Tejon Ranch (TRC) - 2021 Q4 - Annual Report

Financial Performance - Total revenues and other income for the year ended December 31, 2021, were $64,872 million, an increase of 50% from $43,218 million in 2020[27] - The net income attributable to common stockholders for 2021 was $5,348 million, compared to a net loss of $740 million in 2020[27] - The total assets as of December 31, 2021, were $546,036 million, a slight increase from $536,349 million in 2020[27] Real Estate Development - Segment profits for Real Estate—Commercial/Industrial increased to $7,523 million in 2021 from $2,414 million in 2020, reflecting a growth of 212%[27] - The industrial portfolio was 100% leased as of December 31, 2021, with a commercial portfolio leased at 88.5%[36] - The company sold 17.1 acres of land for $4,655,000 during Q4 2021, with plans for a 270,000-square-foot manufacturing complex[41] - A joint venture with Majestic Realty Co. was formed to develop a 629,274 square foot industrial building, with completion expected in 2022[40] - The company plans to develop up to 495 multi-family residences at TRCC, with the first residential community expected to provide housing for local employees[53] - The estimated total cost for the Tejon Ranch Commerce Center project is $161,482 million, with $91,710 million spent to date[55] - As of December 31, 2021, TRCC has total entitlements of 19,300,941 square feet for industrial use and 956,309 square feet for commercial retail, with 13,374,998 square feet and 318,614 square feet available respectively[56] - The Centennial development is entitled for 19,333 housing units and 10.1 million square feet of commercial development, with a 93.03% ownership interest held by the company[76] - The Grapevine project is entitled for 12,000 homes and 5.1 million square feet of commercial development, with over 3,367 acres designated for open space[80] Market Conditions - Vacancy rates in the Inland Empire dropped to a historical low of 0.5% during Q4 2021, leading to a year-over-year lease rate increase of 44%[63] - The northern Los Angeles industrial market saw vacancy rates decrease to 0.6% with average asking rents increasing by 9.6% over the prior quarter[64] - TRCC is positioned to capture tenant interest due to its ability to provide fully-entitled, shovel-ready land parcels, targeting industrial users in high-demand areas[59] Oil and Gas Operations - The company produced approximately 75,006 barrels of oil and 64,000 MCF of dry gas in 2021 from 10,332 acres committed to oil and gas leases[89] - Royalty rates on oil leases averaged approximately 14% of oil production in 2021, with an average production of 29 barrels of oil per day[89] - The price per barrel of oil has increased over 52% from December 31, 2020 levels, impacting revenue expectations for 2022[90] Agricultural Operations - The 2022 State Water Project allocation is currently at 15% of contract amounts, which may affect farming operations[93][101] - The U.S. almond industry projects 2021 yields to be about 2.8 billion pounds, down from 3.1 billion pounds in the previous year, while pistachio yields are expected to improve to approximately 1.2 billion pounds[96] - The company expects to utilize external labor contractors due to challenges in attracting and retaining farm workers, likely increasing overall labor costs[97] Environmental Initiatives - The company has voluntarily conserved 240,000 acres of land, effectively sequestering 3.3 million tons of carbon[109] - The solar array at the IKEA distribution center is a 1.8 MW system that meets the power needs of the facility and contributes to the electric grid[109] - The company has designed its master planned mixed-use residential communities to achieve a jobs-housing balance, reducing commuting miles and emissions[110] Employee and Financial Management - The company employs 90 full-time employees and focuses on attracting and retaining talent through competitive compensation and benefits programs[115] - The company has a long-term debt consisting of two term loans: one for $50,837,000 tied to LIBOR plus a margin of 1.70%, and another for $1,947,000 with a fixed rate of 4.25%[313] - As of December 31, 2021, the company had $6,473,000 in outstanding accounts receivable, with $2,409,000 or 37% at risk for changing prices, primarily attributed to pistachios[322] - The estimated price for pistachios recorded at December 31, 2021, was $2.14 per pound, compared to $2.04 per pound at December 31, 2020; a $0.01 change in price per pound affects receivables by $11,200[323] - The company limits investments to securities with a maturity of less than five years and an investment grade rating to manage interest rate exposure[311] - The company’s marketable securities amounted to $10,590,000 as of December 31, 2021, with a weighted average interest rate of 0.20%[318] - The company’s long-term debt has a weighted average interest rate of 4.25% for the $1,947,000 note and 4.16% for the $50,837,000 note[318] - The company’s exposure to interest rate risk has decreased slightly due to a reduction in marketable securities compared to the prior year[320] - The company’s farming inventories are recorded at actual costs incurred, which are expected to be recovered upon sale of the crops[321] - The company has no outstanding balance on its revolving line of credit (RLC), which can either float at 1.50% over LIBOR or be fixed at 1.50% above LIBOR[312] - The company’s investment activities aim to preserve principal while maximizing yields and managing risk prudently[311]