Tejon Ranch, the largest privately owned piece of land in California, is looking to expand its commercial center by tapping into the municipal bond market for $61.6 million. The mixed-use property, spanning approximately 270,000 acres, has been a focal point of discussions regarding wildfires and urban sprawl in the region. The new financing aims to more than double the size of the existing Tejon Ranch Commerce Center, which currently houses distribution centers for well-known brands like IKEA, Caterpillar, and L’Oreal.
The Tejon Ranch Public Facilities Financing Authority is set to issue bonds for the project, with the funds being allocated towards a 20 million-square-foot development, as outlined in the bond documents. Construction is already in progress for an apartment community within the center, with plans to add 228 housing units by the following year. This initiative comes at a time when California is grappling with a housing crisis amidst challenges such as heatwaves, droughts, and wildfires.
Despite the ambitious development plans, the Tejon Ranch project has faced scrutiny over its environmental impact and wildfire risks. A lawsuit filed in 2019 led to a ruling requiring the company to revise its plans and conduct additional environmental impact assessments. According to J.P. Rose from the Center for Biological Diversity, the initial project conception did not fully consider the environmental costs and wildlife habitats of the area.
With the scarcity of high-yield municipal bonds in the market, investors are showing interest in Tejon Ranch’s bond offering. David Mann, a senior investment analyst at Manulife Asset Management, foresees a favorable demand for the bonds. The strategic location of the commerce center, situated along Interstate 5, the primary north-south route on the west coast, adds to its attractiveness for investors like David Spier from Nitor Capital Management.
Founded through Mexican land grants in the 1800s, Tejon Ranch has a rich heritage of sheep and cattle farming. While it retains a working ranch, the majority of the land is now utilized for various commercial purposes, with only a small percentage dedicated to agriculture. Stifel Financial Corp. has been appointed as the underwriter for the municipal bond deal, with pricing scheduled for Thursday.
The expansion plans for the Tejon Ranch Commerce Center represent a significant milestone in the company’s vision for real estate development. Despite past challenges and ongoing environmental concerns, the project aims to contribute to the economic growth and infrastructure in the region. With investor confidence and market demand on the rise, the success of the Tejon Ranch expansion through municipal bonds could pave the way for future developments in the area.