Zacks Small Cap Research – TRC: Optimistic That Recent Actions Signal Improved Commitment to Delivering Shareholder Value – Technologist

By M. Marin

NYSE:TRC

READ THE FULL TRC RESEARCH REPORT

Directors’ experiences reflect various backgrounds in finance, law, accounting, development & other related areas…

Tejon Ranch Company’s (NYSE:TRC) in recent months has received shareholder criticism for not delivering value despite holding what could be the largest land asset suitable for development and close enough to major California cities to provide much needed industrial, commercial and residential space. We believe recent TRC actions could signal improved commitment to garnering input from and delivering value to shareholders.

Probably the most significant step has been the company added four new board members with extensive experience, including on boards at companies involved in the real estate space, as well as in finance, law, accounting and real estate development.

Does this represent improved TRC response to shareholders?

Importantly, the company noted the additions as consistent with goals to be “responsive to… investor relations engagement, including direct meetings and interaction with… investors…,” indicating to us TRC’s increased willingness to garner input from and deliver value to shareholders. This is particularly notable, in our view, as we believe the results of the company’s latest annual shareholder meeting reflected rising investor sentiment that change is needed in order to optimize value for shareholders.

View standstill agreement with Nitor Capital as a positive outcome of their discussions about TRC’s directions; likely shareholder input into new directors

Heading into 2024’s annual meeting, Nitor Capital Management had been extremely vocal in voicing disagreements with management. Subsequently, Nitor Capital and TRC reached a standstill agreement last month after having “engaged in discussions concerning [TRC’s] business, financial performance and other matters…”

Existing housing shortage likely exacerbated by 2025 opening of nearby Hard Rock Hotel & Casino Tejon

The substantial need for industrial, commercial and residential space near TRC’s land underscores the attractiveness of the property, in our view. Moreover, demand is likely only going to be exacerbated by the opening of the nearby Hard Rock Hotel & Casino Tejon next year.

With the significant need for added housing statewide, the company is developing Terra Vista at Tejon, expected to be the largest rental community in Kern County and to provide affordable housing for people living nearby. Terra Vista at Tejon as TRCC will be a mixed-use master-planned community. The 495 units will consist of affordable studio, one, and two-bedroom apartment homes. TRCC employees and others working nearby – perhaps at the Hard Rock Hotel & Casino Tejon –as well as residents in south Bakersfield, the southern portion of Kern County, and the adjacent Mountain Communities, are expected to view Terra Vista at Tejon as convenient housing.

SUBSCRIBE TO ZACKS SMALL CAP RESEARCH to receive our articles and reports emailed directly to you each morning. Please visit our website for additional information on Zacks SCR. 

DISCLOSURE: Zacks SCR has received compensation from the issuer directly, from an investment manager, or from an investor relations consulting firm, engaged by the issuer, for providing research coverage for a period of no less than one year. Research articles, as seen here, are part of the service Zacks SCR provides and Zacks SCR receives quarterly payments totaling a maximum fee of up to $40,000 annually for these services provided to or regarding the issuer. Full Disclaimer HERE.