SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) March 9, 1999
Tejon Ranch Co.
(Exact Name of Registrant Specified in Charter)
Delaware 1-7183 77-0196136
(State or other jurisdiction (Commission (IRS Employer
of incorporation File Number) Identification No.)
4436 Lebec Road, Lebec, California 93243
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (661) 248-3000
Not Applicable
(Former name or former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets.
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On February 26, 1999 Registrant completed the purchase of three industrial
and commercial buildings in Phoenix Arizona having aggregate rentable square
feet of 101,482. The Phoenix property is a cluster of three buildings in a
master planned industrial park located near Sky Harbor International Airport and
adjacent to the Interstate 10 Freeway. The buildings were built in 1996 and are
100% leased to three tenants under triple net leases expiring in 2002 to 2005.
Annualized rentals under the leases currently aggregate $845,000. The leases
provide for built in rental escalations which approximate current inflation
factors based on the CPI index. The buildings were acquired to complete a tax
deferred exchange of real property in which $4,500,000 in proceeds from the sale
of land in December 1998 were used together with $4,800,000 borrowed from First
Union Bank, with the loan secured by the property acquired.
The acquisition price resulted from arm's length negotiations between
Registrant and The Douglas Allred Company, the seller of the properties, and,
from Registrant's point of view, took into account the prices at which other
comparable properties had been sold, the amount of rent payable under the
leases, the financial strength of the tenants, the age of the buildings, vacancy
factors in the area and the overall demographics and financial outlook for the
Phoenix area. Based upon information obtained in connection with the
transaction, Registrant believes that the rental rates under the leases are
consistent with rental rates typically being paid for other comparable
properties, that, while other industrial and commercial properties are available
in the vicinity of the properties, vacancy rates are low and the Phoenix area is
expected to continue to grow in future years. In purchasing the properties,
Registrant also considered the patterns of increasing values of properties
located near airports, the fact that all operating expenses are payable by the
tenants under the leases and that only limited management of the property would
be required. The Phoenix Airport and Interstate 10 corridor has also
historically been an important part of the industrial market for the Metro-
Phoenix area.
The property acquired was held by the seller as an investment and will be
held by Registrant for that purpose as well. The purchase is expected to allow
Registrant to improve its current revenue flow. The revenues from the buildings
are expected to partially fund on-going real estate activities on Registrant's
land and partially offset the ups and downs in Registrant's revenues due to the
cyclical nature of the commodity markets where its principal products are sold.
The purchase also is expected to allow Registrant to defer federal and state
income tax on the proceeds from the December 1998 sale of land.
The foregoing description of factors considered by Registrant in acquiring
the properties involve forward looking statements which may not turn out to be
correct. Actual results could differ materially from those in the forward
looking statements as a result of over-building of commercial and industrial
structures in the area, a significant decline the economy of the Phoenix area or
the U.S. generally, changes in the financial condition of the tenants, possible
unknown defects in the properties and other factors.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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(a) Financial Statements. Pursuant to subparagraph (a)(4) of Item 7 of
Form 8-K, the financial statements and other information specified by Rule 3-14
of Regulation S-X and the pro forma financial information required by Article 11
of Regulation S-X will be filed by an amendment to this Current Report on Form
8-K within 60 days after the date that this Report is required to be filed.
(b) Exhibits.
EXHIBIT NO. 2. Agreement for Purchase and Sale and Joint Escrow
Instructions dated February 2, 1999 between The Douglas Allred Company
and Tejon Ranchcorp.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned duly authorized.
TEJON RANCH CO.
Dated: March 12, 1999 /s/ Allen E. Lyda
Allen E Lyda, Vice-President Finance
INDEX TO EXHIBITS
Exhibit No. Description Sequentially
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Numbered Page
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2 Agreement for Purchase and Sale and Joint Escrow *
Instructions dated February 2, 1999 between The Douglas
Allred Company and Tejon Ranchcorp.
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*Indicated in the manually signed copy