Newhall Land Raises $25 Million : Public Offering Used to Finance Valencia Developments

Newhall Land & Farming raised nearly $25 million Wednesday through a public offering intended to help finance $100 million in new commercial development in the Santa Clarita Valley within the next five years.

Newhall Land, a partnership whose units trade on the New York and Pacific stock exchanges, sold 750,000 new partnership units. At the same time, the McBean and Zilkha interests, which hold the largest stakes in Newhall Land, and other investors sold 1 million units.

“I just wanted a slight diversification at my age,” explained Peter McBean, 75, who heads trusts that sold 332,000 of their 1.58 million units in Newhall Land. McBean, a member of the Newhall family that founded the company, expressed confidence in the firm and noted that he has never before sold any of his stake.

Most of the Zilkha units were sold by Selim K. Zilkha, a Bel Air investor who couldn’t be reached for comment. His brother Ezra, who also reduced his stake, said he was merely “rearranging my portfolio.” Overall, the Zilkhas sold 480,000 of their 1.73 million units.

The securities offerings Wednesday reduced the McBean stake to 6.7% from 8.8% and the Zilkha stake to 6.6% from 9.6%. The Newhalls, including McBean, still control the firm with about 40% of the company’s units. Both McBean and Ezra Zilkha remain directors of Newhall Management, the managing general partner of Newhall Land.

Planned Improvements

The firm said $15.6 million of the money that it raised will be used this year to build a 285,000-square-foot shopping center, a 200,000-square-foot industrial building, a 192-unit apartment complex and roads, storm drains and other improvements for further development in Valencia, its 10,000-acre planned community 35 miles northeast of downtown Los Angeles.

The remaining $8 million will be used for unspecified projects in Valencia.

Valencia is mostly residential now, and most of its residents commute to Los Angeles or the San Fernando Valley to work. Robert Wilke, Newhall Land’s chief financial officer, said the company wants to focus on commercial and industrial development that will bring more employment to the area.

Valencia now has 17,000 residents, but only 3,000 of its 10,000 acres are developed. Although it has no big regional shopping mall, Valencia does have three substantial shopping centers and 3.5 million square feet of industrial space, the firm’s officials said.

In the offering, the Newhall Land units were sold for $35, unchanged from Tuesday’s closing price. The units closed Wednesday at $35.125.

Newhall Land, one of California’s largest landowners, posted record earnings of $37.5 million on record revenue of $152.3 million in 1985, its first full year as a partnership.