15.

INVESTMENTS IN 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 December 31, 2011 was $53,893,000. The equity in the earnings of the unconsolidated joint ventures was $916,000 for the year ended December 31, 2011. These joint ventures have not been consolidated as of December 31, 2011, because we are not the primary beneficiary in the case of VIEs and 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 TA/Petro, is an unconsolidated joint venture with Travel Centers of America, LLC for the development and management of travel plazas and convenience stores. This is a 60%-owned venture, which owns and operates travel plazas/commercial highway operations in TRCC. It houses multiple commercial eating establishments as well as diesel and gasoline operations. The Company does not control the investment due to its having only 50% voting rights, and because our partner performs the day-to-day operations at the facility. At December 31, 2011, the Company had an equity investment balance of $11,973,000 in this joint venture.

•

Tejon Mountain Village LLC - Tejon Mountain Village LLC is an unconsolidated joint venture between the Company and DMB Pacific Partners II (a wholly owned subsidiary of DMB Associates, Inc.) formed to obtain all necessary government entitlement approvals and to develop the Tejon Mountain Village project. The Company owns a 50% interest in this venture. At December 31, 2011, the Company’s equity investment balance in this joint venture was $36,623,000.

•

Rockefeller Joint Ventures - The Company has two joint ventures with Rockefeller Group Development Corporation for the development of buildings on approximately 91 unaudited acres. These joint ventures are part of an agreement for the development of up to 500 unaudited 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 (unaudited) building. The second of these ventures, 18-19 West LLC, was formed in August 2009 through the contribution of 61.5 acres (unaudited) of land by the Company, which is being held for future development. As of December 31, 2011, the combined equity investment balance in these joint ventures is $5,297,000.

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Centennial Founders, LLC - Centennial Founders, LLC is a joint venture in which the Company had a 50% ownership interest until July 1, 2009 when a change in the joint venture operating agreement resulted in the Company satisfying the requirements for controlling the joint venture. This is a venture with Pardee 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.

We have stated in past filings that the Centennial joint venture operating agreement was amended in August 2009 to allow our partners to become non-funding members during the entitlement phase of the project while we continue as the sole funding partner. During this period any non-funding partner’s percentage ownership interest will be diluted by a 2-to-1 ratio with regard to the amount of capital contributed on such partner’s behalf. Consequently, the operating results of Centennial Founders, LLC were consolidated effective July 1, 2009. Despite this change, our partners continue to be involved in an advisory capacity and may re-elect contributing status at a later time. At December 31, 2011 we have a 68.06% ownership position in Centennial Founders, LLC.

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.

Condensed financial information of the Company’s joint ventures as of and for the year ended December 31 is as follows:

Statement of Operations for the Year Ended

December 31, 2011 ($ in thousands)


	UNCONSOLIDATED													CONSOLIDATED
	Petro Travel Plaza Holdings		Five West Parcel			Tejon Mountain Village			18-19 West			Total		Centennial
Revenues	$	115,992	$	178								$	116,170	$	380

Net income (loss)		3,104		(1,834	)		(38	)		(6	)	$	1,226		(336	)

Partner’s share of net income (loss)		1,242		(917	)		(19	)		(3	)	$	303		(113	)

Equity in earnings (losses) of unconsolidated joint ventures	$	1,862	$	(917	)	$	(26	)	$	(3	)	$	916	$	—

Balance Sheet Information as of

December 31, 2011


	Petro Travel Plaza Holdings			Five West Parcel			Tejon Mountain Village			18-19 West		Total			Centennial
Current assets	$	16,940		$	116		$	1,020		$	12	$	18,088		$	325
Property and equipment, net		44,092			16,509			85,127			4,255		149,983			67,684
Other assets		307			37			—			—		344			—
Long-term debt		(18,076	)		(8,625	)		—			—		(26,701	)		—
Other liabilities		(2,648	)		(201	)		(1,122	)		—		(3,971	)		(1,106	)

Net assets	$	40,615		$	7,836		$	85,025		$	4,267	$	137,743		$	66,903

Statement of Operations for the Year Ended

December 31, 2010 ($ in thousands)


	UNCONSOLIDATED													CONSOLIDATED
	Petro Travel Plaza Holdings		Five West Parcel			Tejon Mountain Village			18-19 West			Total		Centennial
Revenues	$	105,015	$	387		$	—		$	—		$	105,402	$	278

Net income (loss)		2,008		(1,249	)		(72	)		(6	)	$	681		(558	)

Partner’s share of net income (loss)		803		(624	)		(36	)		(3	)	$	140		(216	)

Equity in earnings (losses) of unconsolidated joint ventures	$	1,205	$	(625	)	$	(36	)	$	(3	)	$	541	$	—

Balance Sheet Information as of

December 31, 2010


	Petro Travel Plaza Holdings			Five West Parcel			Tejon Mountain Village			18-19 West		Total			Centennial
Current assets	$	13,717		$	45		$	892		$	15	$	14,669		$	85
Property and equipment, net		44,642			17,179			77,233			4,022		143,076			61,879
Other assets		226			302			—			—		528			1
Long-term debt		(19,287	)		(8,625	)		—			—		(27,912	)		—
Other liabilities		(2,151	)		(116	)		(894	)		—		(3,161	)		(1,251	)

Net assets	$	37,147		$	8,785		$	77,231		$	4,037	$	127,200		$	60,714

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, as well as the amount and timing of joint venture distributions.