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INVESTMENT IN UNCONSOLIDATED AND CONSOLIDATED JOINT VENTURES
 6 Months Ended
Jun. 30, 2024
Equity Method Investments and Joint Ventures [Abstract]  
INVESTMENT IN UNCONSOLIDATED AND CONSOLIDATED JOINT VENTURES 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 June 30, 2024 was $32,134,000. The equity in the income of unconsolidated joint ventures was $4,282,000 for the six months ended June 30, 2024. The unconsolidated joint ventures have not been consolidated as of June 30, 2024, because the Company does not control the investments. The Company’s current joint ventures are as follows:
•Petro Travel Plaza Holdings LLC – TA/Petro is an unconsolidated joint venture with TravelCenters of America Inc. 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 it having only 50% voting rights, and because the 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. The Company's investment in this joint venture was $22,589,000 as of June 30, 2024.
•Majestic Realty Co. – Majestic Realty Co., or Majestic, is a privately-held developer and owner of industrial and commercial properties throughout the United States. The Company partnered with Majestic to form five active 50/50 joint ventures 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 venture. The Company and Majestic guarantee the performance of all outstanding debt. For those investments in a deficit position, in accordance with the applicable accounting guidance, the Company reclassified excess distributions to Other Liabilities within the Consolidated Balance Sheets. The Company expects to continue to record equity in earnings as a debit to the investment account and if it were to become positive, the Company would 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.
•On March 29, 2022, TRC-MRC 5 LLC was formed to pursue the development, construction, lease-up, and management of an approximately 446,400 square foot industrial building located within TRCC-East. The construction of the building was completed in the fourth quarter of 2023, and the joint venture has leased 100% of the rentable space. The joint venture refinanced the construction loan in February 2024 with a promissory note. The note matures on February 3, 2035, and had an outstanding balance of $53,170,000 as of June 30, 2024. Since its inception, the Company has received excess distributions resulting in a deficit balance in its investment of $1,439,000.
•On March 25, 2021, TRC-MRC 4 LLC was formed to pursue the development, construction, lease-up, and management of a 629,274 square foot industrial building located within TRCC-East. The construction of the building was completed in the fourth quarter of 2022, and the joint venture has leased 100% of the rentable space. The joint venture refinanced its construction loan in March 2023 with a promissory note. The note matures on March 1, 2033, and had an outstanding balance of $61,361,000 as of June 30, 2024. Since its inception, the Company has received excess distributions resulting in a deficit balance in its investment of $6,135,000.
•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 on the Company's property at 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 2019, and the joint venture has leased 100% of the rentable space to two tenants. 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 $33,179,000 as of June 30, 2024. The Company's investment in this joint venture was $234,000 as of June 30, 2024.
•In August 2016, the Company 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, and was largely financed through a promissory note. The promissory note was refinanced on June 1, 2018 with a $25,240,000 promissory note. The note matures on July 3, 2028 and had an outstanding principal balance of $21,591,000 as of June 30, 2024. The building was 100% leased as of June 30, 2024. Since its inception, the Company has received excess distributions resulting in a deficit balance in its investment of $848,000.
•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 in 2017. 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 $21,811,000 was outstanding as of June 30, 2024. Since inception of the joint venture, the Company has received excess distributions resulting in a deficit balance in its investment of $1,340,000.
•TRCC/Rock Outlet Center LLC – This joint venture was formed in 2013 with Rockefeller Group Development Corporation, or Rockefeller to develop, own, and manage a net leasable 326,000 square foot outlet center on land at TRCC-East. At June 30, 2024, the Company’s equity investment balance in this joint venture was $9,311,000. 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. On August 16, 2023, the TRCC/Rock Outlet Center LLC joint venture successfully extended the maturity date of its term note with a financial institution from May 31, 2024 to June 30, 2025. In connection with the loan extension, the joint venture also reduced the outstanding amount by $6,000,000. As of June 30, 2024, the outstanding balance of the term note was $20,702,000. The Company and Rockefeller guarantee the performance of the debt.
•Centennial Founders, LLC – CFL is a joint venture with TRI Pointe Homes to pursue the entitlement and development of land that the Company owns in Los Angeles County. As of June 30, 2024, the Company owned 93.57% of CFL.
The Company’s investment balance in each of its unconsolidated joint ventures differs from its capital accounts in the respective joint ventures. The variance represents the difference between the cost basis of assets contributed by the Company and the agreed upon fair value of those assets.
Unaudited condensed statements of operations for the three and six months ended June 30, 2024 and 2023 and condensed balance sheet information of the Company’s unconsolidated joint ventures as of June 30, 2024 and December 31, 2023 are as follows:
Three Months Ended June 30,
202420232024202320242023
Joint VentureTRC
($ in thousands)RevenuesEarnings (Loss)Equity in Earnings (Loss)
Petro Travel Plaza Holdings, LLC$41,399 $40,214 $3,959 $2,874 $2,376 $1,725 
TRCC/Rock Outlet Center, LLC1
1,672 1,563 (673)(872)(337)(437)
TRC-MRC 1, LLC992 1,158 119 357 59 178 
TRC-MRC 2, LLC1,713 1,431 666 734 333 367 
TRC-MRC 3, LLC1,078 1,081 210 207 105 104 
TRC-MRC 4, LLC2,189 1,759 365 18 182 9 
TRC-MRC 5, LLC1,398 — 101 (16)51 (8)
Total$50,441 $47,206 $4,747 $3,302 $2,769 $1,938 
Centennial Founders, LLC$10 $— $(18)$(71)Consolidated
(1) Revenues for TRCC/Rock Outlet Center are presented net of non-cash tenant allowance amortization of $0.3 million for the three months ended June 30, 2024 and June 30, 2023.
Six Months Ended June 30,
202420232024202320242023
Joint VentureTRC
($ in thousands)RevenuesEarnings (Loss)Equity in Earnings (Loss)
Petro Travel Plaza Holdings, LLC$75,898 $75,026 $5,365 $5,144 $3,219 $3,087 
TRCC/Rock Outlet Center, LLC1
3,504 2,994 (1,265)(1,759)(633)(880)
TRC-MRC 1, LLC1,857 2,119 303 453 151 226 
TRC-MRC 2, LLC3,195 2,821 1,776 1,401 888 701 
TRC-MRC 3, LLC2,186 2,132 427 403 214 202 
TRC-MRC 4, LLC3,962 3,535 643 269 321 134 
TRC-MRC 5, LLC2,970 — 243 (30)122 (15)
Total$93,572 $88,627 $7,492 $5,881 $4,282 $3,455 
Centennial Founders, LLC$66 $175 $(13)$38 Consolidated
(1) Revenues for TRCC/Rock Outlet Center are presented net of non-cash tenant allowance amortization of $0.7 million and $0.6 million for the six months ended June 30, 2024 and June 30, 2023, respectively.
June 30, 2024December 31, 2023
Joint VentureTRCJoint VentureTRC
($ in thousands)AssetsDebtEquity (Deficit)EquityAssetsDebtEquity (Deficit)Equity
Petro Travel Plaza Holdings, LLC$78,378 $(12,174)$58,315 $22,589 $72,633 $(12,556)$52,950 $19,370 
TRCC/Rock Outlet Center, LLC55,904 (20,702)34,270 9,311 58,040 (20,850)35,535 9,943 
TRC-MRC 1, LLC24,430 (21,811)1,867 — 25,224 (22,144)1,684 — 
TRC-MRC 2, LLC20,486 (21,591)(739)— 18,882 (21,939)(2,597)— 
TRC-MRC 3, LLC35,422 (33,179)3,076 234 35,467 (33,627)2,087 141 
TRC-MRC 4, LLC50,045 (61,361)(10,388)— 49,964 (61,776)(12,192)— 
TRC-MRC 5, LLC52,279 (53,170)123 — 49,687 (35,138)8,390 4,194 
Total$316,944 $(223,988)$86,524 $32,134 $309,897 $(208,030)$85,857 $33,648 
Centennial Founders, LLC$106,297 $— $105,940 ***$104,979 $— $104,753 ***
*** Centennial Founders, LLC is consolidated within the Company's financial statements.