The Texas Pacific Land Trust (NYSE: TPL) is a publicly traded land trust with its administrative office in Dallas, Texas. Owning well over 900,000 acres (3,600 km) in 20 West Texas counties, TPL is among the largest private landowners in the state of Texas.
TPL was created in February 1888 in the wake of the Texas and Pacific Railway bankruptcy, as a means to dispose of the T&P's vast land holdings. TPL received over 3.5 million acres (14,000 km²), and certain T&P bondholders were allowed to exchange their (now worthless) bonds for trust certificates. The certificates were later divided into "sub-share" certificates (3,000 sub-share certificates is the equivalent of one trust certificate), and the sub-share certificates have been traded on the NYSE since January 1927.
Over 100 years later, even having sold 75 percent of its original landholdings, TPL is still among the largest private landowners in the State of Texas. As of December 31, 2008, TPL owned 963,248.33 acres (3,898.1277 km) of land in 20 West Texas counties, of which around 70 percent is located in Culberson (315,640.09 acres), Reeves (194,750.28 acres), and Hudspeth (160,467.44 acres) counties. In addition, TPL owns a 1/128 nonparticipating perpetual royalty interest in 85,413.60 acres (over half of which is in Ector and Midland counties, and a 1/16 nonparticipating perpetual royalty interest in 386,987.70 acres (over 60 percent of which is in Culberson and Reeves counties).
Trust income is derived from land sales, oil and gas royalties, grazing and sundry leases, interest on notes receivable, and interest on investments. The trust does not actively seek to sell its landholdings, and on rare occasions actually purchases land. (It last did so in 2008, acquiring 640 acres (2.6 km) from the State of Texas in a parcel adjacent to existing holdings.)
TPL has a long-standing policy to repurchase sub-shares with excess cash. As noted in the 2015 annual report, "As provided in Article Seventh of the Declaration of Trust, dated February 1, 1888, establishing the Trust, it will continue to be the practice of the Trustees to purchase and cancel outstanding certificates and sub-shares. These purchases are generally made in the open market and there is no arrangement, contractual or otherwise, with any person for any such purchase."
In 2015, the Trust purchased and retired 204,335 sub-shares at a cost of $28,771,073, representing an average cost of $140.80 per sub-share. The number of sub-shares purchased and retired in 2015 amounted to 2.5% of the total number of sub-shares outstanding as of December 31, 2014.
The policy of buy backs has reduced the sub-share count by 26% between 2004 and 2015 (from 10,971,375 at the end of 2004 to 8,118,064 at the end of 2015.)