costs of capital. 33 We regularly assess our projected capital requirements to fund future growth in our business, repay our debt obligations, and support our other general corporate and operational needs, and we regularly evaluate our opportunities to raise additional capital.
We regularly assess our projected capital requirements to fund future growth in our business, repay our debt obligations, and support our other general corporate and operational needs, and we regularly evaluate our opportunities to raise additional capital.
It is also possible in a rural area like ours that no market for the project will develop as projected. The inability of a client tenant to pay us rent adversely affects our business. Our commercial revenues are derived primarily from rental payments and reimbursement of operating expenses under our leases.
It is also possible in a rural area like ours that no market for the project will develop as projected. Farming and mineral resources are also subject to business cycles and/or seasonality that could have a material impact to the business. The inability of a tenant to pay us rent adversely affects our business.
As a result, the prospect of third-party challenges to planned real estate developments provides additional uncertainties in real estate development planning and entitlements. Third-party challenges in the form of litigation can result in denial of the right to develop, and, by their nature, adversely affect the length of time and the cost required to obtain the necessary approvals.
As a result, the prospect and realization of third-party challenges to planned real estate developments provides additional uncertainties in real estate development planning and entitlements.
Currently, the Centennial entitlement approval has been opposed through litigation against the Company and Los Angeles County.
Certain groups opposed to development have made clear they intend to oppose our projects vigorously, so litigation challenging their approval is expected and has, in the past, occurred. Currently, the Centennial entitlement approval has been opposed through litigation against the Company and Los Angeles County.
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The factors that affect our ability to generate cash can also affect our ability to raise additional funds for these purposes through the addition of debt, the sale of equity, refinancing existing debt, or the sale of assets.
Added
Moreover, some of the factors, events and contingencies discussed below may have occurred in the past, but the disclosures below are not representations as to whether or not the factors, events, or contingencies have occurred in the past, and instead reflect our beliefs and opinions as to the factors, events, or contingencies that could materially and adversely affect us in the future.
Added
Adverse changes in economic conditions in markets where we conduct our operations and where prospective purchasers of future homes and commercial products live could reduce the demand for our products and, as a result, could adversely affect our business, results of operations, and financial condition.
Added
Additionally, increasing insurance costs, particularly in wildfire-prone areas such as California, may make homeownership and commercial property leasing less affordable for prospective buyers and tenants. Rising premiums or limited availability of fire insurance could further suppress demand and negatively impact property values, which, in turn, could adversely affect our results of operations and financial condition.
Added
Third-party challenges in the form of litigation have resulted in denial of the right to develop, and, by their nature, adversely affect the length of time and the cost required to obtain the necessary approvals, and may do so again in the future.
Added
Our commercial revenues are derived primarily from rental payments and reimbursement of operating expenses under our leases. If our tenants fail to make rental payments under 30 their leases, or negotiate lower rates or extended payment terms, our financial condition and cash flows have been and could again be adversely affected.
Added
Increased cybersecurity requirements, vulnerabilities, threats and more sophisticated and targeted computer crime could pose a risk to our systems, networks, products, solutions, services and data.
Added
Such plans and aspirations may also fail to satisfy all of our stakeholders, as they reflect a variety of views that may support or disagree with these initiatives.
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Any slowdown in the local, national, or global economy could negatively impact our access to credit markets and may limit our sources of liquidity in the future and potentially increase our costs of capital.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changePegues is an experienced information technology professional in our information technology department and has served as Director of IT since 2021. He works with the Company’s internal information technology department and external partners to monitor and improve our cybersecurity capabilities. Mr.
Biggest changePegues has served as Director of IT since 2021. He works with the Company’s internal information technology department and external partners to monitor and improve our cybersecurity capabilities. Mr. Pegues has guided, in coordination with other management staff, strategic technology, risk mitigation, process improvement initiatives, and digital initiatives.
Our risk management program also assesses third party risks, and we perform third-party risk management to identify and mitigate risks from third parties, such as vendors, suppliers, and other business partners associated with our use of third-party service providers.
Our risk management program also assesses third party risks, and we perform third-party risk management to identify and mitigate risks from third parties, such as vendors, suppliers, and other business partners associated with our use of third-party 34 service providers.
He earned his Master of Science in Information Technology with Specialization in Project Management from Colorado Technical University and his Bachelor of Science in Business Management with Specialization in Information Technology from Colorado Technical University. Robert D.
His experience in technology and cybersecurity, spans a career of more than 15 years. He earned his Master of Science in Information Technology with Specialization in Project Management from Colorado Technical University and his Bachelor of Science in Business Management with Specialization in Information Technology from Colorado Technical University. Robert D.
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Pegues possesses a proven track record of guiding our 35 organization through strategic technology, risk mitigation, process improvement initiatives, and digital transformations. He also possesses extensive experience in technology and cybersecurity, gained over his career spanning more than 15 years.
Added
Third Party Risk Management The Company uses third-party service providers to assist us from time to time to identify, assess, and manage material risks from cybersecurity threats, including, for example, a managed service security provider that monitors certain of the Company’s computer networks and third-party hosted services.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeDWR has initiated consultation with the State Water Resources Control Board for possible State intervention. The White Wolf Subbasin is designated by DWR as a medium priority, non-critically overdrafted basin, and its GSP was required to be submitted to DWR by January 2022.
Biggest changeThe Kern Subbasin is designated by DWR as a high priority, critically overdrafted basin. GSPs submitted to DWR by the Groundwater Sustainability Agencies in the Kern Subbasin were determined to be inadequate, and DWR has initiated consultation with the State Water Resources Control Board (SWRCB) for possible State intervention.
Since then, a number of developments have occurred that affect or potentially affect SWP supplies from the Delta. One of these developments relates to the Coordinated Operation Agreement, or COA, that DWR and the Bureau of Reclamation, or the Bureau, which operates pumps in the Delta to supply water to its Central Valley Project, or CVP, entered into in 1986.
Since then, a number of developments have occurred that affect or potentially affect SWP supplies from the Delta. 37 One of these developments relates to the Coordinated Operation Agreement, or COA, that DWR and the Bureau of Reclamation, or the Bureau, which operates pumps in the Delta to supply water to its Central Valley Project, or CVP, entered into in 1986.
Regardless of any limitations on groundwater use that might result from SGMA, the Company's lands are in relatively good condition because of the diverse inventory of surface water supplies and banked water that the Company has access, to as mentioned above. There have been many environmental challenges regarding the movement of SWP water through the Sacramento Delta.
Regardless of any limitations on groundwater use that might result from SGMA, the Company's lands are in relatively good condition because of the diverse inventory of surface water supplies and banked water that the Company has access, to as mentioned above. There have been many environmental challenges regarding the movement of SWP water through the Sacramento - San Joaquin Delta.
Since 2006, we have banked 54,728 acre-feet of water from the Antelope Valley-East Kern Water Agency, or AVEK, which has been pumped from the California aqueduct and is currently retained in this water bank. We anticipate adding additional water to the water bank in the future, as water is available.
Since 2006, we have banked 54,728 acre-feet of water from the Antelope Valley-East Kern Water Agency, or AVEK, which has been diverted from the California Aqueduct and is currently retained in this water bank. We anticipate adding additional water to the water bank in the future, as water is available.
Approximately 247,000 acres of our land are located in Kern County, California. The Kern County general plan, or the “General Plan,” for this land contemplates continued commercial, resource utilization, farming, grazing and other agricultural uses, as well as certain new developments and uses, including residential and recreational facilities.
Approximately 247,000 acres of our land are located in Kern County, California. The Kern County government's general plan, or the General Plan, for this land contemplates continued commercial, resource utilization, farming, grazing and other agricultural uses, as well as certain new developments and uses, including residential and recreational facilities.
Any significant development on our currently undeveloped land would involve the construction of roads, utilities and other expensive infrastructure and would have to be done in a manner that accommodates a number of environmental concerns, including endangered species, wetlands issues, and greenhouse gas emissions.
Any significant development on our currently undeveloped land would involve the construction of roads, utilities and other expensive infrastructure and would have to be done in a manner that accommodates a number of environmental concerns, including endangered species, wetlands issues, and GHG emissions.
Portions of our land consist of mountainous terrain, much of which is not presently served by paved roads or by utility or water lines. Much of this property is included within the Conservation Agreement we entered into with five major environmental organizations in June 2008.
Portions of our land consist of mountainous terrain, much of which is not presently served by paved roads or by utility or water lines. Much of this property is included within the RWA we entered into with five major environmental organizations in June 2008.
Purchase costs are subject to annual cost increases based on the greater of the consumer price index or 3%, resulting in a 2024 purchase cost of $956 per acre-foot. The water purchased will ultimately be used in the development of the Company’s land for commercial/industrial development, residential development, and farming.
Purchase costs are subject to annual cost increases based on the greater of the consumer price index or 3%, resulting in a 2025 purchase cost of $986 per acre-foot. The water purchased will ultimately be used in the development of the Company’s land for commercial/industrial development, residential development, and farming.
The initial term of the water purchase agreement with Nickel runs through 2044 and includes a Company option to extend the contract for an additional 35 years. This contract allows us to purchase water each year. The purchase cost of water in 2023 was $928 per acre-foot.
The initial term of the water purchase agreement with Nickel runs through 2044 and includes a Company option to extend the contract for an additional 35 years. This contract allows us to purchase water each year. The purchase cost of water in 2024 was $957 per acre-foot.
During 2023, SWP allocations were 100% of contract levels, and WRMWSD was able to supply us with water from various sources that, when combined with our water sources provided sufficient water to meet our farming and real estate demands.
During 2024, SWP allocations were 40% of contract levels, and WRMWSD was able to supply us with water from various sources that, when combined with our water sources provided sufficient water to meet our farming and real estate demands.
ITEM 2. PROPERTIES Land Our approximately 270,000 acres include portions of the San Joaquin Valley, portions of the Tehachapi Mountains and portions of the western end of the Antelope Valley. Each of our five reporting segments uses various portions of this land.
ITEM 2. PROPERTIES Land Our approximately 270,000 acres include portions of the San Joaquin Valley, portions of the Tehachapi Mountains and portions of the western end of the Antelope Valley. Each of our five reporting segments uses various portions of this land, as indicated in Item 1.
Over time, we have also purchased water for our future use or sale. We have secured SWP entitlement under long-term SWP water contracts within the Tulare Lake Basin Water Storage District and the Dudley-Ridge Water District, totaling 3,444 acre-feet of SWP entitlement annually, subject to SWP allocations. These contracts extend through 2035.
Over time, we have also purchased water for our future use or sale. We have secured SWP entitlement under long-term SWP water contracts with the Tulare Lake Basin Water Storage District and the Dudley-Ridge Water District, totaling 3,444 acre-feet of SWP entitlement annually, subject to SWP allocations.
Accordingly, the Company is not required to recognize an obligation at December 31, 2023.
Accordingly, the Company is not required to recognize an obligation at December 31, 2024.
Proceeds from the sales of these bonds are to reimburse the Company for public infrastructure related to TRCC-East. We paid $2,775,000 and $2,899,000 in special taxes related to the CFDs in 2023 and 2022, respectively.
Proceeds from the sales of these bonds are to reimburse the Company for public infrastructure related to TRCC-East. We paid $3,191,000 and $2,775,000 in special taxes related to the CFDs in 2024 and 2023, respectively.
It is expected that we will have special tax payments in 2024 of $2,803,000, but this could change in the future based on the amount of bonds outstanding within each CFD and the amount of taxes paid by other owners and tenants.
It is expected that we will have special tax payments in 2025 of $3,642,000, but this could change in the future based on the amount of bonds outstanding within each CFD and the amount of taxes paid by other owners and tenants.
Both the entitlement and the banked water are the subject of a long-term water supply contract extending to 2035 between TCWD and the Company. TCWD is the water supplier to TRCC, and will be the principal water supplier for any significant mixed-use development in MV.
Both the SWP entitlement and the banked water are the subject of a long-term water supply contract extending to 2035 between TCWD and the Company. TCWD through its contract with the Company supplies water to TRCC, and will be the principal water supplier for any significant mixed-use development in MV.
Water Operations Our existing long-term water contracts with the Wheeler Ridge-Maricopa Water Storage District, or WRMWSD, provide for water entitlements and deliveries from the SWP to our agricultural and municipal/industrial operations in the San Joaquin Valley. The terms of these contracts extend to 2035.
Water Operations Our existing long-term water contracts with WRMWSD provide for water entitlements and deliveries from the SWP to our agricultural and municipal/industrial operations in the San Joaquin Valley. The terms of these contracts extend to 2035.
This area is accessible from Interstate 5 via Highway 138. Los Angeles County has adopted general plan policies that contemplate future residential development of portions of this land, subject to further assessments of environmental and infrastructure constraints. The Centennial master planned project is on our lands in Los Angeles County.
Los Angeles County has adopted general plan policies that contemplate future residential development of portions of this land, subject to further assessments of environmental and infrastructure constraints. The Centennial master planned project is on our lands in Los Angeles County.
The East CFD has placed liens on 1,931 acres of the Company’s land to secure payments of special taxes related to $72,055,000 of outstanding bond debt sold by TRPFFA for TRCC-East. At TRCC-West, the West CFD has no additional bond debt approved for issuance. At TRCC-East, the East CFD has $44,035,000 of additional bond debt authorized by TRPFFA.
The East CFD has placed liens on 1,931 acres of the Company’s land to secure payments of special taxes related to $95,660,000 of outstanding bond debt sold by TRPFFA for TRCC-East. At TRCC-West, the West CFD has no additional bond debt approved for issuance. At TRCC-East, the East CFD has $18,605,000 of additional bond debt authorized by TRPFFA.
Shortly after the 2019 BiOps were finalized, the State of California issued an Incidental Take Permit, or ITP, pursuant to the California Endangered Species Act, or CESA, which is generally more restrictive on pumping out of the Delta in comparison to the BiOps.
The State of California and various non-governmental organizations filed a legal challenge to the new BiOps. Shortly after the 2019 BiOps were finalized, the State of California issued an Incidental Take Permit, or ITP, pursuant to the California Endangered Species Act, or CESA, which is generally more restrictive on pumping out of the Delta in comparison to the BiOps.
Water from these sources may be more expensive than SWP water because of pumping costs and/or transfer costs. A 15% preliminary SWP water allocation has been made by the California Department of Water Resources, or DWR, for 2024. The current 15% allocation of SWP water will allow us to have sufficient water for our farming needs for the next year.
Water from these sources may be more expensive than SWP water because of pumping costs and/or transfer costs. The DWR has announced a 35% preliminary SWP water allocation for 2025. The current 35% allocation of SWP water will allow us to have sufficient water for our farming needs for the next year.
Interim uses may include the sale of portions of this water to third party users on an annual basis, until the water is fully used for the Company’s internal uses.
Interim uses may include the sale of portions of this water to third party users on an annual basis, until the water is needed to satisfy the Company’s water demands.
An interim operations plan for the Delta has been introduced that would govern Delta operations in the absence of final BiOps, and that plan is also the subject of legal challenges.
An interim operations plan for the Delta has been introduced that would govern Delta operations in the absence of final BiOps, and that plan is also the subject of legal challenges. The new BiOps were finalized and adopted in December 2024. These will supersede the 2019 BiOps.
Under the contracts, we are entitled to annual water for 5,496 acres of land, or 15,547 acre-feet of water subject to SWP allocations, which is adequate for our present farming operations.
Under the contracts, we are entitled to annual water for 5,496 acres of land, or 15,547 acre-feet of water subject to SWP allocations, which is adequate for our present farming operations. It is assumed that at the end of the current contract period, all water contracts will be extended for approximately the same amount of annual water.
TCWD, a local water district serving our land in the district and land we have sold in TRCC, has 5,749 acre-feet of SWP entitlement (also called Table A amount), subject to SWP allocations. In addition, TCWD has 65,005 acre-feet of water stored in Kern County water banks.
TCWD, a local water district whose service area includes land we own and land we have sold in TRCC, has 5,749 acre-feet of SWP entitlement (also called Table A amount), subject to SWP allocations. In addition, TCWD has 60,936 acre-feet of Company water stored in Kern County water banks for future uses.
The Board of Directors of the White Wolf GSA adopted the GSP for the White Wolf Subbasin and submitted it to DWR. In October 2023, DWR announced the approval of the GSP with only four minor correction items to be corrected in the five-year plan update due by 2027.
In October 2023, DWR announced the approval of the GSP with only four minor correction items to be corrected in the five-year plan update due by 2027. Groundwater resources in the White Wolf Subbasin are currently being managed to sustainability.
It is expected that new biological options will be issued in 2024. 38 Other Activities TRPFFA is a joint powers authority formed by Kern County and TCWD to finance public infrastructure within the Company’s Kern County developments. TRPFFA has created two Community Facilities Districts, or CFDs, the West CFD and the East CFD.
Construction is scheduled to begin in the year 2026, and full operations are expected by 2032. Other Activities TRPFFA is a joint powers authority formed by Kern County and TCWD to finance public infrastructure within the Company’s Kern County developments. TRPFFA has created two Community Facilities Districts, or CFDs, the West CFD and the East CFD.
At this time, Wheeler Ridge expects to be able to deliver our entire contract water entitlement in any year that the SWP allocations exceed 30% by drawing on its ground water wells and water banking assets. Based on historical records of water availability, we believe we have no material problems with our water supply.
At this time, Wheeler Ridge expects to be able to deliver our entire contract water entitlement in any year that the SWP allocations exceed 30% by drawing on its supplemental water purchases from other water districts, ground water wells and water banking assets.
Portions of our property also have available groundwater, which we believe would be sufficient to supply commercial development in the Interstate 5 corridor and support current agricultural operations.
Portions of our property also have available groundwater, which we believe would be sufficient to supply commercial development in the Interstate 5 corridor and support current agricultural operations. Groundwater rights in the Antelope Valley Basin have been adjudicated, which limits the availability of groundwater in that basin. In December of 2015, the judgement for the adjudication was finalized.
It is assumed that at the end of the current contract period, all water contracts will be extended for approximately the same amount of annual water. 36 In addition to the WRMWSD contract water entitlements, we have an additional water entitlement from the SWP sufficient to service a substantial amount of future residential and/or commercial development in Kern County.
In addition to the WRMWSD contract water entitlements, we have access to an additional water entitlement from the SWP sufficient to service a substantial amount of future residential and/or commercial development in Kern County.
In years where the supply of water is sufficient, both WRMWSD and TCWD are able to bank (percolate into underground aquifers) some of their excess supplies for future use.
In some years, there is also sufficient runoff from local mountain streams to allow us to capture some of this water in reservoirs and utilize it to supplement our other water supplies. In years where the supply of water is sufficient, both WRMWSD and TCWD are able to bank (percolate into underground aquifers) excess supplies for future use.
This is a process that DWR and the Bureau of Reclamation, or Bureau, jointly requested in 2016 and that resulted in new federal FWS and NMFS Biological Opinions, or BiOps, under Federal Endangered Species Act, or ESA, in 2019.
This is a process that DWR and the Bureau jointly requested in 2016 and that resulted in new federal FWS and NMFS BiOps under Federal Endangered Species Act, or ESA, in 2019. The 2019 BiOps were intended to enhance reliability of water available for pumping out of the Delta based on updated best available science.
A third development is the Reinitiation of Consultation on the Coordinated Long-Term Operation of the Central Valley Project and State Water Project.
The DCP is intended to increase the amount of water available for delivery across the Delta, particularly in wet years. A third development is the Reinitiation of Consultation on the Coordinated Long-Term Operation of the Central Valley Project and State Water Project.
The Castac Basin is a low priority basin, so there is no anticipation at this time of any restriction related to use of groundwater under SGMA.
The Castac Basin is a low priority basin so there is no anticipation at this time of any restriction related to use of groundwater. The Castac Basin GSA filed its GSP in 2020 and is still waiting for a final determination from DWR.
DWR and the SWP Contractors will continue to work on executing amendments to the water supply contracts that provide for addition of the DCP to the SWP. The DCP is intended to increase the amount of water available for delivery across the Delta, particularly in wet years.
This project is known as the Delta Conveyance Project, or DCP. DWR has approved the Final EIR for DCP. DWR and the SWP Contractors will continue to work on executing amendments to the water supply contracts that provide for addition of the DCP to the SWP.
For the water districts in which the Company participates in the San Joaquin Valley, Groundwater Sustainability Plans have been developed and submitted to the DWR for review. Through these plans, it will have to be demonstrated to the satisfaction of the DWR that the groundwater within the basins is sustainably managed by 2040 or 2042.
Through these plans, it will have to be demonstrated to the satisfaction of the DWR that the groundwater within the basins is sustainably managed by 2040 or 2042. To achieve sustainability, the GSPs could impose limitations on the use of groundwater.
In 2013, the Company completed the acquisition of a water purchase agreement that will allow and require the Company to purchase 6,693 acre-feet of water each year from the Nickel Family, LLC, or Nickel, through the Kern County Water Agency.
Since 2012, these contracts have been held by AVEK for our use and extend through 2035. The Company also has a water purchase agreement that requires the Company to purchase 6,693 acre-feet of water each year from the Nickel Family, LLC, or Nickel, through the Kern County Water Agency.
While the General Plan is intended to provide guidelines for land use and development, it is subject to amendment to accommodate changing circumstances and needs. We have three major master planned real estate projects in Kern County: MV, TRCC and Grapevine. The remainder of our land, approximately 23,000 acres, is in Los Angeles County.
We have three major master planned real estate projects in Kern County: MV, TRCC and Grapevine. 35 The remainder of our land, approximately 23,000 acres, is in Los Angeles County. This area is accessible from Interstate 5 via Highway 138.
To achieve sustainability, the GSPs could impose limitations on the use of groundwater. The Company's Kern County lands are located in the Kern Subbasin, the White Wolf Subbasin and the Castac Lake Basin.
The Company's Kern County lands are located in the Kern Subbasin, the White Wolf Subbasin and the Castac Lake Basin. Approximately 9% of the Company's Kern County land is within the Kern Subbasin, 21% within the White Wolf Subbasin, and 1% within the Castac Lake Basin. The land within Kern Subbasin remains undeveloped and is primarily used for cattle grazing.
Removed
In some years, there is also sufficient runoff from local mountain streams to allow us to capture some of this water in reservoirs and utilize it to offset some of the SWP water.
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While the General Plan is intended to provide guidelines for land use and development to third party entities like the Company, it is subject to amendment to accommodate changing circumstances and needs.
Removed
Ground water in the Antelope Valley Basin is subject to an adjudication of the water basin that limits groundwater pumping. 37 The Sustainable Groundwater Management Act, or SGMA, is a sustainable groundwater framework that became effective January 1, 2015.
Added
Water banked by TCWD is at the 36 request of the Company as a part of the water contract with TCWD.
Removed
The Kern Subbasin is designated by DWR as a high priority, critically overdrafted basin, and its GSP was required to be submitted to DWR by January of 2020.
Added
Based on historical records of water availability, we believe we have no material problems with our water supply.
Removed
After their initial submittal to DWR of their GSPs, DWR notified the Groundwater Sustainability Agencies in the Kern Subbasin of deficiencies in their GSPs, which were to be addressed to DWR’s satisfaction by July of 2022. The GSAs met that deadline. Upon evaluation of resubmitted plans, however, DWR determined that the basin is inadequate.
Added
Tejon Ranch was granted an annual groundwater production right of 1,634 acre-feet. The Sustainable Groundwater Management Act, or SGMA, is a sustainable groundwater framework applicable to the water districts in which the Company participates in the San Joaquin Valley, where Groundwater Sustainability Plans, or GSPs, have been developed and submitted to the DWR for review.
Removed
Originally envisioned as a two-tunnel system known as California WaterFix, that project was rescinded and has been replaced with a proposed downsized single-tunnel system referred to as the Delta Conveyance Project, or DCP. In January of 2020, DWR began the environmental review process for the DCP by issuance of a Notice of Preparation of an EIR under CEQA.
Added
Water use in this area is minimal, sustainably managed, and limited to domestic purposes for livestock troughs, with a primary reliance on surface water to support responsible land stewardship. Currently, only one well exists in this area of our land within the Kern Subbasin and it is operated by a third-party for limited agricultural use.
Removed
DWR circulated the Draft EIR for the DCP and the public comment period on the DEIR closed on December 16, 2022. DWR reviewed the comments received and has approved the Final EIR for DCP.
Added
The DWR has been actively consulting with the SWRCB regarding potential state intervention under the SGMA. This process began in March 2023 when DWR deemed the GSPs for six basins inadequate, prompting possible intervention by the SWRCB. These basins include the Chowchilla, Delta-Mendota, Kaweah, Tulare Lake, Tule, and Kern County subbasins.
Removed
The 2019 BiOps were intended to enhance reliability of water available for pumping out of the Delta based on updated best available science. The State of California and various non-governmental organizations filed a legal challenge to the new BiOps.
Added
On February 20, 2025, the SWRCB held a public hearing to consider a probationary designation for the Kern County Subbasin under SGMA. At the hearing, the Board members heard presentations from groundwater sustainability agencies (GSAs), Board staff, and other interested parties, and received public comments, before deciding to continue the hearing to September 17, 2025.
Added
By continuing the hearing, the Board is providing more time for the SWRCB staff to continue working with the Kern County Subbasin GSAs and finish resolving identified deficiencies in their GSPs. The White Wolf Subbasin is designated by DWR as a medium priority, non-critically overdrafted basin.
Added
The Company is also a participant in a water storage project, Sites Reservoir, located in Northern California, in the Sacramento Valley. The Sites Reservoir Project is led by the Sites Project Authority, a joint powers authority made up of irrigation agencies, water districts, cities, and counties.
Added
The Company is participating in the project through AVEK, with 500 acre feet, and through WRMWSD with an additional 500-acre feet. The project’s main goal is to capture more water during wet years, which is especially beneficial and necessary when the precipitation is higher than the snowpack. The reservoir can hold up to 1.5-million-acre feet.
Added
This project is one of the state's largest proposed water infrastructure projects and strongly supported by the State’s Governor. It also recently received over 100 million dollars of federal funding. The Authority is in the process of obtaining a water right permit for the Project.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeFor a discussion of legal proceedings, see Note 14 (Commitments and Contingencies) of the Notes to the Consolidated Financial Statements. ITEM 4. MINE SAFETY DISCLOSURES Not Applicable. 39 PART II
Biggest changeNone of these matters are expected, individually or in aggregate, to have a material adverse effect on the Company. 38 For a discussion of legal proceedings, see Note 13 (Commitments and Contingencies) of the Notes to the Consolidated Financial Statements. ITEM 4. MINE SAFETY DISCLOSURES Not Applicable. 39 PART II
ITEM 3. LEGAL PROCEEDINGS The Company is involved in various legal matters arising out of its operations in the normal course of business. None of these matters are expected, individually or in aggregate, to have a material adverse effect on the Company.
ITEM 3. LEGAL PROCEEDINGS The Company is involved in various legal matters arising out of its operations in the normal course of business.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our Common Stock trades under the symbol TRC on the New York Stock Exchange. As of February 29, 2024, there were 270 registered owners of record of our Common Stock.
Biggest changeITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our Common Stock trades under the symbol TRC on the New York Stock Exchange. As of February 28, 2025, there were 263 registered owners of record of our Common Stock.
No cash dividends were paid in 2023 or 2022 and at this time there is no intention of paying cash dividends in the future.
No cash dividends were paid in 2024 or 2023 and at this time there is no intention of paying cash dividends in the future.
Added
Purchase of Equity Securities The following table provides information regarding repurchases of our common stock during the year ended December 31, 2024: Period Total Number of Shares Purchased 1 Average Price Paid per Share 1 Total Number of Shares Purchased as Part of Publicly Announced Program 2 Maximum Fair Value of Shares that May Yet Be Purchased Under the Program 2 January 2024 1,204 $ 17.06 March 2024 11,152 $ 16.62 12,356 1 Represents shares of common stock that employees surrendered as part of the default option to satisfy withholding taxes in connection with the vesting of restricted stock awards under our stock incentive plan.
Added
Pursuant to the terms of our stock plan, such shares revert to available shares under the plan. 2 We do not have a publicly announced program to purchase shares of our common stock. Accordingly, there were no shares purchased as part of a publicly announced program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeDecember 31, 2022 December 31, 2021 Change ($ in thousands) Revenue Quantity Sold 2 Average Price Revenue Quantity Sold 2 Average Price Revenue Quantity Sold 2 Average Price ALMONDS (lbs.) Current year crop $ 2,851 1,267 $ 2.25 $ 2,257 945 $ 2.39 $ 594 322 $ (0.14) Prior crop years 3,216 1,584 2.03 670 377 1.78 2,546 1,207 0.25 Crop insurance 54 173 $ (119) Subtotal Almonds 1 $ 6,121 2,851 $ 2.13 $ 3,100 1,322 $ 2.21 $ 3,021 1,529 $ (0.08) PISTACHIOS (lbs.) Current year crop $ — — $ — $ 3,462 1,615 $ 2.14 $ (3,462) (1,615) $ (2.14) Prior crop years — — — — — — — — — Prior crop price adjustment 873 365 508 Crop insurance 1,577 466 1,111 Subtotal Pistachios 1 $ 2,450 — $ — $ 4,293 1,615 $ 2.14 $ (1,843) (1,615) $ (2.14) WINE GRAPES (tons) Current year crop $ 3,470 10 $ 347.00 $ 2,850 9 $ 316.67 $ 620 1 $ 30.33 Crop insurance — — — Subtotal Wine Grapes $ 3,470 10 $ 347.00 $ 2,850 9 $ 316.67 $ 620 1 $ 30.33 Other Hay $ 587 $ 408 $ 179 Other farming revenues 373 388 (15) Total farming revenues $ 13,001 $ 11,039 $ 1,962 1 Average price calculation reflects sale of almond and pistachio crops during the calendar reported year exclusive of any price adjustments. 2 Almond and pistachio units are presented in thousands of pounds while wine grapes are presented in thousands of tons. 2022 Operational Highlights: • During 2022, farming segment revenues increased $1,962,000, or 18%, from $11,039,000 in 2021 to $13,001,000 in 2022.
Biggest changeFor further discussion of mineral resources operations, refer to Item 1 “Business—Mineral Resources.” Farming ($ in thousands) 2024 2023 2022 Farming revenues Almonds $ 7,122 $ 5,378 $ 6,121 Pistachios 3,237 4,036 2,450 Wine grapes 2,704 3,290 3,470 Hay 66 267 587 Other 796 979 373 Total farming revenues $ 13,925 $ 13,950 $ 13,001 Farming expenses Cost of sales 11,853 11,945 15,412 Water Holding Costs 2,912 695 3,454 Other expenses 1 2,786 2,617 945 Total farming expenses $ 17,551 $ 15,257 $ 19,811 Operating loss from farming $ (3,626) $ (1,307) $ (6,810) 1 The main components of the other expenses included general and administrative expenses and depreciation expenses. 46 December 31, 2024 December 31, 2023 Change ($ in thousands) Revenue Quantity Sold 2 Average Price Revenue Quantity Sold 2 Average Price Revenue Quantity Sold 2 Average Price ALMONDS (lbs.) Current year crop $ 5,438 2,123 $ 2.56 $ 3,300 1,575 $ 2.10 $ 2,138 548 $ 0.46 Prior crop years 1,037 562 $ 1.85 1,819 1,042 $ 1.75 (782) (480) $ 0.10 Crop insurance 647 259 388 Subtotal Almonds 1 $ 7,122 2,685 $ 2.41 $ 5,378 2,617 $ 1.96 $ 1,744 68 $ 0.45 PISTACHIOS (lbs.) Current year crop $ — — $ — $ 3,990 2,466 $ 1.62 $ (3,990) (2,466) $ (1.62) Prior crop price adjustment 1,836 — 1,836 Crop insurance 1,401 46 1,355 Subtotal Pistachios 1 $ 3,237 — $ — $ 4,036 2,466 $ 1.62 $ (799) (2,466) $ (1.62) WINE GRAPES (tons) Current year crop $ 2,338 8 $ 292.25 $ 3,290 11 $ 299.09 $ (952) (3) $ (6.84) Crop insurance 366 — 366 Subtotal Wine Grapes $ 2,704 8 $ 292.25 $ 3,290 11 $ 299.09 $ (586) (3) $ (6.84) Other Hay $ 66 $ 267 $ (201) Other farming revenues 796 979 (183) Total farming revenues $ 13,925 $ 13,950 $ (25) 1 Average price calculation reflects sale of almond and pistachio crops during the calendar reported year, exclusive of any price adjustments. 2 Almond and pistachio units are presented in thousands of pounds, while wine grapes are presented in thousands of tons. 2024 Operational Highlights: • During 2024, farming segment revenues decreased $25,000, or 0.2%, from $13,950,000 in 2023 to $13,925,000 in 2024.
This discussion and analysis are based on, should be read together with, and is qualified in its entirety by, the consolidated financial statements and notes thereto included in Item 15(a)1 of this Form 10-K, beginning at page F-1. It also should be read in conjunction with the disclosure under “Forward-Looking Statements” in Part 1 of this Form 10-K.
This discussion and analysis are based on, should be read together with, and is qualified in its entirety by, the consolidated financial statements and notes thereto included in Item 15(a) of this Form 10-K, beginning at page F-1. It also should be read in conjunction with the disclosure under “Forward-Looking Statements” in Part 1 of this Form 10-K.
As further summarized below, the RCL requires interest only payments and has a maturity date of January 1, 2029. Upon closing of the Revolving Credit Facility, funds from the RCL were used to pay off and close out the existing Bank of America, N.A. Term Note and Revolving Line of Credit Note.
As further summarized below, the RCL requires interest only payments and has a maturity date of January 1, 2029. Upon closing of the Revolving Credit Facility, funds from the RCL were used to pay off and close out the existing Bank of America, N.A. Term Note (the Bank of America Term Note) and Revolving Line of Credit Note.
The Revolving Credit Facility only requires the payment of interest during the term, at which point the full drawn amount, plus accrued interest, must be repaid by the maturity date if TRC has not earlier repaid the borrowed amount or extended the maturity date.
The Revolving Credit Facility requires the payment of interest only during the term, at which point the full drawn amount, plus accrued interest, must be repaid by the maturity date, if TRC has not earlier repaid the borrowed amount or extended the maturity date.
We operate our business near one of the country’s largest population centers, which is expected to continue to grow well into the future. We currently operate in five reporting segments: commercial/industrial real estate development; resort/residential real estate development; mineral resources; farming; and ranch operations. Our commercial/industrial real estate segment generates revenues from real estate leases, and land and building sales.
We operate our business near one of the country’s largest population centers, which is expected to continue to grow well into the future. We currently operate in five reporting segments: real estate - commercial/industrial; real estate - resort/residential; mineral resources; farming; and ranch operations. Our commercial/industrial real estate segment generates revenues from real estate leases, and land and building sales.
The estimates used are very susceptible to change from period to period, due to the fact that they require management to make assumptions about costs of construction, absorption of product, and timing of project completion, and changes to these estimates could have a material impact on the recognition of profits from the sale of land within our developments.
The estimates used are very susceptible to change from period to period, due to the fact that they require management to make assumptions about 42 costs of construction, absorption of product, and timing of project completion, and changes to these estimates could have a material impact on the recognition of profits from the sale of land within our developments.
Possible indications of impairment may include events or changes in circumstances affecting the entitlement process, government regulation, litigation, geographical demand for new housing, and market conditions related to pricing of new homes. We make significant assumptions to evaluate each real estate development for possible indications of impairment.
Possible indications of impairment may include events or changes in circumstances affecting the entitlement process, government regulation, litigation, geographical demand for new housing, and market conditions related to pricing of new homes and development costs. We make significant assumptions to evaluate each real estate development for possible indications of impairment.
Our business model is designed to create value through the execution of commercial/industrial development, entitlement and development of land for resort/residential uses, and the maximization of earnings from operating assets, while at the same time protecting significant portions of our land for conservation purposes.
Our business model is designed to create value through the execution of commercial/industrial development, entitlement and development of land for resort/residential uses, and the maximization of earnings from operating assets, while at the same time 40 protecting significant portions of our land for conservation purposes.
We believe the following critical accounting estimates reflect our more significant judgments and estimates used in the preparation of the consolidated financial statements: 41 Impairment of Long-Lived Assets, Real Estate Development – We evaluate our real estate development projects for impairment on an ongoing basis.
We believe the following critical accounting estimates reflect our more significant judgments and estimates used in the preparation of the consolidated financial statements: Impairment of Long-Lived Assets, Real Estate Development – We evaluate our real estate development projects for impairment on an ongoing basis.
Recent Accounting Pronouncements For discussion of recent accounting pronouncements, see Note 1 (Summary of Significant Accounting Policies) in the Notes to Consolidated Financial Statements. 42 Results of Operations by Segment We evaluate the performance of our reporting segments separately to monitor the different factors affecting financial results.
Recent Accounting Pronouncements For discussion of recent accounting pronouncements, see Note 1 (Summary of Significant Accounting Policies) in the Notes to Consolidated Financial Statements. Results of Operations by Segment We evaluate the performance of our reporting segments separately to monitor the different factors affecting financial results.
Based on our experience, we believe we will have adequate cash flows, cash balances, and availability on our line of credit over the next twelve months to fund internal operations.
Based on our experience, we believe we will have adequate cash flows, cash balances, and availability on our line of credit over the next 52 twelve months to fund internal operations.
In order to meet these capital requirements, we may need to secure additional debt financing and continue to renew our existing credit facilities. In addition to debt financing, we will use other capital alternatives, such as joint ventures with financial partners, sales of assets, and the issuance of common stock.
To meet these capital requirements, we may need to secure additional debt financing and continue to renew our existing credit facilities. In addition to debt financing, we will use other capital alternatives, such as joint ventures with financial partners, sales of assets, and/or the issuance of common stock.
The decrease was partially offset by higher landscaping revenues of $728,000 and increases in Pastoria Energy Facility and TRCC leasing revenues of $230,000. • Commercial/industrial real estate segment expenses decreased $8,303,000, or 51%, from $16,356,000 in 2022 to $8,053,000 in 2023.
The decrease was partially offset by higher landscaping revenues of $728,000 and increases in Pastoria Energy Facility leasing revenues of $230,000. 43 • Commercial/industrial real estate segment expenses decreased $8,303,000, or 51%, from $16,356,000 in 2022 to $8,053,000 in 2023.
Pistachio revenues increased primarily because the 2022 crop did not bear fruit due to a mild winter. ◦ Almond revenues decreased $743,000 due to unfavorable pricing for crops sold in 2023 when compared to 2022. Additionally, the variations in the mix of almonds sold also attributed to this decrease.
Pistachio revenues increased primarily because the 2022 crop did not bear fruit due to a mild winter. ◦ Almond revenues decreased $743,000 due to unfavorable pricing for crops sold in 2023 when compared to 2022. Additionally, the variations in the mix of almonds sold also contributed to this decrease.
The factors contributing to this increase are as follow: ◦ Pistachio crop revenue increased by $3,990,000 in 2023, which was partially offset by a $1,531,000 decrease in crop insurance and a $873,000 decrease in prior year crop price adjustment.
The factors contributing to this increase are as follows: ◦ Pistachio crop revenue increased by $3,990,000 in 2023, which was partially offset by a $1,531,000 decrease in crop insurance and a $873,000 decrease in prior year crop price adjustment.
The Revolving Credit Facility also contains customary negative covenants that limit the ability of the Company to, among other things, make capital expenditures, incur indebtedness and issue guaranties, consummate certain asset sales, acquisitions or mergers, make investments, pay dividends or repurchase stock, make a change in capital ownership, or incur liens on any assets.
The Revolving Credit Facility also contains customary negative covenants that limit our ability to, among other things, make capital expenditures, incur indebtedness and issue guaranties, consummate certain asset sales, acquisitions or mergers, make investments, pay dividends or repurchase stock, make a change in capital ownership, or incur liens on any assets.
Our largest deferred tax assets were made up of temporary differences related to the deferred gains, pension adjustments, interest rate swap, capitalization of costs, and stock compensation. Deferred tax liabilities consist of joint venture differences, depreciation, deferred gains, interest rate swap, and stock compensation.
Our largest deferred tax assets were made up of temporary differences related to stock compensation, deferred gains, pension adjustments, an interest rate swap, and capitalization of costs. Deferred tax liabilities consist of joint venture differences, depreciation, deferred gains, and an interest rate swap.
The Revolving Credit Facility provides TRC with (i) a revolving credit line (RCL) in the amount of $160,000,000 and (ii) the option for TRC to utilize a letter of credit sub-facility in the amount of $15,000,000 (LOC Sub-Facility). The LOC Sub-Facility is part of, and not in addition to, the RCL.
The Revolving Credit Facility provides TRC with (i) an RCL in the amount of $160,000,000 and (ii) the option for TRC to utilize a letter of credit sub-facility in the amount of $15,000,000 (LOC Sub-Facility). The LOC Sub-Facility is part of, and not in addition to, the RCL.
On November 17, 2023, the Company entered into a Credit Agreement with AgWest Farm Credit, PCA, as administrative agent and letter of credit intermediary (Administrative Agent), and certain other lenders (the Credit Agreement Lenders), collectively, the Revolving Credit Facility.
On November 17, 2023, we entered into a Credit Agreement with AgWest Farm Credit, PCA, as administrative agent and letter of credit intermediary (Administrative Agent), and certain other lenders, collectively, the Revolving Credit Facility.
These assumptions include the identification of appropriate and comparable market prices, the consideration of changes to legal factors or the business climate, and assumptions surrounding continued positive cash flows and development costs.
These assumptions include the identification of appropriate and comparable market prices, the consideration of changes to legal factors or the business climate, and assumptions surrounding expected positive cash flows and development costs.
Our long-term goal through this process is to increase the value of our land and create future revenue opportunities through resort and residential development. We are continuously monitoring the markets in order to identify the appropriate time in the future to begin infrastructure improvements and lot sales.
Our long-term goal through this process is to increase the value of our land and create future revenue opportunities through resort and residential development. We regularly monitoring the markets in order to identify the appropriate time in the future to begin infrastructure improvements and lot sales.
It is useful to read the reporting segment information in conjunction with Note 16 (Reporting Segments and Related Information) of the Notes to Consolidated Financial Statements.
It is useful to read the reporting segment information in conjunction with Note 15 (Reporting Segments and Related Information) of the Notes to Consolidated Financial Statements.
As we move forward with the completion of the litigation, permitting and engineering design for our master planned communities and prepare to move into the development stage, we may need to 52 secure additional funding through either the issuance of equity and/or by securing other forms of financing such as joint ventures equity and debt financing.
As we move forward with the completion of the litigation, permitting and engineering design for our master planned communities and prepare to move into the development stage, we may need to secure additional funding in the long-term through either the issuance of equity and/or by securing other forms of financing such as joint ventures equity and debt financing.
We do not provide a guarantee on the $12,556,000 of debt related to our joint venture with TA/Petro. 55 Non-GAAP Financial Measures EBITDA represents earnings before interest, taxes, depreciation, and amortization, a non-GAAP financial measure, and is used by us and others as a supplemental measure of performance.
We do not provide a guarantee on the $11,793,000 of debt related to our joint venture with TA/Petro. 55 Non-GAAP Financial Measures EBITDA represents earnings before interest, taxes, depreciation, and amortization, a non-GAAP financial measure, and is used by us and others as a supplemental measure of performance.
The Company believes that net savings from exiting the contract over this future time period will more than offset the incentive payment costs. 54 Estimated water payments include the Nickel water contract, which obligates us to purchase 6,693 acre-feet of water annually through 2044 and SWP contracts with Wheeler Ridge Maricopa Water Storage District, Tejon-Castac Water District, Tulare Lake Basin Water Storage District, and Dudley-Ridge Water Storage District.
The Company believes that net savings from exiting the contract over this future time period will more than offset the incentive payment costs. 54 Estimated water payments include the Nickel water purchase contract, which obligates us to purchase 6,693 acre-feet of water annually through 2044 and SWP contracts with WRMWSD, Tulare Lake Basin Water Storage District, and Dudley-Ridge Water Storage District.
Due to the nature of most of our deferred tax assets, we believe they will be used in future years and an allowance is not necessary. The Company classifies interest and penalties incurred on tax payments as income tax expenses. The Company made income tax payments of $2,564,000 in 2023 and $8,237,000 in 2022.
Due to the nature of most of our deferred tax assets, we believe they will be used in future years and an allowance is not necessary. The Company classifies interest and penalties incurred on tax payments as income tax expenses. The Company made income tax payments of $315,000 in 2024 and $2,564,000 in 2023.
The amount of this pay off was $47,078,564 plus accrued interest and fees on the Bank of America Term Note. The Company evaluated the debt exchange under Accounting Standards Codification (ASC) 470 and determined that the exchange should be treated as a debt extinguishment.
The amount of this pay off was $47,078,564 plus accrued interest and fees on the Bank of America Term Note. We evaluated the debt exchange under ASC 470 and determined that the exchange should be treated as a debt extinguishment.
The Company received refunds of $0 in 2023 and $1,410,000 in 2022. For more details, see Note 12. (Income Taxes), of the Notes to Consolidated Financial Statements, included this Annual Report on Form 10-K.
The Company received refunds of $1,000 in 2024 and $0 in 2023. For more details, see Note 11. (Income Taxes), of the Notes to Consolidated Financial Statements, included this Annual Report on Form 10-K.
The interest rate per annum applicable to the Revolving Credit Facility is the one-month term SOFR plus an interest rate spread that is based on TRC’s consolidated net liabilities to equity ratio (NLER).
The interest rate per annum applicable to the Revolving Credit Facility is one-month term SOFR plus an interest rate spread that is based on TRC’s consolidated NLER.
Capitalized interest for the years ended December 31, 2023 and 2022, of $3,098,000 and $2,294,000, respectively, is classified in real estate development. We also capitalized payroll costs related to development, pre-construction, and construction projects, which aggregated $2,270,000 and $2,387,000 for the years ended December 31, 2023 and 2022, respectively. Expenditures for repairs and maintenance are expensed as incurred.
Capitalized interest for the years ended December 31, 2024 and 2023, of $4,353,000 and $3,098,000, respectively, is classified in real estate development. We also capitalized payroll costs related to development, pre-construction, and construction projects, which aggregated $2,884,000 and $2,270,000 for the years ended December 31, 2024 and 2023, respectively. Expenditures for repairs and maintenance are expensed as incurred.
The following table summarizes the cash flow activities for the following years ended December 31: ($ in thousands) 2023 2022 2021 Operating activities $ 13,655 $ 8,531 $ 2,816 Investing activities $ (14,002) $ (1,891) $ (14,652) Financing activities $ (6,865) $ (4,419) $ (6,086) Cash flows provided by operating activities are primarily dependent upon the rental rates of our leases, the collectability of rent and recovery of operating expenses from our tenants, distributions from joint ventures, the success of our crops and commodity prices within our mineral resources segment.
The following table summarizes the cash flow activities for the following years ended December 31: ($ in thousands) 2024 2023 2022 Operating activities $ 14,314 $ 13,655 $ 8,531 Investing activities $ (25,748) $ (14,002) $ (1,891) Financing activities $ 18,794 $ (6,865) $ (4,419) Cash flows provided by operating activities are primarily dependent upon the rental rates of our leases, the collectability of rent and recovery of operating expenses from our tenants, distributions from joint ventures, the success of our crops and commodity prices within our mineral resources segment.
TRC’s ability to borrow/draw additional funds is subject to compliance with certain financial and other covenants, some of which are further described below, and the continuing accuracy of certain representations and warranties contained in the Revolving Credit Facility.
TRC’s ability to borrow/draw additional funds is subject to compliance with certain financial and other covenants, some of which are further described below, and the continuing accuracy of certain representations and warranties contained in the Revolving Credit Facility. Currently there are no letter of credits outstanding.
We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
Lastly, the ranch operations segment consists of game management revenues and ancillary land uses, such as grazing leases and filming. 40 Financial Highlights For 2023, net income attributable to common stockholders was $3,265,000 compared to net income attributed to common stockholders of $15,808,000 in 2022.
Lastly, the ranch operations segment consists of game management revenues and ancillary land uses, such as grazing leases and filming. Financial Highlights For 2024, net income attributable to common stockholders was $2,690,000 compared to net income attributed to common stockholders of $3,265,000 in 2023.
At December 31, 2023, the Company was in compliance with all financial covenants. 53 We expect that current and future capital resource requirements will be provided primarily from current cash and marketable securities, cash flow from ongoing operations, distributions from joint ventures, proceeds from the sale of developed and undeveloped land parcels, potential sales of assets, additional use of debt or drawdowns against our line of credit, proceeds from the reimbursement of public infrastructure costs through CFD bond debt (described below under “Off-Balance Sheet Arrangements”), or issuance of additional common stock.
We expect that current and future capital resource requirements will be provided primarily from current cash and marketable securities, cash flow from ongoing operations, distributions from joint ventures, proceeds from the sale of developed and undeveloped land parcels, potential sales of assets, additional use of debt or drawdowns against our line of credit, proceeds from the reimbursement of public infrastructure costs through CFD bond debt (described below under “Off-Balance Sheet Arrangements”), or issuance of additional common stock.
These costs are expected to remain consistent with current levels of expense with any variability in the future tied to specific absorption transactions in any given year and near-term inflation impacts. TCWD water assessments may vary depending on water availability and its ability to sell water.
These costs are expected to remain consistent with current levels of expense with any variability in the future tied to specific absorption transactions in any given year and near-term inflation, tariff and trade impacts. TCWD water assessments vary depending on water availability and variable costs of delivering the water.
As noted above, at December 31, 2023, we had $64,463,000 in cash and securities and as of the filing date of this Form 10-K, we had $108,615,000 available on credit lines to meet any short-term liquidity needs. We continue to expect that substantial investments will be required in order to develop our land assets.
As noted above, at December 31, 2024, we had $53,708,000 in cash and securities and as of the filing date of this Form 10-K, we had $93,058,000 available on credit lines to meet any short-term liquidity needs. We continue to expect that substantial investments will be required to develop our land assets.
Additionally, the Company experienced a decrease in royalties of $587,000 due to lower price per barrel for oil production, combined with lower production volume of cement and aggregate production, when compared to 2022. • Mineral resources expenses decreased $4,284,000, or 33%, to $8,685,000 in 2023 when compared to $12,969,000 in 2022 as a result of having less cost of water sales. 2022 Operational Highlights: • Revenues from our mineral resources segment increased $608,000, or 3%, to $21,595,000 in 2022 when compared to $20,987,000 in 2021.
Additionally, the Company experienced a decrease in royalties of $587,000 due to lower price per barrel for oil production, combined with lower production volume of cement and aggregate production, when compared to 2022. • Mineral resources expenses decreased $4,284,000, or 33%, to $8,685,000 in 2023 when compared to $12,969,000 in 2022 as a result of having less cost of water sales.
To enhance shareholder value, we will continue to make investments in our real estate segments to secure land entitlement approvals, build infrastructure for our developments, invest in to be leased assets, ensure adequate future water supplies, and provide funds for general land development activities.
We will also make investments as necessary in our real estate segments to secure land entitlement approvals, build infrastructure for our developments, invest in to be leased assets, provide adequate water supplies, and provide funds for general land development activities.
For a depreciable long-lived asset, the new cost basis will be depreciated (amortized) over the remaining useful life of that asset. Restoration of a previously recognized impairment loss is prohibited.
If we recognize an impairment loss, the adjusted carrying amount of the asset will be its new cost basis. For a depreciable long-lived asset, the new cost basis will be depreciated (amortized) over the remaining useful life of that asset. Restoration of a previously recognized impairment loss is prohibited.
Considering that the planned development communities will be in a location that does not currently have many comparable homes, the Company must make assumptions surrounding the expected ability to sell the real estate assets at a price that is in excess of current accumulated costs. We use our internal forecasts and business plans to estimate future prices, absorption, and costs.
Considering that the planned development communities will be in a location that does not currently have many comparable homes, the Company must make assumptions surrounding the expected ability to sell the real estate assets at a price that is in excess of accumulated and estimated future development costs.
Year-Ended December 31, ($ in thousands) 2023 2022 2021 Net income $ 3,265 $ 15,810 $ 5,342 Net income (loss) attributed to non-controlling interest — 2 (6) Interest, net Consolidated interest income (2,557) (634) (57) Our share of interest expense from unconsolidated joint ventures 4,879 2,974 1,708 Total interest, net 2,322 2,340 1,651 Income tax expense 2,323 7,393 3,821 Depreciation and amortization Consolidated 4,806 4,628 4,594 Our share of depreciation and amortization from unconsolidated joint ventures 5,418 4,618 4,639 Total depreciation and amortization 10,224 9,246 9,233 EBITDA 18,134 34,787 20,053 Stock compensation expense 3,252 2,877 4,271 Adjusted EBITDA $ 21,386 $ 37,664 $ 24,324 56 Net operating income (NOI) is a non-GAAP financial measure calculated as operating income, the most directly comparable financial measure calculated and presented in accordance with GAAP, excluding general and administrative expenses, interest expense, depreciation and amortization, and gain or loss on sales of real estate.
Year-Ended December 31, ($ in thousands) 2024 2023 2022 Net income $ 2,688 $ 3,265 $ 15,810 Net income (loss) attributed to non-controlling interest (2) — 2 Interest, net Consolidated interest income (2,273) (2,557) (634) Our share of interest expense from unconsolidated joint ventures 6,165 4,879 2,974 Total interest, net 3,892 2,322 2,340 Income tax expense 976 2,323 7,393 Depreciation and amortization Consolidated 4,885 4,806 4,628 Our share of depreciation and amortization from unconsolidated joint ventures 6,753 5,418 4,618 Total depreciation and amortization 11,638 10,224 9,246 EBITDA 19,196 18,134 34,787 Stock compensation expense 4,182 3,252 2,877 Adjusted EBITDA $ 23,378 $ 21,386 $ 37,664 56 NOI is a non-GAAP financial measure calculated as operating income, the most directly comparable financial measure calculated and presented in accordance with GAAP, excluding general and administrative expenses, interest expense, depreciation and amortization, and gain or loss on sales of real estate.
For further discussion of mineral resources operations, refer to Item 1 “Business—Mineral Resources.” 46 Farming ($ in thousands) 2023 2022 2021 Farming revenues Almonds $ 5,378 $ 6,121 $ 3,100 Pistachios 4,036 2,450 4,293 Wine grapes 3,290 3,470 2,850 Hay 267 587 408 Other 979 373 388 Total farming revenues $ 13,950 $ 13,001 $ 11,039 Total farming expenses $ 15,257 $ 19,811 $ 14,116 Operating loss from farming $ (1,307) $ (6,810) $ (3,077) December 31, 2023 December 31, 2022 Change ($ in thousands) Revenue Quantity Sold 2 Average Price Revenue Quantity Sold 2 Average Price Revenue Quantity Sold 2 Average Price ALMONDS (lbs.) Current year crop $ 3,300 1,575 $ 2.10 $ 2,851 1,267 $ 2.25 $ 449 308 $ (0.15) Prior crop years 1,819 1,042 $ 1.75 3,216 1,584 $ 2.03 (1,397) (542) $ (0.28) Crop insurance 259 54 205 Subtotal Almonds 1 $ 5,378 2,617 $ 1.96 $ 6,121 2,851 $ 2.13 $ (743) (234) $ (0.17) PISTACHIOS (lbs.) Current year crop $ 3,990 2,466 $ 1.62 $ — — $ — $ 3,990 2,466 $ 1.62 Prior crop years — — — — — — — — — Prior crop price adjustment — 873 (873) Crop insurance 46 1,577 (1,531) Subtotal Pistachios 1 $ 4,036 2,466 $ 1.62 $ 2,450 — $ — $ 1,586 2,466 $ 1.62 WINE GRAPES (tons) Current year crop $ 3,290 11 $ 299.09 $ 3,470 10 $ 347.00 $ (180) 1 $ (47.91) Crop insurance — — — Subtotal Wine Grapes $ 3,290 11 $ 299.09 $ 3,470 10 $ 347.00 $ (180) 1 $ (47.91) Other Hay $ 267 $ 587 $ (320) Other farming revenues 979 373 606 Total farming revenues $ 13,950 $ 13,001 $ 949 1 Average price calculation reflects sale of almond and pistachio crops during the calendar reported year, exclusive of any price adjustments. 2 Almond and pistachio units are presented in thousands of pounds, while wine grapes are presented in thousands of tons. 47 2023 Operational Highlights: • During 2023, farming segment revenues increased $949,000, or 7%, from $13,001,000 in 2022 to $13,950,000 in 2023.
This increase was primarily due to an increase in water holding cost of $2,217,000 in 2024. 47 December 31, 2023 December 31, 2022 Change ($ in thousands) Revenue Quantity Sold 2 Average Price Revenue Quantity Sold 2 Average Price Revenue Quantity Sold 2 Average Price ALMONDS (lbs.) Current year crop $ 3,300 1,575 $ 2.10 $ 2,851 1,267 $ 2.25 $ 449 308 $ (0.15) Prior crop years 1,819 1,042 1.75 3,216 1,584 2.03 (1,397) (542) (0.28) Crop insurance 259 54 $ 205 Subtotal Almonds 1 $ 5,378 2,617 $ 1.96 $ 6,121 2,851 $ 2.13 $ (743) (234) $ (0.17) PISTACHIOS (lbs.) Current year crop $ 3,990 2,466 $ 1.62 $ — — $ — $ 3,990 2,466 $ 1.62 Prior crop price adjustment — 873 (873) Crop insurance 46 1,577 (1,531) Subtotal Pistachios 1 $ 4,036 2,466 $ 1.62 $ 2,450 — $ — $ 1,586 2,466 $ 1.62 WINE GRAPES (tons) Current year crop $ 3,290 11 $ 299.09 $ 3,470 10 $ 347.00 $ (180) 1 $ (47.91) Subtotal Wine Grapes $ 3,290 11 $ 299.09 $ 2,470 10 $ 347.00 $ (180) 1 $ (47.91) Other Hay $ 267 $ 587 $ (320) Other farming revenues 979 373 606 Total farming revenues $ 13,950 $ 13,001 $ 949 1 Average price calculation reflects sale of almond and pistachio crops during the calendar reported year exclusive of any price adjustments. 2 Almond and pistachio units are presented in thousands of pounds while wine grapes are presented in thousands of tons. 2023 Operational Highlights: • During 2023, farming segment revenues increased $949,000, or 7%, from $13,001,000 in 2022 to $13,950,000 in 2023.
Within our farming segment, we will make investments as needed to improve efficiency and add capacity to its operations when it is profitable to do so. Our cash and cash equivalents and marketable securities totaled approximately $64,463,000 at December 31, 2023, a decrease of $8,100,000, or 11%, from the corresponding amount at the end of 2022.
Within our farming segment, we intend to make investments as needed to improve efficiency and add capacity to its operations when it is profitable to do so. Our cash and cash equivalents and marketable securities totaled approximately $53,708,000 at December 31, 2024, a decrease of $10,755,000, or 17%, from the corresponding amount at the end of 2023.
Our farming segment had cash outlays of $5,915,000 for cultural and water costs tied to crops not yet in production, developing new almond orchards, grape vineyards, and replacing old farm equipment. Our mineral resources segment spent $988,000 to acquire water for use as needed and for future residential development activity. Lastly, the Company reinvested $63,882,000 into marketable securities.
Our farming segment had cash outlays of $4,891,000 for cultural and water costs tied to crops not yet in production, developing new almond and olive orchards, and replacing old farm equipment. Additionally, our mineral resources segment spent $8,874,000 to acquire water for use as needed and for future residential development activity. Lastly, the Company reinvested $73,995,000 into marketable securities.
It does not include normal purchases, which are made in the ordinary course of business. As discussed in Note 15 (Retirement Plans) of the Notes to Consolidated Financial Statements, we have long-term liabilities for deferred employee compensation, including pension and supplemental retirement plans.
The table above includes only those contracts that include fixed or minimum obligations. It does not include normal purchases, which are made in the ordinary course of business. As discussed in Note 14 (Retirement Plans) of the Notes to Consolidated Financial Statements, we have long-term liabilities for deferred employee compensation, including pension and supplemental retirement plans.
The West CFD has placed liens on 420 acres of land to secure payment of special taxes related to $19,540,000 of outstanding bond debt sold by TRPFFA for TRCC-West. The East CFD has placed liens on 1,931 acres of our land to secure payments of special taxes related to $72,055,000 of outstanding bond debt sold by TRPFFA for TRCC-East.
TRPFFA created two CFD's, the West CFD and the East CFD. The West CFD has placed liens on 420 acres of land to secure payment of special taxes related to $19,540,000 of outstanding bond debt sold by TRPFFA for TRCC-West.
These two loans are 100% guaranteed at December 31, 2023. All other outstanding debt attributed to our joint ventures have met their respective debt covenants hence not subject to an effective guarantee at December 31, 2023.
All other outstanding debt attributed to our joint ventures have met their respective debt covenants hence not subject to an effective guarantee at December 31, 2024.
We are in the preliminary stages of development; hence, no revenues are attributed to this segment for these reporting periods. 2023 Operational Highlights: • In 2023, resort/residential segment expenses decreased $101,000 to $1,528,000, or 6%, when compared to $1,629,000 in 2022.
We are in the preliminary stages of development; hence, no revenues are attributed to this segment for these reporting periods. 2024 Operational Highlights: • In 2024, resort/residential segment expenses increased $1,087,000 to $2,615,000, or 71%, when compared to $1,528,000 in 2023.
These estimated investments include approximately $58,925,000 of development costs at TRCC-East. Of that amount $42,520,000 is to support the Terra Vista at Tejon multi-family project phase 1 development and $16,405,000 for road infrastructures, water treatment system improvements, and expansion of the wastewater treatment plant for future anticipated absorption.
These estimated investments include approximately $45,341,000 of development costs at TRCC-East. Of that amount, $29,657,000 is to complete the Terra Vista at Tejon multi-family project phase 1 development and $10,072,000 for road infrastructures, water treatment system improvements, and expansion of the wastewater treatment plant for future anticipated absorption.
As of December 31, 2023 and 2022, we had income tax receivable of $1,245,000 and $636,000, respectively. As of December 31, 2023, we had net deferred tax liabilities of $8,269,000 compared to $7,180,000 as of December 31, 2022.
As of December 31, 2024 and 2023, we had income tax receivable of $1,279,000 and $1,245,000, respectively. As of December 31, 2024, we had net deferred tax liabilities of $9,059,000 compared to $8,269,000 as of December 31, 2023.
($ in thousands) Year-Ended December 31, Net operating income 2023 2022 2021 Pastoria Energy Facility $ 5,231 $ 4,846 $ 4,355 TRCC 1,296 1,185 1,250 Communication leases 1,070 1,001 940 Other commercial leases 631 616 609 Total Commercial/Industrial net operating income $ 8,228 $ 7,648 $ 7,154 Year-Ended December 31, ($ in thousands) 2023 2022 2021 Commercial/Industrial operating income $ 3,705 $ 24,159 $ 7,523 Plus: Commercial/Industrial depreciation and amortization 468 455 463 Plus: General, administrative, cost of sales and other expenses 7,130 15,491 10,950 Less: Other revenues including land sales (3,075) (32,457) (11,782) Total Commercial/Industrial net operating income $ 8,228 $ 7,648 $ 7,154 The Company utilizes NOI of unconsolidated joint ventures as a measure of financial or operating performance that is not specifically defined by GAAP.
($ in thousands) Year-Ended December 31, Net operating income 2024 2023 2022 Pastoria Energy Facility $ 4,992 $ 5,231 $ 4,846 TRCC 1,334 1,296 1,185 Communication leases 2,269 1,070 1,001 Other commercial leases 441 631 616 Total Commercial/Industrial net operating income $ 9,036 $ 8,228 $ 7,648 Year-Ended December 31, ($ in thousands) 2024 2023 2022 Commercial/Industrial operating income $ 4,642 $ 3,705 $ 24,159 Plus: Commercial/Industrial depreciation and amortization 424 468 455 Plus: General, administrative, cost of sales and other expenses 6,806 7,130 15,491 Less: Other revenues including land sales (2,836) (3,075) (32,457) Total Commercial/Industrial net operating income $ 9,036 $ 8,228 $ 7,648 We utilize NOI of unconsolidated joint ventures as a measure of financial or operating performance that is not specifically defined by GAAP.
During 2024, we will continue to invest funds towards litigation defense, permits, and maps for our master plan mixed-use developments and for master project infrastructure and vertical development within our active commercial and industrial development, including construction on Terra Vista at Tejon, our new multi-family apartment community located immediately adjacent to the Outlets at Tejon at TRCC.
During 2025, we will continue to invest funds towards vertical development within our active commercial and industrial development, including construction on Terra Vista at Tejon, our new multi-family apartment community located immediately adjacent to the Outlets at Tejon at TRCC.
If the estimated future cash flows are less than the carrying value of the asset, we calculate an impairment loss. The impairment loss calculation compares the carrying value of the asset to the asset’s estimated fair value, which may be based on estimated future cash flows (discounted).
The impairment loss calculation compares the carrying value of the asset to the asset’s estimated fair value, which may be based on estimated future cash flows (discounted). We recognize an impairment loss equal to the amount by which the asset’s carrying value exceeds the asset’s estimated fair value.
Our mineral resources segment generates revenues from oil and gas royalty leases, rock and aggregate mining leases, a lease with National Cement of California Inc., and water sales. The farming segment produces revenues from the sale of wine grapes, almonds, and pistachios.
Our active developments within this segment are MV, Centennial, and Grapevine. Our mineral resources segment generates revenues from oil and gas royalty leases, rock and aggregate mining leases, a lease with National Cement of California Inc., and water sales. The farming segment produces revenues from the sale of wine grapes, almonds, and pistachios, and we intend to expand into olives.
The decrease is primarily attributed to lower water sales revenue of $6,625,000. The SWP allocation was at 100% in 2023, due to heavy rainfall in California, which severely limited our water sales opportunities, whereas in 2022 the allocation was at 5%.
The SWP allocation was at 100% in 2023, due to heavy rainfall in California, which severely limited our water sales opportunities, whereas in 2022 the allocation was at 5%.
($ in thousands) 2023 2022 2021 Equity in earnings (loss) Petro Travel Plaza Holdings LLC $ 6,288 $ 8,526 $ 4,957 18-19 West, LLC — (31) 5,206 TRCC/Rock Outlet Center, LLC (1,786) (1,569) (1,443) TRC-MRC 1, LLC 596 21 (7) TRC-MRC 2, LLC 1,386 692 634 TRC-MRC 3, LLC 323 297 (144) TRC-MRC 4, LLC 166 (184) (1) TRC-MRC 5, LLC (105) — — Equity in earnings of unconsolidated joint ventures, net $ 6,868 $ 7,752 $ 9,202 2023 Operational Highlights: During 2023, equity in earnings from unconsolidated joint ventures decreased $884,000, or 11%, to $6,868,000 when compared to $7,752,000 in 2022. • The Petro Travel Plaza equity in earnings decreased $2,238,000 or 26% when compared to 2022, which is largely attributable to lower fuel margins in 2023, we don't expect this drop in fuel margins to continue in 2024. • The above decrease is partially offset by increases in equity in earnings of TRC-MRC1, LLC and TRC-MRC2, LLC joint ventures, mainly attributable to a combination of new leases at higher rental rates and rent escalations.
($ in thousands) 2024 2023 2022 Equity in earnings (loss) Petro Travel Plaza Holdings LLC $ 8,253 $ 6,288 $ 8,526 18-19 West, LLC — — (31) TRCC/Rock Outlet Center, LLC (1,351) (1,786) (1,569) TRC-MRC 1, LLC 613 596 21 TRC-MRC 2, LLC 2,162 1,386 692 TRC-MRC 3, LLC 422 323 297 TRC-MRC 4, LLC 527 166 (184) TRC-MRC 5, LLC 255 (105) — Equity in earnings of unconsolidated joint ventures, net $ 10,881 1 $ 6,868 $ 7,752 1 TRC-DP1 had no operating activities during 2024. 2024 Operational Highlights: During 2024, equity in earnings from unconsolidated joint ventures increased $4,013,000, or 58%, to $10,881,000 when compared to $6,868,000 in 2023. • The Petro Travel Plaza equity in earnings increased $1,965,000 or 31% when compared to 2023, which is largely attributable to higher fuel margins. • Equity in earnings for our TRC-MRC LLC joint ventures increased by $1,613,000 due to higher rental rates or rental escalations, and the new revenue stream generated by the completed industrial building of the TRC-MRC 5, LLC joint venture. • Additionally, equity in loss from the TRCC/Rock Outlet Center joint venture decreased by $435,000 compared to 2023 because of improved occupancy. 2023 Operational Highlights: During 2023, equity in earnings from unconsolidated joint ventures decreased $884,000, or 11%, to $6,868,000 when compared to $7,752,000 in 2022. • The Petro Travel Plaza equity in earnings decreased $2,238,000 or 26% when compared to 2022, which is largely attributable to lower fuel margins in 2023, we don't expect this drop in fuel margins to continue in 2024. • The above decrease is partially offset by increases in equity in earnings of TRC-MRC 1, LLC and TRC-MRC 2, LLC joint ventures, mainly attributable to a combination of new leases at higher rental rates and rent escalations.
Changes in estimates used in these and other items could have a material impact on our financial statements. Please refer to Note 1 (Summary of Significant Accounting Policies) in the Notes to Consolidated Financial Statements, which discusses accounting policies that we have selected from acceptable alternatives.
Please refer to Note 1 (Summary of Significant Accounting Policies) in the Notes to Consolidated Financial Statements, which discusses accounting policies that we have selected from acceptable alternatives.
The Revolving Credit Facility contains customary events of default, including: failure to make required payments; failure to comply with terms of the Credit Facility; bankruptcy and insolvency. The Credit Facility contains other customary terms and conditions, including representations and warranties, which are typical for credit facilities of this type.
The Revolving Credit Facility contains customary events of default, including: failure to make required payments; failure to comply with terms of the Credit Facility; bankruptcy and insolvency.
Capital Structure and Financial Condition At December 31, 2023, total capitalization at book value was $531,038,000 consisting of $47,942,000 of debt and $483,096,000 of equity, resulting in a debt-to-total-capitalization ratio of approximately 9.0%, representing a decrease when compared to the debt-to-total-capitalization ratio of 9.5% at December 31, 2022.
Capital Structure and Financial Condition At December 31, 2024, total capitalization at book value was $555,898,000 consisting of $66,942,000 of debt and $488,956,000 of equity, resulting in a debt-to-total-capitalization ratio of approximately 12.0%, representing an increase when compared to the debt-to-total-capitalization ratio of 9.0% at December 31, 2023.
We will use a combination of the above funding sources to properly match funding requirements with the assets or development project being funded. As we move into 2024, we will be evaluating various options for funding the potential start of development projects. There is no assurance that we can obtain financing or that we can obtain financing at favorable terms.
As we move into 2025, we will be evaluating various options for funding the potential start of development projects. There is no assurance that we can obtain financing or that we can obtain financing at favorable terms.
For further discussion of the farming operations, refer to Item 1 “Business—Farming Operations.” Ranch Operations ($ in thousands) 2023 2022 2021 Ranch operations revenue Game management and other 1 $ 2,884 $ 2,912 $ 2,744 Grazing 1,623 1,194 1,367 Total ranch operations revenues $ 4,507 $ 4,106 $ 4,111 Total ranch operations expenses $ 5,043 $ 5,024 $ 4,679 Operating loss from ranch operations $ (536) $ (918) $ (568) 1 Game management and other revenues consist of revenues from hunting, filming, high desert hunt club (a premier upland bird hunting club), and other ancillary activities. 2023 Operational Highlights: • Revenues from ranch operations increased $401,000, or 10%, from $4,106,000 in 2022 to $4,507,000 in 2023.
For further discussion of the farming operations, refer to Item 1 “Business—Farming Operations.” 48 Ranch Operations ($ in thousands) 2024 2023 2022 Ranch operations revenue Game management and other 1 $ 2,844 $ 2,884 $ 2,912 Grazing 2,351 1,623 1,194 Total ranch operations revenues $ 5,195 $ 4,507 $ 4,106 Ranch operation expenses Operating expenses 2,380 2,586 2,312 Compensation expenses 1,494 1,548 1,708 Other expenses 2 990 909 1,004 Total ranch operations expenses $ 4,864 $ 5,043 $ 5,024 Operating income/(loss) from ranch operations $ 331 $ (536) $ (918) 1 Game management and other revenues consist of revenues from hunting, filming, High Desert Hunt Club (a premier upland bird hunting club), and other ancillary activities. 2 The main components of the other expenses included depreciation and amortization expenses. 2024 Operational Highlights: • Revenues from ranch operations increased $688,000, or 15%, from $4,507,000 in 2023 to $5,195,000 in 2024.
See Item 1, “Business – Real Estate Development Overview” for a further discussion of real estate development activities. 44 Mineral Resources ($ in thousands) 2023 2022 2021 Mineral resources revenues Oil and gas $ 1,005 $ 1,340 $ 737 Rock aggregate 1,903 1,937 1,910 Cement 2,652 2,871 2,210 Exploration leases 29 94 119 Water sales 8,033 14,658 15,523 Reimbursables and other 902 695 488 Total mineral resources revenues $ 14,524 $ 21,595 $ 20,987 Total mineral resources expenses $ 8,685 $ 12,969 $ 13,559 Operating income from mineral resources $ 5,839 $ 8,626 $ 7,428 2023 2022 2021 Oil and gas Oil production (barrels) 94,780 92,788 75,006 Average price per barrel $78.00 $98.00 $69.00 Natural gas production (millions of cubic feet) 62,000 57,000 64,000 Average price per thousand cubic feet $2.87 $2.84 $1.50 Blended royalty rate 13.3% 14.5% 13.9% Water Water sold in acre-feet 5,145 10,400 13,651 Average price per acre-foot $1,561 $1,409 $1,137 Cement Tons sold 1,112,000 1,356,000 1,275,000 Average price per ton $2.39 $2.12 $1.73 Rock/Aggregate Tons sold 1,600,000 1,677,000 1,466,000 Average price per ton $1.19 $1.15 $1.30 Note: Differences between revenues calculated within this table and reported revenues within the previous table are attributed to rounding and the level of precision presented on production units shown. 45 2023 Operational Highlights: • Revenues from our mineral resources segment decreased $7,071,000, or 33%, to $14,524,000 in 2023 when compared to $21,595,000 in 2022.
Mineral Resources ($ in thousands) 2024 2023 2022 Mineral resources revenues Oil and gas $ 856 $ 1,005 $ 1,340 Rock aggregate 2,024 1,903 1,937 Cement 2,759 2,652 2,871 Exploration leases 1 29 94 Water sales 4,383 8,033 14,658 Reimbursables and other 191 902 695 Total mineral resources revenues $ 10,214 $ 14,524 $ 21,595 Mineral resources expenses Cost of sales of water 3,555 5,220 9,549 Other expenses 1 3,497 3,465 3,420 Total mineral resources expenses $ 7,052 $ 8,685 $ 12,969 Operating income from mineral resources $ 3,162 $ 5,839 $ 8,626 1 The main components of the other expenses included general and administrative expenses and depreciation expenses. 2024 2023 2022 Oil and gas Oil production (barrels) 83,411 94,780 92,788 Average price per barrel $76.00 $78.00 $98.00 Natural gas production (millions of cubic feet) 20,480 62,000 57,000 Average price per thousand cubic feet $1.67 $2.87 $2.84 Blended royalty rate 13.4% 13.3% 14.5% Water Water sold in acre-feet 3,500 5,145 10,400 Average price per acre-foot $1,252 $1,561 $1,409 Cement Tons sold 1,079,000 1,112,000 1,356,000 Average price per ton $2.56 $2.39 $2.12 Rock/Aggregate Tons sold 1,442,000 1,600,000 1,677,000 Average price per ton $1.40 $1.19 $1.15 Note: Differences between revenues calculated within this table and reported revenues within the previous table are attributed to rounding and the level of precision presented on production units shown. 2024 Operational Highlights: • Revenues from our mineral resources segment decreased $4,310,000, or 30%, to $10,214,000 in 2024 when compared to $14,524,000 in 2023.
In 2023, we completed construction of a pre-leased 446,400 square-foot industrial building through a joint venture. We also expect the commercial/industrial segment to continue to experience operating costs, net of amounts capitalized, related to professional service fees, marketing, commissions, planning, and staffing costs as we continue to pursue development opportunities.
We also expect the commercial/industrial segment to continue to experience operating costs, net of amounts capitalized, related to professional service fees, marketing, commissions, and planning costs as we continue to pursue development opportunities.
We expect to possibly invest up to $9,949,000 for entitlement and permitting activities, predevelopment activities and land planning design at MV and Grapevine and litigation defense and supplemental recirculated environmental impact report preparation for Centennial.
We expect to possibly invest up to $8,591,000 for entitlement and permitting activities, predevelopment activities and land planning design at MV and Grapevine and litigation defense and supplemental recirculated environmental impact report preparation for Centennial. All real estate capital expenditures are inclusive of capitalized interest, payroll and overhead.
As noted above, these costs are included in the above investment numbers. During 2023, financing activities used $6,865,000, which is comprised of long-term debt repayments of $50,357,000 and tax payments on vested stock grants of $3,353,000. This was partially offset by borrowings from the new line-of-credit facility of $47,942,000.
During 2023, financing activities used $6,865,000, which is comprised of long-term debt repayments of $50,357,000 and tax payments on vested stock grants of $3,353,000. This was partially offset by borrowings from the new line-of-credit facility of $47,942,000. It is difficult to accurately predict cash flows due to the nature of our businesses and fluctuating economic conditions.
During 2023, we made pension contributions of $165,000 and it is projected that we will make a similar contribution in 2024. Our cash contract commitments consist of contracts in various stages of completion related to infrastructure development within our industrial developments and entitlement costs related to our industrial and residential development projects.
During 2024, we didn't make any pension contributions and we don't expect to make contributions in 2025. Our cash contract commitments consist of contracts in various stages of completion related to infrastructure development within our industrial developments and entitlement costs related to our industrial and residential development projects.
Long-term market fundamentals, such as California's significant documented housing shortage and large Southern California population center we believe will support housing demand in our region.
Long-term market fundamentals, such as California's significant 44 documented housing shortage and large Southern California population center we believe will support housing demand in our region. See Item 1, “Business – Real Estate Development Overview” for a further discussion of real estate development activities.
Year-Ended December 31, ($ in thousands) 2023 2022 2021 Net income of unconsolidated joint ventures $ 11,641 $ 12,662 $ 16,752 Plus: Interest expense of unconsolidated joint ventures 9,587 5,834 4,926 Operating income of unconsolidated joint ventures 21,228 18,496 21,678 Plus: Depreciation and amortization of unconsolidated joint ventures 10,246 8,648 8,720 Less: Profit from sale of land — — (10,380) Net operating income of unconsolidated joint ventures $ 31,474 $ 27,144 $ 20,018 57
Year-Ended December 31, ($ in thousands) 2024 2023 2022 Earnings of unconsolidated joint ventures $ 18,874 $ 11,641 $ 12,662 Interest expense of unconsolidated joint ventures 12,167 9,587 5,834 Operating income of unconsolidated joint ventures 31,041 21,228 18,496 Depreciation and amortization of unconsolidated joint ventures 12,869 10,246 8,648 Net operating income of unconsolidated joint ventures $ 43,910 $ 31,474 $ 27,144 57
This is primarily attributed to an increase in grazing lease revenues due to improved pasture levels as a result of 2023 winter rains, which allowed for more cattle grazing on Company's land. • Ranch operations expenses were $5,043,000 in 2023, which stayed consistent when compared to $5,024,000 in 2022. 2022 Operational Highlights: • Revenues from ranch operations decreased $5,000, or 0%, from $4,111,000 in 2021 to $4,106,000 in 2022, which is primarily attributed to an increase in hunting and membership revenues of $167,000 offset by a decline in grazing revenues of $172,000 resulting from a drought clause that resulted from having fewer cattle grazing on the Company's land.
This is primarily attributed to an increase in grazing lease revenues due to improved pasture levels as a result of 2023 winter rains, which allowed for more cattle grazing on Company's land. • Ranch operations expenses were $5,043,000 in 2023, which stayed consistent when compared to $5,024,000 in 2022.
Offsetting cash outlays were maturities on marketable securities of $134,083,000, distributions from unconsolidated joint ventures of $10,978,000, proceeds from water sales of $1,324,000 and proceeds from the interest rate swap settlement of $3,715,000. During 2022, investing activities used $1,891,000, which was largely attributed to capital expenditures of $22,602,000 used primarily for real estate development.
Offsetting cash outlays were maturities on marketable securities of $134,083,000, distributions from unconsolidated joint ventures of $10,978,000, proceeds from water sales of $1,324,000 and proceeds from the interest rate swap settlement of $3,715,000. Our estimated capital investment for 2025 is primarily related to our real estate projects as it was in 2024.
We are also investing approximately $3,068,000 to continue a farm redevelopment program, and $501,000 in the normal replacement of operating equipment, such as ranch equipment, and vehicles.
Our plans also include $8,322,000 for payment of annual water inventory and water related investments. We are also investing approximately $3,542,000 to continue a farm redevelopment program, and $511,000 in the normal replacement of operating equipment, such as ranch equipment, and vehicles.
The above decreases were partially offset by improved farming segment operating results of $5,503,000 mainly due to cost reductions. Also offsetting the decreases were income tax expense savings of $5,070,000 derived from lower taxable profits when compared with the prior period.
Also offsetting the decreases were income tax expense savings of $5,070,000 derived from lower taxable profits when compared with the prior period.
The performance of each reporting segment is discussed below: Real Estate – Commercial/Industrial ($ in thousands) 2023 2022 2021 Commercial/industrial revenues Pastoria Energy Facility Lease $ 5,089 $ 4,859 $ 4,380 TRCC Leasing 1,702 1,535 1,724 TRCC management fees and reimbursements 1,261 1,431 692 Commercial leases 662 646 627 Communication leases 1,079 1,011 952 Landscaping and other 1,965 1,237 1,066 Land sales — 29,796 10,035 Total commercial revenues $ 11,758 $ 40,515 $ 19,476 Total commercial expenses $ 8,053 $ 16,356 $ 11,953 Operating income from commercial/industrial $ 3,705 $ 24,159 $ 7,523 2023 Operational Highlights: • Commercial/industrial real estate development segment revenues were $11,758,000 for the twelve months ended December 31, 2023, a decrease of $28,757,000, or 71%, from $40,515,000 in 2022.
The performance of each reporting segment is discussed below: Real Estate – Commercial/Industrial ($ in thousands) 2024 2023 2022 Commercial/industrial revenues Pastoria Energy Facility Lease $ 4,813 $ 5,089 $ 4,859 TRCC Leasing 1,780 1,702 1,535 TRCC management fees and reimbursements 1,006 1,261 1,431 Commercial leases 665 662 646 Communication leases 2,279 1,079 1,011 Landscaping and other 2,009 1,965 1,237 Land sales — — 29,796 Total commercial/industrial revenues $ 12,552 $ 11,758 $ 40,515 Cost of sales of land $ — $ (176) $ 8,623 Operating expenses 3,453 4,229 3,997 General and administrative expenses 1 3,592 3,146 2,923 Other expenses 2 865 854 813 Total commercial/industrial expenses $ 7,910 $ 8,053 $ 16,356 Operating income from commercial/industrial $ 4,642 $ 3,705 $ 24,159 1 General and administrative expenses included compensation expenses and overheads. 2 The main components of the other expenses included tenant recoverable and depreciation expenses. 2024 Operational Highlights: • Commercial/industrial real estate development segment revenues were $12,552,000 for the twelve months ended December 31, 2024, an increase of $794,000, or 7%, from $11,758,000 in 2023.
The patronage credit is paid annually by the Administrative Agent in the form of a dividend. As of December 31, 2023, the Company's NLER was in tier 3, or less than 35%, and the applicable interest rate spread was 2.25%.
The Administrative Agent pays the patronage credit annually in the form of a dividend. As of December 31, 2024, the Company's NLER was in tier 3, or less than 35%, and the applicable interest rate spread was 2.25%. We received partial patronage credit in February 2025 of $420,000 which represents 125 basis points from the primary lender.
The timing of these investments is dependent on our coordination efforts with Los Angeles County regarding litigation defense for Centennial, permitting activities for Grapevine, and design, civil engineering, land planning and design, for MV. Our plans also include $6,684,000 for payment of annual water inventory and water related investments.
The timing of these investments is dependent on our coordination efforts with Los Angeles County regarding litigation defense for Centennial, permitting activities for Grapevine, and design, civil engineering, land planning and design for MV. Our efforts within our master plan projects are managed to minimize each year's investment.
Of the $22,602,000, we spent $2,491,000 on permitting efforts for MV, $3,598,000 on litigation defense for Centennial, and $1,164,000 on permitting efforts for Grapevine. At TRCC, we primarily used $8,933,000 to expand the roads at TRCC. All real estate capital expenditures are inclusive of capitalized interest, payroll and overhead.
Of the $57,234,000, we primarily used $43,018,000 to develop multi-family units, road, and water infrastructures at TRCC. We also spent $3,014,000 on permitting efforts for MV, $3,963,000 on litigation defense for Centennial, and $1,417,000 on permitting efforts for Grapevine. All real estate capital expenditures are inclusive of capitalized interest, payroll and overhead.
The decrease is namely attributed to a decrease in payroll costs. 2022 Operational Highlights: • In 2022, resort/residential segment expenses decreased $94,000 to $1,629,000, or 5%, when compared to $1,723,000 in 2021. The decrease is attributed to lower professional service costs.
The main components of the other expenses included travel and entertainment expenses and depreciation expenses. 2023 Operational Highlights: • In 2023, resort/residential segment expenses decreased $101,000 to $1,528,000, or 6%, when compared to $1,629,000 in 2022. The decrease is namely attributed to a decrease in payroll costs.
Investment income recognized on marketable securities increased by $1,923,000 due to an increase in average funds invested and higher market interest rate in 2023 compared with 2022. This increase is offset by a decrease of $1,226,000 in other income mainly due to an absence of long-term deferred gains from the sale of the 18-19 West joint venture.
The above decreases of income were partially offset by a $98,000 decrease in pension expenses in 2024. Total other income increased by $697,000, or 40%, from $1,722,000 in 2022 to $2,419,000 in 2023. Investment income recognized on marketable securities increased by $1,923,000 due to an increase in average funds invested and higher market interest rate in 2023 compared with 2022.
We develop our forecasts based on recent sales data, input from marketing consultants, as well as discussions with commercial real estate brokers. When events or changes in circumstances exist that result in an indicator of impairment, we perform an impairment calculation, which compares the carrying value of the asset to the asset’s estimated future cash flows (undiscounted).
When events or changes in circumstances exist that result in an indicator of impairment, we perform an impairment calculation, which compares the carrying value of the asset to the asset’s estimated future cash flows (undiscounted). If the estimated future cash flows are less than the carrying value of the asset, we calculate an impairment loss.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+3 added−2 removed5 unchanged
Biggest changeFarming inventories consist of farming cultural and processing costs related to 2023 and 2022 crop production. The farming costs inventoried are recorded at actual costs incurred. Historically, these costs have been recovered each year when that year’s crop harvest has been sold. With respect to accounts receivable, the amount at risk relates primarily to farm crops.
Biggest changeHistorically, these costs have been recovered each year when that year’s crop harvest has been sold. With respect to accounts receivable, the amount at risk relates primarily to farm crops. These receivables are recorded based on estimated final pricing. The final price is generally not known for several months following the close of our fiscal year.
Interest Rate Sensitivity Financial Market Risks Principal Amount by Expected Maturity At December 31, 2023 (In thousands except percentage data) 2024 2025 2026 2027 2028 Thereafter Total Fair Value Assets: Marketable securities $32,576 $— $— $— $— $— $32,576 $32,556 Weighted average interest rate 5.27% —% —% —% —% —% 5.27% Liabilities: Revolving line-of-credit $— $— $— $— $— $47,942 $47,942 $47,942 Weighted average interest rate 1 S+2.25% S+2.25% S+2.25% S+2.25% S+2.25% S+2.25% S+2.25% 1 The effective interest rate on this line of credit is SOFR plus a margin of 2.25%, and the rate was 7.59% as of December 31, 2023.
Interest Rate Sensitivity Financial Market Risks Principal Amount by Expected Maturity At December 31, 2023 (In thousands except percentage data) 2024 2025 2026 2027 2028 Thereafter Total Fair Value Assets: Marketable securities $32,576 $— $— $— $— $— $32,576 $32,556 Weighted average interest rate 5.27% —% —% —% —% —% 5.27% Liabilities: Revolving line-of-credit $— $— $— $— $— $47,942 $47,942 $47,942 Weighted average interest rate 1 S+2.25% S+2.25% S+2.25% S+2.25% S+2.25% S+2.25% S+2.25% 1 The effective interest rate on this line of credit is SOFR plus a margin of 2.25%, and the rate was 7.59% as of December 31, 2023, before patronage.
To achieve this objective and limit interest rate exposure, we limit our investments to securities with a maturity of less than five years and an investment grade rating from Moody’s or Standard and Poor’s. See Note 3 (Marketable Securities) of the Notes to Consolidated Financial Statements. Our current RCL has a $47,942,000 outstanding balance.
To achieve this objective and limit interest rate exposure, we limit our investments to securities with a maturity of less than five years and an investment grade rating from Moody’s or Standard and Poor’s. See Note 3 (Marketable Securities) of the Notes to Consolidated Financial Statements. Our current RCL has a $66,942,000 outstanding balance.
The interest rate on this line of credit can float at a rate equal to one-month term SOFR plus 2.25%. During the term of this RCL (which matures in January 2029), the Company can borrow at any time and partially or wholly repay any outstanding borrowings and then re-borrow, as necessary outstanding balances.
The interest rate on this line of credit can float at a rate equal to one-month term SOFR plus 2.25%, before patronage. During the term of this RCL (which matures in January 2029), the Company can borrow at any time and partially or wholly repay any outstanding borrowings and then re-borrow, as necessary outstanding balances.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The response to this Item is submitted in a separate section of this Form 10-K. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 59
Of the $7,916,000 in outstanding receivables at December 31, 2024, no receivables were at risk for changing prices as there was no pistachio yield in 2024. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The response to this Item is submitted in a separate section of this Form 10-K. ITEM 9.
Removed
Interest Rate Sensitivity Financial Market Risks Principal Amount by Expected Maturity At December 31, 2022 (In thousands except percentage data) 2023 2024 2025 2026 2027 Thereafter Total Fair Value Assets: Marketable securities $32,652 $1,000 $— $— $— $— $33,652 $33,444 Weighted average interest rate 2.82% 5.20% —% —% —% —% 2.89% Liabilities: Long-term debt ($4.75M note) $265 $277 $289 $302 $315 $244 $1,692 $1,692 Weighted average interest rate 4.25% 4.25% 4.25% 4.25% 4.25% 4.25% 4.25% Long-term debt ($49.1M note) $1,513 $1,589 $1,669 $1,753 $1,840 $40,098 $48,462 $48,462 Weighted average interest rate 4.62% 4.62% 4.62% 4.62% 4.62% 4.62% 4.62% Commodity Price Exposure As of December 31, 2023, we have exposure to adverse price fluctuations associated with certain inventories and accounts receivable.
Added
Interest Rate Sensitivity Financial Market Risks Principal Amount by Expected Maturity At December 31, 2024 (In thousands except percentage data) 2025 2026 2027 2028 2029 Thereafter Total Fair Value Assets: Marketable securities $12,701 $999 $737 $— $— $— $14,437 $14,441 Weighted average interest rate 4.64% 4.06% 4.36% —% —% —% 4.59% Liabilities: Revolving line-of-credit $— $— $— $— $66,942 $— $66,942 $66,942 Weighted average interest rate 1 S+2.25% S+2.25% S+2.25% S+2.25% S+2.25% S+2.25% S+2.25% 1 The effective interest rate on this line of credit is SOFR plus a margin of 2.25%, and the rate was 6.85% as of December 31, 2024, before patronage.
Removed
These receivables are recorded based on estimated final pricing. The final price is generally not known for several months following the close of our fiscal year. Of the $8,352,000 in outstanding receivables at December 31, 2023, $2,824,500 or 34% is at risk for changing prices. Over the previous three years, pistachio prices have fluctuated between $1.62 to $2.72. ITEM 8.
Added
Commodity Price Exposure As of December 31, 2024, we have exposure to adverse price fluctuations associated with certain inventories and accounts receivable. Farming inventories consist of farming cultural and processing costs related to 2024 and 2023 crop production. The farming costs inventoried are recorded as actual costs are incurred.
Added
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 59

Other TRC 10-K year-over-year comparisons