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 at June 30, 2014 was $73,722,000. The equity in the income of the unconsolidated joint ventures was $1,586,000 for the six months ended June 30, 2014. The unconsolidated joint ventures have not been consolidated as of June 30, 2014, 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 – 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 June 30, 2014, the Company had an equity investment balance of $13,045,000 in this joint venture.

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Tejon Mountain Village LLC - Prior to the Company's acquisition of full ownership of the entity on July 15, 2014, Tejon Mountain Village LLC, or TMV LLC, was an unconsolidated joint venture between the Company and DMB TMV LLC, which is owned by DMB Pacific LLC, formed to obtain all necessary government entitlement approvals and to develop the Tejon Mountain Village project. Prior to the acquisition, the Company had 50% voting rights and shared 50% of profit and losses in this venture. The joint venture agreement provided that cash distributions would follow defined distribution levels and be distributed quarterly to the Company and DMB in an amount proportional to capital contributed at each distribution level, some of which were not equal. For additional information please refer to the filed TMV LLC agreement and amendments listed as exhibits under Part II, Item 6 of this report and the description of this agreement in our Form 10K/A for fiscal year ended December 31, 2013. At June 30, 2014, the Company’s equity investment balance in this joint venture was $44,851,000 which includes $1,013,000 of Company contributions during the first six months of June 30, 2014, which helped to fund the joint venture's planning activities. On July 15, 2014, the Company acquired full ownership of TMV LLC. See Note 13 (Subsequent Events) of the Notes to Unaudited Consolidated Financial Statements for further detail regarding the Company's acquisition of full ownership of TMV LLC.

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Rockefeller Joint Ventures – The Company has multiple joint ventures with Rockefeller Group Development Corporation or Rockefeller. 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. The Five-West Parcel joint venture currently has an outstanding loan with a balance of $11,000,000. The note is due in 2015 and is fully secured by the building as well as guarantees from each partner. We do not believe the bank will call on the guarantees provided. 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.

During the second quarter of 2013, we entered into a new joint venture with Rockefeller, the TRCC/Rock Outlet Center LLC joint venture, to develop, own, and manage an approximately 326,000 leasable square foot outlet center on land at TRCC-East. This outlet center is estimated to cost approximately $86 million to construct and will be funded through a construction loan for up to 60% of the costs and equity from the members. This joint venture is separate from the above agreement to develop up to 500 acres of land in TRCC. During the second quarter of 2013, we contributed land and other assets at an agreed value of $10,558,000 for our capital contribution ($2,159,000 at cost) and Rockefeller matched our capital contribution with cash. Rockefeller also reimbursed the Company for $335,000 in outlet center marketing costs, which were offset against the Company's equity in losses for the TRCC/Rock Outlet Center LLC joint venture. 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 June 30, 2014, had an outstanding balance of $18,460,000. The Company and Rockefeller both guarantee the payment and performance of this construction line of credit which is secured by the constructed real property of the outlet center.

At June 30, 2014, the Company’s combined equity investment balance in the three Rockefeller joint ventures was $15,826,000 which includes $8,500,000 of Company contributions during 2014, which helped to fund development of the outlet center.

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Centennial Founders, LLC – Centennial Founders, LLC is a joint venture with Pardee Homes (TRI Pointe Homes), Lewis Investment Company, and 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 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 June 30, 2014 the Company had a 73.55% 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 June 30, 2014 and December 31, 2013 and unaudited condensed statements of operations for the six months ended June 30, 2014 and June 30, 2013 are as follows:

Statement of Operations for the six months ended June 30, 2014



	UNCONSOLIDATED													CONSOLIDATED
($ in thousands)	Petro Travel Plaza Holdings		Five West Parcel		18-19 West LLC		TRCC/Rock Outlet Center		Tejon Mountain Village			Total		Centennial-VIE
Revenues	$	54,658	$	1,710	$	31	$	480	$	—		$	56,879	$	407
Net income (loss)	$	2,555	$	136	$	19	$	20	$	(70	)	$	2,660	$	(32	)
Partner’s share of net income (loss)	$	1,021	$	68	$	10	$	10	$	(35	)	$	1,074	$	(8	)
Equity in earnings (losses)	$	1,534	$	68	$	9	$	10	$	(35	)	$	1,586	$	—

Balance Sheet Information as of June 30, 2014



	UNCONSOLIDATED																	CONSOLIDATED
($ in thousands)	Petro Travel Plaza Holdings			Five West Parcel			18-19 West LLC		TRCC/Rock Outlet Center			Tejon Mountain Village			Total			Centennial-VIE
Current assets	$	16,788		$	1,866		$	25	$	1,860		$	365		$	20,904		$	256
Property and equipment, net	44,686			15,924			4,573		53,040			101,393			219,616			76,355
Other assets	189			257			—		8,129			—			8,575			—
Long-term debt	(16,213		)	(11,000		)	—		(18,460		)	—			(45,673		)	—
Other liabilities	(3,043		)	(22		)	—		(6,903		)	(280		)	(10,248		)	(293		)
Net assets	$	42,407		$	7,025		$	4,598	$	37,666		$	101,478		$	193,174		$	76,318

Statement of Operations for the six months ended June 30, 2013



	UNCONSOLIDATED														CONSOLIDATED
($ in thousands)	Petro Travel Plaza Holdings		Five West Parcel		18-19 West		TRCC/Rock Outlet Center			Tejon Mountain Village			Total		Centennial
Revenues	$	55,364	$	1,673	$	31	$	—		$	—		$	57,068	$	314
Net income (loss)	$	2,394	$	47	$	25	$	(176	)	$	(83	)	$	2,207	$	(232	)
Partner’s share of net income (loss)	$	958	$	23	$	12	$	(88	)	$	(42	)	$	863	$	(66	)
Equity in earnings (losses)	$	1,436	$	24	$	13	$	247		$	(41	)	$	1,679	$	—

Balance Sheet Information as of December 31, 2013



	UNCONSOLIDATED																	CONSOLIDATED
($ in thousands)	Petro Travel Plaza Holdings			Five West Parcel			18-19 West LLC		TRCC/Rock Outlet Center			Tejon Mountain Village			Total			Centennial-VIE
Current assets	$	14,886		$	813		$	10	$	2,428		$	99,690		$	117,827		$	86
Property and equipment, net	43,897			16,980			4,514		24,633			—			90,024			74,968
Other assets	208			438			—		2,161			—			2,807			—
Long-term debt	(16,602		)	(11,000		)	—		—			—			(27,602		)	—
Other liabilities	(2,687		)	(343		)	—		(8,577		)	(168		)	(11,775		)	(204		)
Net assets	$	39,702		$	6,888		$	4,524	$	20,645		$	99,522		$	171,281		$	74,850