INVESTMENT IN UNCONSOLIDATED AND CONSOLIDATED JOINT VENTURES

The Company accounts for its investments in unconsolidated joint ventures using the equity method of accounting unless the venture is a variable interest entity, or VIE, and meets the requirements for consolidation or is a voting interest entity and is controlled by the Company. The Company’s investment in its unconsolidated joint ventures at March 31, 2016 was $32,155,000. The equity in the income of the unconsolidated joint ventures was $1,455,000 for the three months ended March 31, 2016. The Company’s current joint ventures are as follows:

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Petro Travel Plaza Holdings LLC – TA/Petro is an unconsolidated joint venture with TravelCenters of America, LLC for the development and management of travel plazas and convenience stores. The Company has 50% voting rights and shares 60% of profit and losses in this joint venture. It houses multiple commercial eating establishments as well as diesel and gasoline operations in TRCC. The Company does not control the investment due to its having only 50% voting rights, and because our partner in the joint venture is the managing partner and performs all of the day-to-day operations and has significant decision making authority regarding key business components such as fuel inventory and pricing at the facility. At March 31, 2016, the Company had an equity investment balance of $17,000,000 in this joint venture.


•	Rockefeller Joint Ventures - The Company has three joint ventures with Rockefeller Group Development Corporation or Rockefeller. At March 31, 2016, the Company’s combined equity investment balance in these three joint ventures was $15,155,000.

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Two joint ventures are for the development of buildings on approximately 91 acres and are part of an agreement for the potential development of up to 500 acres of land in TRCC including pursuing Foreign Trade Zone, or FTZ, designation and development of the property within the FTZ for warehouse distribution and light manufacturing. The Company owns a 50% interest in each of the joint ventures. Currently the Five West Parcel LLC joint venture owns and leases a 606,000 square foot building to Dollar General which has now been extended to April 2022, and includes an option to extend for an additional three years. The Five West Parcel joint venture currently has an outstanding term loan with a balance of $10,585,000 that matures on May 5, 2022. The Company and Rockefeller guarantee the performance of the debt. The second of these joint ventures, 18-19 West LLC, was formed in August 2009 through the contribution of 61.5 acres of land by the Company, which is being held for future development. Both of these joint ventures are being accounted for under the equity method due to both members having significant participating rights in the management of the ventures.

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The third joint venture is the TRCC/Rock Outlet Center LLC joint venture that was formed during the second quarter of 2013 to develop, own, and manage a 326,000 square foot outlet center on land at TRCC-East. The cost of the outlet center was approximately $87,000,000 and was funded through a construction loan for up to 60% of the costs and the remaining 40% was through equity contributions from the two members. The Company controls 50% of the voting interests of TRCC/Rock Outlet Center LLC, thus it does not control by voting interest alone. The Company is the named managing member, as such we considered the presumption that a managing member controls the limited liability company. The managing member's responsibilities relate to the routine day-to-day activities of TRCC/Rock Outlet Center LLC. However, all operating decisions during development and operations, including the setting and monitoring of the budget, leasing, marketing, financing and selection of the contractor for any of the project's construction, are jointly made by both members of the joint venture. Therefore, the Company concluded that both members have significant participating rights that are sufficient to overcome the presumption of the Company controlling the joint venture through it being named the managing member. Therefore, the investment in TRCC/Rock Outlet Center LLC is being accounted for under the equity method. The TRCC/Rock Outlet Center LLC joint venture is separate from the aforementioned agreement to potentially develop up to 500 acres of land in TRCC. During the fourth quarter of 2013, the TRCC/Rock Outlet Center LLC joint venture entered into a construction line of credit agreement with a financial institution for $52,000,000 that, as of March 31, 2016, had an outstanding balance of $51,325,000. The Company and Rockefeller guarantee the performance of the debt.

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Centennial Founders, LLC – Centennial Founders, LLC is a joint venture with Pardee Homes (owned by TRI Pointe Homes), Lewis Investment Company, and CalAtlantic Group Inc. (formerly Standard Pacific Corp) that was organized to pursue the entitlement and development of land that the Company owns in Los Angeles County. Based on the Second Amended and Restated Limited Liability Company Agreement of Centennial Founders, LLC and the change in control and funding that resulted from the amended agreement, Centennial Founders, LLC qualified as a VIE, beginning in the third quarter of 2009 and the Company was determined to be the primary beneficiary. As a result, Centennial Founders, LLC has been consolidated into our financial statements beginning in that quarter. Our partners retained a noncontrolling interest in the joint venture. At March 31, 2016 the Company had a 75.92% ownership position in Centennial Founders, LLC.

The Company’s investment balance in its unconsolidated joint ventures differs from its respective capital accounts in the respective joint ventures. The differential represents the difference between the cost basis of assets contributed by the Company and the agreed upon contribution value of the assets contributed.

Unaudited condensed balance sheet information of the Company’s unconsolidated and consolidated joint ventures as of March 31, 2016 and December 31, 2015 and unaudited condensed statements of operations for the three months ended March 31, 2016 and March 31, 2015 are as follows:

Statement of Operations for the three months ended March 31, 2016



	Unconsolidated												Consolidated
($ in thousands)	Petro Travel Plaza Holdings		Five West Parcel LLC		18-19 West LLC			TRCC/Rock Outlet Center¹			Total		Centennial-VIE
Revenues	$	23,954	$	790	$	2		$	2,300		$	27,046	$	36
Net income (loss)	$	2,291	$	328	$	(43	)	$	(124	)	$	2,452	$	(57	)
Partner’s share of net income (loss)	$	916	$	164	$	(21	)	$	(62	)	$	997	$	(14	)
Equity in earnings (loss)	$	1,375	$	164	$	(22	)	$	(62	)	$	1,455	$	—

¹ Revenue for TRCC/Rock Outlet Center is comprised of $2.8 million in rental income less non-cash tenant allowance amortization of $0.5 million ($2.8 - $0.5 = $2.3).

Statement of Operations for the three months ended March 31, 2015



	Unconsolidated												Consolidated
($ in thousands)	Petro Travel Plaza Holdings		Five West Parcel LLC		18-19 West LLC			TRCC/Rock Outlet Center¹			Total		Centennial-VIE
Revenues	$	21,861	$	995	$	7		$	2,069		$	24,932	$	93
Net income (loss)	$	1,934	$	182	$	(2	)	$	(201	)	$	1,913	$	(62	)
Partner’s share of net income (loss)	$	774	$	91	$	(1	)	$	(101	)	$	763	$	(16	)
Equity in earnings (loss)	$	1,160	$	91	$	(1	)	$	(100	)	$	1,150	$	—

¹ Revenue for TRCC/Rock Outlet Center is comprised of $2.7 million in rental income less non-cash tenant allowance amortization of $0.6 million ($2.7 - $0.6 = $2.1).

Balance Sheet Information as of March 31, 2016



	Unconsolidated															Consolidated
($ in thousands)	Petro Travel Plaza Holdings			Five West Parcel LLC			18-19 West LLC			TRCC/Rock Outlet Center			Total			Centennial-VIE
Current assets	$	12,782		$	3,751		$	5		$	5,945		$	22,483		$	131
Real Estate	53,604			13,530			4,617			64,318			136,069			82,517
Other assets	174			324			—			18,892			19,390			4
Long-term debt	(14,707		)	(10,585		)	—			(51,325		)	(76,617		)	—
Other liabilities	(2,852		)	(479		)	(5		)	(1,063		)	(4,399		)	(633		)
Net assets	$	49,001		$	6,541		$	4,617		$	36,767		$	96,926		$	82,019

Balance Sheet Information as of December 31, 2015



	Unconsolidated														Consolidated
($ in thousands)	Petro Travel Plaza Holdings			Five West Parcel LLC			18-19 West LLC		TRCC/Rock Outlet Center			Total			Centennial-VIE
Current assets	$	12,013		$	3,277		$	23	$	4,733		$	20,046		$	230
Real Estate	52,296			13,704			4,617		64,842			135,459			81,742
Other assets	264			297			—		19,714			20,275			9
Long-term debt	(14,973		)	(10,725		)	—		(51,557		)	(77,255		)	—
Other liabilities	(2,890		)	(340		)	—		(841		)	(4,071		)	(754		)
Net assets	$	46,710		$	6,213		$	4,640	$	36,891		$	94,454		$	81,227