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Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is 0.16pp more bullish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
+0.24pp
Flat
Net-tone change vs last year's 10-K.
MD&A
+0.08pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
adversely+8
delays+2
volatility+2
fails+2
adverse+1
Positive rising
achieve+4
stabilized+2
stabilization+2
satisfactory+2
greater+1
Risk Factors (Item 1A)
5,768 words
ITEM 1A. RISK FACTORS
The material risks and uncertainties described below make investing in our securities risky. If any of the following risks occur, our business, financial condition, results of operations or future prospects could be materially adversely affected. Our strategy, focused on more aggressive development of our land, involves significant risk and could result in operating losses. The risks that we describe in our public filings are not the only risks that we face. Additional risks and uncertainties not presently known to us, or that we currently consider immaterial, may materially adversely affect our business, financial condition, and results of operations. Moreover, some of the factors, events and contingencies discussed below may have occurred in the past, but the disclosures below are not representations as to whether or not the factors, events, or contingencies have occurred in the past, and instead reflect our beliefs and opinions as to the factors, events, or contingencies that could materially and adversely affect us in the future.
STRATEGIC RISKS
Strategic risk relates to the Company's future business plans and strategies, including the risks associated with the macro- and micro- environment in which we operate, the demand for our products and services, the of investments in our real estate development, technology and public policy.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
loss+5
litigation+2
decline+2
contested+2
declined+1
Positive rising
stabilized+6
enhance+2
effective+1
improvement+1
positive+1
MD&A (Item 7)
10,662 words
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
See Part I, "Forward-Looking Statements" for our cautionary statement regarding forward-looking information.
This discussion and analysis is based on, should be read together with, and is qualified in its entirety by, the consolidated financial statements and notes thereto included in Item 15(a) of this Form 10-K, beginning at page F-1. It also should be read in conjunction with the disclosure under “Forward-Looking Statements” in Part 1 of this Form 10-K. When this report uses the words “we,” “us,” “our,” “Tejon,” “TRC,” and the “Company,” they refer to Tejon Ranch Co. and its subsidiaries, unless the context otherwise requires. References herein to fiscal year refer to our fiscal years ended or ending December 31.
OVERVIEW
Our Business
We are a diversified real estate development and agribusiness company focused on responsibly utilizing our land resources to meet the housing, employment, and lifestyle needs of Californians while creating long-term shareholder value. In support of these objectives, we have been investing in land planning and entitlement activities for new commercial/industrial and resort/residential land developments and in infrastructure improvements within our active industrial development. Our prime asset is approximately 270,000 acres of contiguous, largely undeveloped land that, at its most southerly border, is 60 miles north of Los Angeles and, at its most northerly border, is 15 miles east of Bakersfield.
Adverse changes in economic conditions in markets where we conduct our operations and where prospective purchasers of future homes and commercial spaces live could reduce the demand for our products and, as a result, could adversely affect our business, results of operations, and financial condition. Adverse changes in economic conditions in markets where we conduct our operations and where prospective purchasers of our real estate products live have had and may in the future have a negative impact on our business. Adverse changes in employment levels, job growth, consumer confidence, interest rates, and population growth, or an oversupply of product for sale or lease may reduce demand, depress prices, and cause buyers to cancel their purchase agreements. This, in turn, could adversely affect our results of operations and financial condition. Additionally, increasing insurance costs, particularly in wildfire-prone areas such as California, may make homeownership and commercial property leasing less affordable for prospective buyers and tenants. Rising premiums or limited availability of fire insurance could further suppress demand and negatively impact property values, which, in turn, could adversely affect our results of operations and financial condition.
Higher interest rates and lack of available financing can have significant impacts on the real estate industry. Higher interest rates generally impact the real estate industry by making it harder for borrowers to qualify for financing, which can lead to a decrease in the demand for residential, commercial or industrial sites. Higher interest rates can also lead to tighter construction lending markets impacting the development of industrial buildings within our projects. Any decrease in demand will negatively impact our proposed developments. Lack of available credit to finance real estate purchases can also negatively impact demand. Any downturn in the economy or consumer confidence can also be expected to result in reduced housing demand and slower industrial development, which would negatively impact the demand for land we are developing.
We are subject to various land use regulations and require governmental approvals and permits for our developments that could be denied . In planning and developing our land, we are subject to various local, state, and federal statutes, ordinances, rules and regulations concerning zoning, infrastructure design, subdivision of land, and construction. All of our new developments currently require or have required amending existing general plan and zoning designations, so it is possible that our entitlement applications could be denied. In addition, the zoning that ultimately is approved could include density provisions that would limit density that could be built within the boundaries of a particular area, which could adversely impact the financial returns from a given project. Many states, cities and counties (including neighboring Ventura County) have in the past approved various “slow growth” or “urban limit line” measures. If that were to occur in the jurisdictions governing the Company’s land use, our future real estate development activities could be significantly adversely affected.
Third-party litigation increases the time and cost of our development efforts . The land use approval processes we must follow to ultimately develop our projects have become increasingly complex. Moreover, the statutes, regulations and ordinances governing the approval processes provide third parties the opportunity to challenge the proposed plans and approvals, and we have repeatedly experienced such legal challenges related to our real estate development projects. As a result, the prospect and realization of third-party challenges to planned real estate developments provides additional uncertainties in real estate development planning and entitlements. Third-party challenges in the form of litigation have resulted in denial of the right to develop, and, by their nature, adversely affect the length of time and the cost required to obtain the necessary approvals, and may do so again in the future. In addition, adverse decisions arising from any litigation have increased and may again increase the costs and length of time to obtain ultimate approval of a project and could adversely affect the design, scope, plans and profitability of a project.
We are subject to environmental regulations and opposition from environmental groups that cause delays and increase the costs of our development efforts or preclude such development entirely . Environmental laws that apply to a given site can vary greatly according to the site’s location and condition, present and former uses of the site, and the presence or absence of sensitive elements like wetlands and endangered species. Federal and state environmental laws also govern the construction and operation of our projects and require compliance with various environmental regulations, including analysis of the environmental impact of our projects and evaluation of our reduction in the projects’ carbon footprint and GHG emissions. Environmental laws and conditions may result in delays, cause us to incur additional costs for compliance, mitigation and processing land use applications, or preclude development in specific areas. In addition, in California, third parties have the ability to file litigationchallenging the approval of a project, which they usually do by alleginginadequate disclosure and mitigation of the environmental impacts of the project. Certain groups opposed to development have made clear they intend to oppose our projects vigorously, so litigationchallenging their approval is expected and has, in the past, occurred. Currently, the Centennial entitlement approval has been opposed through litigationagainst the Company and Los Angeles County. The issues most commonly cited in opponents’ public comments include the poor air quality of the San Joaquin Valley air basin, potential impacts of projects on the California condor and other species of concern, the potential for our lands to function as wildlife movement corridors, potential impacts of our projects on traffic and air quality in Los Angeles County, GHG emissions, water availability and criticism of proposed development in rural areas as being “sprawl.” In addition, California has a specific statutory and regulatory scheme intended to reduce GHG emissions in the state and any efforts to enact federal legislation to address climate change concerns could require further reductions in our projects’ carbon footprint in the future.
Until final permits are received, litigation is complete, and final maps are received, we will have a limited inventory of real estate . Each of our four current and planned real estate projects, TRCC, Centennial, MV, and Grapevine involve obtaining various governmental agency permits, local government permits, such as building permits, overcominglitigation, and receiving final maps from local jurisdictions. A delay in achieving these items could lead to additional costs related to these developments and potentially lostopportunities for the sale of lots and parcels to developers and land users.
We are in competition with several other developments for customers and residents . Within our real estate activities, we are in direct competition for customers with other industrial sites in Northern, Central, and Southern California. We are also in competition with other highway interchange locations using Interstate 5 and State Route 99 for commercial leasing opportunities. Once they receive all necessary permits and approvals, Centennial and Grapevine will ultimately compete with other residential housing options in the region, such as developments in the Santa Clarita Valley, Lancaster, Palmdale, and Bakersfield. MV will compete generally for discretionary dollars that consumers will allocate to recreation and second homes,
so its competition will include a greater area and range of projects. Intense competition may decrease our sales and negatively impact our operating results.
Increases in taxes or government fees could increase our cost, and adverse changes in tax laws could reduce demand for homes in our future residential communities. Increases in real estate taxes and other local government fees, such as fees imposed on developers to fund schools, open space, and road improvements, could increase our costs and have an adverse effect on our operations. In addition, any changes to federal or state income tax laws that would reduce or eliminate tax deductions or incentives to homeowners, such as a change limiting the deductibility of real estate taxes or interest on home mortgages, could make housing less affordable or otherwise reduce the demand for housing, which in turn could reduce future sales.
Our developable land is concentrated entirely in California . All of our developable land is in California and our business is especially sensitive to the economic conditions within California. Any adverse change in the economic climate of California, or our regions of that state, and any adverse change in the political or regulatory climate of California, or the counties where our land is located, could adversely affect our real estate development activities. Ultimately, our ability to sell or lease real estate may decline as a result of weak economic conditions or restrictive regulations.
Risks and challenges we have faced and may continue to face in land development . We have in the past and may in the future encounter other difficulties in developing our land, including:
• Difficulty in securing adequate water resources for future developments;
• Natural risks, such as geological and soil problems, earthquakes, fire, heavy rains and flooding, and heavy winds;
• Shortages of qualified trades people;
• Reliance on local contractors, who may be inadequately capitalized or have limited availability;
• Shortages of materials; and
• Increases in the cost of materials, including as a result of tariffs or a trade war.
A prolongeddownturn in the real estate market or instability in the mortgage and commercial real estate financing industry could have an adverse effect on our real estate business. Our residential housing projects, Centennial, MV, and Grapevine, are currently in the entitlement phase, permitting phase, or are fully entitled and waiting for development to begin. If a downturn in the real estate market or an instability in the mortgage and commercial real estate financing industry exists at the time these projects move into their development and marketing phases, our resort/residential business could be adversely affected. An excess supply of homes available due to foreclosures or the expectation of deflation in housing prices could also have a negative impact on our ability to sell our inventory when it becomes available. The inability of potential commercial/industrial clients to get adequate financing for the expansion of their businesses could lead to reduced lease revenues and sales of land within our industrial development.
OPERATIONAL RISKS
Operational risk relates to risks arising from external market factors that affect the operation of our businesses. It includes weather and other natural conditions; regulatory requirements; information management and data protection and security, including cybersecurity; supply chain and business disruption; and other risks, including human resources and reputation.
We are involved in a cyclical industry and are affected by changes in general and local economic conditions . The real estate development industry is cyclical and is significantly affected by changes in general and local economic conditions, including:
• Employment levels
• Availability of financing and insurance
• Interest rates
• Consumer confidence
• Demand for the developed product, whether residential or commercial
• Supply of similar product, whether residential or commercial
• Climate and weather conditions
The process of a project's development begins, and financial and other resources are committed long before a real estate project comes to market, which could occur at a time when the real estate market is depressed. It is also possible in a rural area like ours that no market for the project will develop as projected. Farming, energy and mineral resources are also subject to business cycles and/or seasonality that could have a material impact to the business.
The inability of a tenant to pay us rent adversely affects our business. Our commercial revenues are derived primarily from rental payments and reimbursement of operating expenses under our leases. If our tenants fail to make rental payments under their leases, or negotiate lower rates or extended payment terms, our financial condition and cash flows have been and could again be adversely affected.
Our inability to renew leases or re-lease space on favorable terms as leases expire may significantly affect our business. Some of our revenues are derived from rental payments and reimbursement of operating expenses under our leases. If a tenant experiences a downturn in its business or other types of financial distress, it may be unable to make timely payments under its lease. Also, if our tenants terminate early or decide not to renew their leases, we may not be able to re-lease the space. Even if tenants decide to renew or lease space, the terms of renewals or new leases, including the cost of any tenant improvements, concessions, and lease commissions, may be less favorable to us than current lease terms. Consequently, we could generate less cash flow from the affected properties than expected, which could negatively impact our business. We may have to divert cash flow generated by other properties to meet our debt service payments, if any, or to pay other expenses related to owning the affected properties.
We may experience increased operating costs, which may reduce profitability to the extent that we are unable to pass those costs on to tenants. Our properties are subject to increases in operating expenses, including insurance, property taxes, utilities, administrative costs, and other costs associated with security, landscaping, and repairs and maintenance of our properties. We cannot be certain that our tenants will be able to bear the full burden of costs, such as real estate taxes, insurance, utilities, common area and other expenses that we pass along through our leases, or that such increased costs will not lead them, or other prospective tenants, to seek space elsewhere. If operating expenses increase, the availability of other comparable space in the markets in which we operate may hinder or limit our ability to increase our rents. If operating expenses increase without a corresponding increase in revenues, our profitability would diminish.
From time to time, we experience shortages or increased costs of labor and supplies or other circumstances beyond our control that cause delays or increased costs within our commercial development, which can adversely affect our operating results. Our ability to develop our current industrial development has in the past and may in the future be adversely affected by circumstances beyond our control, including: work stoppages, labor disputes and shortages of qualified trades people; changes in laws relating to union organizing activity; and shortages, delays in availability, or fluctuations in prices of building materials (including as a result of inflation or tariffs). Any of these circumstances could give rise to delays in the start or completion of, or could increase the cost of, developing infrastructure and buildings within our industrial development. If any of the above happens, our operating results could be harmed.
We are dependent on key personnel and the loss of one or more of those key personnel may materially and adversely affect our prospects . Our future success depends, to a significant degree, on the efforts of our senior management. The loss of key personnel could materially and adversely affect our results of operations, financial condition, or our ability to pursue land development. Our success will also depend in part on our ability to attract and retain additional qualified management personnel.
Volatile oil and natural gas prices could adversely affect our cash flows and results of operations. Our cash flows and results of operations are dependent in part on oil and natural gas prices, which are volatile. Oil and natural gas prices also impact the amount we receive for our mineral leases. Moreover, oil and natural gas prices depend on factors we cannot control, such as: changes in foreign and domestic supply and demand for oil and natural gas; weather; political conditions in other oil-producing countries, including the possibilities of insurgency or war in such areas; prices of foreign exports; domestic and international drilling activity and related policies; price and availability of alternate fuel sources; the value of the U.S. dollar relative to other major currencies; the level and effect of trading in commodity markets; and the effect of worldwide energy conservation measures and governmental regulations. Substantial or extended decline in the price of oil and gas, future natural gas, or crude oil price could have a negative impact on our business, liquidity, financial condition and results of operations.
Our reserves and production will decline from their current levels. The rate of production from oil, natural gas, and mining properties generally decline as reserves are depleted. Any decline in production or reserves could materially and adversely affect our future cash flow, liquidity and results of operations.
Water delivery and water availability continues to be a long-term concern within California. Any limitation of delivery of SWP water, limitations on our ability to move our water resources, and the absence of available, reliable alternatives during
drought periods could potentially cause permanent damage to orchards and vineyards and possibly impact future development opportunities.
Our future revenue and profitability related to our water resources will primarily be dependent on our ability to acquire and sell water assets. In light of the fact that our water resources represent a portion of our overall business at present, our long-term profitability will be affected by various factors, including the availability and timing of water resource acquisitions, regulatory approvals and permits associated with such acquisitions, transportation arrangements, and changing technology. We may also encounter unforeseen technical or other difficulties, which could result in cost increases with respect to our water resources. Moreover, our profitability is significantly affected by changes in the market price of water. Future sales and prices of water may fluctuate widely as demand is affected by climatic, economic, demographic and technological factors, as well as the relative strength of the residential, commercial, financial, and industrial real estate markets. The factors described above are not within our control.
Natural and man-made disasters, public health crises, political instability, global conflicts, including trade wars, and other potentially catastrophic events may have an adverse impact on our business and operating results and could decrease the value of our assets. Natural and man-made disasters, public health crises, political instability, and other potentially catastrophic events, including terrorist attacks, particularly those that may cause a decline in global economic activity, could have a material adverse impact on our business, our operating results, and the market price of our common stock. Catastrophic events occurring in California, the United States, or globally may result in declining economic activity, which could reduce the demand for, and the value of, our properties. To the extent that catastrophic events impact our tenants, their businesses similarly could be adversely affected, including their ability to continue to honor their lease obligations. Disruptions to the global economy can also impact demand for, and the prices of our products, which could adversely affect our future cash flow and results of operations.
Information technology failures and data security breaches could harm our business. We use information technology and other computer resources to carry out important operational and marketing activities and to maintain our business records. These information technology systems are dependent upon global communications providers, web browsers, telephone systems and other aspects of the internet infrastructure that have experienced security breaches, cyber-attacks, significant systems failures and electrical outages in the past. A material network breach in the security of our information technology systems could include the theft of customer, employee or Company data. The release of confidential information as a result of a security breach may also lead to litigation or other proceedings against us by affected individuals or business partners, or by regulators, and the outcome of such proceedings, which could include penalties or fines, could have a significant negative impact on our business. We may also be required to incur significant costs to protect againstdamages caused by these information technology failures or security breaches in the future. However, we cannot provide assurance that a security breach, cyber-attack, data theft or other significant systems failure will not occur in the future, and such occurrences could have a material and adverse effect on our consolidated results of operations or financial position.
Increased cybersecurity requirements, vulnerabilities, threats and more sophisticated and targeted computer crime could pose a risk to our systems, networks, products, solutions, services and data. Increased global cybersecurity vulnerabilities, threats and more sophisticated and targeted cyber-related attacks pose a risk to our security and our customers', partners', suppliers' and third-party service providers' products, systems and networks and the confidentiality, availability and integrity of the data. We remain potentially vulnerable to additional known or unknown threatsdespite our attempts to mitigate these risks. We also may have access to sensitive, confidential or personal data or information that is subject to privacy and security laws, regulations or customer-imposed controls. Our efforts to protect sensitive, confidential or personal data or information, may nonetheless leave us vulnerable to material security breaches, theft, misplaced or lost data, programming errors, employee errors and/or malfeasance that could potentially lead to the compromising of sensitive, confidential or personal data or information, improper use of our systems, software solutions or networks, unauthorized access, use, disclosure, modification or destruction of information, production downtimes and operational disruptions. In addition, a cyber-related attack could result in other negative consequences, including damage to our reputation or competitiveness, remediation or increased protection costs, litigation or regulatory action. Additionally, violations of privacy or cybersecurity laws (including the California Consumer Privacy Act), regulations or standards increasingly lead to class-action and other types of litigation, which can result in substantial monetary judgments or settlements. Therefore, any such security breaches could have a material adverse effect on us.
Inflation can have a significant adverse effect on our operations. Inflation can have a major impact on our farming operations. The farming operations are most affected by escalating costs, unpredictable revenues and very high irrigation water costs. High fixed water costs related to our farmlands will continue to adversely affect earnings. Prices received for many of our products are dependent upon prevailing market conditions and commodity prices. Therefore, it is difficult for us to accurately predict revenue, just as we cannot pass on cost increases caused by general inflation, except to the extent reflected in market conditions and commodity prices.
Inflation can adversely impact our real estate operations, by increasing costs of material and labor, as well as the cost of capital, which can impact operating margins. In an inflationary environment, we may not be able to increase prices at the same pace as the increase in inflation, which would further erode operating margins.
Government policies and regulations, particularly those affecting the agricultural sector and related industries, could adversely affect our operations and profitability. Agricultural commodity production and trade flows are significantly affected by government policies and regulations. Governmental policies affecting the agricultural industry, such as taxes, trade tariffs, duties, subsidies, import and export restrictions on commodities and commodity products, can influence industry profitability, the planting of certain crops, the location and size of crop production, whether unprocessed or processed commodity products are traded, and the volume and types of imports and exports. In addition, international trade disputes can adversely affect trade flows by limiting or disrupting trade between countries or regions. Future governmental policies, regulations or actions affecting our industry may adversely affect the supply of, demand for and prices of our products, restrict our ability to do business and cause our financial results to suffer.
Our efforts, goals and disclosures related to environmental stewardship and sustainability matters expose us to risks that can adversely affect our reputation and performance. Our commitment to sustainability with respect to climate change, air quality, and water conservation reflect our current plans and aspirations and are not guarantees that we will be able to achieve our goals. Such plans and aspirations may also fail to satisfy all of our stakeholders, as they reflect a variety of views that may support or disagree with these initiatives. Our pursuit of, or our failure or perceived failure to achieve, these goals and objectives on a timely basis, or at all, could adversely affect our reputation, stock price, operations, financial performance and growth, and expose us to increased scrutiny from the investment community, as well as enforcement authorities.
Our multifamily development, Terra Vista at Tejon, is in its initial lease-up phase and may not achieve anticipated occupancy levels or rental rates. Terra Vista at Tejon, our 228-unit multifamily community completed in 2025, is currently in its initial lease-up phase and has not yet reached stabilized occupancy. During lease-up, operating expenses are generally incurred at levels consistent with stabilized operations, while rental revenues increase gradually as occupancy builds. As a result, the property may generate operating losses until stabilization is achieved.
There can be no assurance that Terra Vista will achieve anticipated occupancy levels, rental rates, or absorption timelines. Demand for rental housing in the greater Bakersfield submarkets may be affected by local employment conditions, competing supply, affordability of homeownership, broader economic conditions, and insurance costs in California. If lease-up occurs more slowly than expected, if rental rates are lower than projected, or if concessions are required to attract tenants, the project’s operating results and cash flows could be adversely affected.
Reliance on third-party property managers could adversely affect property operations and financial performance. We rely on third-party property managers to conduct the day-to-day operations, leasing, and maintenance of our multifamily development. As a result, our ability to maintain occupancy levels, achieve targeted rental rates, control operating expenses, and provide a satisfactory resident experience depends in part on the performance of these third-party managers.
If a property manager fails to effectively market and lease available units, maintain properties in a timely and cost-effective manner, comply with applicable laws and regulations, or provide satisfactory resident services, the performance of the applicable property may be adversely affected. In addition, because we do not directly control all on-site personnel and operational decisions, we may experience delays in identifying and correcting operational or leasing issues, which could result in lower occupancy, increased concessions, higher operating expenses, reduced rent collections, or reputational harm.
Our reliance on third-party managers may also increase the risk that properties under development or in lease-up do not achieve projected absorption rates, rental levels, or stabilization timelines. If a property manager underperforms or fails to meet our expectations, we may be required to replace such manager, which could result in operational disruption, transition costs, and temporary declines in property performance.
Any of these factors could adversely affect our results of operations, financial condition, cash flows, and the value of our real estate investments.
FINANCIAL RISKS
Financial risk relates to our ability to meet financial obligations and mitigate exposure to broad market risks, including volatility in interest rates and commodity prices; credit risk; and liquidity risk, including risk related to our credit ratings and our availability and cost of funding. Credit risk is the risk of financial loss arising from a customer or counterparty failure to meet its contractual obligations. We face credit risk in our commercial businesses, as well as in our investing and leasing activities and derivative financial instruments activities. Liquidity risk refers to the potential inability to meet contractual or contingent financial obligations (whether on- or off-balance sheet) as they arise and could potentially impact an institution’s financial condition or overall safety and soundness.
Constriction of the credit markets or other adverse changes in capital market conditions could limit our ability to access capital and increase our cost of capital. During past economic downturns, we relied principally on positive operating cash flow, cash and investments, our revolving credit facility and equity offerings to meet current working capital needs, entitlement investment, and investment within our developments. Any slowdown in the local, national, or global economy could negatively impact our access to credit markets and may limit our sources of liquidity in the future and potentially increase our costs of capital.
We regularly assess our projected capital requirements to fund future growth in our business, repay our debt obligations, and support our other general corporate and operational needs, and we regularly evaluate our opportunities to raise additional capital. As market conditions permit, we may issue new equity securities through the public capital markets, enter new joint ventures, or obtain additional bank financing to fund our projected capital requirements or provide additional liquidity. Adverse changes in economic, or capital market conditions could negatively affect our business, liquidity and financial results.
Our business model is very dependent on transactions with strategic partners. We may not be able to successfully (1) attract desirable strategic partners; (2) complete agreements with strategic partners; and/or (3) manage relationships with strategic partners going forward, any of which could adversely affect our business. A key to our development and value creation strategies has been the use of joint ventures and strategic relationships. These joint venture partners bring development experience, industry expertise, financial resources, financing capabilities, brand recognition and credibility or other competitive assets.
A complicating factor in any joint venture is that strategic partners may have economic or business interests or goals that are inconsistent with ours or that are influenced by factors related to our business or change over time. These competing interests lead to the difficultchallenges of successfully managing the relationship and communication between strategic partners and monitoring the execution of the partnership plan. We may also be subject to adverse business consequences if the market reputation or financial position of the strategic partner deteriorates. If we cannot successfully execute transactions with strategic partners, our business could be adversely affected.
Inability to comply with credit facility covenants, restrictions or limitations could adversely affect our financial condition. Our ability to meet our debt service and other obligations and the financial covenants under our credit facility will depend, in part, upon our future financial performance. Our future results are subject to the risks and uncertainties described in this report. Our revenues and earnings vary with the level of general economic activity in the markets we serve, and the level of commodity prices related to our farming and mineral resource activities. The factors that affect our ability to generate cash can also affect our ability to raise additional funds for these purposes through the addition of debt, the sale of equity, refinancing existing debt, or the sale of assets.
Our revolving credit facility requires compliance with three financial covenants: (a) total liabilities divided by tangible net worth not greater than 0.55 to 1.00 at each year end; (b) a debt service coverage ratio not less than 1.50 to 1.00 as of each year end on a rolling four quarter basis; and (c) a liquidity ratio not less than 2.00 to 1.00 at each year end. A failure to comply with these requirements could allow the lending bank to terminate the availability of funds under our revolving credit facility and/or cause any outstanding borrowings to become due and payable prior to maturity.
MARKET RISKS
Many factors affect market function: investor anticipation, shocks in other markets, and anything that limits the efficient functioning of the marketplace. Market risks can affect the price of our Common Stock.
Only a limited market exists for our Common Stock, which could lead to price volatility . The limited trading market for our Common Stock may cause fluctuations in the market value of our Common Stock to be exaggerated, leading to price volatility in excess of that which would occur in a more active trading market of our Common Stock.
Concentrated ownership of our Common Stock creates a risk of sudden change in our share price . As of March 19, 2026, directors and members of our executive management team beneficially owned or controlled approximately 21.8% of our
Common Stock. Investors who purchase our Common Stock may be subject to certain risks due to the concentrated ownership of our Common Stock. The sale by any of our large shareholders of a significant portion of that shareholder’s holdings could have a material adverse effect on the market price of our Common Stock. In addition, the registration and sale of any significant number of additional shares of our Common Stock will have the immediate effect of increasing the public float of our Common Stock and any such increase may cause the market price of our Common Stock to decline or fluctuate significantly.
We may be subject to shareholder activism or proxy contests, which could adversely affect our business and stock price.
We may become subject to shareholder activism, proxy contests or other campaigns by investors seeking to influence our strategic direction, capital allocation, governance practices or board composition. Responding to such actions could require significant time and attention from our Board of Directors and management team and could result in substantial legal, advisory and other expenses. In addition, the perceived or actual uncertainty associated with shareholder activism may create instability within the Company, disrupt our strategic initiatives, and adversely affect our relationships with strategic partners, employees and other stakeholders. These actions could also result in volatility in the market price of our Common Stock.
The California property insurance market may adversely affect our development activities and property values.
California’s property insurance market has experienced reduced carrier participation, increased underwriting restrictions and premium volatility. If adequate insurance coverage becomes unavailable or cost-prohibitive for the Company, our tenants or future homeowners within our developments, we may experience delays in development timing, reduced transaction activity, or increased operating costs. In addition, limited availability or higher costs of insurance could adversely affect property values, buyer demand and overall marketability of our real estate assets. Any of these factors could have a material adverse effect on our business, financial condition and results of operations.
Our business model is designed to create value through the execution of commercial/industrial development, entitlement and development of land for resort/residential uses, and the maximization of earnings from operating assets, while at the same time protecting significant portions of our land for conservation purposes. We operate our business near one of the country’s largest population centers, which is expected to continue to grow well into the future.
We currently operate in six reporting segments: real estate - commercial/industrial; multifamily; real estate - resort/residential; mineral resources; farming; and ranch operations.
Our commercial/industrial real estate segment generates revenues from real estate leases, and sales of land and buildings, with TRCC representing our primary commercial and industrial development.
In 2025, we expanded our real estate operations to include a dedicated multifamily segment focused on the development, lease-up, and long-term ownership of residential rental communities within TRCC, beginning with Terra Vista at Tejon. The addition of multifamily residential leasing further diversifies our portfolio and is expected to enhance long-term recurring revenue streams.
Our resort/residential real estate development segment is actively involved in the land entitlement and pre-development activities, both internally and through a joint venture. Our active developments within this segment include Mountain Village, Grapevine, and Centennial.
Our mineral resources segment generates revenues from oil and gas royalty leases, rock and aggregate mining leases, a lease with National Cement of California Inc., and water sales.
Our farming segment produces revenues from the sale of wine grapes, almonds, and pistachios, and we are expanding our permanent crop portfolio to include olives.
Lastly, our ranch operations segment generates revenues from game management activities and ancillary land uses, including grazing leases and filming activities.
Financial Highlights
For 2025, net income attributable to common stockholders was $75,000 compared to net income attributable to common stockholders of $2,690,000 in 2024. The primary factor driving the decrease was an increase in corporate expenses of $2,976,000, primarily due to higher shareholder-related expenses associated with a contested board election and proxy defense efforts. Additionally, equity in earnings of unconsolidated joint ventures decreased by $2,519,000 due to lower fuel and non-fuel revenues at Petro Travel Plaza, or TA/Petro. The above decreases were partially offset by a $3,514,000 improvement in the operating results from farming segment, driven by improved pistachio revenues, and a $2,362,000 increase in profit from the real estate commercial/industrial segment, driven by higher profit from land sales. Total profit from land sales for the year was $1,875,000.
For 2024, net income attributable to common stockholders was $2,690,000 compared to net income attributed to common stockholders of $3,265,000 in 2023. The primary factor driving the decrease was a reduction in mineral resources segment operating income of $2,677,000, which was largely attributable to limited opportunities to sell water. Additionally, the farming segment operating income decreased by $2,319,000 resulting from the lack of pistachio crop yield in the current year. The above decreases were partially offset by improved equity in earnings of unconsolidated joint ventures of $4,013,000 associated with better fuel margins at our TA/Petro joint venture and higher rental rates or rental escalations of our various joint ventures with Majestic.
During 2026, we will continue to invest funds towards vertical development within our active commercial and industrial operations at TRCC, including the development of an additional industrial building and related infrastructure. We also expect to continue with lease-up activities at Terra Vista at Tejon, our multifamily apartment community located immediately adjacent to the Outlets at Tejon within TRCC. We will also invest funds as necessary towards permits, and maps for our master plan mixed-use developments and for master project infrastructure. Securing entitlements for land, as is currently the case with our Centennial project, is a lengthy and complex process that can take several years and involves litigation. During the next few years, our net income will fluctuate from year-to-year based upon, among other factors, commodity prices, production within our farming segment, the timing of land sales and the leasing of land, industrial space, and/or multi-family apartment units within our industrial developments, and equity in earnings generated from our unconsolidated joint ventures.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations provides a narrative discussion of our results of operations. It contains the results of operations for each reporting segment of the business and is followed by a discussion of our financial position. It is useful to read the reporting segment information in conjunction with Note 15 (Reporting Segments and Related Information) of the Notes to Consolidated Financial Statements.
Critical Accounting Estimates
The preparation of our consolidated financial statements in accordance with GAAP requires us to make estimates and judgments that affect the reported amounts for assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We consider an accounting estimate to be critical if: (1) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (2) changes in the estimates that are likely to occur from period to period, use of different estimates that we reasonably could have used in the current period, or would have a material impact on our financial condition or results of operations. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, impairment of long-lived assets, capitalization of costs, allocation of costs related to land sales and leases, stock compensation, and our future ability to utilize deferred tax assets. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Management has discussed the development and selection of these critical accounting estimates with the Audit Committee of our Board of Directors and the Audit Committee has reviewed the foregoing disclosure. In addition, there are other items within our financial statements that require estimation, but are not deemed critical as defined above. Changes in estimates used in these and other items could have a material impact on our financial statements. Please refer to Note 1 (Summary of Significant Accounting Policies) in the Notes to Consolidated Financial Statements, which discusses accounting policies that we have selected from acceptable alternatives.
We believe the following critical accounting estimates reflect our more significant judgments and estimates used in the preparation of the consolidated financial statements:
Impairment of Long-Lived Assets, Real Estate Development – We evaluate our real estate development projects for impairment on an ongoing basis. Our evaluation for impairment involves an initial assessment of each real estate development to determine whether events or changes in circumstances exist that may indicate that the carrying amounts of a real estate development are no longer recoverable. Possible indications of impairment may include events or changes in circumstances affecting the Company’s strategic plan for the real estate development, the entitlement process, government regulation, litigation, geographical demand for new housing, market conditions related to pricing of new homes and development costs.
We make significant assumptions to evaluate each real estate development for possible indications of impairment. These assumptions include the identification of appropriate and comparable market prices, the consideration of changes to legal factors or the business climate, and assumptions surrounding expected positive cash flows and development costs. Considering that the planned development communities will be in a location that does not currently have many comparable homes, the Company must make assumptions surrounding the expected ability to sell the real estate assets at a price that is in excess of accumulated and estimated future development costs. We use our internal forecasts and business plans to estimate future prices, absorption, and costs. We develop our forecasts based on recent sales data, input from marketing consultants, discussions with commercial real estate brokers, as well as contractors' and engineers' estimates.
When events or changes in circumstances exist that result in an indicator of impairment, we perform an impairment calculation, which compares the carrying value of the asset to the asset’s estimated future cash flows (undiscounted). If the estimated future cash flows are less than the carrying value of the asset, we calculate an impairmentloss. The impairmentloss calculation compares the carrying value of the asset to the asset’s estimated fair value, which may be based on estimated future cash flows (discounted). We recognize an impairmentloss equal to the amount by which the asset’s carrying value exceeds the asset’s estimated fair value. If we recognize an impairmentloss, the adjusted carrying amount of the asset will be its new cost basis. For a depreciable long-lived asset, the new cost basis will be depreciated (amortized) over the remaining useful life of that asset. Restoration of a previously recognized impairmentloss is prohibited. If actual results are not consistent with our assumptions and judgments used in estimating future cash flows and asset fair values, we may be exposed to impairmentlosses that could be material to our results of operations.
At this time, there are no assets within any of our reporting segments that we believe are at risk of being impaired due to market conditions, nor have we identified any impairment indicators.
We believe that the accounting estimate related to asset impairment is a critical accounting estimate because it is very susceptible to change from period to period; it requires management to make assumptions about future prices, production, and costs, and the potential impact of a loss from impairment could be material to our earnings. Management’s assumptions regarding future cash flows from real estate developments are expected to fluctuate due to changes in prices, absorption, and costs as future market conditions change.
Allocation of Costs Related to Land Sales and Leases – When we sell or lease land within one of our real estate developments, as we are currently doing within TRCC, and we have not completed all infrastructure development related to the total project, we determine the appropriate costs of sales for the sold land and the timing of recognition of the sale. In the calculation of cost of sales or allocations to leased land, we use estimates and forecasts to determine total costs at completion of the development project. These estimates of final development costs can change as conditions in the market and costs of construction change.
In preparing these estimates, we use internal budgets, forecasts, and engineering reports to help us estimate future costs related to infrastructure that has not been completed. These estimates become more accurate as the development proceeds forward, due to historical cost numbers and to the continued refinement of the development plan. These estimates are updated periodically throughout the year so that, at the ultimate completion of development, all costs have been allocated. Any increases to our estimates in future years will negatively impact net profits and liquidity due to an increased need for funds to complete development. If, however, this estimate decreases, net profits as well as liquidity will improve.
We believe that the estimates used related to cost of sales and allocations to leased land are critical accounting estimates and will become even more significant as we continue to move forward as a real estate development company. The estimates used are very susceptible to change from period to period, due to the fact that they require management to make assumptions about costs of construction, absorption of product, and timing of project completion, and changes to these estimates could have a material impact on the recognition of profits from the sale of land within our developments.
Recent Accounting Pronouncements
For discussion of recent accounting pronouncements, see Note 1 (Summary of Significant Accounting Policies) in the Notes to Consolidated Financial Statements.
Results of Operations by Segment
We evaluate the performance of our reporting segments separately to monitor the different factors affecting financial results. Each reporting segment is subject to review and evaluation as we monitor current market conditions, market opportunities, and available resources. The performance of each reporting segment is discussed below:
Real Estate – Commercial/Industrial
($ in thousands)
Commercial/industrial revenues
Pastoria Energy Facility Lease
TRCC Leasing
TRCC management fees and reimbursements
Commercial leases
Communication leases
Landscaping and other
Land sales
Total commercial/industrial revenues
Cost of sales of land
Operating expenses
Selling, general and administrative expenses
Depreciation and amortization
Total commercial/industrial expenses
Operating income from commercial/industrial
2025 Operational Highlights:
• Commercial/industrial revenues increased to $15,006,000 for the twelve months ended December 31, 2025, reflecting year-over-year growth of 20%, primarily driven by land sales within TRCC. Included in these results was $3,737,000 of land sales revenue from two land sales, including $2,373,000 following the Company's satisfaction of performance obligations related to a 2022 land sale, and a 1.8-acre land sale designated for a future hotel development at TRCC.
• Commercial/industrial real estate segment expenses increased $92,000, or 1%, from $7,910,000 in 2024 to $8,002,000 in 2025. The increase in expenses is primarily attributed to the recognition of $1,862,000 in cost of sales, incurred to
satisfy the performance obligation associated with Nestlé land sale transaction executed in 2022 and a land sale in 2025. The above mentioned increase was partially offset by reductions in both operating expenses and general and administrative expenses during the period.
2024 Operational Highlights:
• Commercial/industrial real estate development segment revenues were $12,552,000 for the twelve months ended December 31, 2024, an increase of $794,000, or 7%, from $11,758,000 in 2023. The primary driver of this increase was a $1,200,000 increase in communication lease revenue, attributable primarily to non-recurring amounts received from a right-of-way tenant for the tenant having increased its fiber optic cables running through the right-of-way for multiple prior periods without proper notification. The above mentioned increase was partially offset by a decrease of $276,000 in revenue from the PEF lease due to lower spark spread payments, and a reduction of $255,000 in management fees compared to 2023, when we completed construction of the TRC-MRC 5, LLC industrial building.
• Commercial/industrial real estate segment expenses decreased $143,000, or 2%, from $8,053,000 in 2023 to $7,910,000 in 2024. The decrease in expenses is primarily attributed to lower property tax expenses, partially offset by higher insurance cost and general and administrative expenses over the comparative period.
For 2026, TRCC is expected to remain the primary driver of new activity within the Company. Through the TRC-DP 1 joint venture formed with Dedeaux Properties, we expect to commence construction of a 510,385 square-foot industrial building during 2026. We also expect the commercial/industrial segment to continue to incur operating costs, net of amounts capitalized, related to professional service fees, marketing, commissions, and planning activities as we pursue additional development opportunities. These costs are expected to remain generally consistent with current levels, with variability in future periods driven primarily by the timing of specific absorption transactions, near-term inflationary pressures, and tariff and trade policy impacts.
The actual timing and completion of development are difficult to predict due to the uncertainties of the market. Infrastructure development and marketing activities and costs will continue over several years as we develop our land holdings. We anticipate shorter lead times and more stable prices for materials, with electrical components being a notable exception. We will also continue to evaluate land resources to determine the highest and best uses for our land holdings. Future sales of land are dependent on market circumstances and specific opportunities. Our goal in the future is to increase land value and create future revenue growth through planning and development of commercial and industrial properties.
See Item 1, “Business – Real Estate Development Overview” for discussion of the market outlook for the next year.
Multifamily
($ in thousands)
Multifamily revenues 1
Leasing revenue
Total multifamily revenues
Operating expenses
Selling, general and administrative expenses
Depreciation and amortization
Multifamily expenses
Operating loss from multifamily
1 Multifamily segment had no operating activities in 2024 and 2023.
2025 Operating Results:
• Multifamily revenues of $732,000 for the year ended December 31, 2025 consisted primarily of rental income generated during the initial lease-up phase of Terra Vista at Tejon, which commenced leasing in May 2025.
• Operating expenses of $2,279,000 reflect normal property-level costs as well as expenses associated with the initial lease-up period, including marketing, staffing, and other start-up costs.
• Because the property has not yet reached stabilized occupancy as of December 31, 2025, operating results for the year reflect the impact of the lease-up phase, and operating margins are not indicative of stabilized operations. We expect to achievestabilized occupancy during 2026, which we anticipate will result in improved operating income compared to 2025 as the property transitions from its lease-up phase to stabilized operations.
Real Estate – Resort/Residential
Our resort/residential segment activities include defending entitlements, land planning and pre-construction engineering and conservation activities for our MV, Grapevine, and Centennial projects. We are in the preliminary stages of development; hence, no revenues are attributed to this segment for these reporting periods.
($ in thousands)
Resort/residential
Operating expenses
Selling, general and administrative expenses
Depreciation and amortization
Total resort/residential expenses
Operating loss from resort/residential
2025 Operational Highlights:
• The resort/residential segment remains in the investment phase with no revenues recognized in 2025. Segment expenses decreased $338,000 to $2,277,000, or 13%, when compared to $2,615,000 in 2024. The decrease was primarily attributable to the decrease in professional service fees and payroll costs.
• The expenses within the resort/residential segment consisted of operating expenses of $1,632,000, general and administrative expenses of $609,000 and depreciation and amortization of $36,000 for the twelve months ended December 31, 2025.
2024 Operational Highlights:
• In 2024, resort/residential segment expenses increased $1,087,000 to $2,615,000, or 71%, when compared to $1,528,000 in 2023. The increase was primarily attributable to an additional $1,250,000 of professional service fees and planning costs related to capital raising efforts tied to our master planned communities.
• The expenses within the resort/residential segment consisted of operating expenses of $1,742,000, general and administrative expenses of $831,000 and depreciation and amortization of $42,000 for the twelve months ended December 31, 2024.
The resort/residential segment will continue to incur costs related to professional service fees, public relations, and staffing as we advance permitting and pre-development activities in the MV, Grapevine, and Centennial communities. These expenses are expected to remain consistent with current levels in the near term, increasing only as individual projects transition into active development. The timing and completion of entitlement-related activities and the commencement of development remain difficult to predict due to uncertainties of the regulatory approval process, and broader economic conditions. We continue to evaluate our land resources to identify the highest and best use for our holdings, with the long-term objective of enhancing land value and creating future revenue opportunities through resort and residential development.
Our long-term business plan for the development of MV, Grapevine, and Centennial remains unchanged. Advancement of infrastructure investment and subsequent lots sales is contingent upon obtaining development capital, and we are actively pursuing capital formation strategies in the context of current market conditions. We believe long-term market fundamentals, including California's well-documented housing shortage and proximity to the large Southern California population center, will support future housing demand in our region.
See Item 1, “Business – Real Estate Development Overview” for a further discussion of real estate development activities.
Mineral Resources
($ in thousands)
Mineral resources revenues
Oil and gas
Rock aggregate
Cement
Exploration leases
Water sales
Reimbursables and other
Total mineral resources revenues
Mineral resources expenses
Cost of sales of water
Operating expenses
Selling, general and administrative expenses
Depreciation and amortization
Total mineral resources expenses
Operating income from mineral resources
Oil and gas
Oil production (barrels)
Average price per barrel
Natural gas production (millions of cubic feet)
Average price per thousand cubic feet
Blended royalty rate
Water
Water sold in acre-feet
Average price per acre-foot
Cement
Tons sold
Average price per ton
Rock/Aggregate
Tons sold
Average price per ton
Note: Differences between revenues calculated within this table and reported revenues within the previous table are attributed to rounding and the level of precision presented on production units shown.
2025 Operational Highlights:
• Revenues from our mineral resources segment decreased $578,000, or 6%, to $9,636,000 in 2025 when compared to $10,214,000 in 2024. The decrease was primarily attributable to lower oil and natural gas production volumes and pricing, along with reduced cement sales volumes.
• Mineral resources expenses decreased $245,000, or 3%, to $6,807,000 in 2025 when compared to $7,052,000 in 2024, reflecting lower cost of sales associated with reduced water sales.
2024 Operational Highlights:
• Revenues from our mineral resources segment decreased $4,310,000, or 30%, to $10,214,000 in 2024 when compared to $14,524,000 in 2023. The decrease is primarily attributed to lower water sales revenue of $3,650,000 due to back-to-back above average rainfall years in California, which severely limited water sales opportunities. Additionally, reimbursable revenues also decreased $711,000 due to a mineral resources tax reassessment.
• Mineral resources expenses decreased $1,633,000, or 19%, to $7,052,000 in 2024 when compared to $8,685,000 in 2023. The decrease was primarily due to lower water cost of sales recognized of $1,665,000.
For further discussion of mineral resources operations, refer to Item 1 “Business—Mineral Resources.”
Farming
($ in thousands)
Farming revenues
Almonds
Pistachios
Wine grapes
Hay
Other
Total farming revenues
Farming expenses
Cost of sales
Fixed water obligations
Selling, general and administrative expenses
Depreciation and amortization
Total farming expenses
Operating loss from farming
December 31, 2025
December 31, 2024
Change
($ in thousands)
Revenue
Quantity Sold 2
Average
Price
Revenue
Quantity Sold 2
Average
Price
Revenue
Quantity Sold 2
Average
Price
ALMONDS (lbs.)
Current year crop
Prior crop years
Crop insurance
Subtotal Almonds 1
PISTACHIOS (lbs.)
Current year crop
Prior crop price adjustment
Crop insurance
Subtotal Pistachios 1
WINE GRAPES (tons)
Current year crop
Crop insurance
Subtotal Wine Grapes
Other
Hay
Other farming revenues
Total farming revenues
1 Average price calculation reflects sale of almond and pistachio crops during the calendar reported year, exclusive of any price adjustments.
2 Almond and pistachio units are presented in thousands of pounds, while wine grapes are presented in thousands of tons.
2025 Operational Highlights:
• During 2025, farming segment revenues increased $4,813,000, or 34.6%, from $13,925,000 in 2024 to $18,738,000 in 2025. The increase was primarily driven by $5,339,000 in pistachio crop revenue recognized in 2025, as there was no pistachio harvest in 2024 as pistachios are an alternate bearing year crop and 2024 was a down-bearing year. The year-over-year increase was further supported by higher almond pricing and increased wine grape sales.
• During 2025, farming segment expenses increased $1,299,000, or 7%, from $17,551,000 in 2024 to $18,850,000 in 2025. This increase was primarily due to higher crop-related cost of sales associated with the 2025 pistachio harvest.
December 31, 2024
December 31, 2023
Change
($ in thousands)
Revenue
Quantity Sold 2
Average
Price
Revenue
Quantity Sold 2
Average
Price
Revenue
Quantity Sold 2
Average
Price
ALMONDS (lbs.)
Current year crop
Prior crop years
Crop insurance
Subtotal Almonds 1
PISTACHIOS (lbs.)
Current year crop
Prior crop price adjustment
Crop insurance
Subtotal Pistachios 1
WINE GRAPES (tons)
Current year crop
Crop insurance
Subtotal Wine Grapes
Other
Hay
Other farming revenues
Total farming revenues
1 Average price calculation reflects sale of almond and pistachio crops during the calendar reported year exclusive of any price adjustments.
2 Almond and pistachio units are presented in thousands of pounds while wine grapes are presented in thousands of tons.
2024 Operational Highlights:
• During 2024, farming segment revenues decreased $25,000, or 0.2%, from $13,950,000 in 2023 to $13,925,000 in 2024. The decrease was primarily driven by a $799,000 decline in pistachio sales revenue, resulting from the absence of a pistachio yield during the year. This is not indicative of a trend but rather attributed to insufficient chill hours, which affected production. Additionally, wine grape sales revenue fell by $586,000, primarily due to lower production volumes, which were impacted by a rare combination of late-season rains and unusually cool temperatures in early spring, both of which contributed to mildew issues that affected vine growth and overall yield. This weather pattern is atypical and not indicative of normal growing season conditions. These declines were mostly offset by a $1,744,000 increase in almond sales revenue, driven by higher crop availability and improved pricing.
• During 2024, farming segment expenses increased $2,294,000, or 15%, from $15,257,000 in 2023 to $17,551,000 in 2024. This increase was primarily due to an increase in water holding cost of $2,217,000 in 2024.
For further discussion of the farming operations, refer to Item 1 “Business—Farming Operations.”
Ranch Operations
($ in thousands)
Ranch operations revenue
Game management and other 1
Grazing
Total ranch operations revenues
Ranch operation expenses
Operating expenses
Selling, general and administrative expenses
Depreciation and amortization
Total ranch operations expenses
Operating income/(loss) from ranch operations
1 Game management and other revenues consist of revenues from hunting, filming, High Desert Hunt Club (a premier upland bird hunting club), and other ancillary activities.
2025 Operational Highlights:
• Revenues from ranch operations increased $284,000, or 5%, from $5,195,000 in 2024 to $5,479,000 in 2025. The increase was primarily attributable to an increase in game management and other revenue of $415,000, primarily attributed to higher guided hunt revenues and increased revenue recognized from hunting memberships. The increase was offset by the decrease in the grazing revenue of $131,000.
• Ranch operations expenses increased $397,000, or 8%, from $4,864,000 in 2024 to $5,261,000 in 2025. This increase was primarily attributable to higher operating expenses of $489,000 mainly associated with additional property taxes of $164,000, additional labor cost of $158,000 and higher repairs and maintenance expenses of $135,000.
2024 Operational Highlights:
• Revenues from ranch operations increased $688,000, or 15%, from $4,507,000 in 2023 to $5,195,000 in 2024. This is primarily attributed to an increase in grazing lease revenues of $728,000 due to improved pasture levels as a result of winter rains.
• Ranch operations expenses decreased $179,000, or 4%, from $5,043,000 in 2023 to $4,864,000 in 2024. This decrease was primarily attributed to lower repair and maintenance expense of $109,000 and savings in payroll and compensation expenses of $54,000.
Other Income
Total other income decreased $1,231,000, or 62%, to $750,000 for the year ended December 31, 2025, compared to $1,981,000 for the year ended December 31, 2024. The decrease was primarily attributed to a $1,359,000 reduction in investment income on marketable securities reflecting lower average invested balances during 2025.
Total other income decreased by $438,000, or 18%, from $2,419,000 in 2023 to $1,981,000 in 2024. Investment income recognized on marketable securities decreased by $284,000 due to a decrease in average funds invested. Additionally, the decrease was attributable to the $426,000 employee retention credit received during the first quarter of 2023, which did not reoccur in 2024. The above decreases of income were partially offset by a $98,000 decrease in pension expenses in 2024.
Corporate Expenses
Corporate general and administrative costs increased $2,976,000, or 26.8%, to $14,068,000 during 2025 when compared to $11,092,000 in 2024. The increase was primarily due to higher shareholders' expenses associated with a contested board election and proxy defense efforts. The main components of the corporate expenses included general and administrative expenses of $7,980,000, operating and professional service expenses of $5,723,000, and depreciation and amortization of $354,000.
Corporate general and administrative costs increased $1,220,000, or 12.4%, to $11,092,000 during 2024 when compared to $9,872,000 in 2023. The increase was primarily attributable to higher stock compensation expense of $1,053,000 over the comparative period. The main components of the 2024 corporate expenses included general and administrative expenses of $6,578,000, operating and professional service expenses of $4,169,000, and depreciation and amortization of $345,000.
Equity in Earnings of Unconsolidated Joint Ventures
Equity in earnings of unconsolidated joint ventures is an important and growing component of our commercial/industrial activities and in the future, equity in earnings of unconsolidated joint ventures can become a significant part of our operations within the resort/residential segment. We continue to use joint ventures to advance our development projects at TRCC. This allows us to combine our resources with other real estate companies and gaingreater access to capital, share in the risks of real estate developments, and share in the operating expenses. More importantly, it allows us to better manage the deployment of our capital and increase our leasing portfolio.
($ in thousands)
Equity in earnings (loss)
Petro Travel Plaza Holdings LLC
TRCC/Rock Outlet Center, LLC
TRC-MRC 1, LLC
TRC-MRC 2, LLC
TRC-MRC 3, LLC
TRC-MRC 4, LLC
TRC-MRC 5, LLC
Equity in earnings of unconsolidated joint ventures, net
1 TRC-DP1, LLC joint venture had no operating activities during both of 2025 and 2024.
2025 Operational Highlights:
During 2025, equity in earnings from unconsolidated joint ventures decreased $2,519,000, or 23%, to $8,362,000 when compared to $10,881,000 in 2024.
• The Petro Travel Plaza equity in earnings decreased $2,192,000 or 27% when compared to 2024. Total revenues decreased $12.8 million, or 8.3%, year over year, driven primarily by a $9.6 million, or 8.9%, decline in fuel revenues reflecting lower volumes, as well as a $3.2 million, or 7.0%, decrease in non-fuel revenues. Fuel costs of revenues declined $9.0 million, or 10.1%, however, the reduction did not fully offset the decrease in fuel revenues, resulting in a $2.9 million, or 6.1%, decline in total gross profit for the period.
2024 Operational Highlights:
• During 2024, equity in earnings from unconsolidated joint ventures increased $4,013,000, or 58%, to $10,881,000 when compared to $6,868,000 in 2023.
• The Petro Travel Plaza equity in earnings increased $1,965,000 or 31% when compared to 2023, which is largely attributable to higher fuel margins. Equity in earnings for our TRC-MRC LLC joint ventures increased by $1,613,000 due to higher rental rates or rental escalations, and the new revenue stream generated by the completed industrial building of the TRC-MRC 5, LLC joint venture.
• Additionally, equity in loss from the TRCC/Rock Outlet Center joint venture decreased by $435,000 compared to 2023 because of improved occupancy.
Income Taxes
For the twelve months ended December 31, 2025, the Company's net income tax expense was $1,088,000 compared to $976,000 for the twelve months ended December 31, 2024. These amounts represent effective income tax rates of approximately 93.9% and 26.6% for the twelve months ended December 31, 2025 and 2024, respectively. Our effective income tax rate for the year ended December 31, 2025 was higher than the federal statutory rate in the United States, as a result of permanent differences arising from non-deductible compensation under Section 162(m) of the Tax Cuts and Jobs Act of 2017. As of December 31, 2025 and 2024, we had income tax receivable of $1,475,000 and $1,279,000, respectively.
As of December 31, 2025, we had net deferred tax liabilities of $9,849,000 compared to $9,059,000 as of December 31, 2024. Our largest deferred tax assets were made up of temporary differences related to deferred gains, pension adjustments, stock compensation, an interest rate swap, and capitalization of costs. Deferred tax liabilities consist of joint venture differences, depreciation, deferred gains, capitalization of stock compensation, and an interest rate swap. Due to the nature of most of our deferred tax assets, we believe they will be used in future years and an allowance is not necessary.
The Company classifies interest and penalties incurred on tax payments as income tax expenses. The Company made $50,000 in estimated federal tax payments in 2025 and $0 in 2024. The Company made $380,000 in estimated California state tax payments in 2025 and $315,000 in 2024. The Company received tax refunds of $28,000 and $1,000 in 2025 and 2024, respectively.
For more details, see Note 11. (Income Taxes), of the Notes to Consolidated Financial Statements, included this Annual Report on Form 10-K.
Liquidity and Capital Resources
Overview
Our financial position allows us to pursue our strategies of continued development of TRCC, funding of operating activities, land entitlement, development, and conservation. Accordingly, we have established well-defined priorities for our available cash, including investing in core operating segments to achieveprofitable future growth. Our primary sources of liquidity include cash generated from operations, investment proceeds, distributions from our unconsolidated joint venture investments and short-term borrowings from our bank credit facilities. In the past, we have also issued common stock and used the proceeds for capital investment activities. Our liquidity may fluctuate throughout the year due to seasonal production cycles within our farming segment, weather conditions, and market demand for our agricultural and real estate products. To meet working capital requirements and fund agricultural inputs and development activities, we utilize our revolving credit facilities as needed.
To enhance shareholder value over the long term, we expect to continue to invest funds towards vertical development within our active commercial and industrial development. We will also make investments as necessary in our real estate segments to secure land entitlement approvals, build infrastructure for our developments, invest in assets to be leased, provide adequate water supplies, and provide funds for general land development activities. Within our farming segment, we intend to make investments as needed to improveefficiency and expand operational capacity when it is economically advantageous to do so. As part of this strategy, we are investing in the development of an additional 150 acres of olives to enhance long-term production capacity and support future revenue growth.
We believe our existing cash balances, projected cash flows from operations, distributions from joint ventures, and available borrowing capacity under our revolving credit facility will be sufficient to meet our anticipated capital expenditures, debt service obligations, and working capital requirements for at least the next 12 months. Revenue-generating operations, joint venture distributions, and access to credit facilities are expected to provide ongoing liquidity beyond the next 12 months. In addition, we have the ability to control a portion of our investing and financing cash flows to the extent necessary based on our liquidity demands.
Our cash and cash equivalents and marketable securities totaled approximately $24,894,000 at December 31, 2025, a decrease of $28,814,000, or 54%, from the corresponding amount at the end of 2024.
The following table summarizes the cash flow activities for the following years ended December 31:
($ in thousands)
Operating activities
Investing activities
Financing activities
Cash flows provided by operating activities are primarily dependent upon the rental rates of our leases, the collectability of rent and recovery of operating expenses from our tenants, distributions from joint ventures, the success of our crops and commodity prices within our mineral resources segment.
During 2025, our operations generated $6,132,000 compared to $14,314,000 in 2024. The year-over-year decrease was primarily driven by lower net income and the settlement of $3.2 million in liabilities related to cash-settled awards and bonus payable to our former Chief Executive Officer.
During 2024, our operations generated $14,314,000 in cash. Distributions from joint ventures increased in 2024, reflecting improved fuel margins and rental rates, as well as higher current liabilities balances.
During 2025, investing activities used $62,306,000, primarily driven by capital expenditures of $63,210,000 related to real estate expenditures either under development or held for lease, and property and equipment investments. Of the $63,210,000, we used $34,073,000 for the completion of Phase 1 of our Terra Vista at Tejon multifamily development and $12,487,000 for road and water infrastructure improvements at TRCC to support continued expansion. We also invested $3,147,000 on permitting efforts for MV, $4,028,000 on litigation defense for Centennial, and $2,932,000 on permitting efforts for Grapevine. All real estate capital expenditures are inclusive of capitalized interest, payroll and overhead. Of the $3,147,000 incurred for MV, approximately $729,000 was related to direct entitlement preservation activities necessary to maintain the project’s development rights. Discretionary project expenditures were reduced by approximately $112,000, or 15%, compared to the prior year as part of our ongoing liquidity management strategy. Of the $4,028,000 incurred for Centennial, approximately $1,863,000 was related to direct litigation defense and ongoing entitlement process. Discretionary project expenditures were reduced by approximately $35,000, or 2%, compared to the prior year.
We continue to actively manage capital deployment across projects, prioritizing required entitlement preservation and legal obligations while reducing discretionary development expenditures. We expect permitting-related expenditures for MV to remain at reduced levels unless development activity accelerates.
Our farming segment incurred cash outlays of $6,202,000 for cultural and water costs tied to crops not yet in production, development of new almond and olive orchards, and replacement of aging farm equipment. In addition, our mineral resources segment invested $8,013,000 to acquire water for use as needed and for future residential development activity. The Company also reinvested $32,387,000 into marketable securities.
These cash outflows were partially offset by $31,637,000 of maturities of marketable securities, $9,409,000 of CFD reimbursements, and $780,000 of distributions from unconsolidated joint ventures. As a result, net cash used in investing activities totaled $62,306,000 for the year.
Terra Vista at Tejon commenced leasing in May 2025 and was approximately 63% leased as of December 31, 2025. As expected for a newly delivered apartment community, the property is currently in its lease-up phase and has not yet reached stabilized occupancy. During this period, operating results reflect start-up and absorption-related costs that are not indicative of stabilized operations. At stabilization, rental revenues are expected to offset fixed operating costs and generate positive operating income.
During 2024, investing activities used $25,748,000, which was largely attributed to capital expenditures of $57,234,000 used primarily for real estate development. Of the $57,234,000, we primarily used $43,018,000 to develop the Terra Vista at Tejon multi-family units, road, and water infrastructures at TRCC. We also spent $3,014,000 on permitting efforts for MV, $3,963,000 on litigation defense for Centennial, and $1,417,000 on permitting efforts for Grapevine. All real estate capital expenditures are inclusive of capitalized interest, payroll and overhead. Our farming segment had cash outlays of $4,891,000 for cultural and water costs tied to crops not yet in production, developing new almond and olive orchards, and replacing old farm equipment. Additionally, our mineral resources segment spent $8,874,000 to acquire water for use as needed and for future residential development activity. Lastly, the Company reinvested $73,995,000 into marketable securities. Offsetting cash outlays were maturities on marketable securities of $92,605,000, distributions from unconsolidated joint ventures of $6,336,000, and CFD reimbursements of $15,745,000.
Our estimated capital investment for 2026 is primarily related to our real estate projects as it was in 2025. These estimated investments include approximately $16,857,000 of development costs at TRCC-East for road infrastructure, water treatment system improvements, and expansion of the wastewater treatment plant for future anticipated absorption. We are also investing approximately $5,254,000 to continue developing olive and almond orchards and replacing old farming equipment. We may invest up to $11,142,000 for entitlement and permitting activities, predevelopment activities and land planning design at MV and Grapevine and litigation defense and ongoing entitlement efforts for Centennial. All real estate capital expenditures are inclusive of capitalized interest, payroll and overhead. The timing of these investments is dependent on our coordination efforts with Los Angeles County regarding litigation defense for Centennial, permitting activities for Grapevine, and design, civil engineering, land planning and design, and capital raising for MV. Our efforts within our master plan projects are managed to minimize each year's investment. Our plans also include $7,212,000 for payment of annual water inventory and water related investments.
We capitalize interest cost as a cost of the project only during the period for which activities necessary to prepare an asset for its intended use are ongoing, provided that expenditures for the asset have been made and interest cost has been incurred. Capitalized interest for the years ended December 31, 2025 and 2024, of $5,091,000 and $4,353,000, respectively, is classified in real estate development. We also capitalized payroll costs related to development, pre-construction, and construction projects, which aggregated $2,881,000 and $2,884,000 for the years ended December 31, 2025 and 2024, respectively. Expenditures for repairs and maintenance are expensed as incurred. As noted above, these costs are included in the above investment numbers.
During 2025, financing activities generated $26,431,000, which is comprised of borrowings from the line-of-credit facility of $27,000,000 to fund construction projects and other ongoing development such as Terra Vista and TRCC infrastructure, partially offset by the tax payments on vested stock grants of $569,000.
During 2024, financing activities generated $18,794,000, which is comprised of borrowings from the line-of-credit facility of $19,000,000 to fund construction projects and other ongoing development such as Terra Vista and TRCC infrastructure, partially offset by the tax payments on vested stock grants of $206,000.
Cash flows and earnings may fluctuate from period to period due to the commodity-driven nature of our farming and mineral operations and the timing of sales and leasing activity within our development projects. Some farming crops, notably pistachios, bear in alternate years which results in reduced revenues for those years. Development timelines, market conditions, and the time required to negotiate transactions can cause variability in reported results across periods. Often, the timing aspect of land development can lead to particular years or periods having more or less earnings than comparable periods. Based on current projections and available liquidity, management expects to maintain sufficient cash resources to fund internal operations over the next 12 months. As we move forward with the completion of the litigation, permitting and engineering design for our master planned communities and prepare to move into the development stage, we may need to secure additional funding in the long-term through either the issuance of equity and/or by securing other forms of financing such as joint ventures equity and debt financing.
Capital Structure and Financial Condition
At December 31, 2025, total capitalization at book value was $584,498,000 consisting of $93,942,000 of debt and $490,556,000 of equity, resulting in a debt-to-total-capitalization ratio of approximately 16.1%, representing an increase when compared to the debt-to-total-capitalization ratio of 12.0% at December 31, 2024.
On November 17, 2023, we entered into a Credit Agreement with AgWest Farm Credit, PCA, as administrative agent and letter of credit intermediary (Administrative Agent), and certain other lenders, collectively, the Revolving Credit Facility. The Revolving Credit Facility provides TRC with (i) an RCL in the amount of $160,000,000 and (ii) the option for TRC to utilize a letter of credit sub-facility in the amount of $15,000,000 (LOC Sub-Facility). The LOC Sub-Facility is part of, and not in
addition to, the RCL. As further summarized below, the RCL requires interest only payments and has a maturity date of January 1, 2029.
Upon closing of the Revolving Credit Facility, funds from the RCL were used to pay off and close out the existing Bank of America, N.A. Term Note (the Bank of America Term Note) and Revolving Line of Credit Note. The amount of this pay off was $47,078,564 plus accrued interest and fees on the Bank of America Term Note. We evaluated the debt exchange under ASC 470 and determined that the exchange should be treated as a debt extinguishment. Future borrowings under the Revolving Credit Facility will be used for ongoing working capital requirements, including to fund future construction projects, farming and ranching operations, and other general corporate purposes.
To maintain availability of funds, undrawn amounts under the RCL will accrue an unused fee of 15 basis points per annum except that, for the LOC Sub-Facility, TRC will incur a fee of 2.00% per annum for each letter of credit issued to TRC. TRC’s ability to borrow/draw additional funds is subject to compliance with certain financial and other covenants, some of which are further described below, and the continuing accuracy of certain representations and warranties contained in the Revolving Credit Facility. Currently, there are no letters of credit outstanding.
The interest rate per annum applicable to the Revolving Credit Facility is one-month term SOFR plus an interest rate spread that is based on TRC’s consolidated NLER. The interest rate spread for the NLER has three tiers: (1) 2.75% if the NLER is 55% or more; (2) 2.5% if the NLER is between 35% and less than 55%; and (3) 2.25% if the NLER is less than 35%. The interest rate spread in the previous sentence may effectively be reduced by applying a patronage credit for TRC’s participation in the farm credit program, which patronage credit historically has been (for reference and information purposes only and not as a guarantee of future patronage credit) between 100-125 basis points. The Administrative Agent pays the patronage credit annually in the form of a dividend. As of December 31, 2025, the Company's NLER was in tier 3, or less than 35%, and the applicable interest rate spread was 2.25%. We received partial patronage credit in February 2026 of $646,000 which represents 125 basis points from the primary lender, and the remaining patronage credit in March 2026 for $310,000 which represents 100 basis points from the other participating lenders. As a result, our effective cost of debt for 2025 was approximately SOFR plus 100 basis points.
The Revolving Credit Facility requires the payment of interest only during the term, at which point the full drawn amount, plus accrued interest, must be repaid by the maturity date, if TRC has not earlier repaid the borrowed amount or extended the maturity date. The RCL may be repaid in part, or in full, by TRC at any time during the term without penalty. Certain events of default (as described in the Revolving Credit Facility) allow acceleration of repayment of borrowed funds, interest and other fees. The Revolving Credit Facility is unsecured, but the agreement provides the Administrative Agent a springing lien on TRC’s wholly owned, unencumbered assets, exclusive of assets subject to negative pledge, if one or more covenants is breached.
The Revolving Credit Facility requires compliance with three financial covenants: (a) total liabilities divided by tangible net worth not greater than 0.55 to 1.00 at each year end; (b) a debt service coverage ratio not less than 1.50 to 1.00 as of each year end on a rolling four quarter basis; and (c) a liquidity ratio not less than 2.00 to 1.00 at each year end.
The Revolving Credit Facility also contains customary negative covenants that limit our ability to, among other things, make capital expenditures, incur indebtedness and issue guaranties, consummate certain asset sales, acquisitions or mergers, make investments, pay dividends or repurchase stock, make a change in capital ownership, or incur liens on any assets.
The Revolving Credit Facility contains customary events of default, including: failure to make required payments; failure to comply with terms of the Credit Facility; bankruptcy and insolvency. The Credit Facility contains other customary terms and conditions, including representations and warranties, which are typical for credit facilities of this type.
At December 31, 2025, the Company was in compliance with all financial covenants.
We expect that current and future capital resource requirements will be provided primarily from current cash and marketable securities, cash flow from ongoing operations, distributions from joint ventures, proceeds from the sale of developed and undeveloped land parcels, potential sales of assets, additional use of debt or drawdowns against our line of credit, proceeds from the reimbursement of public infrastructure costs through CFD bond debt (described below under “Off-Balance Sheet Arrangements”), or issuance of additional common stock.
In May 2025, we filed an updated shelf registration statement on Form S-3 that went effective in May 2025. Under the shelf registration statement, we may offer and sell in the future through one or more offerings not to exceed $200,000,000 of common stock, preferred stock, debt securities, warrants or any combination of the foregoing. The shelf registration allows for efficient and timely access to capital markets and, when combined with our other potential funding sources just noted, provides us with a variety of capital funding options that can then be used and appropriately matched to our funding needs.
As noted above, at December 31, 2025, we had $24,894,000 in cash and securities and as of the filing date of this Form 10-K, we had $66,058,000 available on credit lines to meet any short-term liquidity needs.
We continue to expect that substantial investments will be required to develop our land assets. To meet these capital requirements, we may need to secure additional debt financing and continue to renew our existing credit facilities. In addition to debt financing, we will use other capital alternatives, such as joint ventures with financial partners, sales of assets, and/or the issuance of common stock. As we move into 2026, we will be evaluating various options for funding the potential start of development projects. There is no assurance that we can obtain financing or that we can obtain financing at favorable terms.
Contractual Cash Obligations
The following table summarizes our contractual cash obligations and commercial commitments as of December 31, 2025, to be paid over the next five years and beyond:
Payments Due by Period
($ in thousands)
Total
Less than a year
1-3 years
3-5 years
More than 5 years
Contractual Obligations:
Estimated water payments
Revolving line-of-credit
Cash contract commitments
Defined Benefit Plan
SERP
Total contractual obligations
1 Amount represents Nickel Family water contract payments through 2044 and SWP contract payments through 2085, assuming 3% of escalation on payment each year. For the most significant component, the WRMWSD contract payment, we used an average of the actual water payments for the past five years (2021-2025) as base year, or $5.37 million, escalating 3% each year, to derive at the number disclosed.
The table above includes only those contracts that include fixed or minimum obligations. It does not include normal purchases, which are made in the ordinary course of business.
As discussed in Note 14 (Retirement Plans) of the Notes to Consolidated Financial Statements, we have long-term liabilities for deferred employee compensation, including pension and supplemental retirement plans. Payments in the above table reflect estimates of future defined benefit plan contributions from the Company to the plan trust, estimates of payments to employees from the plan trust, and estimates of future payments to employees from the Company that are in the SERP program. During 2025, we did not make any pension contributions and we do not expect to make contributions in 2026.
Our cash contract commitments consist of contracts in various stages of completion related to infrastructure development within our industrial developments and entitlement costs related to our industrial and residential development projects. Also, included in the cash contract commitments are estimated fees earned in 2014 by a consultant, related to the entitlement of the Grapevine Development Area. The Company exited a consulting contract in 2014 related to the Grapevine Development and is obligated to pay an earned incentive fee at the time of successful receipt of all project permits and entitlements and at a value measurement date five years after entitlements have been achieved for Grapevine. The final amount of the incentive fees will not be finalized until the future payment dates. The Company believes that net savings from exiting the contract over this future time period will more than offset the incentive payment costs.
Estimated water payments include the Nickel water purchase contract, which obligates us to purchase 6,693 acre-feet of water annually through 2044 and SWP contracts with WRMWSD, Tulare Lake Basin Water Storage District, and Dudley-Ridge Water Storage District. These contracts for the supply of future water run through 2035. Please refer to Note 6 (Long-Term Water Assets) of the Notes to Consolidated Financial Statements for additional information regarding water assets.
Off-Balance Sheet Arrangements
The TRPFFA is a joint powers authority formed by Kern County and TCWD to finance public infrastructure within our Kern County developments. TRPFFA created two CFD's, the West CFD and the East CFD. The West CFD has placed liens on 420 acres of land to secure payment of special taxes related to $19,540,000 of outstanding bond debt sold by TRPFFA for TRCC-West. The East CFD has placed liens on 1,931 acres of our land to secure payments of special taxes related to $95,660,000 of outstanding bond debt sold by TRPFFA for TRCC-East. At TRCC-West, the West CFD has no additional bond debt approved for issuance. On July 25, 2024, TRPFFA sold bonds which will provide approximately $25,000,000 of improvement funds for
the reimbursement of public infrastructure costs at TRCC-East. At TRCC-East, the East CFD has approximately $18,605,000 of additional bond debt authorized by TRPFFA.
As of December 31, 2025, aggregate outstanding debt of unconsolidated joint ventures was $216,092,000; $20,039,000 of this debt was attributable to the loan for TRCC/Rock Outlet joint venture. This loan was 100% guaranteed at December 31, 2025. All other outstanding debt attributed to our joint ventures have met their respective debt covenants and therefore were not subject to an effective guarantee at December 31, 2025. The $11,030,000 of debt related to our joint venture with TA/Petro does not require a guarantee from the joint venture or its members.
Non-GAAP Financial Measures
EBITDA represents earnings before interest, taxes, depreciation, and amortization, a non-GAAP financial measure, and is used by us and others as a supplemental measure of performance. We use Adjusted EBITDA to assess the performance of our core operations, for financial and operational decision making, and as a supplemental or additional means of evaluating period-to-period comparisons on a consistent basis. Adjusted EBITDA is calculated as EBITDA, excluding stock compensation expense and certain identified non-recurring items that are not indicative of our on-going operations or that may obscure our underlying results and trends. We believe EBITDA and Adjusted EBITDA provide investors relevant and useful information, when reconciled to their most comparable GAAP financial measure, because they permit investors to view income from our operations on an unleveraged basis, before the effects of taxes, depreciation and amortization, and stock compensation expense and other items impacting comparability. By excluding interest expense and income, EBITDA and Adjusted EBITDA allow investors to measure our performance independent of our capital structure and indebtedness and, therefore, allow for a more meaningful comparison of our performance to that of other companies, both in the real estate industry and in other industries. We believe that excluding charges related to share-based compensation facilitates a comparison of our operations across periods and among other companies without the variances caused by different valuation methodologies, the volatility of the expense (which depends on market forces outside our control), and the assumptions and the variety of award types that a company can use. In addition, the Company excludes certain items impacting comparability, such as shareholder activism advisory costs and legal expenses associated with the Centennial litigation, to provide investors with a clearer understanding of the Company’s core operating performance across periods. EBITDA and Adjusted EBITDA have limitations as measures of our performance. EBITDA and Adjusted EBITDA do not reflect our historical cash expenditures or future cash requirements for capital expenditures or contractual commitments. While EBITDA and Adjusted EBITDA are relevant and widely used measures of performance, they do not represent net (loss) income or cash flows from operations as defined by GAAP. Further, our computation of EBITDA and Adjusted EBITDA may not be comparable to similar measures reported by other companies. The following table reconciles EBITDA and Adjusted EBITDA to Net income, the most directly comparable GAAP measure.
Year-Ended December 31,
($ in thousands)
Net income
Net loss attributed to non-controlling interest
Interest, net
Consolidated interest income
Our share of interest expense from unconsolidated joint ventures
Total interest, net
Income tax expense
Depreciation and amortization
Consolidated
Our share of depreciation and amortization from unconsolidated joint ventures
Total depreciation and amortization
EBITDA
Stock compensation expense
Items impacting comparability:
Shareholder activism expense 1
Centennial litigation expense 2
Adjusted EBITDA
1 Represents advisory fees related to shareholder activism matters.
2 Represents legal expenses associated with the Centennial litigation attributable to opposing counsel.
NOI is a non-GAAP financial measure calculated as operating income, the most directly comparable financial measure calculated and presented in accordance with GAAP, excluding general and administrative expenses, interest expense, depreciation and amortization, and gain or loss on sales of real estate. We believe NOI provides useful information to investors regarding our financial condition and results of operations because it primarily reflects those income and expense items that are incurred at the property level. Therefore, we believe NOI is a useful measure for evaluating the operating performance of our real estate assets. The following tables reconcile operating income to NOI.
Year-Ended December 31,
($ in thousands)
Commercial/Industrial operating income
Plus: Commercial/Industrial depreciation and amortization
Plus: General, administrative, cost of sales and other expenses
Less: Other revenues including land sales
Total Commercial/Industrial net operating income
($ in thousands)
Year-Ended December 31,
Net operating income
Pastoria Energy Facility
TRCC
Communication leases
Other commercial leases
Total Commercial/Industrial net operating income
Year-Ended December 31,
($ in thousands)
Multifamily operating loss 1
Plus: Multifamily depreciation and amortization
Plus: Selling, general and administrative expenses
Total Multifamily net operating loss
1 Multifamily segment had no operating activities in 2024 and 2023.
We utilize NOI of unconsolidated joint ventures as a measure of financial or operating performance that is not specifically defined by GAAP. We believe NOI of unconsolidated joint ventures provides investors with additional information concerning operating performance of our unconsolidated joint ventures. We also use this measure internally to monitor the operating performance of our unconsolidated joint ventures. Our computation of this non-GAAP measure may not be the same as similar measures reported by other companies. This non-GAAP financial measure should not be considered as an alternative to net income as a measure of the operating performance of our unconsolidated joint ventures or to cash flows computed in accordance with GAAP as a measure of liquidity nor are they indicative of cash flows from operating and financial activities of our unconsolidated joint ventures.
The following schedule reconciles net income of unconsolidated joint ventures to NOI of unconsolidated joint ventures. Please refer to Note 16 (Investment in Unconsolidated and Consolidated Joint Ventures) of the Notes to Unaudited Consolidated Financial Statements for further discussion on joint ventures.
Year-Ended December 31,
($ in thousands)
Earnings of unconsolidated joint ventures
Interest expense of unconsolidated joint ventures
Operating income of unconsolidated joint ventures
Depreciation and amortization of unconsolidated joint ventures
Net operating income of unconsolidated joint ventures
