INVESTMENT IN UNCONSOLIDATED AND CONSOLIDATED JOINT VENTURES

The Company maintains investments in 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. The Company’s investment in its unconsolidated joint ventures as of March 31, 2020 was $39,554,000. Equity in earnings from unconsolidated joint ventures was $1,355,000 for the three months ended March 31, 2020. The unconsolidated joint ventures have not been consolidated as of March 31, 2020, because the Company does not control the investments. The Company’s current joint ventures are as follows:

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Petro Travel Plaza Holdings LLC – Petro Travel Plaza Holdings LLC is an unconsolidated joint venture with TravelCenters of America that develops and manages travel plazas, gas stations, convenience stores, and fast food restaurants throughout TRCC. The Company has 50% of the voting rights but participates in 60% of all profits and losses. The Company does not control the investment due to having only 50% of the voting rights. The Company's partner is the managing partner and performs all of the day-to-day operations and has significant decision-making authority over key business components such as fuel inventory and pricing at the facilities. The Company's investment in this joint venture was $25,159,000 as of March 31, 2020.

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Majestic Realty Co. – Majestic Realty Co. (Majestic), is a privately-held developer and owner of master planned business parks throughout the United States. The Company has formed three 50/50 joint ventures with Majestic to acquire, develop, manage, and operate industrial real estate at TRCC. The partners have equal voting rights and equally share in the profit and loss of the joint ventures. The Company and Majestic guarantee the performance of all outstanding debt.

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In November 2018, TRC-MRC 3, LLC was formed to pursue the development, construction, leasing, and management of a 579,040 square foot industrial building located within TRCC-East. TRC-MRC 3, LLC qualified as a VIE from inception, but the Company is not the primary beneficiary; therefore, it does not consolidate TRC-MRC 3, LLC in its financial statements. The construction of the building was completed in the fourth quarter of 2019, and the Company has delivered the space to a tenant that has leased 67% of the rentable space. In March 2019, the joint venture entered into a promissory note with a financial institution to finance the construction of the building. The note matures on May 1, 2030 and had an outstanding principal balance of $31,375,000 as of March 31, 2020. On April 1, 2019, the Company contributed land with a fair value of $5,854,000 to TRC-MRC 3, LLC in accordance with the limited liability agreement. The Company's investment in this joint venture was $6,016,000 as of March 31, 2020.

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In August 2016, we partnered with Majestic to form TRC-MRC 2, LLC to acquire, lease, and maintain a fully occupied warehouse at TRCC-West. The partnership acquired the 651,909 square foot building for $24,773,000 that was largely financed through a promissory note guaranteed by both partners. The promissory note was refinanced on June 1, 2018 with a $25,240,000 promissory note. The note matures on July 1, 2028 and has an outstanding principal balance of $24,311,000 as of March 31, 2020. Since its inception, the Company has received excess distributions resulting in a deficit balance of $2,374,000. In accordance with the applicable accounting guidance, the Company reclassified excess distributions to Other Liabilities within the Consolidated Balance Sheets. The Company will continue to record equity in earnings as a debit to the investment account and if it were to become positive, the Company will reclassify the liability to an asset. If it becomes obvious that any excess distribution may not be returned (upon joint venture liquidation or otherwise), the Company will immediately recognize the liability as income.

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In September 2016, TRC-MRC 1, LLC was formed to develop and operate an approximately 480,480 square foot industrial building at TRCC-East. The joint venture completed construction of the building during the third quarter of 2017. Since its inception, the Company has received excess distributions resulting in a deficit balance of $488,000. In accordance with the applicable accounting guidance, the Company reclassified excess distributions to Other Liabilities within the Consolidated Balance Sheets. The Company will continue to record equity in earnings as a debit to the investment account and if it were to become positive, the Company will reclassify the liability to an asset. If it becomes obvious that any excess distribution may not be returned (upon joint venture liquidation or otherwise), the Company will immediately recognize the liability as income. The joint venture refinanced its construction loan in December 2018 with a mortgage loan. The original balance of the mortgage loan was $25,030,000, of which $24,405,000 was outstanding as of March 31, 2020.


•	Rockefeller Joint Ventures – The Company has three joint ventures with Rockefeller Group Development Corporation, or Rockefeller. At March 31, 2020, the Company’s combined equity investment balance in these three joint ventures was $8,379,000.


◦	Two joint ventures are for the development of buildings on approximately 91 acres of land and are part of an agreement for the potential development of up to 500 acres of land in TRCC that are tied to a Foreign Trade Zone designation. The Company owns a 50% interest in each of the joint ventures.


▪	The Five West Parcel LLC joint venture owned and leased a 606,000 square foot building, the joint venture's primary asset, to Dollar General. The building was sold to a third party in November 2019 for a purchase price of $29,088,000, realizing a gain of $17,537,000. The outstanding term loan of the joint venture was paid off upon the sale.


▪	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 net leasable 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 the joint venture by voting interest alone. The Company is the named managing member. The managing member's responsibilities relate to the routine day-to-day activities of TRCC/Rock Outlet Center LLC. However, all operating decisions during the development period and ongoing operations, including the setting and monitoring of the budget, leasing, marketing, financing and selection of the contractor for any 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 has a term note with a financial institution that matures on September 5, 2021. As of March 31, 2020, the outstanding balance of the term note was $38,468,000. The Company and Rockefeller guarantee the performance of the debt.

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Centennial Founders, LLC – Centennial Founders, LLC, CFL, is a joint venture that was initially formed with TRI Pointe Homes, Lewis Investment Company, Lewis), and CalAtlantic to pursue the entitlement and development of land that the Company owns in Los Angeles County. Based on the Second Amended and Restated Limited Company Agreement of CFL and the change in control and funding that resulted from the amended agreement, CFL qualified as a VIE beginning in 2009, and the Company was determined to be the primary beneficiary. As a result, CFL is consolidated into the Company's financial statements. The Company's partners retained a noncontrolling interest in the joint venture. At March 31, 2020, the Company owned 92.63% of CFL.

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

Unaudited condensed statement of operations for the three months ended March 31, 2020 and condensed balance sheet information of the Company’s unconsolidated joint ventures as of March 31, 2020 and December 31, 2019 are as follows:



	Three Months Ended March 31,
	2020		2019		2020			2019			2020			2019
	Joint Venture										TRC
($ in thousands)	Revenues				Earnings(Loss)						Equity in Earnings(Loss)
Petro Travel Plaza Holdings, LLC	$	23,213	$	25,406	$	2,539		$	1,870		$	1,523		$	1,122
Five West Parcel, LLC	—		684		(1		)	171			(1		)	86
18-19 West, LLC	3		3		(30		)	(28		)	(15		)	(14		)
TRCC/Rock Outlet Center, LLC¹	1,863		1,898		(812		)	(785		)	(406		)	(393		)
TRC-MRC 1, LLC	787		736		40			(5		)	20			(2		)
TRC-MRC 2, LLC	1,020		984		343			154			172			77
TRC-MRC 3, LLC	625		—		125			—			62			—
Total	$	27,511	$	29,711	$	2,204		$	1,377		$	1,355		$	876

Centennial Founders, LLC	$	47	$	122	$	(27	)	$	64		Consolidated

(1) Revenues for TRCC/Rock Outlet Center are presented net of non-cash tenant allowance amortization of $0.5 million as of both of March 31, 2020 and March 31, 2019.



	March 31, 2020										December 31, 2019
	Joint Venture								TRC		Joint Venture								TRC
($ in thousands)	Assets		Debt			Equity			Equity		Assets		Debt			Equity			Equity
Petro Travel Plaza Holdings, LLC	$	80,057	$	(15,288	)	$	62,600		$	25,159	$	77,835	$	(15,287	)	$	60,061		$	23,636
Five West Parcel, LLC	650		—			647			139		694		—			648			140
18-19 West, LLC	4,627		—			4,369			1,615		4,849		—			4,600			1,730
TRCC/Rock Outlet Center, LLC	68,650		(38,468		)	29,377			6,625		69,459		(38,909		)	29,688			6,781
TRC-MRC 1, LLC	28,761		(24,405		)	3,570			—		28,673		(24,542		)	3,623			—
TRC-MRC 2, LLC	20,101		(24,311		)	(8,938		)	—		20,026		(24,455		)	(7,094		)	—
TRC-MRC 3, LLC	38,046		(31,375		)	6,177			6,016		37,292		(28,061		)	6,052			5,953
Total	$	240,892	$	(133,847	)	$	97,802		$	39,554	$	238,828	$	(131,254	)	$	97,578		$	38,240

Centennial Founders, LLC	$	96,847	$	—		$	96,641		***		$	96,415	$	—		$	96,143		***

*** Centennial Founders, LLC is consolidated within the Company's financial statements.