The company’s centrally located Tejon Ranch Commerce Center (TRCC), a 20 million square-foot state-of-the-art commercial/industrial development sitting on both sides of the I-5, makes it the ideal logistics hub for both inbound and outbound shipments with direct and immediate access to the interstate. TRCC lies within two to four hours of the major ports of Los Angeles/Long Beach and Oakland that handle nearly 40% of the total volume in the United States. Additionally, TRCC’s location allows retailers to reach more than 40 million people with next-day delivery and 70 million in two days, with the shortest average distance to major population centers in the western U.S.

TRCC’s proximity to northern Los Angeles County and Bakersfield is well suited for regional e-commerce fulfillment centers. Developed through land sales, or in conjunction with like-minded joint venture partners, today TRCC is home to distribution and logistics centers for some the world’s largest companies, including Caterpillar, Dollar General, Famous Footwear, L'Oreal, and Ikea, which occupies more than two million square feet of space. Tejon also recently welcomed Camping World to TRCC. The company began its relocation from Bakersfield in January 2021.

We have successfully monetized six million square feet of commercial/industrial/ retail space, building a thriving center for industrial distribution facilities and well-known retailers. Over the last three years, Tejon Ranch has developed nearly 1.1 million square feet, which is now 100% leased.

With approximately 14 million square feet of fully entitled space immediately available for sale, lease or build-to-suit, TRCC is well positioned to capture opportunities facilitated by the recent substantial increase in online shopping, which is driving the need for warehouse space. Because COVID-19 also disrupted foreign sourcing, inventories have been put at risk, requiring businesses to return to domestic operations and increase inventories, again driving the need for additional industrial square footage closer to home. Research from JLL forecasts that industrial demand, which is outstripping supply, will grow by more than one billion square feet by 2025. At Tejon Ranch, we are seeing an increasing number of inquiries about available space from manufacturers and large corporations seeking solutions for their western U.S. supply chain distribution, as well as third-party logistics. This accelerated demand should propel future growth at the Commerce Center. In the meantime, we will continue to ensure that food, water, and other essential supplies are being delivered across California through distribution centers located at TRCC, and by fueling the trucks needed to get goods to where they need to be.

In January of this year, we received a building permit for our newest spec building at TRCC, an approximate 630,000 square-foot state-of-the art distribution center we anticipate delivering in 2022. We also developed plans, which were recently approved by the Kern County Board of Supervisors, for a proposed 495-unit apartment home community located adjacent to the Outlets at Tejon. This new residential offering will turn the Commerce Center into a true mixed-use community. The two-phase project will include 13 residential buildings, each two-to-four stories high, including resident amenities, and 8,000 square feet of commercial space. The purpose of this project is to continue our efforts to create development that generates recurring revenue for the company, value for our shareholders, and provides a quality, live-work environment for people to enjoy. The new residences will also increase energy for the Outlets, complementing our already existing regional draw. It is important to note that this apartment home community will be the first Tejon Ranch housing project moving forward as part of our corporate goal of being a completely integrated real estate company.

All the retail offerings at TRCC, including our award-winning outlet center, also benefit from heavy traffic in the north/south California corridor, providing travelers with the convenience of stopping and refueling, grabbing a bite to eat, or even resting at one of the local hotels. While we saw some initial retail challenges at the start of the pandemic, the Outlets at Tejon rebounded nicely when stay-at-home orders in California were initially lifted in late summer. Even during times in which stay-at-home orders were in place in the state, the outlets remained open, following stringent COVID protocols, and have had some of their best performing days and weeks after reopening.

Fully operational, TRCC, along with our mineral resources and farming businesses, generate steady revenue and cash flow for investment into our future development commitments, both commercial and retail, as well as our master planned residential communities.

We understand many of our investors are interested in how the Company addresses and discloses information related to ESG. While the information is disclosed throughout our filings and in various reports, I thought it would be helpful to give you a brief overview here.

Environmental Sustainability Environmental stewardship, or sustainability, is one of Tejon Ranch Co.’s core values, along with quality and visionary innovation. This commitment to sustainability manifests itself in many ways across the Company and its operations.

Climate Change The Company maintains policies intended to both reduce its carbon footprint and proactively sequester, or capture and store, carbon.

Since 2008, the Company has voluntarily conserved 240,000 acres of its land covered by trees and other vegetation. A recent analysis conducted for the Company by Dudek Environmental Services determined that this acreage effectively sequesters 3.3 million tons of carbon. That equals the volume of carbon produced in a single year by 2.5 million passenger vehicles-10% of California’s 2019 passenger vehicle fleet.

Solar power is used significantly within TRCC. For example, in 2019 the Company installed a solar covered parking structure at the Outlets at Tejon. The structure covers 1.85 acres and is projected to offset 83% of the center’s electricity needs for shared spaces and produce 1,076,000 kWh of clean energy every year. In addition, the IKEA distribution center at TRCC features a 1.8 MW photovoltaic solar array covering 370,000 square feet of the warehouse’s rooftop. The system handles the power needs of IKEA’s distribution center and provides power into the electric grid as well.

The Company has entered into a lease with Calpine Energy, a power generating company, for the development of a 600-acre industrial-sized solar field. Located immediately adjacent to Calpine’s PEF, a natural gas and steam powered generating plant in the San Joaquin Valley portion of the Ranch, the solar array is expected to produce approximately 100 MW of power once fully operational.

The Company’s three master planned mixed use residential communities are also designed to make use of renewable energy sources:
At Grapevine, 50% or more of its energy supply will be produced on site by renewable sources.
All homes in Mountain Village will feature roof-top photovoltaic solar arrays.
At Centennial, 50% or more of its energy supply will be produced on site by renewable sources.

Air Quality The Company has contracted with the San Joaquin Valley Unified Air Pollution Control District to pre-mitigate air emissions related to the Company’s current development at TRCC-East, and future development at Mountain Village and Grapevine. As of last year, the air district had fully offset current air emissions at TRCC-East, as well as future emissions projected to occur at full build-out of the project.

Nearly two decades ago, the Company helped establish and has continuously supported Valley Clean Air Now, a non-profit, 501(c)(3) public charity that advances quantifiable and voluntary solutions addressing air pollution in California’s San Joaquin Valley, a region with some of the worst air quality and highest poverty levels in the United States.  The Company continues to support the organization in its mission to improve public health and quality of life in disadvantaged communities located in the region.

Its programs deliver up to $850 in smog repair vouchers and $9,500 in down payment incentives to low-income residents in the region so they can replace high-polluting vehicles with used plug-in or hybrid cars.

In the past five years, it has helped more than 35,000 households improve their vehicle emissions by completing over 20,000 smog repairs and providing more than 26,000 smog repair vouchers.  Additionally, the vehicle replacement program has delivered more than 2,000 plug-in electric vehicles.  Based on pre- and post-repair emission capture readings, the vehicle repair and replacement work has cut 692 tons of oxides of nitrogen (also known as “NOx”), 71 tons of carbon monoxide, and 90 tons of hydro-carbon emissions from the Valley’s air.

Water Conservation As mentioned previously, water conservation is at the heart of our water asset and delivery plans. At TRCC-East, reclaimed water from the water treatment plant is used for irrigation purposes . Landscaping at the Outlets at Tejon consists of drought-tolerant, native planting material. Each of the Company’s master planned mixed-use residential communities will feature state-of-the-art water conservation measures, reclaimed water for irrigation, stormwater capture, and drought-tolerant landscaping. The Company’s agricultural operations use highly efficient drip irrigation to water its orchards and vineyards.

Social Tejon Ranch’s business operations, at their core, benefit society. We are, and will be, creating jobs, which is especially important given we are in a region that traditionally suffers from high unemployment. Our crops help feed the world. Distribution centers and our TravelCenters help goods get to market.

We will be creating much-needed housing, including affordable housing, for California. A recent study by the Partnership for America’s Economic Success examined the societal impact of the housing crisis, particularly on childhood development. It concluded that, at the most basic level, the lack of affordable housing puts safe, healthy, well-maintained housing out of reach for too many families, leaving children in homes that can impede their development.

We also value diversity in the workplace and can confidently say our workforce reflects the diverse makeup of our community.

Governance We are governed by a diverse board of highly experienced professionals whose experience and expertise directly relates to and benefits the business operations of Tejon Ranch Co. The company is fully complying with the gender diversity policies of the State of California and will continue to add diversity to the Board going forward.

Last year the Board also made the decision to de-classify the Board over a three-year period, leading to the annual election of directors.