Tejon Ranch Co.
11/05/2026 | Press release | Distributed by Public on 11/05/2026 13:44
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements, including without limitation statements regarding strategic alliances, the almond, pistachio, olives and grape industries, the future plantings of permanent crops, future yields, prices and water availability for the Company's crops and real estate operations, future prices, production and demand for oil and other minerals, future development of the Company's property, future revenue and income of its jointly-owned travel plaza and other joint venture operations, the adequacy of future cash flows to fund our operations, future revenue and income from residential leasing, the adequacy of current assets and contracts to meet our water and other commitments, market value risks associated with investment and risk management activities and with respect to inventory and accounts receivable, our outstanding indebtedness, ongoing negotiations and other future events and conditions. In some cases, these statements are identifiable through use of words such as "anticipate," "believe," "estimate," "expect," "intend," "plan," "project," "target," "can," "could," "may," "will," "should," "would," "likely," and similar expressions such as "in the process" "designed to," "well positioned," or "envisioned to." In addition, any statements that refer to projections of our future financial performance, our anticipated growth, and trends in our business and other characterizations of future events or circumstances are forward-looking statements. We caution you not to place undue reliance on these forward-looking statements. These forward-looking statements are not a guarantee of future performance, are subject to assumptions and involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company, or industry results, to differ materially from any future results, performance, or achievement implied by such forward-looking statements. These risks, uncertainties and important factors include, but are not limited to, weather, market, geopolitical and economic forces, availability of financing for land development activities, and competition and success in obtaining various governmental approvals and entitlements for land development activities, and the timing and outcome of regulatory or litigation processes. No assurance can be given that the actual future results will not differ materially from the forward-looking statements that we make for several reasons, including those described above and in Part I, Item 1A "Risk Factors" of our most recent Annual Report on Form 10-K.
OVERVIEW
We are a California-based company whose 270,000-acre landholding supports a diversified portfolio of real estate and land-based businesses, anchored by the Tejon Ranch Commerce Center ("TRCC"), a 20 million-square-foot commercial and industrial development strategically located along Interstate 5 at the gateway between the Los Angeles Basin and California's Central Valley. TRCC is the primary driver of our revenue and earnings. TRC's portfolio within TRCC comprises approximately 3.4 million square feet of gross leasable area, which is substantially fully leased to nationally recognized tenants, including IKEA, L'Oréal, and Dollar General. In addition, the broader TRCC development, totaling over 8 million square feet, includes major third-party industrial users such as Caterpillar and Nestlé, further reinforcing the scale, quality, and strategic importance of the park.
We are actively expanding TRCC through additional industrial development, commercial leasing activity, and the introduction of our first residential community, Terra Vista at Tejon, which has transitioned TRCC into a mixed-use master-planned development. In connection with the commencement of lease-up at Terra Vista at Tejon, we began reporting Multifamily as a separate operating segment in 2025, reflecting our expansion into the development and long-term ownership of residential rental communities.
Our prime asset is approximately 270,000 acres of contiguous, largely undeveloped land, extending approximately 60 miles north of downtown Los Angeles at its southern boundary and to an area approximately 15 miles southeast of Bakersfield at its northern boundary.
Business Objectives and Strategies
Our primary business objective is to maximize long-term shareholder value through the development, leasing, and monetization of our land-based assets, with our commercial and industrial operations at the Tejon Ranch Commerce Center ("TRCC") serving as a central component of this strategy. We allocate capital toward projects that we believe generate attractive risk-adjusted returns while enhancing the long-term value of our landholdings.
Complementing our commercial platform, our Multifamily segment is focused on the development and long-term ownership of residential rental communities within our master-planned projects, beginning with Terra Vista at Tejon. Terra Vista is currently in the lease-up phase as we work to stabilize occupancy and optimize rental rates. Typical of newly delivered apartment communities, lease-up is expected to occur over time as market awareness builds and occupancy trends toward stabilized levels. Upon stabilization, we expect the project to generate recurring rental revenues and net operating income, increasing the stability and predictability of our earnings. Multifamily development also supports on-site employment centers by providing housing within our mixed-use communities and represents a strategic expansion of our real estate platform.
Looking beyond our current development footprint at TRCC, we hold long-term entitlements for two large-scale master-planned residential communities - Mountain Village and Grapevine - and are in the re-entitlement process for a third, Centennial (as described below), collectively comprising 35,278 housing units and more than 35 million square feet of commercial development.
Centennial at Tejon Ranch, or Centennial, had entitlements approved in 2019 by the Los Angeles County Board of Supervisors. These approvals were litigated in two lawsuits filed in Los Angeles County Superior Court. As previously disclosed and summarized in our annual report on Form 10-K, this litigation resulted in LA County rescinding and setting aside the Centennial approvals in compliance with the court's final judgment, and the Company considers that litigation resolved. There have been no material developments during the three months ended September 30, 2026, that would change that conclusion. Now that this litigation is resolved, the Company is seeking re-entitlement of the Centennial project ("re-entitlement"). We expect that re-entitlement will involve processing project and use entitlements that are substantively similar to the Centennial approvals that were approved by the LA County Board of Supervisors in 2019. In that regard LA County, as lead agency, circulated a recirculated partial draft environmental impact report ("RPDEIR") for public review and comment that is expected to facilitate the consideration of re-entitlement before LA County's Regional Planning Commission and (ultimately) the Board of Supervisors early next year.
All of these efforts are supported by diverse revenue streams generated from other operations, including: farming, mineral resources, ranch operations, and our various joint ventures.
Our Business
We currently operate in six reporting segments: Commercial/Industrial real estate development; Multifamily; Resort/Residential real estate development; Mineral Resources; Farming; and Ranch Operations.
Commercial/Industrial Real Estate
The Commercial/Industrial segment is the Company's primary revenue and earnings engine, encompassing the full cycle of real estate value creation: planning and permitting of land held for development, construction of infrastructure and buildings (both pre-leased and speculative), and the sale of entitled land parcels to third parties. This segment represents the largest contributor to the Company's consolidated operating income. In addition to rental revenues, the segment benefits from recurring income streams such as communications leases, a power plant lease, and landscape maintenance fees.
At the heart of the commercial/industrial real estate development segment is TRCC, a 20 million square foot mixed-use development on Interstate 5 just north of the Los Angeles basin. With the completion of Terra Vista at Tejon construction, TRCC is now evolving into a vibrant residential and employment hub, enhancing the interconnectivity of our mixed-use master planned community strategy. Over eight million square feet of industrial, commercial and retail space has already been developed or is under development, including distribution centers for IKEA, Caterpillar, Nestlé, Famous Footwear, L'Oreal, Camping World, Sunrise Brands, and Dollar General. TRCC sits on both sides of Interstate 5, giving distributors immediate access to the West Coast's principal north-south goods movement corridor.
We are also involved in multiple joint ventures within TRCC with several partners that help us expand our commercial/industrial business activities:
•A joint venture with TravelCenters of America that owns and operates two travel and truck stop facilities, comprised of five separate gas stations with convenience stores and fast-food restaurants within TRCC-West and TRCC-East.
•A joint venture, TRCC/Rock Outlet Center LLC, with Rockefeller Group Development Corporation, or Rockefeller which operates the Outlets at Tejon, a net leasable 326,000 square foot shopping experience in TRCC-East.
•Five joint ventures with Majestic Realty Co., or Majestic, to develop, manage, and operate five industrial buildings comprised of 2.8 million square feet of industrial space all within TRCC and all fully leased.
•A joint venture, TRC-DP1, LLC, or the DP1 Joint Venture, with Dedeaux Properties to develop, manage, and operate an industrial building of 510,385 square feet at TRCC-East. On April 28, 2026, we contributed approximately 24.57 acres of land to the DP1 Joint Venture and construction commenced, with certificate of occupancy expected in the first quarter of 2027.
Multifamily
In 2021, the Kern County Board of Supervisors approved a Conditional Use Permit authorizing the development of Terra Vista at Tejon, a multifamily apartment community within TRCC consisting of up to 495 units across thirteen buildings, approximately 6,500 square feet of amenity space, and 8,000 square feet of community-serving retail on a 22-acre site immediately north of the Outlets at Tejon. The first phase, completed in 2025, includes 228 units and represents the first newly constructed, professionally managed multifamily community within TRCC, introducing a new product type to the South Bakersfield submarket.
Leasing commenced in May 2025, and the project was approximately 83% leased as of September 30, 2026, reflecting continued absorption toward stabilization. Terra Vista at Tejon represents the initial residential component of TRCC and is intended to support housing demand from employees working in nearby distribution, retail, hospitality, and service uses, including employees who work at the Hard Rock Casino Tejon. The Company continues to position its multifamily platform to benefit from regional employment growth, while monitoring key operating metrics such as occupancy, leasing activity, renewal rates, concessions, and rental rates, which may fluctuate based on market conditions, competitive supply, and broader economic factors.
Resort Residential
The Resort/Residential real estate development segment is actively involved in the land entitlement and development process internally and through a joint venture. Our active developments within this segment are MV, Centennial, and Grapevine, with Grapevine North representing a fourth opportunity in this segment. Our master planned communities represent long-term value drivers for the Company. By leveraging a strong track record of obtaining and defending entitlements in California's complex regulatory environment, we are building the foundation for future recurring revenue generation while preserving optionality across our land portfolio.
•MV encompasses a total of 26,417 acres, of which 5,082 acres are approved to be used for a master planned community development that will include housing, retail, and commercial components. MV is entitled for 3,450 homes, 160,000 square feet of commercial development, 750 hotel keys, and more than 21,335 acres of open space;
•The Centennial development is a master planned community development encompassing 12,323 acres of our land within Los Angeles County. Upon completion of Centennial, it is estimated that the community will include approximately 19,333 homes and 10.1 million square feet of commercial development, including nearly 3,500 affordable units. See Note 11 (Commitments and Contingencies) of the Notes to Unaudited Consolidated Financial Statements for additional information related to current progress on re-entitlement;
•Grapevine is an 8,010-acre development area located on the San Joaquin Valley floor portion of our landholdings, adjacent to TRCC. Upon completion of Grapevine, this master planned community is expected to include 12,000 homes, 5.1 million square feet of commercial development, and more than 3,367 acres of open space and parks; and
•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. Grapevine North may feature mixed-use community development similar to Grapevine at Tejon Ranch, or other development uses as appropriate based upon market conditions at the time. The Company is not currently pursuing entitlements for Grapevine North.
Please refer to our Annual Report on Form 10-K for the year ended December 31, 2025, for a more detailed description of our active developments within the Resort/Residential real estate development segment.
Our mineral resources segment generates recurring royalty income from third-party extraction activities with minimal capital deployment by the Company, such as our lease with National Cement Company of California Inc. During the quarter, National Cement exercised its option to extend the lease term an additional 20 years, through 2047. The extension reinforces the long-term value of our land assets and supports our strategy of generating recurring revenue from our landholdings.
Our farming segment produces revenues from the sale of wine grapes, almonds, and pistachios. As part of our crop segmentation strategy within the farming division, we have initiated the planting of an olive orchard to diversify our commodity portfolio and better position the Company for shifts in market conditions.
Our ranch operations primarily support land stewardship and cost management across our broader landholdings. These activities include infrastructure maintenance and operational oversight of our approximately 270,000 acres and contribute modest operating income.
Summary of Third Quarter and YTD 2026 Performance
Third Quarter Summary
For the three months ended September 30, 2026, net income attributable to common stockholders was $3,300,000 compared with $1,670,000 for the three months ended September 30, 2025, an increase of $1,630,000. The increase was primarily attributed to a $4,397,000 improvement in operating result, from an operating loss of $2,024,000 in the prior period to operating income of $2,373,000 in the current period. The improvement was primarily driven by the farming segment, where revenues increased $8,293,000, reflecting higher crop sales, $2,581,000 of pricing adjustments related to prior-year pistachio sales and $3,897,000 of crop insurance proceeds. As a result, farming segment operating results improved from a loss of $1,027,000 in the prior period to income of $1,444,000 in the current period. Multifamily revenues increased $743,000 as Terra Vista at Tejon continued its lease-up activities, while mineral resources revenues increased $791,000, primarily due to higher rock aggregate royalties and water sales. Ranch operations and commercial/industrial revenues increased $515,000 and $301,000, respectively.
Corporate expenses decreased $626,000 primarily due to share-based compensation adjustments of $300,000 in 2026 and $360,000 in 2025, related to the impact of forfeited awards in both periods. Excluding these adjustments, corporate expenses decreased $1,286,000, or 39.8%, from $3,228,000 to $1,942,000.
These improvements were partially offset by a $223,000 decrease in equity in earnings of unconsolidated joint ventures, lower investment income, and a $2,409,000 increase in income taxes, from an income tax benefit of $972,000 in the prior-year quarter to income tax expense of $1,437,000 in the current period.
Year-to-Date Summary
For the nine months ended September 30, 2026, net income attributable to common stockholders was $6,086,000 compared with a net loss attributable to common stockholders of $1,506,000 for the nine months ended September 30, 2025, an improvement of $7,592,000. The improvement was primarily attributed to an $11,835,000 increase in operating results, from an operating loss of $10,245,000 in the prior-year period to operating income of $1,590,000 in the current-year period.
Corporate expenses decreased $5,037,000, primarily reflecting the non recurrence of $3,399,000 of shareholder activism advisory costs and costs associated with the contested election incurred during 2025, together with lower consulting compensation and other corporate administrative expenses.
Farming revenues increased $7,775,000, primarily reflecting $6,915,000 of pistachio revenues, including $2,581,000 of pricing adjustments related to prior-year crop sales, $3,897,000 of crop insurance proceeds and higher wine grape revenues. These increases contributed to a $2,723,000 reduction in the farming segment's operating loss compared to the prior-year period. Commercial/industrial revenues included a $6,854,000 land sale to TRC-DP1, LLC, which generated gross profit of approximately $2,000,000 compared with $600,000 of gross profit from land sales in the prior-year period. Multifamily revenues increased $2,281,000 as Terra Vista at Tejon continued its lease-up activities, while mineral resources revenues increased $2,008,000, primarily due to higher water sales and rock aggregate royalties. These improvements were partially offset by a $4,148,000 increase in income tax expense, from an income tax benefit of $1,809,000 in the prior-year period to income tax expense of $2,339,000 in the current period, and by lower investment income.
This Management's Discussion and Analysis of Financial Condition and Results of Operations provides a discussion of our consolidated results of operations, including the results of each reporting segment, followed by an analysis of our financial condition. The segment information should be read in conjunction with Note 13 (Reporting Segments and Related Information) of the Notes to Unaudited Consolidated Financial Statements.
Critical Accounting Estimates
The preparation of our interim financial statements in accordance with GAAP requires us to make estimates and judgments that affect the reported amounts for assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We consider an accounting estimate to be critical if: (1) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (2) changes in the estimates that are likely to occur from period to period, use of different estimates that we reasonably could have used in the current period, or would have a material impact on our financial condition or results of operations. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, impairment of long-lived assets, capitalization of costs, allocation of costs related to land sales and leases, stock compensation, and our future ability to utilize deferred tax assets. 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.
During the nine months ended September 30, 2026, our critical accounting policies have not changed since the filing of our Annual Report on Form 10-K for the year ended December 31, 2025. Please refer to that filing for a description of our critical accounting policies. Please also refer to Note 1 (Basis of Presentation) in the Notes to Unaudited Consolidated Financial Statements in this report for a discussion regarding recently issued accounting pronouncements not yet adopted.
Results of Operations by Segment
We evaluate the performance of our reporting segments separately, to monitor the different factors affecting financial results. Each reporting segment is subject to review and evaluation, as we monitor current market conditions, market opportunities, and available resources. The performance of each reporting segment is discussed below:
Real Estate - Commercial/Industrial:
| Three Months Ended September 30, | Change | ||||||||||||||||||||||
| ($ in thousands) | 2026 | 2025 | $ | % | |||||||||||||||||||
| Commercial/industrial revenues | |||||||||||||||||||||||
| Pastoria Energy Facility | $ | 1,391 | $ | 1,209 | $ | 182 | 15 | % | |||||||||||||||
| TRCC Leasing | 618 | 502 | 1 | 116 | 23 | % | |||||||||||||||||
| TRCC management fees and reimbursements | 245 | 282 | (37) | (13) | % | ||||||||||||||||||
| Commercial leases | 165 | 162 | 3 | 2 | % | ||||||||||||||||||
| Communication leases | 348 | 332 | 16 | 5 | % | ||||||||||||||||||
| Landscaping and other services | 477 | 456 | 1 | 21 | 5 | % | |||||||||||||||||
| Total commercial/industrial revenues | $ | 3,244 | $ | 2,943 | $ | 301 | 10 | % | |||||||||||||||
| Operating expenses | 649 | 702 | (53) | (8) | % | ||||||||||||||||||
| Selling, general and administrative expenses | 783 | 690 | 93 | 13 | % | ||||||||||||||||||
| Depreciation and amortization | 95 | 106 | (11) | (10) | % | ||||||||||||||||||
| Total commercial/industrial expenses | $ | 1,527 | $ | 1,498 | $ | 29 | 2 | % | |||||||||||||||
| Operating income from commercial/industrial | $ | 1,717 | $ | 1,445 | $ | 272 | 19 | % | |||||||||||||||
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1 Prior period's segment activity related to the TRCC Leasing and Landscaping and other services has been recast to conform to the current period presentation.
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•Commercial/industrial real estate development segment revenues were $3,244,000 for the three months ended September 30, 2026, compared to $2,943,000 for the same period in 2025, an increase of $301,000, or 10.2%. There were no land sales in either quarter. The increase was primarily attributable to a $182,000 increase in Pastoria Energy Facility revenues, reflecting the absence of a favorable spark spread in the prior-year quarter, and a $116,000 increase in TRCC leasing revenues. Pastoria revenues are subject to fluctuations in electricity demand and market conditions, including weather-related factors that influence spark spreads.
•Commercial/industrial real estate development segment expenses were $1,527,000 for the three months ended September 30, 2026, compared to $1,498,000 for the same period in 2025, an increase of $29,000, or 1.9%. Selling, general and administrative expenses increased $93,000, or 13.5%, primarily due to lower capitalization of labor costs following the completion of construction at Terra Vista at Tejon. Operating expenses decreased $53,000, or 7.5%, and depreciation and amortization expenses decreased $11,000.
•Operating income from commercial/industrial (segment revenues less segment expenses, which included no land sale activity in either quarter) increased $272,000, or 18.8%, to $1,717,000 ,primarily reflecting higher revenues from Pastoria Energy Facility and TRCC leasing activities, together with lower operating and depreciation and amortization expenses.
| Nine Months Ended September 30, | Change | ||||||||||||||||||||||
| ($ in thousands) | 2026 | 2025 | $ | % | |||||||||||||||||||
| Commercial/industrial revenues | |||||||||||||||||||||||
| Pastoria Energy Facility | $ | 3,680 | $ | 3,441 | $ | 239 | 7 | % | |||||||||||||||
| TRCC Leasing | 1,576 | 1,406 | 1 | 170 | 12 | % | |||||||||||||||||
| TRCC management fees and reimbursements | 713 | 733 | (20) | (3) | % | ||||||||||||||||||
| Commercial leases | 437 | 492 | (55) | (11) | % | ||||||||||||||||||
| Communication leases | 1,044 | 975 | 69 | 7 | % | ||||||||||||||||||
| Landscaping and other services | 1,365 | 1,369 | 1 | (4) | - | % | |||||||||||||||||
| Land sale | 6,854 | 2,373 | 4,481 | 189 | % | ||||||||||||||||||
| Total commercial/industrial revenues | $ | 15,669 | $ | 10,789 | $ | 4,880 | 45 | % | |||||||||||||||
| Cost of sales of land | 4,854 | 1,773 | 3,081 | 174 | % | ||||||||||||||||||
| Operating expenses | 1,952 | 1,835 | 117 | 6 | % | ||||||||||||||||||
| Selling, general and administrative expenses | 2,316 | 2,443 | (127) | (5) | % | ||||||||||||||||||
| Depreciation and amortization | 295 | 318 | (23) | (7) | % | ||||||||||||||||||
| Total commercial/industrial expenses | $ | 9,417 | $ | 6,369 | $ | 3,048 | 48 | % | |||||||||||||||
| Operating income from commercial/industrial | $ | 6,252 | $ | 4,420 | $ | 1,832 | 41 | % | |||||||||||||||
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1 Prior period's segment activity related to the TRCC Leasing and Landscaping and other services has been recast to conform to the current period presentation.
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•Commercial/industrial real estate development segment revenues were $15,669,000 for the nine months ended September 30, 2026, compared to $10,789,000 for the same period in 2025, an increase of $4,880,000, or 45%. The increase was primarily attributable to higher land sale activity: during the second quarter of 2026 the Company completed a $6,854,000 land sale in connection with TRC-DP1, LLC, compared to land sales of $2,373,000 in the prior-year period. Gross profit from land sales was $2,000,000 in the current-year period, compared to $600,000 in the prior-year period.
•Excluding land sales, revenues from recurring operations increased $399,000, or 4.7%, to $8,815,000, primarily due to a $239,000 increase in Pastoria Energy Facility revenues, a $170,000 increase in TRCC leasing revenues and a $69,000 increase in communication lease revenues, partially offset by a $55,000 decrease in commercial leasing revenues and a $20,000 decrease in TRCC management fees and reimbursements.
•Commercial/industrial real estate development segment expenses were $9,417,000 for the nine months ended September 30, 2026, compared to $6,369,000 for the same period in 2025, an increase of $3,048,000, or 48%. The increase was primarily attributable to a $3,081,000 increase in cost of sales of land associated with the land sales described above, and a $117,000 increase in operating expenses, partially offset by a $127,000 decrease in selling, general and administrative expenses and a $23,000 decrease in depreciation and amortization expense.
•Excluding cost of land sales, segment expenses decreased $33,000, or 0.7%. Selling, general and administrative expenses decreased $127,000, or 5.2%, and depreciation and amortization expense decreased $23,000, partially offset by a $117,000, or 6.4%, increase in operating expenses. The increase in operating expenses was primarily attributable to personnel costs that were capitalized in the prior-year period in connection with the development of Terra Vista at Tejon but expensed in 2026 following the project's completion. Operating income from recurring operations increased $432,000, or 11.3%, to $4,252,000.
TRCC Competitive Positioning and Industrial Market Outlook
The major logistics operators selecting TRCC are proof of TRCC's value as a hub to serve customers throughout California and the broader western United States, and their presence continues to be highlighted in our marketing efforts. We intend to continue emphasizing in our marketing strategy TRCC's strategic labor and logistics advantages, Kern County's business-friendly incentive framework, and the operating success of existing tenants and property owners within the development. Our location aligns with a logistics model that is the foundation of modern distribution strategy, which favors large, centralized distribution facilities strategically located to optimize the balance of inbound and outbound efficiencies, rather than numerous smaller, decentralized distribution centers. In addition, TRCC's location provides access to nearly 90% of California consumers within a single-day truck turn and to markets of more than 40 million people for next-day delivery service, which we believe supports e-commerce fulfillment operations.
Our FTZ designation allows businesses to secure the many benefits and cost reductions associated with streamlined movement of goods in and out of the trade zone. This FTZ designation is marketed to tenants alongside the AKIP adopted by the Kern County Board of Supervisors. AKIP aims to expand and enhance Kern County's competitiveness by taking affirmative steps to attract new businesses and to encourage the growth and resilience of existing businesses. AKIP provides incentives, such as assistance in obtaining tax incentives, building supporting infrastructure, and workforce development.
We believe the FTZ and AKIP, together with our ability to offer fully entitled, shovel-ready land parcels capable of supporting buildings of any size, including buildings of one million square feet or more, provides us with a meaningful marketing advantage. Our marketing efforts are directed primarily toward the Inland Empire region of Southern California, the Santa Clarita Valley of northern Los Angeles County and the northern San Fernando Valley, where the availability of new industrial product is limited and real estate costs remain relatively high, and the San Joaquin Valley of California. We continue to analyze market conditions and evaluate opportunities to expand our portfolio of industrial buildings for lease, either independently or through partnerships, as we have done with buildings developed through our joint ventures.
A potential disadvantage to our development strategy is TRCC's greater distance from the Ports of Los Angeles and Long Beach as compared to warehouse and distribution facilities in the Inland Empire, a major industrial market east of Los Angeles that continues to expand farther east into areas including Perris, Moreno Valley and Beaumont. However, as Inland Empire development continues to move eastward, the relative disadvantage of TRCC's distance from the ports may lessen. At the same time, TRCC's location continues to offer access to major transportation corridors and broad regional consumer markets.
During the quarter ended September 30, 2026, industrial market conditions in Southern California continued to gain momentum. In the Inland Empire, vacancy remained unchanged at 7.8%, while net absorption totaled approximately 876,000 square feet during the quarter continuing a record absorption year. Average asking rents moderated as new supply came online, reported at $0.97 per square foot from $0.99 per square foot in the prior quarter. Gross leasing and sales activity totaled 9.1 million square feet, also on pace for the strongest year on record.
The San Fernando Valley and Ventura County industrial markets were stable during the third quarter with year-to-date gross activity totaling 5,000,000 square feet. Combined net absorption for the quarter was negative 370,000 square feet, compared with positive absorption of approximately 371,000 square feet in the prior quarter. Overall vacancy increased slightly to 3.8% with vacancy reaching 4.0% in the San Fernando Valley and 3.4% in Ventura County. No new supply was delivered during the quarter, while approximately 2.0 million square feet remained under construction. Average asking rents held steady at approximately $1.46 per square foot in the San Fernando Valley and $1.25 per square foot in Ventura County.
See below for the vacancy rates and average asking rent of Inland Empire, North Los Angeles County (San Fernando Valley and Ventura County), Greater Los Angeles, and Southern Central Valley.
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Vacancy Rates
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Average Monthly Asking Rent | ||||||||||||||||||||||||||||||||||
| September 30, 2026 | December 31, 2025 | September 30, 2025 | September 30, 2026 | December 31, 2025 | September 30, 2025 | ||||||||||||||||||||||||||||||
| Inland Empire | 7.8% | 7.6% | 7.5% | $0.97 | $1.04 | $1.05 | |||||||||||||||||||||||||||||
| San Fernando Valley and Ventura County (North LA County) | 3.8% | 3.6% | 3.3% | $1.41 | $1.42 | $1.43 | |||||||||||||||||||||||||||||
| Greater Los Angeles | 5.7% | 5.7% | 5.7% | $1.18 | $1.21 | $1.24 | |||||||||||||||||||||||||||||
| Southern Central Valley | 6.5% | 7.6% | 7.8% | $0.79 | $0.74 | $0.71 | |||||||||||||||||||||||||||||
| TRCC | 0% | 0% | 0% | $0.80+ | $0.75+ | $0.75+ | |||||||||||||||||||||||||||||
Industrial users seeking larger facilities continue to consider locations further north into neighboring Kern County, including TRCC, as an alternative to more established Southern California industrial markets. While market conditions remain competitive, TRCC continues to attract interest from prospective tenants seeking alternatives to the Inland Empire and Santa Clarita Valley. However, there can be no assurance that this interest will translate into increased leasing activity or offset the effects of elevated vacancy rates, rental rate pressure, regulatory constraints, tenant consolidation trends or competing industrial developments.
Given California's regulators' recent efforts at the local and state levels to tighten restrictions on industrial zoning and specific industrial uses, we anticipate further legislative activity in this area. The Company's existing and planned developments are designed to align with current regulatory requirements, while incorporating flexibility where possible to adapt to future policy changes. Through our advocacy efforts, Tejon Ranch will engage in policy discussions that support our commercial and industrial development objectives.
We expect our commercial/industrial real estate development segment to continue to incur costs, net of amounts capitalized, primarily related to professional service fees, marketing, planning activities, and personnel as we pursue development opportunities. In addition, capital market conditions remain relatively restrictive, and elevated interest rates and limited construction financing availability may continue to slow commercial real estate development activity in the near term.
The timing and completion of future development projects remain subject to market conditions and other uncertainties. Infrastructure development, marketing activities, and related costs may continue to increase over several years as we develop our landholdings. We will continue to evaluate our land resources to determine their highest and best use. Future land sales will depend on market conditions and the availability of suitable opportunities. Our long-term strategy is to enhance the value of our landholdings through planning and development activities that support future commercial and industrial growth.
Multifamily:
| Three Months Ended September 30, | Change | ||||||||||||||||||||||
| ($ in thousands) | 2026 | 2025 | $ | % | |||||||||||||||||||
| Multifamily revenues | $ | 924 | $ | 181 | $ | 743 | 410 | % | |||||||||||||||
| Operating expenses | 502 | 216 | 286 | 132 | % | ||||||||||||||||||
| Selling, general and administrative expenses | 209 | 152 | 57 | 38 | % | ||||||||||||||||||
| Net operating income (loss) | $ | 213 | $ | (187) | 400 | (214) | % | ||||||||||||||||
•Multifamily revenues increased to $924,000 for the three months ended September 30, 2026, from $181,000 in the prior-year period, primarily reflecting higher occupancy as leasing activity progressed following the property's placement in service during the second quarter in 2025.
•Multifamily net operating income was $213,000 for the three months ended September 30, 2026, compared to a net operating loss of $187,000 in the prior-year period. The improvement was driven by higher revenues, partially offset by increases in property-level operating expenses of $286,000 and selling, general and administrative expenses of $57,000 associated with ongoing operations.
•The Company anticipates continued revenue growth as the property progresses toward stabilization. Operating margins are also expected to benefit from higher occupancy as fixed operating costs are spread across a larger tenant base, although the timing and extent of these improvements will depend on leasing activity and market conditions.
| Nine Months Ended September 30, | Change | ||||||||||||||||||||||
| ($ in thousands) | 2026 | 2025 | $ | % | |||||||||||||||||||
| Multifamily revenues | $ | 2,477 | $ | 196 | $ | 2,281 | 1164 | % | |||||||||||||||
| Operating expenses | 1,169 | 326 | 843 | 259 | % | ||||||||||||||||||
| Selling, general and administrative expenses | 562 | 414 | 148 | 36 | % | ||||||||||||||||||
| Net operating income (loss) | $ | 746 | $ | (544) | 1,290 | (237) | % | ||||||||||||||||
•Multifamily revenues increased to $2,477,000 for the nine months ended September 30, 2026, compared with $196,000 in the prior-year period, primarily reflecting higher occupancy as leasing activity progressed following the property's placement in service during the second quarter of 2025.
•Multifamily net operating income was $746,000 for the nine months ended September 30, 2026, compared to a net operating loss of $544,000 in the prior-year period. The improvement was driven by higher revenues, partially offset by increases in property-level operating expenses of $843,000 and selling, general and administrative expenses of $148,000 associated with ongoing operations.
•The Company anticipates continued revenue growth as the property progresses toward stabilization. Operating margins are also expected to benefit from higher occupancy as fixed operating costs are spread across a larger tenant base, although the timing and extent of these improvements will depend on leasing activity and market conditions.
Real Estate - Resort/Residential:
We are in the preliminary stages of property development; hence, no revenues or profits are attributed to this segment.
Resort/Residential real estate development segment expenses were $427,000 for the three months ended September 30, 2026, an increase of $109,000 from $318,000 for the three months ended September 30, 2025. The increase reflected modest changes across several expense categories, with no single category accounting for a significant portion of the increase.
Resort/Residential real estate development segment expenses were $1,146,000 for the nine months ended September 30, 2026, compared to $1,008,000 for the prior-year period an increase of $138,000, or 13.7%. The increase reflected a $226,000 increase in operating expenses, partially offset by a $78,000 decrease in selling, general and administrative expenses, reflecting lower allocated overhead costs, and a $10,000 decrease in depreciation.
Our long-term business strategy to develop the master-planned communities of Mountain Village, Centennial, and Grapevine remains unchanged. We believe the fundamental drivers of housing demand in California, including a large and growing population, persistent housing supply constraints, and affordability-driven migration to the suburban and exurban regions of Los Angeles and Kern Counties, continue to support long-term demand for residential development in our markets.
While near-term market conditions, including elevated interest rates and affordability pressures, may affect the pace of housing activity, California's well-documented housing shortage continues to support the long-term need for additional housing. Accordingly, the majority of expenditures and capital investments within our Resort/Residential real estate segment remain focused on these three communities.
As development activities progress, we expect to evaluate a variety of financing alternatives to fund future project development, including joint ventures with strategic partners, debt financing, and the potential issuance of additional equity securities.
Mineral Resources:
| Three Months Ended September 30, | Change | ||||||||||||||||||||||
| ($ in thousands) | 2026 | 2025 | $ | % | |||||||||||||||||||
| Mineral resources revenues | |||||||||||||||||||||||
| Water sales | $ | 1,874 | $ | 1,686 | $ | 188 | 11 | % | |||||||||||||||
| Oil and gas | 175 | 138 | 37 | 27 | % | ||||||||||||||||||
| Cement | 650 | 610 | 40 | 7 | % | ||||||||||||||||||
| Rock aggregate | 1,264 | 738 | 526 | 71 | % | ||||||||||||||||||
| Total mineral resources revenues | $ | 3,963 | $ | 3,172 | $ | 791 | 25 | % | |||||||||||||||
| Cost of sales of water | 1,439 | 1,366 | 73 | 5 | % | ||||||||||||||||||
| Operating expenses | 372 | 264 | 108 | 41 | % | ||||||||||||||||||
| Selling, general and administrative expenses | 154 | 147 | 7 | 5 | % | ||||||||||||||||||
| Depreciation and amortization | 343 | 344 | (1) | - | % | ||||||||||||||||||
| Total mineral resources expenses | $ | 2,308 | $ | 2,121 | $ | 187 | 9 | % | |||||||||||||||
| Operating income from mineral resources | $ | 1,655 | $ | 1,051 | $ | 604 | 57 | % | |||||||||||||||
•Mineral resources segment revenues were $3,963,000 for the three months ended September 30, 2026, an increase of $791,000, or 24.9%, from $3,172,000 in the prior-year period. The increase was primarily driven by higher rock aggregate sales of $526,000 reflecting increased demand, sales volumes and average realized prices. Water sales increased $188,000 while cement and oil and gas revenues increased $40,000 and $37,000, respectively, primarily reflecting higher sales volumes and, in the case of oil and gas, higher commodity prices.
•Mineral resources segment expenses were $2,308,000 for the three months ended September 30, 2026, an increase of $187,000, or 8.8%, compared with $2,121,000 in the prior-year period. The increase was primarily attributed to higher operating expenses of $108,000 and increased water costs of sales of $73,000, consistent with higher water sales activity. Other expense categories remained relatively unchanged.
| Nine Months Ended September 30, | Change | ||||||||||||||||||||||
| ($ in thousands) | 2026 | 2025 | $ | % | |||||||||||||||||||
| Mineral resources revenues | |||||||||||||||||||||||
| Water sales | $ | 4,165 | $ | 3,156 | $ | 1,009 | 32 | % | |||||||||||||||
| Oil and gas | 543 | 518 | 25 | 5 | % | ||||||||||||||||||
| Cement | 1,935 | 1,747 | 188 | 11 | % | ||||||||||||||||||
| Rock aggregate | 2,326 | 1,594 | 732 | 46 | % | ||||||||||||||||||
| Reimbursables and other | 316 | 262 | 54 | 21 | % | ||||||||||||||||||
| Total mineral resources revenues | $ | 9,285 | $ | 7,277 | $ | 2,008 | 28 | % | |||||||||||||||
| Cost of sales of water | 3,180 | 2,548 | 632 | 25 | % | ||||||||||||||||||
| Operating expenses | 1,009 | 841 | 168 | 20 | % | ||||||||||||||||||
| Selling, general and administrative expenses | 466 | 576 | (110) | (19) | % | ||||||||||||||||||
| Depreciation and amortization | 1,031 | 1,031 | - | - | % | ||||||||||||||||||
| Total mineral resources expenses | $ | 5,686 | $ | 4,996 | $ | 690 | 14 | % | |||||||||||||||
| Operating income from mineral resources | $ | 3,599 | $ | 2,281 | $ | 1,318 | 58 | % | |||||||||||||||
•Mineral resources segment revenues were $9,285,000 for the nine months ended September 30, 2026, an increase of $2,008,000, or 27.6%, compared with $7,277,000 in the prior-year period. The increase was primarily driven by higher water sales of $1,009,000, reflecting increased demand, and higher rock aggregate revenues of $732,000, primarily due to increased sales volumes. Cement revenues increased $188,000, reflecting higher sales volumes, while oil and gas revenues increased $25,000, primarily due to higher production volumes and commodity prices.
•Mineral resources segment expenses were $5,686,000 for the nine months ended September 30, 2026, an increase of $690,000, or 13.8%, compared with $4,996,000 for the prior-year period. The increase primarily reflected higher costs of water sales of $632,000, consistent with the increased water sales activity, and higher operating expenses of $168,000, partially offset by a $110,000 decrease in selling, general and administrative expenses.
Demand for the Company's water is influenced by annual State Water Project ("SWP") allocations, hydrologic conditions, and customers' operational needs. Higher SWP allocations generally reduce demand for supplemental water supplies, while lower allocations may increase demand. Accordingly, water sales may fluctuate significantly from period to period and current results may not be indicative of future performance.
The Company believes its water assets, including water banking operations, groundwater recharge capabilities and long-term water supply contracts, provide resources to support existing operations and future development activities, as well as potential opportunities for water sales to third parties. As groundwater regulation in California continues to evolve, particularly under the Sustainable Groundwater Management Act ("SGMA"), the availability and management of these resources remain important to the Company's long-term planning.
SWP water contracts require annual payments for both fixed and variable costs associated with the SWP and the applicable water districts, regardless of water delivery. In addition to surface water supplies, the Company holds adjudicated groundwater rights, including an annual allocation of 1,634 acre-feet in the Antelope Valley Basin. The Company also has access to groundwater underlying portions of its landholdings, which it believes, together with other available water resources, will support planned commercial development along the Interstate 5 corridor, and ongoing agricultural operations.
In Kern County, the Company's lands span three groundwater basins subject to varying regulatory requirements: the Kern Subbasin, the White Wolf Subbasin, and the Castac Basin. Approximately 9% of the Company's Kern County land is within the Kern Subbasin and is primarily used for grazing with limited water demand. The White Wolf Subbasin is subject to groundwater management requirements under SGMA, while the Castac Basin is designated as a low-priority basin. The Company continues to monitor regulatory developments and believes its combination of surface water supplies, groundwater rights and banked water provides flexibility in managing future water requirements.
Oil and natural gas prices are subject to volatility resulting from changes in supply and demand, inventory levels, geopolitical events, economic conditions and regulatory developments. Oil and gas production in California has generally declined in recent years due to regulatory requirements, natural production declines, reduced capital investment and other industry factors.
Farming:
| Three Months Ended September 30, | Change | ||||||||||||||||||||||
| ($ in thousands) | 2026 | 2025 | $ | % | |||||||||||||||||||
| Farming revenues | |||||||||||||||||||||||
| Almonds | $ | 1,999 | $ | 1,515 | $ | 484 | 32 | % | |||||||||||||||
| Pistachios | 6,591 | - | 6,591 | 100 | % | ||||||||||||||||||
| Wine grapes | 3,572 | 2,451 | 1,121 | 46 | % | ||||||||||||||||||
| Other | 466 | 369 | 97 | 26 | % | ||||||||||||||||||
| Total farming revenues | $ | 12,628 | $ | 4,335 | $ | 8,293 | 191 | % | |||||||||||||||
| Cost of sales | 9,561 | 3,819 | 5,742 | 150 | % | ||||||||||||||||||
| Selling, general and administrative expenses | 506 | 119 | 387 | 325 | % | ||||||||||||||||||
| Depreciation and amortization | 983 | 768 | 215 | 28 | % | ||||||||||||||||||
| Direct farming expenses | $ | 11,050 | $ | 4,706 | $ | 6,344 | 135 | % | |||||||||||||||
| Operating income (loss) from farming before fixed water obligations | 1,578 | (371) | 1,949 | 525 | % | ||||||||||||||||||
| Fixed water obligations | 134 | 656 | $ | (522) | (80) | % | |||||||||||||||||
| Operating income (loss) from farming | $ | 1,444 | $ | (1,027) | $ | 2,471 | (241) | % | |||||||||||||||
•Farming segment revenues totaled $12,628,000 for the three months ended September 30, 2026, an increase of $8,293,000, or 191.3%, compared to $4,335,000 for the prior-year period. The increase was primarily attributable to $6,591,000 of pistachio revenues, including $2,581,000 of pricing adjustments on prior-year crop sales and $3,437,000 of crop insurance proceeds, compared to no pistachio revenues in the prior-year quarter. Wine grape revenues increased $1,121,000, reflecting an accelerated harvest due to warmer weather conditions during the quarter, as well as $460,000 of crop insurance proceeds. Almond revenues increased $484,000, reflecting higher average realized prices.
•Direct farming expenses, excluding water holding costs, were $11,050,000 for the three months ended September 30, 2026, compared to $4,706,000 for the prior-year period, an increase of $6,344,000, or 134.8%. The increase primarily reflected higher costs of sales of $5,742,000, including the recognition of current-year crop growing costs associated with insured crop losses and crop sales. Selling, general and administrative expenses increased $387,000, primarily due to higher irrigation water costs purchased, while depreciation and amortization expense increased $215,000. Water holding costs decreased $522,000 to $134,000. Despite the increase in reported revenues, abnormally warm spring weather and unfavorable growing conditions adversely affected current-year crop yields, with industry reports also reflecting reduced crop yields across the region. Accordingly, the revenue increase was not indicative of improved current-year crop production. Total farming segment expenses were $11,184,000 for the three months ended September 30, 2026, compared to $5,362,000 in the prior-year period.
•Operating income from farming before fixed water obligations was $1,578,000 for the three months ended September 30, 2026, compared with an operating loss of $371,000 in the prior-year period. The $1,949,000 improvement primarily reflected higher revenues, partially offset by an increased direct farming expenses. The Company believes this measure is useful in evaluating farming operations separately from fixed water obligations incurred to preserve long-term water rights, regardless of farming activity.
| Nine Months Ended September 30, | Change | ||||||||||||||||||||||
| ($ in thousands) | 2026 | 2025 | $ | % | |||||||||||||||||||
| Farming revenues | |||||||||||||||||||||||
| Almonds | $ | 3,025 | $ | 3,412 | $ | (387) | (11) | % | |||||||||||||||
| Pistachios | 6,915 | (10) | 6,925 | NM | |||||||||||||||||||
| Wine grapes | 3,572 | 2,451 | 1,121 | 46 | % | ||||||||||||||||||
| Other | 761 | 645 | 116 | 18 | % | ||||||||||||||||||
| Total farming revenues | $ | 14,273 | $ | 6,498 | $ | 7,775 | 120 | % | |||||||||||||||
| Cost of sales | 10,351 | 5,567 | 4,784 | 86 | % | ||||||||||||||||||
| Selling, general and administrative expenses | 634 | 221 | 413 | 187 | % | ||||||||||||||||||
| Depreciation and amortization | 1,569 | 1,447 | 122 | 8 | % | ||||||||||||||||||
| Direct farming expenses | $ | 12,554 | $ | 7,235 | $ | 5,319 | 74 | % | |||||||||||||||
| Operating income (loss) from farming before fixed water obligations | $ | 1,719 | $ | (737) | $ | 2,456 | 333 | % | |||||||||||||||
| Fixed water obligations | $ | 1,905 | $ | 2,172 | $ | (267) | (12) | % | |||||||||||||||
| Operating loss from farming | $ | (186) | $ | (2,909) | $ | 2,723 | 94 | % | |||||||||||||||
•Farming segment revenues totaled $14,273,000 for the nine months ended September 30, 2026, an increase of $7,775,000, or 120%, compared with $6,498,000 for the prior-year period. The increase was primarily attributable to pistachio revenues, including prior-year pricing adjustments and crop insurance proceeds, and higher wine grape revenues due to timing of harvest when compared to prior-year period, partially offset by a $387,000, or 11.3%, decrease in almond revenues due to lower sales of almond carryover crop.
•Direct farming expenses were $12,554,000 for the nine months ended September 30, 2026, compared to $7,235,000 for the prior-year period, an increase of $5,319,000, or 73.5%. The increase primarily reflected higher costs of sales of $4,784,000, or 85.9%, including $4,019,000 of pistachio costs and a $1,339,000 increase in wine grape costs, partially offset by a $572,000 decrease in almond costs. Selling, general and administrative expenses increased $413,000, while depreciation and amortization increased $122,000, or 8.4%. Water holding costs decreased $267,000, or 12.3% to $1,905,000, resulting in total farming segment expenses of $14,459,000 compared with $9,407,000 in the prior-year period.
•Operating income from farming before fixed water obligations was $1,719,000 for the nine months ended September 30, 2026, compared to an operating loss of $737,000 for the prior-year period. The $2,456,000 improvement primarily reflected higher revenues, partially offset by an increase in direct farming expenses.
Water holding costs represent fixed costs incurred to maintain the Company's long-term water rights and related infrastructure. These costs are generally incurred regardless of the volume of water purchased or used in farming operations. Accordingly, changes in these costs are not necessarily indicative of changes in farming activity or operating performance but reflect the Company's long-term strategy of preserving water resources to support its agricultural and real estate development operations.
Seasonality
Almond, pistachio, and wine grape sales are seasonal, with the majority of revenues typically generated during the third and fourth quarters of the year. Almonds and pistachios are generally sold at prevailing market prices, while wine grapes are sold under contracted pricing arrangements. The timing of harvesting and sales recognition may vary between quarters and years, affecting quarterly comparisons.
Olive Expansion
The Company completed the planting of an additional 150 acres of olive orchards during 2026, bringing total olive acreage to approximately 300 acres. Olive trees generally require several years to reach commercial production, and accordingly, the newly planted acreage is not expected to generate meaningful revenues in the near term. The expanded olive acreage is expected to further diversify the Company's agricultural commodity mix over the long term.
Weather Conditions
Weather conditions can significantly affect chill accumulation during dormancy, a period critical to tree and vine development. Winter conditions generally provided adequate chill accumulation for the Company's almond and pistachio orchards. However, elevated temperatures during February 2026 resulted in insufficient chill accumulation for the Company's pistachio orchards, contributing to reduced crop yields. Separately, warmer temperatures during the spring adversely affected almond development, resulting in lower almond kernel weights. During 2026, the Company recognized crop insurance proceeds related to weather-related crop losses, as discussed above.
Input Costs
The Company continues to monitor broader macroeconomic and geopolitical developments that may affect production costs. Labor costs, including both employees and contract labor, have continued to increase, and the Company expects this trend to continue in the near term. The Company utilizes contract labor for seasonal activities, including pruning and harvesting, to supplement its workforce. In addition, fertilizer, chemicals, fuel, and other agricultural inputs remain subject to price volatility. Although the Company seeks to manage these costs through operational planning and procurement strategies, continued increases in input costs could adversely affect operating results.
Water
The long-term effects of California's groundwater management laws on future agricultural production and new plantings remain uncertain. In addition, water availability continues to be a long-term consideration for agricultural operations throughout California. Limitations on State Water Project deliveries, particularly during drought conditions, could adversely affect agricultural production. The Company had sufficient water supplies to meet its agricultural requirements during the 2026 growing season, with the majority of crops harvested as of September 30, 2026.
Ranch Operations:
| Three Months Ended September 30, | Change | ||||||||||||||||||||||
| ($ in thousands) | 2026 | 2025 | $ | % | |||||||||||||||||||
| Ranch operations revenues | |||||||||||||||||||||||
|
Game management and other 1
|
$ | 1,147 | $ | 800 | $ | 347 | 43 | % | |||||||||||||||
| Grazing | 706 | 538 | 168 | 31 | % | ||||||||||||||||||
| Total ranch operations revenues | $ | 1,853 | $ | 1,338 | $ | 515 | 38 | % | |||||||||||||||
| Operating expenses | 1,059 | 976 | 83 | 9 | % | ||||||||||||||||||
| Selling, general and administrative expenses | 174 | 106 | 68 | 64 | % | ||||||||||||||||||
| Depreciation and amortization | 91 | 94 | (3) | (3) | % | ||||||||||||||||||
| Total ranch operations expenses | $ | 1,324 | $ | 1,176 | $ | 148 | 13 | % | |||||||||||||||
| Operating income from ranch operations | $ | 529 | $ | 162 | $ | 367 | 227 | % | |||||||||||||||
|
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.
|
|||||||||||||||||||||||
•Ranch operations revenues totaled $1,853,000 for the three months ended September 30, 2026, an increase of $515,000, or 38.5%, compared with $1,338,000 in the prior-year period. The increase was primarily attributable to higher game management revenues of $226,000, reflecting increased guided hunting and membership activity, higher grazing revenues of $168,000, primarily due to higher cattle prices, and an increase of $126,000 in other ranch revenues, partially offset by decreases in other revenue categories.
•Ranch operations expenses were $1,324,000 for the three months ended September 30, 2026, an increase of $148,000, or 13%, compared with $1,176,000 for the prior-year period. The increase primarily reflected higher operating expenses of $83,000 and selling, general and administrative expenses of $68,000, while depreciation and amortization remained relatively unchanged.
| Nine Months Ended September 30, | Change | ||||||||||||||||||||||
| ($ in thousands) | 2026 | 2025 | $ | % | |||||||||||||||||||
| Ranch operations revenues | |||||||||||||||||||||||
|
Game management and other 1
|
$ | 2,628 | $ | 2,050 | $ | 578 | 28 | % | |||||||||||||||
| Grazing | 2,042 | 1,675 | 367 | 22 | % | ||||||||||||||||||
| Total ranch operations revenues | $ | 4,670 | $ | 3,725 | $ | 945 | 25 | % | |||||||||||||||
| Operating expenses | 3,160 | 3,110 | 50 | 2 | % | ||||||||||||||||||
| Selling, general and administrative expenses | 402 | 387 | 15 | 4 | % | ||||||||||||||||||
| Depreciation and amortization | 268 | 287 | (19) | (7) | % | ||||||||||||||||||
| Total ranch operations expenses | $ | 3,830 | $ | 3,784 | $ | 46 | 1 | % | |||||||||||||||
| Operating income (loss) from ranch operations | $ | 840 | $ | (59) | $ | 899 | (1,524) | % | |||||||||||||||
|
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.
|
|||||||||||||||||||||||
•Ranch operations revenues totaled $4,670,000 for the nine months ended September 30, 2026, an increase of $945,000, or 25%, compared with $3,725,000 for the prior-year period. The increase was primarily driven by higher grazing revenues of $367,000, reflecting favorable cattle prices, increased game management revenues of $348,000, reflecting higher guided hunting and membership activity, and an increase in other ranch revenues of $240,000.
•Ranch operations expenses were $3,830,000 for the nine months ended September 30, 2026, an increase of $46,000, or 1.2%, compared with $3,784,000 for the prior-year period. Expenses remained relatively stable, with modest increases in operating and selling, general and administrative expenses, partially offset by lower depreciation expense.
Corporate and Other:
The following table summarizes the principal components of the changes in corporate general and administrative expenses for the periods presented (in thousands):
|
Corporate General and Administrative Expenses (in thousands)
|
|||||||||||||||||||||||
| Three Months Ended September 30, | Change | ||||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
| Corporate expenses | $ | 2,242 | $ | 2,868 | $ | (626) | (21.8) | % | |||||||||||||||
| Share-based compensation adjustments | (300) | 360 | (660) | (183.3) | % | ||||||||||||||||||
| Corporate expenses, excluding share-based compensation adjustments | $ | 1,942 | $ | 3,228 | $ | (1,286) | (39.8) | % | |||||||||||||||
| Nine Months Ended September 30, | Change | ||||||||||||||||||||||
| 2026 | 2025 | $ | % | ||||||||||||||||||||
| Corporate expenses | $ | 6,967 | $ | 12,004 | $ | (5,037) | (42.0) | % | |||||||||||||||
| Share-based compensation adjustments | (622) | (430) | (192) | 44.7 | % | ||||||||||||||||||
| Less: non-recurring costs | - | (3,399) | 3,399 | (100.0) | % | ||||||||||||||||||
| Corporate expenses, excluding share-based compensation adjustments and non-recurring costs | $ | 6,345 | $ | 8,175 | $ | (1,830) | (22.4) | % | |||||||||||||||
For the three-month period, corporate expenses decreased $626,000, or 21.8%, to $2,242,000, compared to $2,868,000 for the same period in 2025. The comparison was impacted by share-based compensation adjustments of $300,000 in 2026 and $360,000 in 2025, related to the impact of forfeited awards in the prior-year period. Excluding these adjustments, corporate expenses decreased $1,286,000, or 39.8%, from $3,228,000 to $1,942,000. The decrease was primarily attributable to $539,000 in lower shareholder-related expenses, $255,000 in reduced costs associated with the former Chief Executive Officer and $230,000 in lower salary expenses. These reductions were partially offset by the timing of audit fees and higher legal expenses.
For the nine months ended September 30, 2026, corporate expenses decreased $5,037,000, or 42.0%, to $6,967,000, compared to $12,004,000 for the same period in 2025. The decrease was primarily attributable to $3,399,000 of non-recurring charges incurred in the prior-year period. Excluding these charges and the impact of share-based compensation adjustments, corporate expenses decreased $1,830,000, or 22.4%, primarily reflecting lower compensation and other corporate expenses.
Other Reconciling Items:
Total other income was $30,000 for the three months ended September 30, 2026, a decrease of $138,000 from $168,000 for the same period in 2025, primarily due to lower investment income as a result of a lower average invested balance.
Total other income was $109,000 for the nine months ended September 30, 2026, a decrease of $551,000 from $660,000 for the same period in 2025, primarily due to lower investment income as a result of a lower average invested balance.
Depreciation for our Multifamily segment was $516,000 for the three months ended September 30, 2026, an increase of $234,000 from $282,000 for the same period in 2025. Terra Vista was constructed in phases, and depreciation commenced on each building as it was completed and placed in service, beginning in the second quarter of 2025, with the final building delivered in October 2025. The increase therefore reflects a full quarter of depreciation on all completed buildings in 2026, compared with a partial period of depreciation on only the initial buildings in 2025.
Depreciation for our Multifamily segment was $1,548,000 for the nine months ended September 30, 2026, an increase of $1,126,000 from $422,000 for the same period in 2025. As discussed above, the buildings within Terra Vista were completed and placed in service in phases beginning in the second quarter of 2025, with the final building delivered in October 2025. The increase reflects a full nine months of depreciation on all completed buildings in 2026, compared with depreciation on only the initial buildings from their respective in-service dates in 2025.
Joint Ventures:
| Three Months Ended September 30, | Change | ||||||||||||||||||||||
| ($ in thousands) | 2026 | 2025 | $ | % | |||||||||||||||||||
| Equity in earnings (loss) | |||||||||||||||||||||||
| Petro Travel Plaza Holdings, LLC | $ | 1,552 | $ | 1,933 | $ | (381) | (20) | % | |||||||||||||||
| TRCC/Rock Outlet Center LLC | (262) | (323) | 61 | 19 | % | ||||||||||||||||||
| TRC-MRC 1, LLC | 251 | 217 | 34 | 16 | % | ||||||||||||||||||
| TRC-MRC 2, LLC | 514 | 488 | 26 | 5 | % | ||||||||||||||||||
| TRC-MRC 3, LLC | 126 | 89 | 37 | 42 | % | ||||||||||||||||||
| TRC-MRC 4, LLC | 104 | 88 | 16 | 18 | % | ||||||||||||||||||
| TRC-MRC 5, LLC | 47 | 63 | (16) | (25) | % | ||||||||||||||||||
| Total equity in earnings | $ | 2,332 | $ | 2,555 | $ | (223) | (9) | % | |||||||||||||||
•Equity in earnings was $2,332,000 for the three months ended September 30, 2026, a decrease of $223,000, or 8.7%, compared to $2,555,000 for the prior-year period. The decrease was primarily attributable to a $381,000 decrease in equity in earnings from the Petro Travel Plaza Holdings, LLC joint venture, reflecting lower site-level margins as higher labor and operating expenses more than offset an improvement in fuel margins. This decrease was partially offset by improved results at the TRCC/Rock Outlet Center LLC joint venture, where the equity loss narrowed by $61,000, and by an aggregate $97,000 increase in equity in earnings from the TRC-MRC joint ventures, primarily reflecting improved operating performance.
| Nine Months Ended September 30, | Change | ||||||||||||||||||||||
| ($ in thousands) | 2026 | 2025 | $ | % | |||||||||||||||||||
| Equity in earnings (loss) | |||||||||||||||||||||||
| Petro Travel Plaza Holdings, LLC | $ | 4,178 | $ | 4,557 | $ | (379) | (8) | % | |||||||||||||||
| TRCC/Rock Outlet Center LLC | (672) | (1,191) | 519 | 44 | % | ||||||||||||||||||
| TRC-MRC 1, LLC | 742 | 680 | 62 | 9 | % | ||||||||||||||||||
| TRC-MRC 2, LLC | 1,572 | 1,510 | 62 | 4 | % | ||||||||||||||||||
| TRC-MRC 3, LLC | 381 | 333 | 48 | 14 | % | ||||||||||||||||||
| TRC-MRC 4, LLC | 312 | 265 | 47 | 18 | % | ||||||||||||||||||
| TRC-MRC 5, LLC | 209 | 114 | 95 | 83 | % | ||||||||||||||||||
| Total equity in earnings | $ | 6,722 | $ | 6,268 | $ | 454 | 7 | % | |||||||||||||||
•Equity in earnings was $6,722,000 for the nine months ended September 30, 2026, an increase of $454,000, or 7.2%, from $6,268,000 for the prior-year period. The increase was primarily attributable to improved results at the TRCC/Rock Outlet Center LLC joint venture, where the equity loss narrowed by $519,000, due to the absence of a tenant turnover write-down recognized during the second quarter of 2025, and to an aggregate $314,000 increase in equity in earnings from the TRC-MRC joint ventures, primarily reflecting improved operating performance. These increases were partially offset by a $379,000 decrease in equity in earnings from Petro Travel Plaza Holdings, LLC, reflecting lower site-level margins.
Please refer to "Non-GAAP Financial Measures" for further financial discussion of the results of our joint ventures.
Seasonality and Variability of Results
Our operations are seasonal in nature, and accordingly, results for interim periods are not necessarily indicative of results to be expected for the full fiscal year. Historically, a substantial portion of our farming revenues has been generated during the third and fourth quarters of the fiscal year due to the timing of harvests and crop sales. In contrast, non-contracted water sales typically occur in the first quarter of the fiscal year and may vary significantly depending on hydrological conditions. In periods of drought, demand for water may increase, resulting in higher water sales, whereas wetter conditions may reduce demand.
In addition, our real estate development, sales, and leasing activities are inherently variable and depend on market conditions, the timing of transactions, and the availability of suitable opportunities. As a result, revenues and operating results related to these activities may fluctuate significantly from period to period, making comparisons between interim periods less meaningful.
For further discussion of the risks and uncertainties that could potentially adversely affect us, please refer to Part I, Item 7 - "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2025, or Annual Report, and to Part I, Item 1A - "Risk Factors" of our Annual Report. For further discussion, please refer to Note 11 (Commitments and Contingencies) of the Notes to Unaudited Consolidated Financial Statements in this report.
Income Taxes
For the nine months ended September 30, 2026, we had an income tax expense of $2,339,000 compared to a benefit of $1,809,000 for the nine months ended September 30, 2025. The effective tax rates were 28% and 55% for the nine months ended September 30, 2026 and 2025, respectively. As of September 30, 2026, the Company had income taxes payable of $847,000. We classify interest and penalties incurred on tax payments as income tax expenses. Our effective tax rates differ from statutory rates primarily because of permanent differences related to Internal Revenue Code Section 162(m), state taxes and mineral depletion. The Internal Revenue Code Section 162(m) compensation deduction limitations occurred due to changes in tax law arising from the 2017 Tax Cuts and Jobs Act.
Liquidity and Capital Resources
Our financial position allows us to pursue our long-term strategies, including the continued development of TRCC, funding of operating activities, land entitlement, real estate development, and conservation. Accordingly, we have established priorities for the deployment of available capital, including investing in core operating segments to support long-term profitable growth. Our primary sources of liquidity include cash generated from operations, distributions from our unconsolidated joint ventures, investment proceeds, and borrowings under our revolving credit facilities. In the past, we have also issued common stock to fund capital investment activities. Our liquidity may fluctuate throughout the year due to seasonal production cycles within our farming segment, weather conditions, and market demand for our agricultural and real estate products. To meet working capital requirements and fund agricultural and development activities, we utilize our revolving credit facilities as needed.
We expect to continue investing in the vertical development of our commercial and industrial real estate projects. We also expect to invest in our real estate segments to secure land entitlement approvals, construct infrastructure, develop income-producing assets, maintain adequate water resources, and support other development activities. Within our farming segment, we will continue to invest in projects that improve operating efficiency and enhance long-term productivity when economically justified. During 2026, we completed the planting of an additional 150 acres of olive orchards, bringing total olive acreage to approximately 300 acres. While the newly planted acreage is not expected to generate meaningful revenues for several years, the investment is intended to further diversify the Company's agricultural commodity mix and support long-term production.
We believe our existing cash balances, projected cash flows from operations, distributions from joint ventures, and available borrowing capacity under our revolving credit facility will be sufficient to meet our anticipated capital expenditures, debt service obligations, and working capital requirements for at least the next 12 months. We also expect cash flows from operations, joint venture distributions, and available borrowing capacity to provide ongoing liquidity beyond the next 12 months. In addition, we have the ability to manage the timing of certain capital expenditures and other investing activities, as necessary, to align with our liquidity requirements.
Our cash, cash equivalents and marketable securities totaled approximately $8,792,000 as of September 30, 2026, a decrease of $16,102,000 from $24,894,000 as of December 31, 2025.
The following table shows our cash flow activities for the nine months ended September 30, 2026:
| (in thousands) | 2026 | 2025 | |||||||||
| Operating activities | $ | 7,259 | $ | (4,106) | |||||||
| Investing activities | $ | (14,131) | $ | (56,100) | |||||||
| Financing activities | $ | (547) | $ | 24,510 | |||||||
Operating Activities
During the first nine months of 2026, our operations provided $7,259,000, largely attributable to improved segment results and higher distribution of earnings from unconsolidated joint ventures.
During the first nine months of 2025, our operations used $4,106,000, largely attributable to cash used to settle our current liabilities balance including liability classified stock compensation awards of $1,831,000.
Investing Activities
During the first nine months of 2026, investing activities used $14,131,000 compared with $56,100,000 in the prior-year period. The decrease primarily reflected lower real estate development expenditures following the completion of construction at Terra Vista at Tejon, reduced investments in water assets, and net proceeds from maturities and purchases of marketable securities. Investing activities also included $3,689,000 of distributions of capital from unconsolidated joint ventures, compared with $773,000 in the prior-year period.
Capital expenditures, inclusive of capitalized interest and payroll (exclusive of stock compensation), totaled $19,647,000 in the first nine months of 2026, compared with $49,393,000 in the prior-year period. Current-year expenditures were primarily related to infrastructure improvements at TRCC, entitlement and permitting activities for the Company's master planned communities, and investments in farming operations and equipment. These expenditures include $6,553,000 on infrastructure improvements at TRCC-East, $2,261,000 and $2,632,000 on permitting efforts for MV and Grapevine, respectively, and $3,665,000 on re-entitlement costs for Centennial.
Discretionary project expenditures increased by approximately $185,000, or 5.2%, compared to the prior-year period, reflecting targeted spending on priority initiatives. Of the $3,665,000 incurred for Centennial, approximately $1,850,000 related to direct re-entitlement process, with the balance primarily consisting of non-discretionary costs necessary to maintain the project and meet ongoing obligations. Excluding Centennial-related expenditures, discretionary project expenditures decreased by approximately $198,000, or 11.8%, compared to the prior-year period, consistent with our ongoing focus on liquidity management and cost discipline.
We continue to actively manage capital deployment across projects, prioritizing required entitlement preservation and legal obligations while reducing discretionary development expenditures. We expect permitting-related expenditures for MV to remain at reduced levels unless development activity accelerates.
Within our farming segment, we incurred cash outlays of $4,252,000, including $1,501,000 related to olive production, as well as cultural costs for crops currently classified as under development, and replacement of machinery and equipment. During the period, the farming segment capitalized approximately $803,000 of irrigation water costs related to crops under development, as those costs are attributable to orchards that have not yet reached commercial production. Additionally, we used $4,420,000 to acquire water assets. We had marketable securities of $14,566,000 that matured, and we reinvested $5,416,000.
During the first nine months of 2025, investing activities used $56,100,000, primarily reflecting expenditures related to the construction of the first phase of Terra Vista at Tejon, along with investments in real estate development, water assets and other capital improvements.
We made capital expenditures, inclusive of capitalized interest and payroll (exclusive of stock compensation), of $49,393,000 for real estate development and farming reflected as follows: At TRCC, we spent $25,291,000 of construction cost on Terra Vista at Tejon, and $6,014,000 on infrastructure improvements at TRCC-East. We also spent $2,194,000 and $1,652,000 on permitting efforts for MV and Grapevine, respectively, and $2,554,000 on litigation defense for Centennial. Within our farming segment, we spent $4,733,000, which included cultural costs for orchards currently classified as under development and replacement of machinery and equipment. Additionally, we used $8,926,000 to acquire water assets. We had marketable securities of $29,508,000 that matured, and we reinvested $32,387,000. Lastly, we received proceeds of $773,000 from joint venture distributions.
As we move forward, we anticipate we will continue to use cash from operations, proceeds from the maturity of securities, and anticipated distributions from joint ventures to fund real estate project investments, including the investments summarized below.
Our estimated capital investment, inclusive of capitalized interest and payroll, for the remainder of 2026 is primarily related to our real estate projects. These estimated investments include $3,800,000 of infrastructure development at TRCC-East to support the continued commercial retail and industrial development, water treatment system improvements, and expansion of the wastewater treatment plant for future anticipated absorption, a substantial portion of which is expected to be reimbursed through the CFD bond proceeds. We also expect to invest up to $3,965,000 for land planning, re-entitlement, federal and state agency permitting activities, and development activities at MV, Centennial, and Grapevine during the remainder of 2026.
We capitalize interest cost as a cost of the project only during the period for which activities necessary to prepare an asset for its intended use are ongoing, provided expenditures for the asset have been made and interest cost has been incurred. Capitalized interest for the nine months ended September 30, 2026 and 2025, was $3,551,000 and $3,529,000, respectively, and is classified within real estate development. We also capitalized payroll costs related to development, pre-construction, and construction projects, which aggregated $1,282,000 and $1,666,000 for the nine months ended September 30, 2026 and 2025, respectively. Expenditures for repairs and maintenance are expensed as incurred.
Financing Activities
During the first nine months of 2026, financing activities used $547,000, which was primarily attributable to borrowings on the line of credit of $9,000,000 and $8,500,000 of repayments under the Company's revolving line of credit, resulting in net borrowings of $500,000. Financing activities also included $1,047,000 of tax payments associated with vested stock grants.
During the first nine months of 2025, financing activities provided $24,510,000, primarily reflecting $25,000,000 of borrowings under the Company's revolving line of credit to fund construction and ongoing development activities, partially offset by $490,000 of tax payments associated with vested stock grants.
Cash flows and earnings may fluctuate from period to period due to the commodity-driven nature of our farming and mineral operations and the timing of sales and leasing activity within our development projects. Some farming crops, notably pistachios, bear in alternate years which results in reduced revenues for those years, with 2026 being an alternate up bearing year for pistachios. Development timelines, market conditions, and the time required to negotiate transactions can cause variability in reported results across periods. Often, the timing aspect of land development can lead to particular years or periods having more or less earnings than comparable periods. Based on current projections and available liquidity, management expects to maintain sufficient cash resources to fund internal operations over the next 12 months. As we move forward with the re-entitlement, 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.
Capital Structure and Financial Condition
At September 30, 2026, total capitalization at book value was $591,291,000, consisting of $94,442,000 of debt and $496,849,000 of equity, resulting in a debt-to-total-capitalization ratio of approximately 16.0%, representing a decrease compared to the debt-to-total-capitalization ratio of 16.1% at December 31, 2025.
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. 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. 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 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 Accounting Standards Codification (ASC) 470 and determined that the exchange should be treated as a debt extinguishment. Future borrowings under the Revolving Credit Facility will be used for ongoing working capital requirements, including to fund future construction projects, farming and ranching operations, and other general corporate purposes.
To maintain availability of funds, undrawn amounts under the RCL will accrue an unused fee of 15 basis points per annum except that, for the LOC Sub-Facility, TRC will incur a fee of 2.00% per annum for each letter of credit issued to TRC. 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 letters of credit outstanding.
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 net liabilities to equity ratio (NLER). The interest rate spread for the NLER has three tiers: (1) 2.75% if the NLER is 55% or more; (2) 2.5% if the NLER is between 35% and less than 55%; and (3) 2.25% if the NLER is less than 35%. The interest rate spread in the previous sentence may effectively be reduced by applying a patronage credit for TRC's participation in the farm credit program, which patronage credit historically has been (for reference and information purposes only and not as a guarantee of future patronage credit) between 100-125 basis points. The Administrative Agent pays the patronage credit annually in the form of a dividend. As of September 30, 2026, 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 2026 of $646,000 which represents 125 basis points from the primary lender, and the remaining patronage credit in March 2026 for $310,000 which represents 100 basis points from the other participating lenders.
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. The RCL may be repaid in part, or in full, by TRC at any time during the term without penalty. Certain events of default (as described in the Revolving Credit Facility) allow acceleration of repayment of borrowed funds, interest and other fees. The Revolving Credit Facility is unsecured, but the agreement provides the Administrative Agent a springing lien on TRC's wholly owned, unencumbered assets, exclusive of assets subject to negative pledge, if one or more covenants is breached.
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 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.
The Revolving Credit Facility contains customary events of default, including: failure to make required payments; failure to comply with terms of the RCL; bankruptcy and insolvency. The RCL contains other customary terms and conditions, including representations and warranties, which are typical for credit facilities of this type.
At September 30, 2026 and December 31, 2025, we were in compliance with all financial covenants.
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"), and/or issuance of additional common stock.
In May 2025, we filed an updated shelf registration statement on Form S-3 that went effective in May 2025. Under the shelf registration statement, we may offer and sell in the future through one or more offerings not to exceed $200,000,000 of common stock, preferred stock, debt securities, warrants or any combination of the foregoing. The shelf registration allows for efficient and timely access to capital markets and, when combined with our other potential funding sources just noted, provides us with a variety of capital funding options that can then be used and appropriately matched to our funding needs.
As noted above, at September 30, 2026 we had $8,792,000 in cash and securities and $65,558,000 available on our RCL to meet any short-term liquidity needs. See Note 3 (Marketable Securities) and Note 7 (Line of Credit and Long-Term Debt) of the Notes to Unaudited Consolidated Financial Statements for more information.
We continue to expect that substantial investments will be required to develop our land assets. 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. As we progress through 2026, 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.
Contractual Cash Obligations
The following table summarizes our contractual cash obligations and commercial commitments as of September 30, 2026, to be paid over the next five years and thereafter:
| Payments Due by Period | ||||||||||||||||||||||||||||||||
| (In thousands) | Total | One Year or Less | Years 2-3 | Years 4-5 | Thereafter | |||||||||||||||||||||||||||
| Contractual Obligations: | ||||||||||||||||||||||||||||||||
|
Estimated water payments 1
|
1,516,432 | 1,657 | 29,683 | 31,492 | 1,453,600 | |||||||||||||||||||||||||||
| Revolving line-of-credit | 94,442 | - | 94,442 | - | - | |||||||||||||||||||||||||||
| Cash contract commitments | 9,289 | 9,289 | - | - | - | |||||||||||||||||||||||||||
| Defined Benefit Plan | 5,755 | 511 | 1,007 | 1,089 | 3,148 | |||||||||||||||||||||||||||
| SERP | 5,153 | 575 | 1,123 | 1,076 | 2,379 | |||||||||||||||||||||||||||
| Total contractual obligations | $ | 1,631,071 | $ | 12,032 | $ | 126,255 | $ | 33,657 | $ | 1,459,127 | ||||||||||||||||||||||
|
1 Amount represents Nickel Family water contract payments through 2044 and SWP contract payments through 2085, assuming 3% of escalation on payment each year. For the most significant component, the WRMWSD contract payment, we used an average of the actual water payments for the past five years (2021-2025) as base year, or $5.37 million, escalating 3% each year, to derive the amount disclosed.
|
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The table above includes only those contracts that include fixed or minimum obligations. It does not include normal purchases that are made in the ordinary course of business.
Estimated water payments include the Nickel Family, LLC water contract, which obligates us to purchase 6,693 acre-feet of water annually through 2044 and SWP contracts with WRMWSD, TCWD, Tulare Lake Basin Water Storage District, and Dudley-Ridge Water District. These contracts for the supply of future water run through 2085. Please refer to Note 5 (Long-Term Water Assets) of the Notes to Consolidated Financial Statements for additional information regarding water assets.
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. Also, included in the cash contract commitments are estimated fees earned in 2014 by a consultant, related to the entitlement of the Grapevine Development Area. The Company exited a consulting contract in 2014 related to the Grapevine Development and is obligated to pay an earned incentive fee at the time of successful receipt of all project permits and entitlements and at a value measurement date five years after entitlements have been achieved for Grapevine. The final amount of the incentive fees will not be finalized until the future payment dates. The Company believes that net savings from exiting the contract over this future time period will more than offset the incentive payment costs.
As discussed in Note 12 (Retirement Plans) of the Notes to Unaudited Consolidated Financial Statements, we have long-term liabilities for deferred employee compensation, including pension and supplemental retirement plans. Payments in the above table reflect estimates of future defined benefit plan contributions from us to the plan trust, estimates of payments to employees from the plan trust, and estimates of future payments to employees from us that are in the SERP program. We don't expect to make contributions in 2026.
Off-Balance Sheet Arrangements
The TRPFFA is a joint powers authority formed by Kern County and TCWD to finance public infrastructure within our Kern County developments. TRPFFA created two CFDs, 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. The East CFD has placed liens on 1,931 acres of our 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. On July 25, 2024, TRPFFA sold bonds which will provide approximately $25,000,000 of improvement funds for the reimbursement of public infrastructure costs at TRCC-East. At TRCC-East, the East CFD has approximately $18,605,000 of additional bond debt authorized by TRPFFA.
As of September 30, 2026, aggregate outstanding debt of unconsolidated joint ventures was $223,995,000; $19,833,000 of this debt was attributable to the loan for TRCC/Rock Outlet Center LLC joint venture. This loan was 100% guaranteed at September 30, 2026. All other outstanding debt attributed to our joint ventures have met their respective debt covenants, and hence were not subject to an effective guarantee at September 30, 2026. We do not provide a guarantee on the $10,458,000 of debt related to our joint venture with TA/Petro.
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 use Adjusted EBITDA to assess the performance of our core operations, for financial and operational decision making, and as a supplemental or additional means of evaluating period-to-period comparisons on a consistent basis. Adjusted EBITDA is calculated as EBITDA, excluding stock compensation expense and certain identified non-recurring items that are not indicative of our on-going operations or that may obscure our underlying results and trends. We believe EBITDA and Adjusted EBITDA provide investors relevant and useful information, when reconciled to their most comparable GAAP financial measure, because they permit investors to view income from our operations on an unleveraged basis, before the effects of taxes, depreciation and amortization, and stock compensation expense and other items impacting comparability. By excluding interest expense and income, EBITDA and Adjusted EBITDA allow investors to measure our performance independent of our capital structure and indebtedness and, therefore, allow for a more meaningful comparison of our performance to that of other companies, both in the real estate industry and in other industries. We believe that excluding charges related to share-based compensation facilitates a comparison of our operations across periods and among other companies without the variances caused by different valuation methodologies, the volatility of the expense (which depends on market forces outside our control), and the assumptions and the variety of award types that a company can use. In addition, the Company excludes certain items impacting comparability, such as shareholder activism advisory costs to provide investors with a clearer understanding of the Company's core operating performance across periods. EBITDA and Adjusted EBITDA have limitations as measures of our performance. EBITDA and Adjusted EBITDA do not reflect our historical cash expenditures or future cash requirements for capital expenditures or contractual commitments. While EBITDA and Adjusted EBITDA are relevant and widely used measures of performance, they do not represent net (loss) income or cash flows from operations as defined by GAAP. Further, our computation of EBITDA and Adjusted EBITDA may not be comparable to similar measures reported by other companies. The following table reconciles EBITDA and Adjusted EBITDA to Net income, the most directly comparable GAAP measure.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| ($ in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net income (loss) | $ | 3,298 | $ | 1,671 | $ | 6,082 | $ | (1,508) | |||||||||||||||
| Net loss attributable to non-controlling interest | (2) | 1 | (4) | (2) | |||||||||||||||||||
| Interest, net | |||||||||||||||||||||||
| Consolidated | (97) | (177) | (350) | (749) | |||||||||||||||||||
| Our share of interest expense from unconsolidated joint ventures | 1,414 | 1,539 | 4,241 | 4,473 | |||||||||||||||||||
| Total interest, net | 1,317 | 1,362 | 3,891 | 3,724 | |||||||||||||||||||
| Income tax provision (benefit) | 1,437 | (972) | 2,339 | (1,809) | |||||||||||||||||||
| Depreciation and amortization: | |||||||||||||||||||||||
| Consolidated | 2,128 | 1,690 | 4,992 | 3,800 | |||||||||||||||||||
| Our share of depreciation and amortization from unconsolidated joint ventures | 1,687 | 1,666 | 5,021 | 5,098 | |||||||||||||||||||
| Total depreciation and amortization | 3,815 | 3,356 | 10,013 | 8,898 | |||||||||||||||||||
| EBITDA | 9,869 | 5,416 | 22,329 | 9,307 | |||||||||||||||||||
| Stock compensation expense | 527 | (133) | 1,243 | 1,157 | |||||||||||||||||||
| Items impacting comparability: | |||||||||||||||||||||||
|
Shareholder activism expense 1
|
- | - | - | 3,399 | |||||||||||||||||||
| Adjusted EBITDA | $ | 10,396 | $ | 5,283 | $ | 23,572 | $ | 13,863 | |||||||||||||||
|
1 Represents advisory fees related to the contested board election and proxy defense.
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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. We believe NOI provides useful information to investors regarding our financial condition and results of operations because it primarily reflects those income and expense items that are incurred at the property level. Therefore, we believe NOI is a useful measure for evaluating the operating performance of our real estate assets. The following tables reconcile operating income to NOI.
In connection with the segment reporting change described in Note 13 (Reporting Segments and Related Information), under which Multifamily operations are presented as a separate reporting segment, net operating income for the prior-year periods has been recast to exclude the results of the Multifamily operations previously included within the commercial/industrial real estate development segment. As a result, commercial/industrial net operating income for the three and nine months ended September 30, 2025 presented herein differs from the amounts previously reported in our Quarterly Report on Form 10-Q for the period ended September 30, 2025.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| ($ in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Commercial/Industrial operating income | $ | 1,717 | $ | 1,445 | $ | 6,252 | $ | 4,420 | |||||||||||||||
| Plus: Commercial/Industrial depreciation and amortization | 95 | 106 | 295 | 318 | |||||||||||||||||||
| Plus: General, administrative, cost of sales and other expenses | 1,176 | 1,277 | 3,622 | 3,816 | |||||||||||||||||||
| Less: Other revenues including land sales | (632) | (696) | (3,906) | (2,582) | |||||||||||||||||||
| Total Commercial/Industrial net operating income | $ | 2,356 | $ | 2,132 | $ | 6,263 | $ | 5,972 | |||||||||||||||
| ($ in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
| Net operating income | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Pastoria Energy Facility | $ | 1,486 | $ | 1,256 | $ | 3,869 | $ | 3,582 | |||||||||||||||
| TRCC | 433 | 385 | 1,123 | 1,032 | |||||||||||||||||||
| Communication leases | 348 | 332 | 1,032 | 963 | |||||||||||||||||||
| Other commercial leases | 89 | 159 | 239 | 395 | |||||||||||||||||||
| Total Commercial/Industrial net operating income | $ | 2,356 | $ | 2,132 | $ | 6,263 | $ | 5,972 | |||||||||||||||
We utilize NOI of unconsolidated joint ventures as a measure of financial or operating performance that is not specifically defined by GAAP. We believe NOI of unconsolidated joint ventures provides investors with additional information concerning operating performance of our unconsolidated joint ventures. We also use this measure internally to monitor the operating performance of our unconsolidated joint ventures. Our computation of this non-GAAP measure may not be the same as similar measures reported by other companies. This non-GAAP financial measure should not be considered as an alternative to net income as a measure of the operating performance of our unconsolidated joint ventures or to cash flows computed in accordance with GAAP as a measure of liquidity nor are they indicative of cash flows from operating and financial activities of our unconsolidated joint ventures.
The following schedule reconciles net income of unconsolidated joint ventures to NOI of unconsolidated joint ventures. Please refer to Note 14 (Investment in Unconsolidated and Consolidated Joint Ventures) of the Notes to Unaudited Consolidated Financial Statements for further discussion on joint ventures.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| ($ in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Earnings of unconsolidated joint ventures | $ | 4,145 | $ | 4,465 | $ | 12,050 | $ | 11,016 | |||||||||||||||
| Interest expense of unconsolidated joint ventures | 2,794 | 3,030 | 8,355 | 8,826 | |||||||||||||||||||
| Operating income of unconsolidated joint ventures | 6,939 | 7,495 | 20,405 | 19,842 | |||||||||||||||||||
| Depreciation and amortization of unconsolidated joint ventures | 3,220 | 3,168 | 9,628 | 9,702 | |||||||||||||||||||
| Net operating income of unconsolidated joint ventures | $ | 10,159 | $ | 10,663 | $ | 30,033 | $ | 29,544 | |||||||||||||||
Tejon Ranch Co. published this content on November 05, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on November 05, 2026 at 19:44 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]