Tejon Ranch Puts Its Cattle Business on the Market
Tejon Ranch Co. put its historic cattle operations on the auction block Friday to take advantage of rising beef prices and focus on real estate development.
The company, which has raised livestock on the giant ranch north of Los Angeles for more than 150 years, said it anticipates it will lease grazing land on the 270,000-acre ranch to the buyer of its cattle business until the property is ready for development.
The company has begun building an industrial park near the junction of Interstate 5 and U.S. 99 and is planning a 4,000-acre residential community on the southern end of the ranch near Quail Lake.
“We have made a decision to accelerate our real estate entitlement and development program in order to unlock the embedded value of our land as expeditiously as possible,” Tejon Ranch President Robert A. Stine said. “We intend to reinvest the proceeds of our cattle operations in that program.”
Despite stepping up the pace of real estate development, Tejon, which owns 36,000 head of cattle in California and Texas, continues to generate the vast majority of its revenue from livestock sales. Cowboys still herd cattle between summer and winter grazing lands on the ranch, which straddles Los Angeles and Kern counties.
“They drive their truck, unload their horse and do their thing,” Allen E. Lyda, Tejon Ranch’s chief financial officer, said of the company’s modern-day cowboys.
Cattle industry observers said Tejon Ranch selected a good time to sell its livestock operation. Beef prices have risen steadily in recent years, as beef consumption has risen for the first time in about two decades while many cattle herds were shrunk during the lean years.
In addition, Tejon Ranch has a reputation for running an efficient cattle operation and has played a major role in industry efforts to boost the quality and consistency of beef products, said Steve Kay, editor and publisher of Cattle Buyers Weekly in Petaluma.
“It’s probably an excellent time for Tejon Ranch to attract buyers to their livestock program,” Kay said.
Tejon Ranch executives said they expect to complete the sale, which includes a feedlot in Hereford, Texas, by early next year. The ranch’s livestock management team is “a likely bidder,” the company said.
Despite its rural setting more than 50 miles northeast of downtown Los Angeles, Tejon Ranch sits in the path of development as metropolitan Los Angeles continues to expand, company executives said.
Home furnishings retailer IKEA agreed this year to build one of California’s largest buildings, a nearly 2-million-square-foot distribution center, at Tejon Ranch’s new industrial park in southern Kern County.
On the southern edge of its property in Los Angeles County, Tejon Ranch has formed a partnership with Pardee Construction Co., Lewis Investment Co. and Standard Pacific Corp. to develop a master-planned community.
