If you're driving north from Los Angeles on Interstate 5, descending from the Tejon Pass into the green San Joaquin Valley, take a look at the 270,000 acres to the east. For 30 bucks or so, this land -- or at any rate, a tiny sliver of it -- could be your land.

That was the recent price of a share in Tejon Ranch Co. (TRC), owner of this vast tract. And although Tejon Ranch still earns about a third of its revenues from raising grapes, almonds, pistachios, and walnuts, investing in the outfit is not necessarily a nutty idea. As Michael Winer, manager of the Third Avenue Real Estate Value Fund, explains, Tejon Ranch has big plans for its property, which it owns free and clear. A 350-acre industrial complex, including a 51-acre truck stop, is already on the ground. Three home-building companies are teaming up with TRC on a residential community; shopping centers and golf courses are envisioned as well. "This land is right in the path of the future growth of Los Angeles and Kern counties," says Winer, whose firm holds a 30% stake in Tejon Ranch.

It will take a few years to find out if Tejon Ranch's location will pay off as Winer imagines. What's already clear is that his fund has been right in the path of a major shift in investor sentiment. Surely you noticed: When virtual profits went out of fashion, in 2000, hard assets came in. Together with historically low interest rates, the real in real estate has helped a whole spectrum of property investments hold or gain value during this bear market. The overheated market for single-family homes is the most dramatic example; another is the commercial retail space that many entrepreneurs own. Most intriguing for us nonlandlord types are real estate mutual funds like Winer's.

But are such funds good building blocks in a long-term investing plan, or are they a cyclical play whose time may be passing? That was the question that led me to call on Winer, a 47-year-old former California developer who is now based in New York City. His fund has been among the best-performing in the sector, with an annualized return of 16% since its launch in 1998. Just as interesting, however, is Third Avenue's long record as a value-oriented investment firm. Founder Marty Whitman made his reputation by finding assets available at bargain prices. Real estate fits the value philosophy very well. The companies are simple to understand, and they own real things -- including, of course, the stuff that is in many ways the ultimate hard asset. "Land," says Winer, "is a storehouse of value. If it isn't harvested now, it will probably be worth more later."

For Winer, the trick is to find prime land that's unencumbered by debt, yet managed by people with a vision for it. That often means a company that has owned its turf for a long, long time but relatively recently started making new plans for it. Tejon Ranch traces its roots back to 1843; its current, development-minded boss arrived in 1996. The St. Joe Co., one of Winer's biggest investments, is a former timber and pulp company that owns a million acres in northwestern Florida. It's now building million-dollar homes on the Gulf Coast, among many other projects.

Winer's focus on companies that own, develop, and manage real estate is unusual. Most real estate mutual funds invest mainly in real estate investment trusts. REITs, of course, are companies that own and usually operate income-producing real estate and pass on at least 90% of their income to shareholders in the form of dividends. For dividend-hungry investors REITs can be very attractive; the ones that avoided the weaker parts of the property market (including office space) had a very good 2002.

But Winer's objective is long-term capital appreciation, which means investing in companies that can use their income to finance future growth. Recently, he did have about 25% of his portfolio in REITs, and he has also invested in some big, established operating companies. Land, however, is one of the major themes in his portfolio, and half a dozen of the companies he owns have significant holdings at a very low cost basis.

Real estate, of course, has fads, booms, and busts. Winer figures that single-family homes, for example, have become overvalued, though he doesn't expect a drastic correction. But real property also offers some real opportunities for long-term growth. And it turns out that the stock market is a good place to look for them.

Kenneth Klee covers finance.

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