Q3 2025 Tejon Ranch Co Earnings Call
Fishing will follow the formal presentation.
If anyone should require operator assistance during the conference he's keen stall and then zero on your telephone keypad.
Please note that this event is being recorded.
I will now hand, you over to Nick Otis. Please go ahead Sir.
Good afternoon, and welcome to the home Ranch company's third quarter 2025 earnings call. My name is Nick Ortiz joining me today are Matthew Walker, President and CEO, and Robert Velasquez, Senior Vice President and Chief Financial Officer, Today's press release 10-Q, and this webcast are available.
On our Investor Relations website, a replay will be posted after we conclude that state is I, our doctor Hone ranch Dot Com. Today's remarks may include forward looking statements. These statements are made under the safe Harbor provisions of the private Securities Litigation Reform Act of 1995 and are subject to risks.
And uncertainties that could cause actual results to differ materially keep factors are detailed in our SEC filings, including our most recent forms 10-Q and 10-K, we assume no obligation to update any forward looking statements.
We may reference non-GAAP measures. These measures should be considered in addition to not as a substitute for GAAP results reconciliations to the most directly comparable GAAP measure and reasons why we use non-GAAP are included in today's filings and are posted on our IR website again is I R. Dr.
Orange Dot com.
After prepared remarks, we'll address questions shareholders were invited to submit questions by email in advance with that I'll turn the call over to Matt.
Good afternoon, I'm, not Walker, President and CEO, John Ranch company.
Like to thank you for joining us on our earnings call for the third quarter of 2025.
Before we get started I want to Mark this milestone and explain today's format.
This is the first quarterly earnings call that Carolyn ranch's ever hosted.
With it we joined the 97% of companies listed on the New York stock exchange that communicate with investors in this way.
Over the past nine months, we've made it a priority to be more transparent more consistent and more direct.
With todays earnings call at next week's Investor engagement day in New York, We're building better ways to connect with our shareholders and talk about the business.
Our call today falls the format used by many public companies with a few variations.
About three quarters of companies went live questions to sell side analysts and only a very small percentage open questions to all investors.
We're providing every shareholder with the opportunity to submit questions via email and we'll be answering those live during the Q&A session.
Please note that this is a work in process and we will continue to refine and improve our format from here.
Now, let's talk about the quarter.
We were encouraged by our farming operations, which delivered strong year over year improvement last quarter revenues increased by more than 50% and our farming segment Bottomline in GAAP terms improved by $2 million as we held expenses flat and capitalized on higher production.
Our farming business remains a foundational part of town ranch.
Cash generator, whose adjusted EBITDA has been positive and 11 out of the last 12 years.
<unk> also provides several strategic advantages.
It helps us manage our water rights it supports access to low cost debt through our AG less credit facility and are producing solid returns with reasonable capital investment will.
We'll be talking more about our farming economic story next week.
Thank you Helen Ranch Commerce Center, we continue to see the power of the Trc platform, even in a challenging market for industrial and commercial real estate.
Our industrial portfolio remains 100% leased our commercial portfolio was 95% leased while the outlet setting now maintain a 90% occupancy.
Our joint ventures play a major role in driving organic growth at <unk> with our five industrial J P. 's with Majestic Realty contributing stable cash flow.
Trc as a whole remains fully leased and our weighted average rent levels continue to decline.
We're also maintaining about a 40% cost advantage to the inland Empire, West, which makes <unk>, an attractive logistics solution for tenants.
The Ta Petro joint venture continues to be our highest performing profit center while.
While reduced car and truck traffic impacted our sales last quarter. The opening of the new $600 million hard rock casino in just a few days will be a real game changer for.
The casino should increase traffic to TICC benefiting all of our retail assets, including the Ta travel centers, our retail and the outlets at the helm.
We're also expanding the <unk> platform, adding new projects at deepen its ecosystem.
Tara Vista at home, our first multifamily community is heading on track towards stabilization and is now more than halfway leased it.
A milestone for the company and a key part of our long term strategy to build a residential community around our commercial center.
This starts with Terabits to and will continue in the future with our fully entitled Great find Master planned community, which is currently advancing through design.
With that our CFO, Robert Velasquez, who will walk you through the quarter financials in more detail and then I'll provide some additional remarks before we open it up for questions.
Thank you, Matt and good afternoon, everyone.
I'll start with a summary of the quarter's results they walk through performance by segment and finish with a brief update on liquidity and the balance sheet.
For the third quarter ended September 32, one ranch reported net income of $1 7 million or six cents per basic and diluted shares compared with a net loss of $1 8 million or <unk> <unk> per share in the same period last year.
Total revenues were $12 million up 10% year over year, while total costs of expenses declined by nearly 5%.
As Matt mentioned the improvement in quarterly profitability was driven primarily by strong farming results.
Commercial and industrial leasing and steady performance from our mineral resources and joint venture operations.
I'll turn to the performance of our individual segments, starting with real estate commercial and industrial.
In this sector revenues increased 4% to $3 1 million, reflecting income from our continued leasing up of turbine stuff as well as additional revenues from communication leases.
Those increases were partially offset by slightly lower revenue from Pistorio energy facility due to milder summer temperatures operating income for this segment rose 7% to $976000.
Within our unconsolidated joint ventures.
And earnings totaled $2 6 million the Ta Petro partnership remains our largest single earnings contributor generating $1 9 million in the quarter.
Operator: I'm in listening-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please key in star and then zero on your telephone keypad. Please note that this event is being recorded. I will now hand you over to Nick Ortiz. Please go ahead, sir.
Our five industrial joint ventures, with Majestic Realty contributed $945000 of earnings in the quarter, reflecting a 24% margin across the MRC buildings.
Welcome to the Vivid Conference Center. The next available conference specialist will be with you momentarily.
Turning to mineral resources. This segment produced operating income of $1 1 million on revenues of $3 2 million, which was stable year over year.
Good afternoon. This is the conference center. May I have your first name, please.
David.
David and what is your last name, please David
Brown.
Okay. And which conference can I connect you with for today?
The business continues to require minimal capital expenditures outside of water operations. After adjusting for costs water sales contributed $322000 to the mineral segment operating profit for the quarter.
Nick Ortiz: Good afternoon and welcome to Tejon Ranch Company's third quarter 2025 earnings call. My name is Nick Ortiz. Joining me today are Matthew Walker, President and CEO, and Robert Velasquez, Senior Vice President and Chief Financial Officer. Today's press release, 10-Q, and this webcast are available on our investor relations website. A replay will be posted after we conclude. That site is ir.tejonranch.com. Today's remarks may include forward-looking statements. These statements are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties that could cause actual results to differ materially. Key factors are detailed in our SEC filings, including our most recent forms 10-Q and 10-K. We assume no obligation to update any forward-looking statements. We may reference non-GAAP measures. These measures should be considered in addition to, not as a substitute for, GAAP results.
It's staged on Ranch.
Got it. Yep. What company are you with David? I'll place you write in.
Hi era.
All right, I'll place you in now. Thank you.
And farming revenues improved by more than 50% compared to last year, while GAAP operating losses, which includes water holding costs were reduced by 40%.
I'll turn to the performance of our individual segments, starting with real estate commercial and Industrial.
The fact this rebound reflects both improved production and the advantages of how we manage our cultural cough and water resources last year's results were hurt by weather challenges and with the <unk> lack of chill hours, coupled with it being a down bearing year yoga Doe pistachio crop this season yields normalized across all.
In this sector revenues, increased 4% to 3.1 million, reflecting income from the continued, leasing app of terrorist attack, as well as additional revenues from communication leases.
those increases were partially offset by slightly lower revenue from Pastoria energy facility due to milder summer temperatures, operating income for this segment will 7% to 976,000
Major crops.
Our integrated approach to water gives us significant flexibility with allocations from the state water projects are high we benefit from lower farming cost when they're low we're positioned to monetize our stored in contracted supply.
Within our unconsolidated Ventures equity and earnings total of $2.6 million, the TA Patrol partnership remains our largest single earnings contributor, generating $1.9 million in the quarter.
Nick Ortiz: Reconciliations to the most directly comparable GAAP measure, and reasons why we use non-GAAP, are included in today's filings and are posted on our IR website. Again, it is ir.tejonranch.com. After prepared remarks, we'll address questions. Shareholders were invited to submit questions by email in advance. With that, I'll turn the call over to Matt.
Moving onto ranch operations that segment delivers consistent results with total revenues of $1 3 million and positive operating income supported by stable grazing and gained management activities.
Our 5 industrial joint ventures with Majestic. Realy contributed 945,000 of earnings in the quarter. Reflecting a 24% margin across the MRC buildings.
At the corporate level general and administrative costs declined slightly from the prior year to $2 9 million in the quarter.
turning to Mineral Resources, this segment produced operating income of 1.1 million on revenues of 3.2 million, which was stable year-over-year,
Consolidated operating income improved by 37% year over year to $3 4 million across our operating segments depreciation and amortization totaled $3 8 million and adjusted EBITDA for the year to date period was $13 9 million up seven 3% from the same period last year.
to require minimal Capital expenditures outside of water operations, after adjusting, for costs,
Matt Walker: Good afternoon. I'm Matt Walker, President and CEO of Tejon Ranch Company. I'd like to thank you for joining us on our earnings call for the third quarter of 2025. Before we get started, I want to mark this milestone and explain today's format. This is the first quarterly earnings call that Tejon Ranch has ever hosted. With it, we join the 97% of companies listed on the New York Stock Exchange that communicate with investors in this way. Over the past nine months, we've made it a priority to be more transparent, more consistent, and more direct. With today's earnings call and next week's investor engagement day in New York, we're building better ways to connect with our shareholders and talk about the business. Our call today follows the format used by many public companies, with a few variations.
Water sales, contributed 322,000 to the mineral segments, operating profit for the quarter.
As of September 30, total assets were $630 million up from $608 million at year end.
We ended the quarter with $21 million in cash and marketable securities and $68 million of availability under our <unk> revolving credit facility.
Our total debt stood at $91 9 million, resulting in a debt to total capitalization ratio of roughly 16% year to date capital investment was $49 9 million, primarily tied to construction of tariff if the infrastructure at Trc east and legal and permitting work across.
In farming revenues, improved by more than 50% compared to last year while Gap operating losses. Which includes water holding costs were reduced by 40% the segus rebound. Reflects both improved production and the advantages of how we manage our cultural costs and Water Resources. Last year's results were hurt by weather challenges and with the pistachios lack of chill hours. Coupled with it being a down bearing year yielded, no pistachio crop but this season yields normalized across all major crops
Matt Walker: About three-quarters of companies limit live questions to sell-side analysts, and only a very small percentage open questions to all investors. We are providing every shareholder with the opportunity to submit questions via email, and will be answering those live during the Q&A session. Please know that this is a work in process, and we will continue to refine and improve our format from here. Now let's talk about the quarter. We were encouraged by our farming operations, which delivered strong year-over-year improvement last quarter. Revenues increased by more than 50%, and our farming segment bottom line in GAAP terms improved by $2 million as we held expenses flat and capitalized on higher production. Our farming business remains a foundational part of Tejon Ranch. It's a cash generator whose adjusted EBITDA has been positive in 11 out of the last 12 years. Farming also provides several strategic advantages.
Our integrated approach to water gives us significant flexibility when allocations from the state water projects are high. We benefit from lower farming costs when they're low we're positioned to monetize our stored and contracted supplies.
Our master plan community.
Reimbursement proceeds from the community facilities district amounted to $5 6 million offsetting the capital investments made during the year.
We continue to manage capital allocation carefully focusing on projects that enhance cash generation.
Moving on to Ranch operations that segment delivers consistent results with total revenues of 1.3 million and positive, operating income supported by stable grazing and game management activities.
In summary, the quarter reflected solid improvement in profitability steady contributions from our recurring revenue businesses and disciplined cost control, we believe that the combination of resilient operating assets.
At the corporate level General and administrative costs declined slightly from the prior year to 2.9 Million in the quarter.
<unk> rental income and the strength of our joint venture partnerships positions to one ranch well as we move into 2026, I'll stop there and turn it back to Matt.
Consolidated operating income improved by 37% year-over-year to 3.4 million across our operating segments depreciation and amortization total, 3.8 million and adjusted, evida for the year to date. Period was 13.9 million of 7.3% from the same period last year.
Thanks, Robert for the quarter was positive I'd like to make something clear to.
As of September 30th total assets were 630 million up from 68 million at your end.
To help ranch is not yet where it needs to be and we have a lot more to do to get them there.
Matt Walker: It helps us manage our water rights, it supports access to low-cost debt through our AgWest Farm Credit facility, and it produces solid returns with reasonable capital investment. We'll be talking more about our farming economic story next week. At the Tejon Ranch Commerce Center, we continue to see the power of the TRCC platform, even in a challenging market for industrial and commercial real estate. Our industrial portfolio remains 100% leased. Our commercial portfolio is 95% leased, while the Outlets at Tejon maintain a 90% occupancy. Our joint ventures play a major role in driving organic growth at TRCC, with our five industrial JVs with Majestic Realty contributing stable cash flow. TRCC as a whole remains fully leased, and our weighted average rent levels continue to climb. We're also maintaining about a 40% cost advantage to the Inland Empire West, which makes TRCC an attractive logistics solution for tenants.
Accordingly, we have been.
Focus intently on cost discipline to improve our operating margins.
We ended the quarter with 21 million in cash and marketable, securities and 68 million of availability under our aggress, revolving credit facility.
We've been scrutinizing every contract looking for efficiencies and lower cost solutions, we've identified savings today, which will result in a far more efficient operation in the future.
Additionally, our largest overhead cost of staffing as part of our G&A review, we recently completed a workforce reduction that will save more than $2 million per year.
Our total debts that at 91.9% in the debt to Total capitalization ratio of roughly 16% year to date capital investment was 49.9 Million primarily tied to construction of Terra Vista infrastructure at trcc East and legal and permitting work across our master plan communities.
Reduction impacted employees at all levels of the organization and lowered our head count by 20%.
It wasn't an easy decision, but it was a necessary one.
Reimbursement, proceeds from the community facilities, District amounted to 5.6 million offsetting the capital Investments made during the year.
These expense reductions represent a downpayment unchanged they demonstrate our intent to operate with discipline accountability and a clear eye on the bottom line.
We continue to manage Capital, allocation carefully focusing on projects that enhance cash generation.
In closing, we had a good quarter, but we still have a long ways to go and we're not done yet we look forward to sharing more of how we are positioning the company for success in the quarters and years to come.
Matt Walker: The TA Petro joint venture continues to be our highest-performing profit center. While reduced car and truck traffic impacted our sales last quarter, the opening of the new $600 million Hard Rock Tejon Casino in just a few days will be a real game changer. The casino should increase traffic to TRCC, benefiting all of our retail assets, including the TA travel centers, our retail, and the Outlets at Tejon. We're also expanding the TRCC platform, adding new projects that deepen its ecosystem. Terra Vista at Tejon, our first multifamily community, is heading on track toward stabilization and is now more than halfway leased. It's a milestone for the company and a key part of our long-term strategy to build a residential community around our commercial center.
That concludes our prepared remarks, we would now like to respond to the questions that were submitted by shareholders. Please give us a minute while we pull those up.
In summary the quarter, reflected solid Improvement in profitability, steady contributions from our recurring, Revenue businesses, and disciplined cost control. We believe that the combination of resilient operating assets, growing rental income and the strength of our joint venture Partnerships positions to Horn Ranch. Well, as we move into 2026, I'll stop there, and turn it back to Matt.
Thanks, Robert.
[noise] thinks match, we received 20 questions via E Mail, we will read and respond to the questions in the order that they were received our first question today. It's Brown Larry Zichron. His question is after all these years of failure don't you think you should just sell as much land.
Well, the quarter was positive, I'd like to make something clear.
Accordingly we've been focused intently on cost discipline to improve our operating margins.
And as you can and buy back stock so as to realize the maximum amounts for shareholders.
We've been scrutinizing, every contract, looking for efficiencies and lower cost Solutions. We've identified savings today which will result in a far more efficient operation in the future.
Thanks for the thanks for the question Larry.
Matt Walker: This starts with Terra Vista and will continue in the future with our fully entitled Grapevine Master Plan community, which is currently advancing through design. With that, our CFO, Robert Velasquez, will walk you through the quarter financials in more detail, and then I'll provide some additional remarks before we open it up for questions.
Let me first emphasize that my one and only goals for our master planned communities.
Is to create long term shareholder value. However, weak out there I do believe that our successfully implemented masterplan community can generate decades of significant cash flow you can see this with other public companies that are in our space.
Additionally our largest overhead cost is Staffing as part of our GNA review, we recently completed a Workforce reduction that will save more than dollars per year. This reduction impacted employees at all levels of the organization and lowered our headcount by 20%.
It wasn't an easy decision but it was a necessary 1.
Robert Velasquez: Thank you, Matt, and good afternoon, everyone. I'll start with a summary of the quarter's results, then walk through performance by segment, and finish with a brief update on liquidity and the balance sheet. For the third quarter ended 30 September, Tejon Ranch Company reported net income of $1.7 million, or $0.06 per basic and diluted share, compared with a net loss of $1.8 million, or $0.07 per share, in the same period last year. Total revenues were $12 million, up 10% year-over-year, while total costs and expenses declined by nearly 5%. As Matt mentioned, the improvement in quarterly profitability was driven primarily by strong farming results, stable commercial and industrial leasing, and steady performance from our mineral resources and joint venture operations. I'll turn to the performance of our individual segments, starting with real estate, commercial, and industrial.
With that said I understand your concern and that of other shareholders I want to reiterate that everything is on the table. So there is a compelling opportunity to monetize a portion of our land holdings. As you suggested we will evaluate it however for right now I believe that with great fine person.
These expense reductions represented down payment on change. They demonstrate our intent to operate with discipline accountability and a clear eye on the bottom line.
In closing, we had a good quarter but we still have a long ways to go and we're not done yet. We look forward to sharing more of how we are positioning the company for success in the quarters and years to come.
That concludes our prepared remarks. We would now like to respond to the questions that were submitted by shareholders.
Selling and implementation plan, which builds on the significant growth that we're having at Trc C makes a lot of sense on mountain village I'd like to embark on a capital raising effort to identify a joint venture partner, who would contribute equity and avoid dilution to our shareholders and on Centennial.
Please give us a minute while we pull those up.
Completing a re entitlement is the most prudent approach at this point to preserve our investment in that asset.
Thanks, Matt. We received 20 questions via email. We'll read and respond to the questions in the order that they were received. Our first question today is from Larry zicklin. His question is after all these years of failure, don't you think you should just sell as much land as you can and buy back stock? So as to realize the maximum amounts for shareholders
Let me add that I will be discussing all of this in greater detail at our Investor engagement event next week I know there are strong opinions about what we should do and I would like to more fully explain our rationale to all that.
Robert Velasquez: In this sector, revenues increased 4% to $3.1 million, reflecting income from the continued leasing up of Terra Vista, as well as additional revenues from communication leases. Those increases were partially offset by slightly lower revenue from Pastoria Energy Facility due to milder summer temperatures. Operating income for this segment rose 7% to $976,000. Within our unconsolidated joint ventures, equity in earnings totaled $2.6 million. The TA Petro Partnership remains our largest single earnings contributor, generating $1.9 million in the quarter. Our five industrial joint ventures with Majestic Realty contributed $945,000 of earnings in the quarter, reflecting a 24% margin across the MRC buildings. Turning to mineral resources, this segment produced operating income of $1.1 million on revenues of $3.2 million, which was stable year-over-year. The business continues to require minimal capital expenditures outside of water operations.
Yeah.
Thanks, Matt we received a series of questions from Georgia Pasta Lucas. The first question is what is the company's policy regarding the disclosure of more detailed cost information on items, such as the Trc C cost to complete and the estimated cost of the first phases of plans.
Community development.
Thanks for your question George.
Let me see if I can answer it.
We provide information for all of our material cash requirements are that includes capital expenditures and we do that at the end of the latest fiscal period as we're required to do by the SEC.
We also disclose our material cash requirements from our known contractual obligations.
It's also worth noting that every year, we do disclose in our annual report our estimated cost to complete.
Robert Velasquez: After adjusting for costs, water sales contributed $322,000 to the mineral segment's operating profit for the quarter. In farming, revenues improved by more than 50% compared to last year, while GAAP operating losses, which includes water holding costs, were reduced by 40%. The segment's rebound reflects both improved production and the advantages of how we manage our cultural costs and water resources. Last year's results were hurt by weather challenges, and with the pistachios, lack of chill hours coupled with it being a down-bearing year yielded no pistachio crop, but this season's yields normalized across all major crops. Our integrated approach to water gives us significant flexibility. When allocations from the state water projects are high, we benefit from lower farming costs. When they're low, we're positioned to monetize our stored and contracted supplies.
Thanks for the, uh, thanks to the question Larry. Um, let me first emphasize that my 1 and only goal for our master plan communities, um, is to create long-term shareholder value. However, we get there. I do believe that. A successfully implemented master plan Community. Can generate Decades of significant cash flow. You can see this with other public companies that are in our space.
The horizontal infrastructure for Trc.
George and our next question Yep, Georgia next question is has the company estimated the overall capital costs of the first phases of planned community development and will it disclose the scope cost and <unk>.
Let me add that I will be discussing all of this in Greater detail at our investor engagement event next week. I know there are strong opinions about what we should do and I would like to more fully explain our rationale uh, to you all then.
Related capital funding sources, as well as whether or not this development might require third party investment or purchase commitments.
Okay I've covered some of that but let me let me expand on other portions of your question. So similar to my previous answer we do provide information in our most recent SEC filings on our material cash requirements and that includes our cap.
Thanks. Matt. We received a series of questions from George aposta, Laius. The first question is, what is the company's policy regarding the disclosure of more detailed cost information on items such as the TRC cost to complete and the estimated costs of the first phases of planned Community Development?
Robert Velasquez: Moving on to ranch operations, that segment delivers consistent results with total revenues of $1.3 million and positive operating income, supported by stable grazing and game management activities. At the corporate level, general and administrative costs declined slightly from the prior year to $2.9 million in the quarter. Consolidated operating income improved by 37% year-over-year to $3.4 million across our operating segments. Depreciation and amortization totaled $3.8 million, and adjusted EBITDA for the year-to-date period was $13.9 million, up 7.3% from the same period last year. As of 30 September 2023, total assets were $630 million, up from $608 million at year-end. We ended the quarter with $21 million in cash and marketable securities, and $68 million of availability under our AgWest revolving credit facility. Our total debt stood at $91.9 million, resulting in a debt-to-total capitalization ratio of roughly 16%.
So as I mentioned before we haven't yet disclosed specific capital cost estimates our project.
Budgets for the initial development phases of any of our M. P. CS.
Those depend on several.
Several ongoing doctors, including the final design or market conditions at the time that we intend to launch them and N B final infrastructure scope and cost.
As it relates to the funding sources that you mentioned.
Thanks for your question, George. Um let me see if I can answer it. Uh, we uh we provide information for all of our material, cash requirements, uh that includes Capital expenditures um and we do that at the end of the latest fiscal period as we're required to do by the SEC. Uh we also disclose our material cash requirements from our known contractual um obligations. Um, it's also worth noting that every year we do disclose in our annual report. Our estimated cost to complete um, of the horizontal infrastructure for trcc.
The plan for all of our Master planned communities as I've mentioned in the previous question, we intend to capitalize those with a third party joint venture partner, who would contribute the new equity or we would contribute the land to that venture and this strategy would avoid dilution to our shareholders.
Projects they'd also include a capitalization with construction financing at the at the Bachelor level.
George is the next question. Yep. George's. Next question is, has the company estimated the overall Capital costs of the first phases of planned Community Development and will it disclosed the scope cost and related Capital funding sources, as well as whether or not this development might require third-party investment or purchase commitments.
Okay. Next question will the company disclosed its detailed accounting policies regarding allocation of basis on the first phase of community development.
Robert Velasquez: Year-to-date capital investment was $49.9 million, primarily tied to construction of Terra Vista, infrastructure at TRCC East, and legal and permitting work across our master plan community. Reimbursement proceeds from the community facilities district amounted to $5.6 million, offsetting the capital investments made during the year. We continue to manage capital allocation carefully, focusing on projects that enhance cash generation. In summary, the quarter reflected solid improvement in profitability, steady contributions from our recurring revenue businesses, and disciplined cost control. We believe that the combination of resilient operating assets, growing rental income, and the strength of our joint venture partnerships positions Tejon Ranch well as we move into 2026. I'll stop there and turn it back to Matt.
Okay.
So accounting for construction cost in our community development is completed in accordance with GAAP. This means that project cost like land acquisition cost or development cost construction cost.
Interest you know real estate taxes, certain direct overhead things like that those are all capitalized while those activities are in progress those costs or that accumulated by space again in accordance with GAAP.
Okay, I've covered some of that but let me uh um um let me expand on uh other portions of your question. So similar to my previous answer, we do provide information in our most recent SEC filings on our material, cash requirements and that includes our capacity. As I mentioned before, we haven't yet disclosed specific Capital cost estimates or project. Um budgets for the initial development phases of any of our MPCs. Uh those depend on several ongoing factors including the final design or market conditions um, at the time that we intend to launch them and and the final infrastructure scope and cost.
In our annual report, we do have a section called the allocation of cost that provide some additional detail on that.
Alright next question have you estimated the level of end user absorption necessary to commence the first phases of development for the planned communities and if so will you disclose that estimates.
Matt Walker: Thanks, Robert. While the quarter was positive, I'd like to make something clear. Tejon Ranch is not yet where it needs to be, and we have a lot more to do to get it there. Accordingly, we've been focused intently on cost discipline to improve our operating margins. We've been scrutinizing every contract, looking for efficiencies, and lower-cost solutions. We've identified savings today, which will result in a far more efficient operation in the future. Additionally, our largest overhead cost is staffing. As part of our G&A review, we recently completed a workforce reduction that will save more than $2 million per year. This reduction impacted employees at all levels of the organization and lowered our headcount by 20%. It wasn't an easy decision, but it was a necessary one. These expense reductions represent a down payment on change.
As it relates to the funding sources that you mentioned. Uh, the plan for all of our master plan communities, as I mentioned in the previous question, uh, we intend to capitalize those with a third-party joint venture partner, who would contribute the new Equity? We would contribute the land to that Venture and this, uh, strategy would avoid dilution to our shareholders, um, projects. Uh, they'd also include a capitalization with, uh, construction financing at the, uh, at the Venture level,
So we we definitely consider absorption when we're talking about proceeding with development.
But more generally we look at the entire investment Holistically So Tim.
Okay. Next question. Will the company disclosed its detailed accounting policies regarding allocation of basis on the first phase of Community Development?
Typically absorption of slower at the beginning of a project and then it ramps up to a stabilized level over time each project.
Um, okay. Um
<unk> is expected to have a joint venture partner, so that JV partner is going to be looking for an expected market rates of return that they would need in order to proceed with the project. So.
Matt Walker: They demonstrate our intent to operate with discipline, accountability, and a clear eye on the bottom line. In closing, we had a good quarter, but we still have a long way to go, and we're not done yet. We look forward to sharing more of how we are positioning the company for success in the quarters and years to come. That concludes our prepared remarks. We would now like to respond to the questions that were submitted by shareholders. Please give us a minute while we pull those up.
We would expect that the equity would end up driving that that return decision to proceed. We also have an internal hurdle rate to return so that we're generating a sufficient return.
For our shareholders. So that's how we approach the investment criteria.
That's necessary in order to move ahead with the with the project.
So accounting for construction cost in our community, development is completed in accordance with gaap. Um, this means that project costs like land acquisition cost or development costs, construction costs uh interests. You know, real estate taxes certain direct overhead, things like that, those are all capitalized. While those activities are in progress. Those costs are then accumulated by phase. Again, in accordance, with gaap, um, in our annual report, we do have a section called the allocation of cost, um, that provides some additional detail. Um,
Final question from George based on your most up to date estimates and the status of negotiations with builders will the sale of land in Phase. One result in a book profit where book loss.
Nick Ortiz: Thanks, Matt. We received 20 questions via email. We'll read and respond to the questions in the order that they were received. Our first question today is from Larry Zicklin. His question is, After all these years of failure, don't you think you should just sell as much land as you can and buy back stock so as to realize the maximum amounts for shareholders?
All right. Next question. Have you estimated the level of end user absorption necessary to convince the first phases of development for the planned communities? And if so, will you disclose that estimate?
Let's see not knowing.
Which project you're speaking about let me speak to this more generally I think I can I think I can cover the question.
For any given master planned community there is expected to be a material book profit for the entire project and that would be consistent with achieving that.
So we, um, we definitely consider absorption when we're talking about proceeding with development, um, but more generally, we look at the entire investment holistically. So,
Matt Walker: Thanks for the question, Larry. Let me first emphasize that my one and only goal for our master plan communities is to create long-term shareholder value, however we get there. I do believe that a successfully implemented master plan community can generate decades of significant cash flow. You can see this with other public companies that are in our space. With that said, I understand your concern, and that of other shareholders. I want to reiterate that everything is on the table. If there is a compelling opportunity to monetize a portion of our land holdings, as you've suggested, we will evaluate it. However, for right now, I believe that with Grapevine, pursuing an implementation plan which builds on the significant growth that we're having at TRCC makes a lot of sense.
The hurdle rates that I just mentioned in your previous question. So yeah. So I think you'd have you'd have a book profit for the entire project for the first phase of development for any of our master planned communities that phase is likely going to have a significant amount of upfront infrastructure.
So the initial phase is not likely to include a book profit.
I can't speak to other companies in their master planned communities, but what I, just said isn't unique to pay one ranch that's that's.
Typical of many master planned communities.
Rate return that they would need in order to proceed with the project. So, um, uh, we would expect that the equity would end up driving, um, that that return decision, um, to proceed. We also have an internal hurdle rate, uh, to return so that we're generating a sufficient return, um, for our shareholders. Um, so that's how we approach the investment criteria that's necessary in order to move ahead with the, with the project.
You have a multi phase.
Can you see the return of capital typically occurs beyond that initial phase.
Matt Walker: On Mountain Village, I'd like to embark on a capital-raising effort to identify a joint venture partner who would contribute equity and avoid dilution to our shareholders. On Centennial, completing a re-entitlement is the most prudent approach at this point to preserve our investment in that asset. Let me add that I will be discussing all of this in greater detail at our investor engagement event next week. I know there are strong opinions about what we should do, and I would like to more fully explain our rationale to you all then.
Yeah.
Alright, Thanks, Matt from David Spier with Nitro capital. We received the following question first question. The 2 million dollar expense reduction is welcomed and appreciated. However, based on management stated value of Trc see the book value of our MPC assets and he estimated value.
Final question from George based on your most up-to-date estimates and the status of negotiations with Builders will the sale of land in Phase 1, result in a book profit, or book loss.
um,
Let's see. Not knowing uh which project you're speaking about? Let me speak to this more generally. Um I think I can I think I can cover the question.
Of our cash flowing land leases and royalties to hone arguably has a net asset value that is north of $40 per share following the expense reduction and the implementation of your plan what will our annual per share cash flow earnings power be public markets do not value noncash.
For any given master plan Community, there's expected to be a material book profit for the entire project, and that would be consistent with achieving. Um, the hurdle rate that I just mentioned, um, in your previous question. Um,
Nick Ortiz: Thanks, Matt. We received a series of questions from George Apostolakis. The first question is, what is the company's policy regarding the disclosure of more detailed cost information on items such as the TRCC cost to complete, and the estimated costs of the first phases of planned community development?
Low producing assets nor assets that are not being actively monetized. So if your plan will not lead to near term earnings power north of $2 per share and we are not going to monetize our MPC assets in the near term how do we make money that's public shareholders.
Matt Walker: Thanks for your question, George. Let me see if I can answer it. We provide information for all of our material cash requirements. That includes capital expenditures, and we do that at the end of the latest fiscal period, as we're required to do by the SEC. We also disclose our material cash requirements from our known contractual obligations. It's also worth noting that every year we do disclose in our annual report our estimated cost to complete of the horizontal infrastructure for TRCC.
Hey, David Thanks for Thanks for your question I appreciate it.
First off we agree with you that the company is undervalued.
A critical part of that value is the expectation of future returns that future earnings potential comes in a couple of different areas and it'll come from the build out of the 11 million square feet of Trc C over time and as the market permits.
So you so I think you'd have a book. You'd have a book profit for the entire project for the first phase of development for any of our master plan communities, that phase is likely going to have a significant amount of upfront infrastructure. Um, so the initial phase is not likely to, um, include a book profit. Um, I can't speak to other companies and their master plan communities, but what I just said isn't unique to tone Ranch. That's that's typical of many master plan communities. Um, where you have a multi-phase MPC the return of capital typically, occurs beyond that initial phase.
All right, thanks. Matt. For I'm David spear with nitor capital. We received the following questions. First question.
We're also working to identify new revenue sources that take advantage of the unique attributes of the branch so there'll be value. We hope that's created there.
Nick Ortiz: George, is the next question? Yep. George's next question is, Has the company estimated the overall capital costs of the first phases of planned community development, and will it disclose the scope, cost, and related capital funding sources, as well as whether or not this development might require third-party investment or purchase commitments?
We expect that value will come from the ongoing cash flow from our existing portfolio of income producing assets and then and we're looking to find ways to increase that over time and it'll come from the development of Master planned communities and those master plan.
The 2 million dollar expense reduction is welcome to and appreciated. However, based on management stated value of trcc, the book value of our MPC assets and the estimated value of our cash flowing land leases and royalties to hone arguably has a net asset value. That is north of forty dollars per share.
Following the expense reduction and the implementation of your plan. What will our annual per share? Cash, earnings power, B.
Communities have the potential to generate earnings which are in order of magnitude greater than what the company is producing today and to do that over a sustained period of time.
Matt Walker: Okay. I've covered some of that, but let me expand on other portions of your question. Similar to my previous answer, we do provide information in our most recent SEC filings on our material cash requirements, and that includes our CapEx, as I mentioned before. We haven't yet disclosed specific capital cost estimates or project budgets for the initial development phases of any of our MPCs. Those depend on several ongoing factors, including the final design or market conditions at the time that we intend to launch them, and the final infrastructure scope and cost. As it relates to the funding sources that you mentioned, the plan for all of our master plan communities, as I mentioned in the previous question, we intend to capitalize those with a third-party joint venture partner who would contribute the new equity.
Public markets, do not value non-cash, flow producing assets, nor assets that are not being actively monetized. So if your plan will not lead to near-term earnings power, north of $2 per share and we are not going to monetize our MPC Assets, in the near term. How will we make money as public shareholders?
I believe that the combination of all of those assets will result in a material earnings per share growth.
Okay.
One final question from David Spier, how much additional capital and how much time will it take before mountain village, where centennial are generating profits and returns for shareholders.
Okay.
I'm going to cover this in more detail next week, but let me answer it for you today and in this way.
On mountain village as I've mentioned.
In previous answers I'm going to be focused on our capital raising effort in the near term over the next year or so so.
Matt Walker: We would contribute the land to that venture, and this strategy would avoid dilution to our shareholders. Projects, they'd also include a capitalization with construction financing at the venture level.
So the capital allocation for that will be rather modest and that'll be size just to complete that capital raising effort.
Hey, David. Thanks for uh, thanks for your question, appreciate it. Um, first off, uh, we agree with you that the company is undervalued. Um, a critical part of that value is the expectation of future returns, uh, that future earnings, potential comes in a couple of different areas. Um, it'll come from the buildout of the 11 million square feet of trcc over time. And as the market permits, um, we're also working to identify new Revenue sources that take advantage of the unique attributes of the ranch. So there will be value. We hope that's created, uh, their uh, we expect that value will come from the ongoing cash flow from our existing portfolio of income producing assets and then and, and and we're looking to find ways to increase that over time.
I have previously mentioned also that we're going to go out and look for a joint venture equity partner, who will provide the additional equity so that we don't dilute our shareholders that James NIE between hone and the equity partner would then complete the construction documents that would probably take 18 to 24 months.
Nick Ortiz: Okay. Next question. Will the company disclose its detailed accounting policies regarding allocation of basis on the first phase of community development?
Um, and it'll come from the development of master plan communities. Those master plan communities have the potential to generate earnings which are in orders of magnitude greater than what the company is producing today, and to do that over a sustained period of time.
Matt Walker: Okay. Accounting for construction costs in our community development is completed in accordance with GAAP. This means that project costs, like land acquisition costs, development costs, construction costs, interest, real estate taxes, certain direct overhead, things like that, those are all capitalized while those activities are in progress. Those costs are then accumulated by phase, again, in accordance with GAAP. In our annual report, we do have a section called the allocation of cost that provides some additional detail on that.
And then we break ground on the initial phase of horizontal infrastructure and that would take 24 months or so and then at that point, you would be initiating homesite sales to builders and custom lot buyers.
so I believe that the combination of all of those assets will result in a material earnings per share growth
Okay.
At that point, there would be ongoing revenue generation. So that's a quick breakdown of.
1 final question, from David Speer, how much additional capital and how much time will it take before Mountain Village or Centennial? Are generating profits returns for shareholders.
Uh huh.
In rough terms of the timetable for mountain village.
Okay. Um,
You also mentioned Centennial so on Centennial, our first step is to re entitled the project through Los Angeles County.
That would include us updating our environmental documentation.
This would this would take we would think.
Nick Ortiz: All right. Next question. Have you estimated the level of end-user absorption necessary to commence the first phases of development for the planned communities? If so, will you disclose that estimate?
Until some time near the end of next year plus or minus.
That process of going through the county.
What it would take a couple of months after that as well.
Matt Walker: We definitely consider absorption when we're talking about proceeding with development. More generally, we look at the entire investment holistically. Typically, absorption is slow at the beginning of a project, and then it ramps up to a stabilized level over time. Each project is expected to have a joint venture partner. That JV partner is going to be looking for an expected market rate return that they would need in order to proceed with the project. We would expect that the equity would end up driving that return decision to proceed. We also have an internal hurdle rate to return so that we're generating a sufficient return for our shareholders. That's how we approach the investment criteria that's necessary in order to move ahead with the project.
That point I think a lot depends on our ability to move more immediately into our mapping process.
Mapping process would take a couple of years and then with our construction documents in hand. After we completed the mapping we'd be able to commence construction.
And similar to what I just described.
Village, then start with the installation of the horizontal infrastructure given that we do have a re entitlement effort, it's harder to estimate the outer timeframes given some uncertainty to complete the entitlement process.
And in this way um on Mountain Village. Uh as I mentioned um uh in previous answers I'm going to be focused on a capital raising effort in the near term over the next year or so uh so the capital allocation for that will be rather modest and it'll be sized just to complete that Capital raising effort. Um, I've previously mentioned also that we're going to go out and look for a joint venture um Equity partner who will provide the additional Equity so that we don't dilute our shareholders that JV um, between Tahoe and the equity partner would then complete the construction documents that would probably take uh, 18 to 24 months and then we break ground on the initial phase of horizontal infrastructure and that would take 24 months or so. And then at that point you would be initiating home site sales to builders and to custom lot buyers. Um at that
And then that implementation phase once we completed the entitlement would also be done under a joint venture similar to the ones that I've described before.
Point there would be ongoing Revenue generation. So, that's a quick breakdown of of, uh, in rough terms of the time table, um, for Mountain Village,
Hope that helps and again I'll be able to talk more about that.
Next week with a little more time.
Thanks, Matt from Justin <unk> with them. We received the following question Mountain village in Centennial have a combined book value of more than $290 million, but produce no income and consume capital are they worth book value or more if so why not sell them to us.
You also mentioned Centennial. So on Centennial, our first step uh is to re-enter the project through Los Angeles County. Uh that would include us updating our environmental documentation
Nick Ortiz: Final question from George. Based on your most up-to-date estimates and the status of negotiations with builders, will the sale of land in phase one result in a book profit or book loss?
this would uh this would take we would think uh until sometime near the end of next year plus or minus uh that process of going through the county. Um,
Block more than 60% of market cap, leading great mine in TICC already valued by management above our market cap no other lever matches the shareholder value why not put them up for sale.
Matt Walker: Let's see. Not knowing which project you're speaking about, let me speak to this more generally. I think I can cover the question. For any given master plan community, there's expected to be a material book profit for the entire project, and that would be consistent with achieving the hurdle rates that I just mentioned in your previous question. I think you'd have a book profit for the entire project. For the first phase of development for any of our master plan communities, that phase is likely going to have a significant amount of upfront infrastructure. The initial phase is not likely to include a book profit. I can't speak to other companies and their master plan communities, but what I just said isn't unique to Tejon Ranch. That's typical of many master plan communities.
Hey, Justin Thanks, Thanks for the question so.
We agree with you we agree with you that mountain village in Centennial are worth more than their book value.
One comment I'd make on your net asset values. So when we were looking at that range of net asset values or Trc see and you've noted that its in excess of our current market cap I. Just want you to know that when we did that exercise that didn't include the grapevine Master planned community.
It was just for the commercial assets that are part of Trc.
Uh, would you know, would would take a couple months, um, after that as well? Um, at that point I think a lot depends on our ability to move more immediately into a mapping process and that mapping process would take a couple years and then with our construction documents in hand, after we completed the mapping, we'd be able to commit to construction. Um and similar to what I just described on Mountain Village, uh, then start with the installation of the horizontal infrastructure, given that we do have an A A reiterate, it's harder to estimate the outer time frames. Um given some uncertainty uh to complete the entitlement process. Um and then that implementation phase, once we completed the entitlement would also be done under a joint venture similar to to the ones that I've described before.
As I mentioned in.
My answer to some of the previous questions.
Hope that helps. And again, I'll be able to talk more about that. Um, next week with a little more time.
We believe that mountain village in Centennial, both provide significant long term cash flow generating potential I'll be talking like I said before more about that next week and I again, just want to say that the company is always keeping its options open and evaluating all approaches to maximizing asset.
Matt Walker: Where you have a multi-phase MPC, the return of capital typically occurs beyond that initial phase.
Nick Ortiz: All right. Thanks, Matt. From David Spear with Nitro Capital, we received the following questions. First question. The $2 million expense reduction is welcomed and appreciated. However, based on management's stated value of TRCC, the book value of our MPC assets, and the estimated value of our cash flowing land leases and royalties, Tejon arguably has a net asset value that is north of $40 per share. Following the expense reduction and the implementation of your plan, what will our annual per-share cash earnings power be? Public markets do not value non-cash flow producing assets, nor assets that are not being actively monetized. If your plan will not lead to near-term earnings power north of $2 per share and we are not going to monetize our MPC assets in the near term, how will we make money as public shareholders?
And that goes for our master planned communities or any other asset on the ranch.
Alright, we have six questions from David Ross.
Thanks, Matt from Justin. Lebo with, um, we received the following question Mountain Village and Centennial have a combined Book value of more than 290 million but produce no income. And consume Capital, are they worth Book value or more? If so, why not sell them to unlock more than 60% of market cap leaving, great mind and trcc already valued by management of our market cap. No other lever matches this shareholder value, why not put them up for sale.
The first one is the release said tariff Estelle will increase to 228 units or are you committed to that.
Yes, thanks for thanks for the question David.
Hey, Justin thanks. Uh, thanks for the question. Um, so we we agree with you. We agree with you that Mountain Village and Centennial are worth more than their Book value. Um,
We worked on that wording a little bit let me, let me try to explain that a little bit to you.
At the end of the third quarter.
We had completed and delivered 180 units since the end of the quarter. We've now completed and delivered all 228 units and we've now signed leases on more than half of the 228. So it was really just a timing difference on how we reported the third quarter.
1 comment, I'd make on your net asset value. So, when we were looking at that range of net asset values for trcc, um, and you noted that it's in excess of our current market cap. I just want you to know that that when we did that exercise, that didn't include the grape vine master plan committee. It was just for the, the commercial assets that are part of trcc.
But.
To be clear, we have completed construction on the first phase of a terrible stuff, which is a good accomplishment.
Matt Walker: Hey, David. Thanks for your question. Appreciate it. First off, we agree with you that the company is undervalued. A critical part of that value is the expectation of future returns. That future earnings potential comes in a couple of different areas. It'll come from the build-out of the 11 million square feet of TRCC over time, as the market permits. We're also working to identify new revenue sources that take advantage of the unique attributes of the ranch. There will be value, we hope, that's created there. We expect that value will come from the ongoing cash flow from our existing portfolio of income-producing assets. We're looking to find ways to increase that over time. It'll come from the development of master plan communities.
And we're pleased.
The next question is the release says you are committed to be M. P. CS, but you have half of Trc available that is 100% unencumbered today why not focus on that Trc, which you can control.
Um, as I mentioned, uh, in my answer to some of the previous questions, uh, we believe that Mountain Village and Centennial, both provide significant long-term cash flow, generating potential. I'll be talking. Um, like I said before, more about that next week, um, and I again just want to say that the company is always keeping its options, open and evaluating all approaches to maximizing asset value. And that goes for our master plan communities, or any other asset, um, on the ranch
Hi, I Couldnt agree with you more.
So trc remains our focus.
I think if you've looked at how we've deployed capital over the last five years. The majority of it has gone to Trc we.
All right, we have um 6 questions from David Roth. Um, the first 1 is the release says. Terra Vista will increase to 228 units. Are you committed to that?
We continue to see the value of the future there.
Flywheel effect that I've talked about between our industrial and our outlets in our retail and our travel in the hotel and all the residential users.
Feeding off each other that's real the casino is only going to add to that and the advantage of the casino as we're leveraging the $600 million that the tribe is spending that's.
Matt Walker: Those master plan communities have the potential to generate earnings which are an order of magnitude greater than what the company is producing today, and to do that over a sustained period of time. I believe that the combination of all of those assets will result in material earnings per share growth.
That's gonna help bring traffic.
<unk> T RCC, which should just continue that flywheel so.
I agree.
I called <unk> the <unk>.
<unk> of our activity from which all of our growth.
Should emanate.
Next question farming and ranch operations do not provide consistent returns why not lease up these assets for an annuity to the owners.
Um, we had completed and delivered 180, um, units since the end of the quarter. We've now completed and delivered all 228 units, and we've now signed leases on more than half of the 228. So, it was really just a timing difference on how we reported the third quarter. Um, but to to, to be clear, uh, we have completed construction, um, on the first phase of, uh, Terra Vista, which is a good accomplishment. Um, and we're and we're pleased.
Nick Ortiz: Okay. One final question from David Spear. How much additional capital and how much time will it take before Mountain Village or Centennial are generating profits, returns for shareholders?
It's a good it's a good fair question.
Tried to cover it in the press release covered it in my earlier remarks, I'll talk about it again some more next week, but let me just let me just again answer it for for them for you here.
Next question is, the release says you are committed to the mpc's but you have half of trcc available that is 100% unencumbered Today. Why not focus on that trcc, which you can control
Matt Walker: Okay. I'm going to cover this in more detail next week, but let me answer it for you today in this way. On Mountain Village, as I mentioned in previous answers, I'm going to be focused on a capital-raising effort in the near term over the next year or so. The capital allocation for that will be rather modest, and it'll be sized just to complete that capital-raising effort. I've previously mentioned also that we're going to go out and look for a joint venture equity partner who will provide the additional equity so that we don't dilute our shareholders. That JV between Tejon and the equity partner would then complete the construction documents. That would probably take 18 to 24 months. Then we'd break ground on the initial phase of horizontal infrastructure, and that would take 24 months or so.
Taking a step back I've heard from a lot of shareholders on many of many of you will.
Submitted questions that's the focus.
That we should have is on generating cash flow.
We agree with that so what that means with respect to farming, we should be looking at farming through our cash flow lands not necessarily an earnings labs and measured that.
I, um, I couldn't agree with you more. Uh, so trcc remains our Focus. Um, I think if you've looked at how we've deployed Capital Over The Last 5 Years, the majority of it has gone. Um, to trcc, we, um, we continue to see the value of the future there. Uh, the flywheel effect that I've talked about, um, between our industrial and our outlets, and our retail, and our travel, and the hotel, and all the residential uses, um, feeding off each other, that's real. Um, the casino is only going to add to that and the advantage of the casino is, we're leveraging the 6, 0 0,
And my effort to try to better tell the story of the company we've.
We've mentioned and we've mentioned in the press release, our concept of an adjusted EBITDA figure and we think that's the right way to look at the farming business. So adjusted EBITDA as we're measuring it.
That the tribe is spending, uh, to help and that's going to help bring traffic, um, into trcc which should just, uh, continue that flywheel. So, uh, I, I agree. Uh, but I, I call trcc, the, the nucleus, uh, of our activity from which all of our growth, um, uh, should emanate
Backs out noncash expenses like depreciation and it also accounts for the water holding costs that we're gonna have to expend, whether we farm the property or not and if you do all of that and you look at farming.
Matt Walker: At that point, you would be initiating home site sales to builders and to custom lot buyers. At that point, there would be ongoing revenue generation. That's a quick breakdown, in rough terms, of the timetable for Mountain Village. You also mentioned Centennial. On Centennial, our first step is to re-entitle the project through Los Angeles County. That would include us updating our environmental documentation. This would take, we would think, until sometime near the end of next year, ±. That process of going through the county would take a couple of months after that as well. At that point, I think a lot depends on our ability to move more immediately into a mapping process. That mapping process would take a couple of years.
Next question, farming, and Ranch operations do not provide consistent returns. Why not lease out these assets for an annuity to the owners?
On an adjusted EBITDA basis, as I mentioned in my earlier remarks, and Robert did as well we have generated positive cash flow from farming and it's something like 23 out of the last 24 years again I'll go through this more net.
It's a good. It's, it's, it's a good fair question. Um, we tried to cover it in the press release. I covered it in my earlier remarks. Um, I'll talk about it, again some more next week, but let me just let me just again, answer it. Um, for, for, for you here, uh,
Next week, but I do believe there is a more favorable story.
To tell about farming and we'd be happy to have the dialogue.
Next question the share price is at a 52 year low there has never been a return of capital to owners of the company, we have assets with a lot of value and $15 million per year in cash flow when do the owners get paid.
You know David I I understand your frustration.
The lack of share price appreciation over 52 years its unacceptable.
Matt Walker: With our construction documents in hand, after we completed the mapping, we'd be able to commence construction. Similar to what I just described on Mountain Village, we would then start with the installation of the horizontal infrastructure. Given that we do have a re-entitlement effort, it's harder to estimate the outer timeframes, given some uncertainty to complete the entitlement process. That implementation phase, once we completed the entitlement, would also be done under a joint venture, similar to the ones that I've described before. Hope that helps. Again, I'll be able to talk more about that next week with a little more time.
What can I say.
Taking a step back. I've heard, um, from a lot of shareholders, um, many of many of you, um, who have submitted questions that the focus, um, that we should have is on generating cash flow. Uh, we we, we agree with that. So, what that means, with respect to farming, we should be looking at farming through a cash flow lens, not necessarily an earnings lens, and the measure that, uh, in in my effort, to try to better tell the story of the company we've, uh, we, we've, uh, mentioned in the, um, we've mentioned in the press release, our concept of an adjusted, Eva figure, and we think
I've been here for eight months and I intend to change that it's not going to happen overnight.
But I want to see the share price move at all.
I intend to implement a plan that will that will achieve that.
So you know we have in the past paid a dividend, but it has been a while.
So my intention is to implement a plan it will leverage our existing balance sheet it'll utilize capital from from third parties to help start growing our cash flow producing asset base.
The goal of all of this is to create share price appreciation and it's also to create cash flow. So that we can ultimately allow for things like the payment of dividends again or share repurchases. So that is that is that is the end goal and we need to find a way to get there and I intend to I intend to do that.
Nick Ortiz: Thanks, Matt. From Justin Lebos, we received the following question. Mountain Village and Centennial have a combined book value of more than $290 million, but produce no income and consume capital. Are they worth book value or more? If so, why not sell them to unlock more than 60% of market cap, leaving Grapevine and TRCC, already valued by management above our market cap? No other lever matches this shareholder value. Why not put them up for sale?
If that's the right way to look at the farming business. So adjusted IBA as we're measuring it, it backs out, non-cash expenses like depreciation and it also accounts for the water holding costs that we're going to have to expend whether we Farm the property or not. And if you do all of that and you look at farming um, on an adjusted ebit of basis, as I mentioned, uh, in my earlier, uh, remarks and and Robert did as well. We've generated positive cash flow from farming and it's something like 23 out of the last 24 years. Again, I'll go through this more um next week. Um but I do believe there is a more favorable story um to tell about farming um and would be happy to have the dialogue.
Why do you need such a big board of directors. What evidence can you point to that suggests the board has created value for shareholders.
Next question, the share price is at a 52-year low. There has never been a return of capital to owners of the company. We have assets with a lot of value and $50 million per year, in cash flow. When do the owners get paid
Do you calculate the returns on the M. P. CS after 20 years.
Matt Walker: Hey, Justin. Thanks for the question. We agree with you. We agree with you that Mountain Village and Centennial are worth more than their book value. One comment I'd make on your net asset value. When we were looking at that range of net asset values for TRCC, and you noted that it's in excess of our current market cap, I just want you to know that when we did that exercise, that didn't include the Grapevine Master Plan community. It was just for the commercial assets that are part of TRCC. As I mentioned in my answer to some of the previous questions, we believe that Mountain Village and Centennial both provide significant long-term cash flow generating potential. I'll be talking, like I said before, more about that next week.
So on the on the board.
I'm gonna be addressing a number of governance issues next week. So if you could.
If you could.
Wait until next week, you should expect that I'll cover that topic.
You know, David, I um, I understand your frustration, um, the lack of share price appreciation, over 52 years, it's unacceptable. I mean, I I mean what what can I say? Um, I've been here for 8 months and I intend to change that. It's not going to happen overnight. Um but I want to see the share price move and I I
I prefer to cover all of the government it's topics.
Outwards.
On the MPC is.
So we look at value a couple of different ways.
We do believe that given the fact that we're bringing in a third party investor we look at the value relative to our book value and the appreciation on that land and we need to produce an acceptable hurdle on our.
Our cost to date, so I'll again be talking more about about that next week.
Matt Walker: I, again, just want to say that the company is always keeping its options open and evaluating all approaches to maximizing asset value. That goes for our master plan communities or any other asset on the ranch.
Um the goal of all of this is to create share price appreciation and it's also to create cash flow so that we can ultimately allow for things like the payment of dividends again uh or share repurchases. So that is that is that is the end goal and we need to find a way to get there and I intend I intend to do that.
How do you define fiduciary responsibility and had the leadership and good stewards of our capital example, spending three and a half million dollars on a wasted proxy fight we did not benefit.
Let's see.
Nick Ortiz: All right, we have six questions from David Roth. The first one is, the release says Terra Vista will increase to 228 units. Are you committed to that?
Why do you need such a big board of directors? What evidence can you point to that suggests? The board has created value for shareholders? How do you calculate the Returns on the mpc's after 20 years?
So I define fiduciary responsibility as putting shareholders first I'm here to create shareholder value our management team all of US were here to create value for the shareholders.
Matt Walker: Yeah, thanks for the question, David. We worked on that wording a little bit. Let me try to explain that a little bit to you. At the end of the third quarter, we had completed and delivered 180 units. Since the end of the quarter, we've now completed and delivered all 228 units, and we've now signed leases on more than half of the 228. It was really just a timing difference on how we reported the third quarter. To be clear, we have completed construction on the first phase of Terra Vista, which is a good accomplishment, and we're pleased.
And that's how I and we would like to be judged.
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There are many areas that I think we have been good stewards of the company's capital I believe the significant investment that the company made in our tariff Vista apartments, I believe that that will prove to be a very important catalyst for creating value all throughout <unk>.
D C, particularly when we look at back at that and 510 15 years from now.
I'd also like to be clear I'm not afraid to admit my mistakes there are definitely things.
So on the, on the board. Um, I'm going to be addressing a number of governance, um, issues next week. So if you could, um, if you could, uh, wait until next week, um, you should expect that I'll cover that topic. Um, then, um, I I, I prefer to cover all of the government's topics, um, um, at once, um, on the mpc's. Uh, so we look at Value a couple of different ways. Um, you know, we do believe that given the fact that we're bringing in a third-party investor. Um, you know, we look at the value relative to our book value and the appreciation on that land and we need to produce an acceptable hurdle, um, on our cost to date. So, I'll
That I would do differently I put the contested election last spring in that category certainly when you look at the results it's hard to conclude anything else.
Again, be talking more about um, about that next week.
Nick Ortiz: The next question is, the release says you are committed to the MPCs, but you have half of TRCC available that is 100% unencumbered today. Why not focus on that TRCC, which you can control?
Youre right.
The capital could have been deployed into things which create.
How do you Define fiduciary responsibility and have the leadership in good stewards of our Capital example? Spending 3 and a half million on a wasted proxy fight. We did not benefit.
Economic value all I'll leave it at that.
Matt Walker: I couldn't agree with you more. TRCC remains our focus. I think if you've looked at how we've deployed capital over the last five years, the majority of it has gone to TRCC. We continue to see the value of the future there. The flywheel effect that I've talked about between our industrial, our outlets, our retail, our travel, the hotel, and all the residential uses feeding off each other, that's real. The casino is only going to add to that. The advantage of the casino is we're leveraging the $600 million that the tribe is spending to help, and that's going to help bring traffic into TRCC, which should just continue that flywheel. I agree. I call TRCC the nucleus of our activity from which all of our growth should emanate.
Let's see. Um,
We'll move on to questions from Richard <unk>, and Grubhub Wickersham from Glenbrook capital. The first question is given the $49 eight 4% that voted in favor of the PFS Trust proposal to allow shareholders to call a special meeting will this be approved by the board.
The directors as was recommended by ISS. We would appreciate a response to this question. We've previously asking it in a public letter to the board, which letter was ignored.
So, I Define fiduciary responsibility as putting shareholders first. Um, I'm here to create shareholder, uh, value, uh, the management team. Uh, all of us, uh, we're here to create value for the shareholders. Um, and that's how I, and we uh, would like to be judged. Um,
Thank you Richard and Grover for the question.
So like some of the other governance.
Topics.
I don't want to be evasive, but I would like to cover governance, all together and I'd like to I'd like to talk about the subject of a special meeting next week and I'll make sure that I communicate more broadly in the event that you aren't able to join us so that all shareholders understand where we are.
There are many areas that I think we have been good stewards of the company's capital. I believe the significant investment that the company made in, um, our Terra Vista Apartments. I believe that that will prove to be a very important Catalyst for creating value all throughout trcc. Um, particularly. When we look at back at that in 5 10, 15 years from now,
Nick Ortiz: Next question. Farming and ranch operations do not provide consistent returns. Why not lease out these assets for an annuity to the owners?
<unk> headed on issues of governance, so you'll be receiving in answer to that question, but.
Matt Walker: It's a good, fair question. We tried to cover it in the press release. I covered it in my earlier remarks. I'll talk about it again, some more next week. Let me just again answer it for you here. Taking a step back, I've heard from a lot of shareholders, many of you who have submitted questions, that the focus that we should have is on generating cash flow. We agree with that. What that means with respect to farming is we should be looking at farming through a cash flow lens, not necessarily an earnings lens. The measure that, in my effort to try to better tell the story of the company, we've mentioned in the press release is our concept of an adjusted EBITDA figure. We think that's the right way to look at the farming business.
The next week.
Next question is can you. Please give more color on this part of the press release.
Um, I'd also like to be clear. I'm not afraid to admit my mistakes. There are definitely things, uh, that I would do differently. Um, I put the contested election last spring in that category. Certainly, when you look at the results, it's hard to conclude anything else. Um, you're right. Uh, the capital could have been deployed into things which create, um, economic value.
I'll I'll leave it at that.
And earnings of unconsolidated joint ventures decreased by $1 3 million compared with the prior year period, mainly attributed to the reduction in equity in earnings recorded for the Ta Petro joint venture.
Yeah.
I can I can I can see the confusion with that.
As Robert and I mentioned in our remarks, the earnings from our joint venture with Ta Petro, whereas 60% partner in that.
We'll move on to questions from uh, Richard rudley and Grover Wickersham from Glenbrook Capital. The first question is given the 49.84% that voted in favor of the PFS trust proposal to allow shareholders to call a special meeting? Will this be approved by the board of directors as was recommended by ISS. We would appreciate a response to this question. We have previously asked it in a public letter to the board which letter was ignored.
So those are driven by three different things first our fuel sales at both diesel and gas diesel and gasoline.
Thank you, Richard. Uh, and Grover for the question. Um,
Second our convenient store in travel store sales.
Third would be.
Matt Walker: Adjusted EBITDA, as we're measuring it, facts out non-cash expenses like depreciation. It also accounts for the water holding costs that we're going to have to expend, whether we farm the property or not. If you do all of that and you look at farming on an adjusted EBITDA basis, as I mentioned in my earlier remarks and Robert did as well, we've generated positive cash flow from farming, and it's something like 23 out of the last 24 years. Again, I'll go through this more next week. I do believe there is a more favorable story to tell about farming, and we'd be happy to have the dialogue.
The related commercial real estate, that's mostly fast food restaurants. So there was less traffic on Interstate five last quarter and Theres really been less traffic on the phy for the entire year. There are any number of reasons for that and the reduced port shipments has something to do with that theres less local travel.
So like some of the other governance topics um I don't want to be evasive but I would like to cover governance all together. Um, and I'd like to uh I'd like to talk about the subject of a special meeting next week and I'll make sure that I communicate more broadly, uh, in the event that you aren't, um, able to join us so that all shareholders
Um, understand where we are headed um on issues of governance. Um so you'll be receiving um an answer to that question. Um, the next week.
From traffic counts that we get so all of that when you have fewer car is getting off the free whether whether their cars or trucks that come in to TICC, that's going to have a cascading effect on the equity in earnings for the assets that are part of our joint venture.
Next question is, can you please give more color on this part of the press release?
With Ta Petro so hopefully that explains the nature of the reduction of our joint venture there. Unlike unlike R. R.
Equity and earnings of unconsolidated joint ventures decreased by 1.3 million compared with the prior year period, mainly attributed to the reduction in equity and earnings recorded for the TA Pro joint venture.
Our majestic industrial joint ventures, where you've got a lease that is that from quarter to quarter should be constant, but ta petro varies according to demand.
Nick Ortiz: Next question. The share price is at a 52-year low. There has never been a return of capital to owners of the company. We have assets with a lot of value and $50 million per year in cash flow. When do the owners get paid?
Please describe the economics of the joint venture relationship in the Grapevine location and discuss what management intentions are for taking greater Trc control of the development and reducing or eliminating the joint venture split of economics.
Matt Walker: David, I understand your frustration. The lack of share price appreciation over 52 years is unacceptable. I mean, what can I say? I've been here for eight months, and I intend to change that. It's not going to happen overnight. I want to see the share price move. I intend to implement a plan that will achieve that. You know, we have in the past paid a dividend, but it has been a while. My intention is to implement a plan. It'll leverage our existing balance sheet, and it'll utilize capital from third parties to help start growing our cash flow-producing asset base. The goal of all of this is to create share price appreciation, and it's also to create cash flow so that we can ultimately allow for things like the payment of dividends again, or share repurchases. That is.
Okay, I've talked a couple of times about joint ventures, Let me summarize.
All of them all at once so.
Again, we've got five joint ventures with Majestic reality on five different industrial buildings. Each of those is a 50 50 joint venture.
Outlets at their home. That's also a 50 50 joint venture and we have that with Rockefeller and then I just mentioned a 60 40 joint venture that we've got with them with Ta Petro We've got we've got good joint venture partners.
Going forward as we look at the remaining 11 1 million square feet left to develop I would expect us to develop more real estate at Trc on our own balance sheet, but.
And our remarks um the earnings uh from our joint venture with ta petro and we're a 60% partner in that. Uh so those are driven by 3 different things. Uh, first our fuel sales, that's both diesel gas, uh, Diesel and gasoline. Uh second our convenience store and travel store sales. Um uh third would be uh, the related commercial real estate that's mostly um, faster restaurants. So there was less traffic on Interstate 5 last quarter, there's really been less traffic on the 5 for the entire year. There are any number of reasons for that. And I mean, reduced Port shipments have something to do with it. There's less local travel, um, from traffic counts that we get. So, all of that, when you have fewer cars getting off the free, whether whether they're cars or trucks, that come in to trcc, that's going to have a cascading effect on the equity in earnings, for the assets that are part of our
Given that I do want to be clear, we look at each opportunity individually. So it's based on a whole bunch of different <unk>.
Matt Walker: The end goal, we need to find a way to get there, and I intend to do that.
Doctors, but I do understand the question capturing 100% of the revenue as part of our asset base.
Joint venture um with T8 Pro. So hopefully that explains the nature of the reduction of our joint venture there. Unlike um, unlike our, um, our Majestic industrial joint ventures where you've got a lease that is that from a quarter to quarter should be constant, um, the TA Petro, um, varies according to demand,
Nick Ortiz: Why do you need such a big board of directors? What evidence can you point to that suggests the board has created value for shareholders? How do you calculate the returns on the MPCs after 20 years?
Is helpful for the long term growth of our cash flow in the future.
Great final question.
This portion given the apparent success of the apartment development near Great mine and the potential demand from hard rock casino employees is management contemplating either additional apartments or townhouses.
Matt Walker: On the board, I'm going to be addressing a number of governance issues next week. If you could wait until next week, you should expect that I'll cover that topic then. I'd prefer to cover all of the governance topics at once. On the MPCs, we look at value a couple of different ways. We do believe that, given the fact that we're bringing in a third-party investor, we look at the value relative to our book value and the appreciation on that land. We need to produce an acceptable hurdle on our cost to date. I'll, again, be talking more about that next week.
Please describe the economics of the joint venture relationships in the Grapevine location and discuss what management intentions are for taking greater TRC control of the developments and reducing or eliminating, the joint venture split of economics.
So that's a good question.
I mean, the short answer is yes, I mean, we definitely have plans to build more residential at Trc you and that includes multifamily housing. It also includes the single family homes in the great by Master planned community. So we've now as I've mentioned before we've completed 228 units in our first phase at tariff Vista.
The second phase is entitled for an additional it's like 170 units. So.
As you as you mentioned in your question, we have in fact seen demand for our apartments for the casino employees, we've been working pretty closely with hard rock.
To encourage their employees to consider us.
Been a good it's been a good partnership and they haven't yet even open their doors.
Nick Ortiz: How do you define fiduciary responsibility, and have the leadership and good stewards of our capital? Example, spending $3.5 million on a wasted proxy fight. We did not benefit.
So those are capital allocation decisions and return hurdle decisions that we are exploring every single day on where to deploy our capital, but the short answer.
Okay, I've talked a couple times about joint ventures. Let me summarize. Um, all of them um, all at once. So um, again, we've got 5 joint, ventures with Majestic reality on 5 different, um, industrial buildings. Each of those is a 5050 joint venture, uh, The Outlets at tone. That's also a 50/50 joint venture. And we have uh, that, uh, with Rockefeller and that I just mentioned the 6040 joint venture that we've got with, um, with ta Petro. We've got, we've got good joint venture Partners, um, going forward as we look at the remaining 11.1 million square feet left to develop. I would expect, um, us to develop more real estate at trcc on our own balance sheet but given that I do want to be clear. We look at each opportunity individually so it's based on a whole bunch of different um factors. But I do understand the question. Capturing a 100% of the revenue.
Um uh as part of our asset base um is helpful for the long term. Uh growth of our cash flow uh in the future.
Matt Walker: Let's see. I define fiduciary responsibility as putting shareholders first. I'm here to create shareholder value. The management team, all of us, we're here to create value for the shareholders. That's how I and we would like to be judged. There are many areas that I think we have been good stewards of the company's capital. I believe the significant investment that the company made in our Terra Vista apartments will prove to be a very important catalyst for creating value all throughout TRCC, particularly when we look back at that in 5, 10, 15 years from now. I'd also like to be clear. I'm not afraid to admit my mistakes. There are definitely things that I would do differently. I put the contested election last spring in that category. Certainly, when you look at the results, it's hard to conclude anything else.
Is yes, we expect it to bill to develop more residential around Trc.
And then we have two questions from John Christiansen. The first question is if a buyer would put in a formal written bid to buy mountain village at the current book value with the company sell it.
Right. Final question. Um for this portion given the apparent success of the apartment development near Grapevine and the potential demand from Hard Rock, Casino employees is management contemplating either additional apartments or town houses.
Good question, John Thanks for asking.
A couple a couple of things as I previously noted I'll say all options are on the table. So if a reputable party made a substantive offer I would be obligated to bring that offer to the board to consider.
So, that's a good question. Um, the short answer is, yes. Uh, I mean we've definitely have plans to build more residential at trcc and that includes multifamily housing. It also includes the single family homes, uh, in the great fine master plan community,
With that said as I noted before we believe that the property is worth more than book, So I'll just I'll just.
I'll just I'll just I'll just leave it at that.
But.
We're flexible and we're looking at we're looking at alternatives, but we have a plan in place.
Matt Walker: You're right. The capital could have been deployed into things which create economic value. I'll leave it at that.
The company cut $2 million from overhead was $1 million of that the consulting costs being paid to the previous CEO.
No.
So, we've now, as I mentioned before, we've completed 228 units in our first phase at Terra Vista, the second phase is entitled for an additional it's like 170 units. So, um, as you, as you mentioned, in your question, we have in fact seen demand for our apartments for the casino employees. Uh, we've been working pretty closely with hard rock, um, to encourage their employees to consider us. Uh, it's been a good. It's been a good partnership and they haven't uh, yet even opened their doors. Um, so those are capital, allocation decisions um and return hurdle decisions um that we are exploring every single day on where to deploy our Capital. But the short answer um, is
The $2 million of savings came entirely from.
Nick Ortiz: We'll move on to questions from Richard Rudgley and Grover Wickersham from Glenbrook Capital. The first question is, given the 49.84% that voted in favor of the PFS Trust proposal to allow shareholders to call a special meeting, will this be approved by the board of directors as was recommended by ISS? We would appreciate a response to this question. We have previously asked it in a public letter to the board, which letter was ignored?
Is yes, we expect to build uh to develop more residential around trcc.
The reduction of staffing costs from our existing staff that's been on hand from the time that I took over as a CEO not from not from other any other any other savings would be.
And then we have two questions from John Christensen. The first question is, if a buyer would put in a formal written bid to buy Mountain Village at the current book value with the company, sell it.
I guess you are separate from that.
Good question John. Um, thanks for asking. Um,
And with that Matt that is the last question.
Great well, thank you all very much.
Matt Walker: Thank you, Richard and Grover, for the question. Like some of the other governance topics, I don't want to be evasive, but I would like to cover governance altogether. I'd like to talk about the subject of a special meeting next week. I'll make sure that I communicate more broadly in the event that you aren't able to join us, so that all shareholders understand where we are headed on issues of governance. You'll be receiving an answer to that question next week.
All right that concludes to hone ranch company's third quarter 2025 earnings call on behalf of the management team here. Thank you for joining us for a recording of today's call or more information. Please visit IR dot to hone ranch Dot Com Goodbye.
Yeah.
Yeah.
Thank you ladies and gentlemen that concludes today's event. Thank you for attending and you may now disconnect your line.
Noted before, we believe that the property is worth more than book. So, um I'll I'll just I'll just um I'll just uh I'll just I'll just leave it at that.
But, uh, but we're flexible. Um, and, and we're looking at, uh, we're looking at Alternatives. Um, but we we have a plan in place.
Nick Ortiz: Next question is, can you please give more color on this part of the press release? Equity in earnings of unconsolidated joint ventures decreased by $1.3 million compared with the prior year period, mainly attributed to the reduction in equity in earnings recorded for the TA Petro joint venture.
The company cut million dollars from overhead was $1 million of that the Consulting cost being paid to the previous CEO.
Matt Walker: Yeah. I can see the confusion with that. As Robert and I mentioned in our remarks, the earnings from our joint venture with TA Petro, and we're a 60% partner in that, are driven by three different things. First, our fuel sales. That's both diesel and gasoline. Second, our convenience store and travel store sales. Third would be the related commercial real estate. That's mostly fast food restaurants. There was less traffic on Interstate 5 last quarter. There's really been less traffic on the 5 for the entire year. There are any number of reasons for that, and reduced port shipments have something to do with it. There's less local travel from traffic counts that we get.
Uh know. Um so the $1 of savings uh came entirely from um the reduction of Staffing costs from our existing staff that's been on hand from the time that I took over as uh, as CEO, not from not from other any other any other savings would be in addition or separate from that.
And with that, Matt, that is the last question.
Great. Well thank you all very much.
All right, that concludes to home Ranch company's third quarter 2025 earnings call on behalf of the management team here. Thank you for joining us for recording of today's call or more information. Please visit IR tohome ranch.com goodbye.
Thank you, ladies and gentlemen. That concludes today's event. Thank you for attending, and I'm an artist. Connect your line.
Matt Walker: All of that, when you have fewer cars getting off the freeway, whether they're cars or trucks that come into TRCC, that's going to have a cascading effect on the equity in earnings for the assets that are part of our joint venture with TA Petro. Hopefully, that explains the nature of the reduction of our joint venture there. Unlike our Majestic Realty industrial joint ventures, where you've got a lease that from quarter to quarter should be constant, the TA Petro varies according to demand.
Nick Ortiz: Please describe the economics of the joint venture relationships in the Grapevine location and discuss what management intentions are for taking greater TRC control of the developments and reducing or eliminating the joint venture split of economics.
Matt Walker: Okay. I've talked a couple of times about joint ventures. Let me summarize all of them all at once. We've got five joint ventures with Majestic Realty on five different industrial buildings. Each of those is a 50/50 joint venture. The Outlets at Tejon, that's also a 50/50 joint venture, and we have that with Rockefeller. I just mentioned the 60/40 joint venture that we've got with TA Petro. We've got good joint venture partners. Going forward, as we look at the remaining 11.1 million sq ft left to develop, I would expect us to develop more real estate at TRCC on our own balance sheet. Given that, I do want to be clear. We look at each opportunity individually, so it's based on a whole bunch of different factors. I do understand the question. Capturing 100% of the revenue.
Matt Walker: As part of our asset base, it is helpful for the long-term growth of our cash flow in the future.
Nick Ortiz: All right. Final question for this portion, given the apparent success of the apartment development near Grapevine and the potential demand from Hard Rock Tejon Casino employees, is management contemplating either additional apartments or townhouses?
Matt Walker: That's a good question. The short answer is yes. I mean, we definitely have plans to build more residential at TRCCU, and that includes multifamily housing. It also includes the single-family homes in the Grapevine Master Plan Community. We've now, as I mentioned before, completed 228 units in our first phase at Terra Vista. The second phase is entitled for an additional, it's like 170 units. As you mentioned in your question, we have, in fact, seen demand for our apartments for the casino employees. We've been working pretty closely with Hard Rock to encourage their employees to consider us. It's been a good partnership, and they haven't yet even opened their doors. Those are capital allocation decisions and return hurdle decisions that we are exploring every single day on where to deploy our capital. The short answer.
Matt Walker: Yes, we expect to develop more residential around TRCC.
Nick Ortiz: We have two questions from John Christiansen. The first question is, if a buyer would put in a formal written bid to buy Mountain Village at the current book value, would the company sell it?
Matt Walker: Good question, John. Thanks for asking. A couple of things. As I previously noted, I'll say all options are on the table. If a reputable party made a substantive offer, I would be obligated to bring that offer to the board to consider. With that said, as I noted before, we believe that the property is worth more than book. I'll just leave it at that. We're flexible, and we're looking at alternatives, but we have a plan in place.
Nick Ortiz: The company cut $2 million from overhead. Was $1 million of that the consulting cost being paid to the previous CEO?
Matt Walker: No. The $2 million of savings came entirely from the reduction of staffing costs from our existing staff that's been on hand from the time that I took over as CEO, not from any other. Savings would be in addition or separate from that.
Nick Ortiz: Matt, that is the last question.
Matt Walker: Great. Well, thank you all very much.
Nick Ortiz: All right. That concludes Tejon Ranch Company's third quarter 2025 earnings call. On behalf of the management team here, thank you for joining us. For a recording of today's call or more information, please visit ir.tejonranch.com. Goodbye.
Operator: Thank you. Ladies and gentlemen, that concludes today's event. Thank you for attending, and you may now disconnect your line.