When Newhall Land & Farming's directors met recently to appoint a successor to James F. Dickason, who retires Saturday as chairman and chief executive, they not unexpectedly tapped company President Thomas L. Lee as the new chief executive.
But Lee was not immediately elected to succeed Dickason as chairman. Not that Newhall plans to bring in an outsider; Lee is expected to get that post as well, and the chairmanship simply remains vacant in the meantime.
It's just that at 104-year-old Newhall, where relatives of the founding Newhall family still control 30% of the stock, change comes gradually.
"Jim (Dickason) was chief executive for six years before he gained the chairman's title," said Lee, 45. "You earn your stripes."
And true to Newhall's conservative style, Lee will try to earn his by staying close to the company's current strategy of focusing its resources on Valencia, the 10,000-acre "master-planned" community Newhall has been developing for more than two decades in the Santa Clarita Valley, 35 miles northwest of downtown Los Angeles.
"We don't really have any big changes in the works," Lee said in a recent interview at Newhall's Valencia headquarters. "We think we're on a good course."
Which does not mean that Lee is averse to any change. One item on his agenda is to have Newhall acquire additional land to build another planned community, which would be Newhall's first major land acquisition in 28 years.
"We have the money and it's a question of finding the right piece" of property, Lee said, adding that Newhall would prefer to find another ranch located in Southern California.
Newhall already is one of California's largest land owners, developers and farmers, with 123,000 acres spread over eight ranches.
Newhall last year earned $43.7 million on revenue of $169.2 million, with about 75% of the revenue generated by real estate activities and the balance from farming. On the real estate side, Newhall builds the homes it sells, develops commercial properties to generate leasing income and sells land for commercial and industrial use.
In early 1985, Newhall converted from a corporation to a publicly held partnership whose 20.7 million units are traded on the New York and Pacific stock exchanges like shares of stock. But unlike a corporation, the partnership's earnings and other income flow directly to the limited partners without first being taxed at the corporate level.
Like any developer, Newhall has to keep a close eye on the housing market, trying to ensure that it does not have rows of newly built homes sitting empty when interest rates soar and demand plunges.
Newhall has an advantage even then, however.
"We've owned this land forever; we don't have heavy carrying costs associated with the land, so we don't have to force sales activity to take place when the market goes to hell," Lee said. "We can ride out the storm and wait for it get better again."