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INVESTMENT IN UNCONSOLIDATED AND CONSOLIDATED JOINT VENTURES
 3 Months Ended
Mar. 31, 2023
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 March 31, 2023 was $36,291,000. Equity in earnings from unconsolidated joint ventures was $1,517,000 for the three months ended March 31, 2023. The unconsolidated joint ventures have not been consolidated as of March 31, 2023, because the Company does not control the investments. The Company’s current joint ventures are as follows:
•Petro Travel Plaza Holdings LLC – Petro Travel Plaza Holdings LLC, or Petro, 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 $25,004,000 as of March 31, 2023.
•Majestic Realty Co. – Majestic Realty Co., or Majestic, is a privately-held developer and owner of master planned business parks in the United States. The Company has five active 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.
•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 is financed by a $49,226,000 construction loan that had an outstanding balance of $1,419,000 as of March 31, 2023. The construction loan is individually and collectively guaranteed by the Company and Majestic. In December 2022, the Company contributed land with fair value of $8,501,000 to TRC-MRC5, LLC. The total cost of the land was $2,477,000. The Company recognized profit of $3,012,000 and deferred profit of $3,012,000 after applying the five-step revenue recognition model in accordance with ASC Topic 606 - Revenue From Contracts With Customers and ASC Topic 323, Investments - Equity Method and Joint Ventures. The project is currently under construction and is expected to be completed by the winter of 2023/2024. The joint venture has leased 100% of the rentable space.
•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 was completed in the fourth quarter of 2022, and the Company 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 $62,400,000 as of March 31, 2023. In 2021, the Company contributed land with a fair value of $8,464,000 to TRC-MRC 4, LLC. The total cost of the land was $2,895,000. The Company recognized profit of $2,785,000 and deferred profit of $2,785,000. Since its inception, the Company has received excess distributions resulting in a deficit balance in its investment of $5,760,000.
•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 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 building is 100% leased as of March 31, 2023. 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 $34,281,000 as of March 31, 2023. 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 $209,000 as of March 31, 2023.
•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, which 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 $22,447,000 as of March 31, 2023. The building is 100% leased as of March 31, 2023. Since its inception, the Company has received excess distributions resulting in a deficit balance in its investment of $2,062,000. 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.
•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 building is 100% leased as of March 31, 2023. Since its inception, the Company has received excess distributions resulting in a deficit balance in its investment of $1,954,000. 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 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 $22,629,000 was outstanding as of March 31, 2023.
•In February 2022, we formed TRC-MRC Multi I, LLC, to pursue the development, construction, lease-up, and management of approximately 495 multi-family rental units located within TRCC-East. As of March 31, 2023, the Company controlled the joint venture and has consolidated its assets within the Consolidated Balance Sheet. On January 26, 2023, the Company and Majestic entered into a Membership Interest Purchase Agreement, formalizing the purchase of Majestic's interest in this joint venture for $175,000. The entity was dissolved shortly thereafter. The project is currently undergoing final design and engineering of Phase I of the project.
•Rockefeller Joint Ventures – The Company has one joint venture with Rockefeller Group Development Corporation, or Rockefeller. At March 31, 2023, the Company’s equity investment balance in these one joint ventures was $6,835,000.
•TRCC/Rock Outlet Center LLC was formed in 2013 to develop, own, and manage a net leasable 326,000 square foot outlet center on land at TRCC-East. 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, 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. As a result, the investment in TRCC/Rock Outlet Center LLC is being accounted for under the equity method. On September 7, 2021, the TRCC/Rock Outlet Center LLC joint venture successfully extended the maturity date of its term note with a financial institution from September 5, 2021 to May 31, 2024. In connection with the loan extension, the joint venture also reduced the outstanding amount by $4,600,000. As of March 31, 2023, the outstanding balance of the term note was $27,432,000. The Company and Rockefeller guarantee the performance of the debt.

•Centennial Founders, LLC – Centennial Founders, LLC, or 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 March 31, 2023, the Company owned 93.32% 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, 2023 and condensed balance sheet information of the Company’s unconsolidated joint ventures as of March 31, 2023 and December 31, 2022 are as follows:
Three Months Ended March 31,
202320222023202220232022
Joint VentureTRC
($ in thousands)RevenuesEarnings (Loss)Equity in Earnings (Loss)
Petro Travel Plaza Holdings, LLC$34,812 $38,328 $2,270 $1,934 $1,362 $1,161 
TRCC/Rock Outlet Center, LLC1
1,431 1,564 (887)(414)(443)(207)
TRC-MRC 1, LLC961 839 96 19 48 9 
TRC-MRC 2, LLC1,390 1,025 667 344 334 172 
TRC-MRC 3, LLC1,051 1,018 196 158 98 79 
TRC-MRC 4, LLC1,776 — 251 (1)125 (1)
TRC-MRC 5, LLC— — (14,000)— (7,000)— 
Total$41,421 $42,774 $2,579 $2,040 $1,517 $1,213 
Centennial Founders, LLC$175 $121 $109 $97 Consolidated
(1) Revenues for TRCC/Rock Outlet Center are presented net of non-cash tenant allowance amortization of $0.3 million and $0.3 million for the three months ended March 31, 2023 and March 31, 2022, respectively.


March 31, 2023December 31, 2022
Joint VentureTRCJoint VentureTRC
($ in thousands)AssetsDebtEquity (Deficit)EquityAssetsDebtEquity (Deficit)Equity
Petro Travel Plaza Holdings, LLC$82,290 $(13,128)$62,339 $25,004 $84,225 $(13,318)$63,069 $25,441 
TRCC/Rock Outlet Center, LLC58,286 (27,432)(29,797)6,835 59,196 (27,707)30,684 7,279 
TRC-MRC 1, LLC23,631 (22,629)638 — 24,085 (22,787)1,042 — 
TRC-MRC 2, LLC19,048 (22,447)(3,589)— 18,398 (22,612)(3,939)— 
TRC-MRC 3, LLC36,350 (34,281)1,861 209 36,608 (34,494)2,690 386 
TRC-MRC 4, LLC52,858 (62,400)(12,859)— 50,497 (40,130)8,974 4,485 
TRC-MRC 5, LLC10,741 (1,419)8,586 4,243 8,602 — — 4,300 
Total$283,204 $(183,736)$27,179 $36,291 $281,611 $(161,048)$102,520 $41,891 
Centennial Founders, LLC$103,532 $— $103,347 ***$102,984 $— $102,689 ***
*** Centennial Founders, LLC is consolidated within the Company's financial statements.