# TEJON RANCH CO (TRC) FY 2024 MD&A

Verbatim Item 7 Management's Discussion and Analysis from TEJON RANCH CO's 10-K for fiscal year 2024.

SEC filing source: https://www.sec.gov/Archives/edgar/data/96869/000009686925000006/trc-20241231.htm
Accession: 0000096869-25-000006
Filing date: 2025-03-06
Report date: 2024-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/TRC/
All MD&A years: /company/TRC/mda/
Previous year: /company/TRC/mda/fy2023/ (FY 2023)
Next year: /company/TRC/mda/fy2025/ (FY 2025)

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 are 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 committed to responsibly using our land and resources to meet the housing, employment, and lifestyle needs of Californians and to create value for our shareholders. 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.

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

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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 five reporting segments: real estate - commercial/industrial; real estate - resort/residential; mineral resources; farming; and ranch operations.

Our commercial/industrial real estate segment generates revenues from real estate leases, and land and building sales. The primary commercial/industrial development is TRCC. In 2025, we plan to expand our real estate operations to include residential leasing, further diversifying our portfolio and enhancing long-term recurring revenue streams. The resort/residential real estate development segment is actively involved in the land entitlement and pre-development efforts both internally and through a joint venture. Our active developments within this segment are MV, Centennial, and Grapevine. 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. The farming segment produces revenues from the sale of wine grapes, almonds, and pistachios, and we intend to expand into olives. Lastly, the ranch operations segment consists of game management revenues and ancillary land uses, such as grazing leases and filming.

Financial Highlights

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.

For 2023, net income attributable to common stockholders was $3,265,000 compared to net income attributed to common stockholders of $15,808,000 in 2022. The primary factor driving the decrease was the absence of land sales in 2023 within the commercial/industrial segment, contributing to a $20,454,000 decrease in segment operating profits. Additionally, the mineral resources segment operating income decreased by $2,787,000 largely attributable to limited opportunities to sell water as a result of 100% SWP allocation. The above decreases were partially offset by improved farming segment operating results of $5,503,000 mainly due to cost reductions. Also offsetting the decreases were income tax expense savings of $5,070,000 derived from lower taxable profits when compared with the prior period.

During 2025, we will continue to invest funds towards vertical development within our active commercial and industrial development, including construction on Terra Vista at Tejon, our new multi-family apartment community located immediately adjacent to the Outlets at Tejon at TRCC. We will also invest funds as necessary towards litigation defense, permits, and maps for our master plan mixed-use developments and for master project infrastructure. Securing entitlements for our land is a long, arduous 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.

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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 entitlement process, government regulation, litigation, geographical demand for new housing, and 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 impairment loss. The impairment loss 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 impairment loss equal to the amount by which the asset’s carrying value exceeds the asset’s estimated fair value. If we recognize an impairment loss, 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 impairment loss 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 impairment losses 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

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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

[[GREPCENT_TABLE]]
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[[/GREPCENT_TABLE]]

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 expense, partially offset by higher insurance cost and general and administrative expenses over the comparative period.

2023 Operational Highlights:

•Commercial/industrial real estate development segment revenues were $11,758,000 for the twelve months ended December 31, 2023, a decrease of $28,757,000, or 71%, from $40,515,000 in 2022. The absence of land sales was the primary driver of this decrease. We sold three land parcels in 2022, totaling 98.2 acres, for $29,796,000, whereas in 2023 we did not sell any land parcels. The decrease was partially offset by higher landscaping revenues of $728,000 and increases in Pastoria Energy Facility leasing revenues of $230,000.

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•Commercial/industrial real estate segment expenses decreased $8,303,000, or 51%, from $16,356,000 in 2022 to $8,053,000 in 2023. The decrease in expenses is primarily attributed to the absence of $8,623,000 in cost of sales from the land sales in 2022.

For 2025, TRCC will continue to be the driver of new activity within the Company. Construction began in January of 2024 on Terra Vista at Tejon, our new multi-family apartment community located immediately adjacent to the Outlets at Tejon. We expect to start the construction of a 510,385 square-foot industrial building in 2025 through the TRC-DP 1 joint venture formed with Dedeaux Properties. We also expect the commercial/industrial segment to continue to experience operating costs, net of amounts capitalized, related to professional service fees, marketing, commissions, and planning costs as we continue to pursue development opportunities. These costs are expected to remain consistent with current levels of expense with any variability in the future tied to specific absorption transactions in any given year and near-term inflation, tariff and trade impacts. TCWD water assessments vary depending on water availability and variable costs of delivering the water.

The actual timing and completion of development is 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.

Real Estate – Resort/Residential

Our resort/residential segment activities include defending entitlements, land planning and pre-construction engineering and conservation activities for our Centennial, Grapevine, and MV projects.

We are in the preliminary stages of development; hence, no revenues are attributed to this segment for these reporting periods.

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 professional service fees of $1,352,000, general and administrative expenses of $1,215,000 and other expenses of $48,000 for the twelve months ended December 31, 2024. The main components of the other expenses included travel and entertainment expenses and depreciation expenses.

2023 Operational Highlights:

•In 2023, resort/residential segment expenses decreased $101,000 to $1,528,000, or 6%, when compared to $1,629,000 in 2022. The decrease is namely attributed to a decrease in payroll costs. The expenses consisted of general and administrative expenses of $1,384,000, professional service fees of $99,000 and other expenses of $45,000 for the twelve months ended December 31, 2023. The main components of the other expenses included travel and entertainment expenses and depreciation expenses.

The resort/residential segment will continue to incur costs in the future related to professional service fees, public relations costs, and staffing costs as we continue to go forward with permitting and pre-development activities for the above communities. We expect these expenses to remain consistent with current years' cost in the near term and only begin to increase as we move into the development phase of each project in the future. The actual timing and completion of entitlement-related activities and the beginning of development is difficult to predict due to the uncertainties of the approval process, the length of time related to litigation defense, and the status of the economy. We will also continue to evaluate land resources to determine the highest and best use for our landholdings. Our long-term goal through this process is to increase the value of our land and create future revenue opportunities through resort and residential development.

We regularly monitoring the markets in order to identify the appropriate time in the future to begin infrastructure improvements and lot sales. Our long-term business plan of developing the communities of MV, Centennial, and Grapevine remains unchanged. As home buyer trends change in California to a more suburban orientation and the economy stabilizes, we believe the perception of land values will also begin to improve. Long-term market fundamentals, such as California's significant

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documented housing shortage and large Southern California population center we believe will support housing demand in our region.

See Item 1, “Business – Real Estate Development Overview” for a further discussion of real estate development activities.

Mineral Resources

[[GREPCENT_TABLE]]
[["($ in thousands)","","2024","","2023","","2022"],["Mineral resources revenues"],["Oil and gas","","$","856","","","$","1,005","","","$","1,340"],["Rock aggregate","","2,024","","","1,903","","","1,937"],["Cement","","2,759","","","2,652","","","2,871"],["Exploration leases","","1","","","29","","","94"],["Water sales","","4,383","","","8,033","","","14,658"],["Reimbursables and other","","191","","","902","","","695"],["Total mineral resources revenues","","$","10,214","","","$","14,524","","","$","21,595"],["Mineral resources expenses"],["Cost of sales of water","","3,555","","","5,220","","","9,549"],["Other expenses1","","3,497","","","3,465","","","3,420"],["Total mineral resources expenses","","$","7,052","","","$","8,685","","","$","12,969"],["Operating income from mineral resources","","$","3,162","","","$","5,839","","","$","8,626"],["1 The main components of the other expenses included general and administrative expenses and depreciation expenses."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","","2024","","2023","","2022"],["Oil and gas"],["Oil production (barrels)","","83,411","","94,780","","92,788"],["Average price per barrel","","$76.00","","$78.00","","$98.00"],["Natural gas production (millions of cubic feet)","","20,480","","62,000","","57,000"],["Average price per thousand cubic feet","","$1.67","","$2.87","","$2.84"],["Blended royalty rate","","13.4%","","13.3%","","14.5%"],["Water"],["Water sold in acre-feet","","3,500","","5,145","","10,400"],["Average price per acre-foot","","$1,252","","$1,561","","$1,409"],["Cement"],["Tons sold","","1,079,000","","1,112,000","","1,356,000"],["Average price per ton","","$2.56","","$2.39","","$2.12"],["Rock/Aggregate"],["Tons sold","","1,442,000","","1,600,000","","1,677,000"],["Average price per ton","","$1.40","","$1.19","","$1.15"],["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."]]
[[/GREPCENT_TABLE]]

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-

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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.

2023 Operational Highlights:

•Revenues from our mineral resources segment decreased $7,071,000, or 33%, to $14,524,000 in 2023 when compared to $21,595,000 in 2022. The decrease is primarily attributed to lower water sales revenue of $6,625,000. The SWP allocation was at 100% in 2023, due to heavy rainfall in California, which severely limited our water sales opportunities, whereas in 2022 the allocation was at 5%. Additionally, the Company experienced a decrease in royalties of $587,000 due to lower price per barrel for oil production, combined with lower production volume of cement and aggregate production, when compared to 2022.

•Mineral resources expenses decreased $4,284,000, or 33%, to $8,685,000 in 2023 when compared to $12,969,000 in 2022 as a result of having less cost of water sales.

For further discussion of mineral resources operations, refer to Item 1 “Business—Mineral Resources.”

Farming

[[GREPCENT_TABLE]]
[["($ in thousands)","","2024","","2023","","2022"],["Farming revenues"],["Almonds","","$","7,122","","","$","5,378","","","$","6,121"],["Pistachios","","3,237","","","4,036","","","2,450"],["Wine grapes","","2,704","","","3,290","","","3,470"],["Hay","","66","","","267","","","587"],["Other","","796","","","979","","","373"],["Total farming revenues","","$","13,925","","","$","13,950","","","$","13,001"],["Farming expenses"],["Cost of sales","","11,853","","","11,945","","","15,412"],["Water Holding Costs","","2,912","","","695","","","3,454"],["Other expenses1","","2,786","","","2,617","","","945"],["Total farming expenses","","$","17,551","","","$","15,257","","","$","19,811"],["Operating loss from farming","","$","(3,626)","","","$","(1,307)","","","$","(6,810)"],["1 The main components of the other expenses included general and administrative expenses and depreciation expenses."]]
[[/GREPCENT_TABLE]]

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[[GREPCENT_TABLE]]
[["","","December 31, 2024","","","December 31, 2023","","","Change"],["($ in thousands)","","Revenue","","Quantity Sold2","","Average Price","","","Revenue","","Quantity Sold2","","Average Price","","","Revenue","","Quantity Sold2","","Average Price"],["ALMONDS (lbs.)"],["Current year crop","","$","5,438","","","2,123","","","$","2.56","","","","$","3,300","","","1,575","","","$","2.10","","","","$","2,138","","","548","","","$","0.46"],["Prior crop years","","1,037","","","562","","","$","1.85","","","","1,819","","","1,042","","","$","1.75","","","","(782)","","","(480)","","","$","0.10"],["Crop insurance","","647","","","","","","","","259","","","","","","","","388"],["Subtotal Almonds1","","$","7,122","","","2,685","","","$","2.41","","","","$","5,378","","","2,617","","","$","1.96","","","","$","1,744","","","68","","","$","0.45"],["PISTACHIOS (lbs.)"],["Current year crop","","$","\u2014","","","\u2014","","","$","\u2014","","","","$","3,990","","","2,466","","","$","1.62","","","","$","(3,990)","","","(2,466)","","","$","(1.62)"],["Prior crop price adjustment","","1,836","","","","","","","","\u2014","","","","","","","","1,836"],["Crop insurance","","1,401","","","","","","","","46","","","","","","","","1,355"],["Subtotal Pistachios1","","$","3,237","","","\u2014","","","$","\u2014","","","","$","4,036","","","2,466","","","$","1.62","","","","$","(799)","","","(2,466)","","","$","(1.62)"],["WINE GRAPES (tons)"],["Current year crop","","$","2,338","","","8","","","$","292.25","","","","$","3,290","","","11","","","$","299.09","","","","$","(952)","","","(3)","","","$","(6.84)"],["Crop insurance","","366","","","","","","","","\u2014","","","","","","","","366"],["Subtotal Wine Grapes","","$","2,704","","","8","","","$","292.25","","","","$","3,290","","","11","","","$","299.09","","","","$","(586)","","","(3)","","","$","(6.84)"],["Other"],["Hay","","$","66","","","","","","","","$","267","","","","","","","","$","(201)"],["Other farming revenues","","796","","","","","","","","979","","","","","","","","(183)"],["Total farming revenues","","$","13,925","","","","","","","","$","13,950","","","","","","","","$","(25)"],["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."]]
[[/GREPCENT_TABLE]]

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.

47

[[GREPCENT_TABLE]]
[["","December 31, 2023","","","","December 31, 2022","","","","Change"],["($ in thousands)","Revenue","","Quantity Sold2","","Average Price","","","","Revenue","","Quantity Sold2","","Average Price","","","","Revenue","","Quantity Sold2","","Average Price"],["ALMONDS (lbs.)"],["Current year crop","$","3,300","","","1,575","","","$","2.10","","","","","$","2,851","","","1,267","","","$","2.25","","","","","$","449","","","308","","","$","(0.15)"],["Prior crop years","1,819","","","1,042","","","1.75","","","","","3,216","","","1,584","","","2.03","","","","","(1,397)","","","(542)","","","(0.28)"],["Crop insurance","259","","","","","","","","","54","","","","","","","","","$","205"],["Subtotal Almonds1","$","5,378","","","2,617","","","$","1.96","","","","","$","6,121","","","2,851","","","$","2.13","","","","","$","(743)","","","(234)","","","$","(0.17)"],["PISTACHIOS (lbs.)"],["Current year crop","$","3,990","","","2,466","","","$","1.62","","","","","$","\u2014","","","\u2014","","","$","\u2014","","","","","$","3,990","","","2,466","","","$","1.62"],["Prior crop price adjustment","\u2014","","","","","","","","","873","","","","","","","","","(873)"],["Crop insurance","46","","","","","","","","","1,577","","","","","","","","","(1,531)"],["Subtotal Pistachios1","$","4,036","","","2,466","","","$","1.62","","","","","$","2,450","","","\u2014","","","$","\u2014","","","","","$","1,586","","","2,466","","","$","1.62"],["WINE GRAPES (tons)"],["Current year crop","$","3,290","","","11","","","$","299.09","","","","","$","3,470","","","10","","","$","347.00","","","","","$","(180)","","","1","","","$","(47.91)"],["Subtotal Wine Grapes","$","3,290","","","11","","","$","299.09","","","","","$","2,470","","","10","","","$","347.00","","","","","$","(180)","","","1","","","$","(47.91)"],["Other"],["Hay","$","267","","","","","","","","","$","587","","","","","","","","","$","(320)"],["Other farming revenues","979","","","","","","","","","373","","","","","","","","","606"],["Total farming revenues","$","13,950","","","","","","","","","$","13,001","","","","","","","","","$","949"],["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."]]
[[/GREPCENT_TABLE]]

2023 Operational Highlights:

•During 2023, farming segment revenues increased $949,000, or 7%, from $13,001,000 in 2022 to $13,950,000 in 2023. The factors contributing to this increase are as follows:

◦Pistachio crop revenue increased by $3,990,000 in 2023, which was partially offset by a $1,531,000 decrease in crop insurance and a $873,000 decrease in prior year crop price adjustment. Pistachio revenues increased primarily because the 2022 crop did not bear fruit due to a mild winter.

◦Almond revenues decreased $743,000 due to unfavorable pricing for crops sold in 2023 when compared to 2022. Additionally, the variations in the mix of almonds sold also contributed to this decrease. During 2022, a majority of almonds sold were of the Nonpareil and Monterey varieties, which generally sell at a higher price.

◦Wine grape revenues decreased $180,000 due to unfavorable pricing, partially offset by higher yields.

•During 2023, farming segment expenses decreased $4,554,000, or 23%, from $19,811,000 in 2022 to $15,257,000 in 2023. The decrease is mainly attributable to lower water holding cost of $3,040,000. Additionally, utility costs decreased by $805,000 due to water availability in 2023 resulting in less need of water transmission costs to pump water for farming.

For further discussion of the farming operations, refer to Item 1 “Business—Farming Operations.”

48

Ranch Operations

[[GREPCENT_TABLE]]
[["($ in thousands)","","2024","","2023","","2022"],["Ranch operations revenue"],["Game management and other 1","","$","2,844","","","$","2,884","","","$","2,912"],["Grazing","","2,351","","","1,623","","","1,194"],["Total ranch operations revenues","","$","5,195","","","$","4,507","","","$","4,106"],["Ranch operation expenses"],["Operating expenses","","2,380","","","2,586","","","2,312"],["Compensation expenses","","1,494","","","1,548","","","1,708"],["Other expenses2","","990","","","909","","","1,004"],["Total ranch operations expenses","","$","4,864","","","$","5,043","","","$","5,024"],["Operating income/(loss) from ranch operations","","$","331","","","$","(536)","","","$","(918)"],["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."],["2 The main components of the other expenses included depreciation and amortization expenses."]]
[[/GREPCENT_TABLE]]

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.

2023 Operational Highlights:

•Revenues from ranch operations increased $401,000, or 10%, from $4,106,000 in 2022 to $4,507,000 in 2023. This is primarily attributed to an increase in grazing lease revenues due to improved pasture levels as a result of 2023 winter rains, which allowed for more cattle grazing on Company's land.

•Ranch operations expenses were $5,043,000 in 2023, which stayed consistent when compared to $5,024,000 in 2022.

Other Income

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.

Total other income increased by $697,000, or 40%, from $1,722,000 in 2022 to $2,419,000 in 2023. Investment income recognized on marketable securities increased by $1,923,000 due to an increase in average funds invested and higher market interest rate in 2023 compared with 2022. This increase was offset by a decrease of $1,226,000 in other income mainly due to an absence of long-term deferred gains from the sale of the 18-19 West joint venture.

Corporate Expenses

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 salaries and compensation expenses of $10,261,000 and other expenses of $831,000. Other expenses include professional services fees, licenses and fees, and depreciation expenses. The year-over-year increase in compensation expense is not expected to be a trend, but rather to return to historical averages in the future.

49

Corporate general and administrative costs increased $173,000, or 1.8%, to $9,872,000 during 2023 when compared to $9,699,000 in 2022. The increase is primarily attributable to higher salary and stock compensation expense recognized during the period, offset by lower professional service expense. The main components of the corporate expenses included salaries and compensation expenses of $9,007,000 and other expenses of $865,000. Other expenses include professional services fees, licenses and fees, and depreciation expenses.

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 gain greater 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.

[[GREPCENT_TABLE]]
[["($ in thousands)","2024","","2023","","2022"],["Equity in earnings (loss)"],["Petro Travel Plaza Holdings LLC","$","8,253","","","$","6,288","","","$","8,526"],["18-19 West, LLC","\u2014","","","\u2014","","","(31)"],["TRCC/Rock Outlet Center, LLC","(1,351)","","","(1,786)","","","(1,569)"],["TRC-MRC 1, LLC","613","","","596","","","21"],["TRC-MRC 2, LLC","2,162","","","1,386","","","692"],["TRC-MRC 3, LLC","422","","","323","","","297"],["TRC-MRC 4, LLC","527","","","166","","","(184)"],["TRC-MRC 5, LLC","255","","","(105)","","","\u2014"],["Equity in earnings of unconsolidated joint ventures, net","$","10,881","","1","$","6,868","","","$","7,752"],["1 TRC-DP1 had no operating activities during 2024."]]
[[/GREPCENT_TABLE]]

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.

2023 Operational Highlights:

During 2023, equity in earnings from unconsolidated joint ventures decreased $884,000, or 11%, to $6,868,000 when compared to $7,752,000 in 2022.

•The Petro Travel Plaza equity in earnings decreased $2,238,000 or 26% when compared to 2022, which is largely attributable to lower fuel margins in 2023, we don't expect this drop in fuel margins to continue in 2024.

•The above decrease is partially offset by increases in equity in earnings of TRC-MRC 1, LLC and TRC-MRC 2, LLC joint ventures, mainly attributable to a combination of new leases at higher rental rates and rent escalations. Moreover, the lease within the TRC-MRC 4, LLC joint venture commenced in late 2022, bringing on a new revenue stream for the Company.

50

Income Taxes

For the twelve months ended December 31, 2024, the Company's net income tax expense was $976,000 compared to $2,323,000 for the twelve months ended December 31, 2023. These amounts represent effective income tax rates of approximately 27% and 42% for the twelve months ended December 31, 2024 and 2023, respectively. Our effective income tax rate for the year ended December 31, 2024 was comparable to the federal statutory rate in the United States, with minor adjustments due to temporary differences. As of December 31, 2024 and 2023, we had income tax receivable of $1,279,000 and $1,245,000, respectively.

As of December 31, 2024, we had net deferred tax liabilities of $9,059,000 compared to $8,269,000 as of December 31, 2023. Our largest deferred tax assets were made up of temporary differences related to stock compensation, deferred gains, pension adjustments, an interest rate swap, and capitalization of costs. Deferred tax liabilities consist of joint venture differences, depreciation, deferred gains, 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 income tax payments of $315,000 in 2024 and $2,564,000 in 2023. The Company received refunds of $1,000 in 2024 and $0 in 2023.

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

Cash Flow and Liquidity

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 achieve profitable future growth. We have historically funded our operations with cash flows from operating activities, investment proceeds, 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.

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, including construction on Terra Vista at Tejon, our new multi-family apartment community located immediately adjacent to the Outlets at Tejon at TRCC. We will also make investments as necessary in our real estate segments to secure land entitlement approvals, build infrastructure for our developments, invest in to be leased assets, provide adequate water supplies, and provide funds for general land development activities. Within our farming segment, we intend to make investments as needed to improve efficiency and add capacity to its operations when it is profitable to do so.

Our cash and cash equivalents and marketable securities totaled approximately $53,708,000 at December 31, 2024, a decrease of $10,755,000, or 17%, from the corresponding amount at the end of 2023.

The following table summarizes the cash flow activities for the following years ended December 31: 

[[GREPCENT_TABLE]]
[["($ in thousands)","","2024","","2023","","2022"],["Operating activities","","$","14,314","","","$","13,655","","","$","8,531"],["Investing activities","","$","(25,748)","","","$","(14,002)","","","$","(1,891)"],["Financing activities","","$","18,794","","","$","(6,865)","","","$","(4,419)"]]
[[/GREPCENT_TABLE]]

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 2024, our operations generated $14,314,000 in cash. The distributions from joint ventures are largely attributed to the increasing earnings from the joint ventures due to improved fuel margins and rent rates, and an increased current liabilities balance.

During 2023, our operations generated $13,655,000 in cash primarily through joint venture distributions. The distributions from joint ventures are largely attributed to changes in loan covenants that allowed additional cash to be distributed in 2023.

51

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 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.

During 2023, investing activities used $14,002,000, which was largely attributed to capital expenditures of $21,328,000 used primarily for real estate development. Of the $21,328,000, we spent $2,111,000 on permitting efforts for MV, $4,341,000 on litigation defense for Centennial, and $1,436,000 on permitting efforts for Grapevine. At TRCC, we primarily used $7,815,000 to develop road and water infrastructures. All real estate capital expenditures are inclusive of capitalized interest, payroll and overhead. Lastly, our farming segment had cash outlays of $4,870,000 for cultural and water costs tied to crops not yet in production, developing new almond orchards, grape vineyards, and replacing old farm equipment. Additionally, our mineral resources segment spent $6,034,000 to acquire water for use as needed and for future residential development activity. We also contributed $4,500,000 to our unconsolidated joint ventures during the year. Lastly, the Company reinvested $132,317,000 into marketable securities. The increase in investment activities is due to the short-term nature of our marketable securities and the reinvestment of maturities until the cash is needed for operational and development activities. Offsetting cash outlays were maturities on marketable securities of $134,083,000, distributions from unconsolidated joint ventures of $10,978,000, proceeds from water sales of $1,324,000 and proceeds from the interest rate swap settlement of $3,715,000.

Our estimated capital investment for 2025 is primarily related to our real estate projects as it was in 2024. These estimated investments include approximately $45,341,000 of development costs at TRCC-East. Of that amount, $29,657,000 is to complete the Terra Vista at Tejon multi-family project phase 1 development and $10,072,000 for road infrastructures, water treatment system improvements, and expansion of the wastewater treatment plant for future anticipated absorption. We expect to possibly invest up to $8,591,000 for entitlement and permitting activities, predevelopment activities and land planning design at MV and Grapevine and litigation defense and supplemental recirculated environmental impact report preparation 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 for MV. Our efforts within our master plan projects are managed to minimize each year's investment. Our plans also include $8,322,000 for payment of annual water inventory and water related investments. We are also investing approximately $3,542,000 to continue a farm redevelopment program, and $511,000 in the normal replacement of operating equipment, such as ranch equipment, and vehicles.

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, 2024 and 2023, of $4,353,000 and $3,098,000, respectively, is classified in real estate development. We also capitalized payroll costs related to development, pre-construction, and construction projects, which aggregated $2,884,000 and $2,270,000 for the years ended December 31, 2024 and 2023, respectively. Expenditures for repairs and maintenance are expensed as incurred. As noted above, these costs are included in the above investment numbers.

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.

During 2023, financing activities used $6,865,000, which is comprised of long-term debt repayments of $50,357,000 and tax payments on vested stock grants of $3,353,000. This was partially offset by borrowings from the new line-of-credit facility of $47,942,000.

It is difficult to accurately predict cash flows due to the nature of our businesses and fluctuating economic conditions. Our earnings and cash flows will be affected from period to period by the commodity nature of our farming and mineral operations, the timing of sales and leases of property within our development projects, and the beginning of development within our residential projects. The timing of sales and leases within our development projects is difficult to predict due to the time necessary to complete the development process and negotiate sales or lease contracts. Often, the timing aspect of land development can lead to particular years or periods having more or less earnings than comparable periods. Based on our experience, we believe we will have adequate cash flows, cash balances, and availability on our line of credit over the next

52

twelve months to fund internal operations. 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, 2024, total capitalization at book value was $555,898,000 consisting of $66,942,000 of debt and $488,956,000 of equity, resulting in a debt-to-total-capitalization ratio of approximately 12.0%, representing an increase when compared to the debt-to-total-capitalization ratio of 9.0% at December 31, 2023.

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 letter of credits 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, 2024, 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 2025 of $420,000 which represents 125 basis points from the primary lender. We expect to receive the remaining patronage credit in March 2025 for $206,000 which represents 100 basis point from the other participating lenders.

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.

53

At December 31, 2024, 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 2022, we filed an updated shelf registration statement on Form S-3 that went effective in May 2022. 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, 2024, we had $53,708,000 in cash and securities and as of the filing date of this Form 10-K, we had $93,058,000 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 2025, 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. We believe we have adequate capital resources to fund our cash needs and our capital investment requirements in the near-term, as described earlier in the cash flow and liquidity discussions.

Contractual Cash Obligations

The following table summarizes our contractual cash obligations and commercial commitments as of December 31, 2024, to be paid over the next five years and beyond:

[[GREPCENT_TABLE]]
[["","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","$","307,473","","","$","15,029","","","$","29,853","","","$","31,671","","","$","230,920"],["Revolving line-of-credit","66,942","","","\u2014","","","\u2014","","","66,942","","","\u2014"],["Cash contract commitments","37,655","","","36,065","","1","518","","","\u2014","","","1,071"],["Defined Benefit Plan","5,490","","","484","","","1,000","","","995","","","3,011"],["SERP","5,247","","","580","","","1,134","","","1,090","","","2,443"],["Total contractual obligations","$","422,807","","","$","52,158","","","$","32,505","","","$","100,698","","","$","237,445"],["1 Amount primarily represents our contractual commitments related to our multifamily development."]]
[[/GREPCENT_TABLE]]

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 2024, we didn't make any pension contributions and we don't expect to make contributions in 2025.

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.

54

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, 2024, aggregate outstanding debt of unconsolidated joint ventures was $221,465,000; $20,545,000 of this debt was attributable to the loan for TRCC/Rock Outlet joint venture. This loan was 100% guaranteed at December 31, 2024. All other outstanding debt attributed to our joint ventures have met their respective debt covenants hence not subject to an effective guarantee at December 31, 2024. We do not provide a guarantee on the $11,793,000 of debt related to our joint venture with TA/Petro.

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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. We believe Adjusted EBITDA provides investors relevant and useful information because it permits investors to view income from our operations on an unleveraged basis, before the effects of taxes, depreciation and amortization, and stock compensation expense. 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. 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 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.

[[GREPCENT_TABLE]]
[["","Year-Ended December 31,"],["($ in thousands)","2024","","2023","","2022"],["Net income","$","2,688","","","$","3,265","","","$","15,810"],["Net income (loss) attributed to non-controlling interest","(2)","","","\u2014","","","2"],["Interest, net"],["Consolidated interest income","(2,273)","","","(2,557)","","","(634)"],["Our share of interest expense from unconsolidated joint ventures","6,165","","","4,879","","","2,974"],["Total interest, net","3,892","","","2,322","","","2,340"],["Income tax expense","976","","","2,323","","","7,393"],["Depreciation and amortization"],["Consolidated","4,885","","","4,806","","","4,628"],["Our share of depreciation and amortization from unconsolidated joint ventures","6,753","","","5,418","","","4,618"],["Total depreciation and amortization","11,638","","","10,224","","","9,246"],["EBITDA","19,196","","","18,134","","","34,787"],["Stock compensation expense","4,182","","","3,252","","","2,877"],["Adjusted EBITDA","$","23,378","","","$","21,386","","","$","37,664"]]
[[/GREPCENT_TABLE]]

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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.

[[GREPCENT_TABLE]]
[["($ in thousands)","Year-Ended December 31,"],["Net operating income","2024","","2023","","2022"],["Pastoria Energy Facility","$","4,992","","","$","5,231","","","$","4,846"],["TRCC","1,334","","","1,296","","","1,185"],["Communication leases","2,269","","","1,070","","","1,001"],["Other commercial leases","441","","","631","","","616"],["Total Commercial/Industrial net operating income","$","9,036","","","$","8,228","","","$","7,648"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","Year-Ended December 31,"],["($ in thousands)","2024","","2023","","2022"],["Commercial/Industrial operating income","$","4,642","","","$","3,705","","","$","24,159"],["Plus: Commercial/Industrial depreciation and amortization","424","","","468","","","455"],["Plus: General, administrative, cost of sales and other expenses","6,806","","","7,130","","","15,491"],["Less: Other revenues including land sales","(2,836)","","","(3,075)","","","(32,457)"],["Total Commercial/Industrial net operating income","$","9,036","","","$","8,228","","","$","7,648"]]
[[/GREPCENT_TABLE]]

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 from unconsolidated joint ventures to NOI of unconsolidated joint ventures.

[[GREPCENT_TABLE]]
[["","Year-Ended December 31,"],["($ in thousands)","2024","","2023","","2022"],["Earnings of unconsolidated joint ventures","$","18,874","","","$","11,641","","","$","12,662"],["Interest expense of unconsolidated joint ventures","12,167","","","9,587","","","5,834"],["Operating income of unconsolidated joint ventures","31,041","","","21,228","","","18,496"],["Depreciation and amortization of unconsolidated joint ventures","12,869","","","10,246","","","8,648"],["Net operating income of unconsolidated joint ventures","$","43,910","","","$","31,474","","","$","27,144"]]
[[/GREPCENT_TABLE]]

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