UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

~~FORM 10-K~~

(Mark One)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



x	~~ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

For the fiscal year ended December 31, ~~2017~~2020

OrOR



¨	~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to Commission file number: 1-07183

~~Commission File Number: 1-7183~~

TEJON RANCH CO.



	~~TEJON RANCH CO.~~
	~~(Exact name of Registrant~~(Exact name of registrant as specified in its charter)

Delaware 77-0196136



~~Delaware~~		~~77-0196136~~
~~(State or other jurisdiction of~~ ~~incorporation or organization)~~		~~(IRS Employer~~ (State or other jurisdiction of incorporation or organization.) (I.R.S. Employer Identification No.)

P.O. Box 1000, ~~Lebec,~~Tejon Ranch, California 93243

(Address of principal executive offices) (Zip Code)

(661) 248-3000

(Registrant’s telephone number, including area ~~code: (661) 248-3000~~code)

Securities registered pursuant to Section 12(b) of the Act:

Title of ~~Each Class~~each class

Trading symbol(s)

Name of ~~Exchange of Which Registered~~each exchange on which registered

Common Stock, $0.50 par value

TRC

New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

~~____________________________________________________~~

~~Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes~~ ¨ No x

~~Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes~~ ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web Site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T ((§232.405 of this chapter) during the preceding 12 months (or for shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes

☐

☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes

☐

☒

Yes

☒

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T ((§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes

☒

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer” “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer

¨☐

Accelerated filer

x☐

Non-accelerated filer

¨☒

Smaller reporting company

¨☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

~~Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes~~ ¨ No x

~~The aggregate market value of registrant’s Common Stock, par value $.50 per share, held by persons other than those who may be deemed to be affiliates of registrant on June 30, 2017 was $422,344,798~~Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes☐No☒

The aggregate market value of registrant’s Common Stock, par value $.50 per share, held by persons other than those who may be deemed to be affiliates of registrant onJune 30, 2020 was $377,594,813 based on the last reported sale price on the New York Stock Exchange as of the close of business on that date.

The number of the Company’s outstanding shares of Common Stock on February 28, ~~2018~~2021 was ~~25,912,425.~~

~~____________________________________________________~~ 26,285,692.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the Annual Meeting of Stockholders relating to the directors and executive officers of the Company are incorporated by reference into Part III.

TABLE OF CONTENTS




PART I	3
ITEM 1.		BUSINESS	4
ITEM 1A.		RISK FACTORS	2226
ITEM 1B.		UNRESOLVED STAFF COMMENTS	2732
ITEM 2.		PROPERTIES	2833
ITEM 3.		LEGAL PROCEEDINGS	3036
ITEM 4.		MINE SAFETY DISCLOSURES	3036

PART II			3137
ITEM 5.		MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	3137
ITEM 6.		SELECTED FINANCIAL DATA	3137
ITEM 7.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	3138
ITEM 7A.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	5359
ITEM 8.		FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	5561
ITEM 9.		CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	5561
ITEM 9A.		CONTROLS AND PROCEDURES	5661
ITEM 9B.		OTHER INFORMATION	5661

PART III			5661
ITEM 10.		DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	5661
ITEM 11.		EXECUTIVE COMPENSATION	5661
ITEM 12.		SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	5661
ITEM 13.		CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	5762
ITEM 14.		PRINCIPAL ~~ACCOUNTING~~ACCOUNTANT FEES AND SERVICES	5762

PART IV			5863
ITEM 15.		EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	5863
ITEM 16.		FORM 10-K SUMMARY	5863

SIGNATURES			6367
ITEM 15(a)(1) - FINANCIAL STATEMENTS			6670
ITEM 15(a)(2) - FINANCIAL STATEMENT SCHEDULES			6670

PART I

Forward-Looking Statements

This annual report on Form 10-K contains forward-looking statements, including without limitation, statements regarding strategic alliances, the almond, pistachio and grape industries, the future plantings of permanent crops, future yields, prices, and ~~prices,~~ water availability for our crops and real estate operations, future prices, production and demand for oil and other minerals, future development of our property, future revenue and income of our jointly-owned travel plaza and other joint venture operations, potential losses to the Company as a result of pending environmental proceedings, the adequacy of future cash flows to fund our operations, and of current assets and contracts to meet our water and other commitments, market value risks associated with investment and risk management activities and with respect to inventory, accounts receivable and our own outstanding indebtedness, ongoing negotiations, the uncertainties regarding the expected impact of COVID-19 on the Company, its customers, suppliers, global economic conditions, and other future events and conditions. In some cases, these statements are identifiable through the use of words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “target,” “can,” “could,” “may,” “will,” “should,” “would,” “likely,” and similar ~~expressions.~~expressions such as “in the process,” “designed to,” or “envisioned to” In addition, any statements that refer to projections of our future financial performance, our anticipated growth, and trends in our business and other characterizations of future events or circumstances are forward-looking statements. We caution you not to place undue reliance on these forward-looking statements. These forward-looking statements are not a guarantee of future ~~performances~~performance and are subject to assumptions and involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company, or industry results, to differ materially from any future results, performance, or achievement implied by such forward-looking statements. These risks, uncertainties and important factors include, but are not limited to, the impact of COVID-19 and the actions taken by governments, businesses, and individuals in response to it, weather, market and economic forces, availability of financing for land development activities, and competition and success in obtaining various governmental approvals and entitlements for land development activities. No assurance can be given that the actual future results will not differ materially from the forward-looking statements that we make for a number of reasons including those described above and in Part I, Item 1A, “Risk Factors” of this report.

As used in this annual report on Form 10-K, references to the “Company,” “Tejon,” “TRC,” “we,” “us,” and “our” refer to Tejon Ranch Co. and its consolidated subsidiaries. The following discussion should be read in conjunction with the consolidated financial statements and the accompanying notes appearing elsewhere in this annual report on Form 10-K.

ITEM 1. BUSINESS

Company Overview

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 create value for our shareholders. Current operations consist of land planning and entitlement, land development, commercial land sales and leasing, leasing of land for mineral royalties, water asset management and sales, grazing leases, ~~income portfolio management,~~ farming, and ranch operations.

These activities are performed through our five reporting segments:

Our prime asset is approximately 270,000 acres of contiguous, largely undeveloped land that, at its most southerly border, is 60 miles north of downtown Los Angeles and, at its most northerly border, is 15 miles east of Bakersfield. We create value by securing entitlements for our land, facilitating infrastructure development, strategic land planning, monetization of land through development and/or sales, and conservation in order to maximize the highest and best use for our land. We are involved in ~~several~~seven joint ventures ~~which~~that either own, develop, and/or operate real estate properties. We enter into joint ventures as a means to facilitate the development of portions of our land.

The COVID-19 Pandemic

Our first priority with regard to the COVID-19 pandemic is to provide for the health and safety of our employees, customers, suppliers and others with whom we partner. We are fully committed to continuing our essential business operations in this unprecedented environment, subject to appropriate risk mitigation and safety practices. Employees are required to wear masks and maintain proper social distancing. The commercial real estate operations that we and our joint ventures operate, are comprised of major national restaurant, retail and fuel brands that follow nationally accepted safety standards that help mitigate the spread of COVID-19.

The U.S. and global economies continue to be affected by the COVID-19 pandemic. There are no reliable estimates of how long the pandemic will last or how many more people will be affected by it, or its continued impact on our business. The return to normalcy is highly contingent on, among other things, the wide spread dissemination and use of an effective vaccine, which is still in its very early stages of distribution. Additionally, the efficacy of current vaccines on newer and potentially more lethal strains of COVID-19 is still being investigated by the scientific community and may also impact the return to normalcy.

We operate in the State of California and our operations were initially subject to the "shelter-in-place" order issued by the California Governor in March 2020, in addition to orders set by Los Angeles and Kern County governments. The State of California took an extremely cautious approach in reopening and even re-imposed statewide stay-at-home orders during the winter of 2020. On January 26, 2021, California lifted regional stay-at-home orders across the state, returning the state to a system of county-by-county restrictions. Kern County and Los Angeles County are rated Purple, as of the date of this report, and represents widespread COVID-19 transmission risk under California's Blueprint for a Safer Economy. Under such circumstances, our farming and mineral resources segments have operated and may continue to operate as normal, while our retail outlets can currently operate at 25% capacity and our restaurants can operate for take-out and outdoor dining only.

The actions taken by governments, other businesses, and individuals in response to the pandemic did have and will continue to have an impact our results of operations and overall financial performance. In 2020, we evaluated our operations for expense reductions and cash savings by renegotiating contracts and pricing with a significant portion of our vendors, and right sizing our labor needs. We will continue to monitor and evaluate our needs for expense reduction throughout 2021.

Please see the "Results of Operations" by Segment in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further discussion of the impact of COVID-19 on our various reporting segments.

Business Objectives and Strategies

Our primary business objective is to maximize long-term shareholder value through the monetization of our land-based assets. A key element of our strategy is to entitle and then develop large-scale ~~mixed use~~mixed-use master planned residential and commercial/industrial real estate projects to serve the growing populations of Southern and Central California. ~~Once all entitlements are approved, our mixed use~~Our mixed-use master planned residential developments have been approved to collectively ~~may~~ include up to ~~35,000~~35,278 housing units, ~~with 15,450 units currently approved,~~ and more than 35 million square feet of commercial ~~space, with 25 million square feet currently approved.~~space. We have obtained entitlements on Mountain Village at Tejon Ranch, or MV, and ~~Grapevine at Tejon Ranch, or Grapevine, and are currently~~the tentative tract map for the first four phases of residential development in MV has been approved, as well as the ~~entitlement process with~~commercial site plan for the first phase of commercial development in MV. Centennial, at Tejon Ranch, or ~~Centennial.~~Centennial, had entitlements approved in December 2018, and received legislative approvals in April 2019 from the Los Angeles County Board of Supervisors. The Kern County Board of Supervisors unanimously reapproved the Grapevine at Tejon Ranch project, or Grapevine in 2019. We are currently engaged in ~~entitlement,~~ construction, commercial sales, and leasing at our fully operational commercial/industrial center Tejon Ranch Commerce Center, or TRCC. In January 2021, the Kern County Board of Supervisors approved two Conditional Use Permits, authorizing development of multi-family apartment uses within the Tejon Ranch Commerce Center, on a 27-acre site located immediately north of the Outlets at Tejon. This authorization allows the Company to develop up to a maximum of 495 multi-family residences, in thirteen apartment buildings, as well as approximately 6,500 square feet of community amenity space and 8,000 square feet of community serving retail on the ground floor of a portion of the residential buildings. All of these efforts are supported by diverse revenue streams generated from other operations ~~including~~including: farming, mineral resources, and our various joint ventures.

Percentage of Total Revenue₁ ~~and Other Income~~1,2 by Segment:

¹_{1. Real Estate includes equity in earnings of unconsolidated joint ventures.}

2. Charts presented only include the segment revenues, other income components are excluded.

Note: Our Resort Residential reporting segment did not report revenues in the periods reported herein.

The following table shows the revenues from continuing operations, segment profits and identifiable assets of each of our continuing segments for the last three years:

FINANCIAL INFORMATION ABOUT SEGMENTS

(Amounts in thousands of dollars)


	Year Ended December 31,										Year Ended December 31,
	2017			2016			2015				2020		2019		2018
Revenues and Other Income										Revenues and Other Income
Real Estate—Commercial/Industrial (2)	$	9,403		$	9,438		$	8,272
Real Estate—Commercial/Industrial										Real Estate—Commercial/Industrial	$	9,536	$	16,792	$	8,970
Mineral Resources	5,983			14,153			15,116			Mineral Resources	10,736		9,791		14,395
Farming	16,434			18,648			23,836			Farming	13,866		19,331		18,563
Ranch operations (2)	3,837			3,338			3,923
Ranch operations										Ranch operations	3,692		3,609		3,691
Segment revenues	35,657			45,577			51,147			Segment revenues	37,830		49,523		45,619
Gain on sale of real estate	—			1,044			—

Investment income	462			457			528			Investment income	884		1,239		1,344
Other income	153			158			381
Revenues and other income	$	36,272		$	47,236		$	52,056		Revenues and other income	38,714		50,762		46,963
Equity in earnings of unconsolidated joint ventures	4,227			7,098			6,324			Equity in earnings of unconsolidated joint ventures	4,504		16,575		3,834
Total revenues and other income (1)	$	40,499		$	54,334		$	58,380		Total revenues and other income (1)	$	43,218	$	67,337	$	50,797
Segment Profits (Losses) and Net Income										Segment Profits (Losses) and Net Income
Real Estate—Commercial/Industrial (2)	$	2,874		$	2,338		$	1,578
Real Estate—Commercial/Industrial										Real Estate—Commercial/Industrial	$	2,414	$	3,831	$	2,724
Real Estate—Resort/Residential	(1,955		)	(1,630		)	(2,349		)	Real Estate—Resort/Residential	(1,612)		(2,247)		(1,530)
Mineral Resources	3,019			6,357			7,720			Mineral Resources	4,322		3,973		8,172
Farming	233			(25		)	4,852			Farming	(1,237)		4,080		2,535
Ranch operations (2)	(1,574		)	(2,396		)	(2,189		)
Segment profits (3)	2,597			4,644			9,612
Ranch operations										Ranch operations	(1,204)		(1,707)		(1,760)
Segment profits (2)										Segment profits (2)	2,683		7,930		10,141
Gain on sale of real estate	—			1,044			—			Gain on sale of real estate	1,331		—		—
Investment income	462			457			528			Investment income	884		1,239		1,344
Other income	153			158			381
Other income (loss)										Other income (loss)	110		(1,824)		(59)
Corporate expenses	(10,141		)	(12,550		)	(12,808		)	Corporate expenses	(9,430)		(9,361)		(9,705)
Operating (loss) income before equity in earnings of unconsolidated joint ventures	(6,929		)	(6,247		)	(2,287		)
(Loss) income from operations before equity in earnings of unconsolidated joint ventures										(Loss) income from operations before equity in earnings of unconsolidated joint ventures	(4,422)		(2,016)		1,721
Equity in earnings of unconsolidated joint ventures	4,227			7,098			6,324			Equity in earnings of unconsolidated joint ventures	4,504		16,575		3,834
(Loss) income before income taxes	(2,702		)	851			4,037
Income tax (benefit) provision	(1,123		)	336			1,125
Income before income taxes										Income before income taxes	82		14,559		5,555
Income tax expense										Income tax expense	829		3,980		1,320
Net (loss) income	(1,579		)	515			2,912			Net (loss) income	(747)		10,579		4,235
Net loss attributable to noncontrolling interest	(24		)	(43		)	(38		)
Net loss attributable to non-controlling interest										Net loss attributable to non-controlling interest	(7)		(1)		(20)
Net (loss) income attributable to common stockholders	$	(1,555	)	$	558		$	2,950		Net (loss) income attributable to common stockholders	$	(740)	$	10,580	$	4,255
Identifiable Assets by Segment (4)
Identifiable Assets by Segment (3)										Identifiable Assets by Segment (3)
Real estate—commercial/industrial	$	63,065		$	65,290		$	67,550		Real estate—commercial/industrial	$	73,317	$	76,814	$	65,929
Real estate—resort/residential	258,697			243,963			228,064			Real estate—resort/residential	297,052		286,801		273,620
Mineral Resources	48,305			45,066			46,025			Mineral Resources	57,797		55,049		54,144
Farming	36,317			36,895			32,542			Farming	38,090		41,258		40,835
Ranch operations	3,625			3,893			4,313			Ranch operations	2,442		2,624		2,973
Corporate	108,190			44,594			53,425			Corporate	67,651		76,876		91,547
Total assets	$	518,199		$	439,701		$	431,919		Total assets	$	536,349	$	539,422	$	529,048

(1) Refer to ~~Note 16, Reporting Segments~~Item 7, Management's Discussion and ~~Related Information~~Analysis of ~~the Notes to the Consolidated~~ Financial ~~Statements~~Condition and Results of Operations for additional detail ~~related to~~on segment revenues.

(2) During the fourth quarter of 2015, the Company reclassified revenues and expenses previously classified as commercial/industrial into a new segment called Ranch Operations. Ranch operations comprise of grazing leases, game management and other ancillary services supporting the ranch.

~~(3)~~ Segment profits are revenues less operating expenses, excluding investment income and expense, corporate expenses, equity in earnings of unconsolidated joint ventures, and income taxes.

~~(4)~~(3) Total Assets by Segment include both assets directly identified with those operations and an allocable share of jointly used assets. Corporate assets consist of cash and cash equivalents, refundable and deferred income taxes, land, buildings, and improvements.

Real Estate Development Overview

Our real estate operations consist of the following activities: real estate development, commercial land sales and leasing, land planning and entitlement, ~~income portfolio management,~~ and conservation.

Interstate 5, one of the ~~nation��s~~nation’s most heavily traveled freeways, brings in excess of ~~83,000~~88,000 vehicles per day through our land, which includes 16 miles of Interstate 5 frontage on each side of the freeway and the commercial land surrounding three interchanges. The strategic plan for real estate focuses on development opportunities along the Interstate 5 and Highway 138 corridors, which includes TRCC in Kern County, Centennial, a ~~mixed use~~mixed-use master planned community on our land in Los Angeles County, ~~Mountain Village,~~MV, a resort and residential community in Kern County, and Grapevine, a ~~mixed use~~mixed-use master planned community on our land in Kern County. TRCC includes developments east and west of Interstate 5 at TRCC-East and TRCC-West, respectively.

The chart below is a continuum of the real estate development process highlighting each project's current status and key milestones to be met in moving through the real estate development process in California. During this process, we may experience delays arising from factors beyond our control. Such factors include litigation and a changing regulatory environment.

Operating Segments

Real Estate - Commercial/Industrial

Our real estate ~~activities within our~~ commercial/industrial segment ~~include: entitling,~~includes: planning, and permitting of land for development; construction of infrastructure; the construction of pre-leased buildings; the construction of buildings to be leased or sold; and the sale of land to third parties for their own development. The commercial/industrial segment also includes activities related to communications leases and landscape maintenance fees. ~~Our~~At the heart of our real estate ~~operations~~commercial/industrial segment is TRCC, a 20 million square foot commercial/industrial development on Interstate 5 just north of the Los Angeles basin. Nearly six million square feet of industrial, commercial and retail space has already been developed, including distribution centers for IKEA, Caterpillar, Famous Footwear, L'Oreal, Camping World and Dollar General. TRCC sits on both sides of Interstate 5, giving distributors immediate access to the west coast’s principal north-south goods movement corridor.

The U.S. Department of Commerce expanded the Foreign Trade Zone (FTZ) it previously granted, covering all the industrial sites within ~~our resort/~~TRCC, an area totaling 1,094 acres. The FTZ designation allows the user within the FTZ to secure the many benefits and cost reductions associated with streamlined movement of goods in and out of the zone. This FTZ designation is further supplemented by the Economic Development Incentive Policy, or EDIP, adopted by the Kern County Board of Supervisors. EDIP is aimed to expand and enhance the County's competitiveness by taking affirmative steps to attract new businesses and to encourage the growth and resilience of existing businesses. The EDIP provides incentives such as assistance in obtaining state tax incentives, building supporting infrastructure, and workforce development.

TRCC Residential:

On January 6, 2021, the Kern County Board of Supervisors approved two Conditional Use Permits (CUP) which will authorize development of multi-family apartment uses within the Tejon Ranch Commerce Center. The approved CUP's authorize the Company to develop up to a maximum of 495 multi-family residences, in thirteen apartment buildings, as well as approximately 6,500 square feet of community amenity space and 8,000 square feet of community retail on the ground floor of a portion of the residential ~~segment~~buildings. The development would be located on a 27-acre site located immediately north of the Outlets at Tejon. The Company will allocate resources to this ~~time include costs~~project during 2021 to advance this new project at TRCC, providing the much needed housing for ~~land entitlement, land planning~~the thousands of employees currently working at the various distribution centers, retailers and ~~pre-construction engineering, and land stewardship and conservation activities.~~

~~Operating Segments~~

~~Real Estate - Commercial/Industrial~~fast-food restaurants at TRCC.

Construction:

~~During 2017, our~~We formed TRC-MRC 13, a joint venture with Majestic Realty Co., or Majestic, ~~completed the construction of a state-of-the-art, 480,480 square foot distribution facility.~~

During 2016, our commercial retail activity continued to grow as new leases came on line with Habit Burger and Baja Fresh. In addition, our TA/Petro, or Petro, joint venture completed construction of a new Shell gas station and convenience store that commenced operations during the first quarter of 2016. Lastly, we have entered into two joint venture operating agreements with Majestic, a Los ~~Angeles based~~Angeles-based commercial/industrial developer, to pursue the development, construction, leasing, and management of ~~an approximately 480,480~~a 579,040 square foot industrial building ~~on the Company’s property~~ at TRCC-East in 2018. The construction of the industrial building was completed in the fourth quarter of 2019, and the Company has leased 100% of the rentable space to ~~purchase, own, and manage~~two tenants.

Also in 2019, we completed construction of a ~~652,000~~4,900 square foot ~~fully leased, industrial~~multi-tenant retail building at TRCC-East. We contributed this multi-tenant building and underlying land to our joint venture with TravelCenters of America Inc. In return for this land contribution, the Company received a priority distribution right of $2.8 million from the joint venture. The joint venture opened this location for operations in ~~TRCC-West.~~2020, operating several national brands including Dunkin' Donuts, Jamba Juice, Charleys Philly Steaks, and Baskin Robbins.

The following is a summary of the Company's commercial, retail and industrial real estate developments as of December 31, ~~2017:~~

2020:


($ in thousands)								($ in thousands)
Project	Cost to Date		Estimated Cost to Complete		Total Estimated Cost at Completion		Estimated Completion Date	Project	Cost to Date		Estimated Cost to Complete		Total Estimated Cost at Completion		Estimated Completion Date
Tejon Ranch Commerce Center	$	83,582	$	71,909	$	155,491	TBD	Tejon Ranch Commerce Center	$	90,294	$	70,083	$	160,377	TBD
Less: Reimbursements from TRPFFA¹	64,862		60,450		125,312		TBD	Less: Reimbursements from TRPFFA1	76,891		50,537		127,428		TBD
TRCC Development Costs, net	$	18,720	$	11,459	$	30,179		TRCC Development Costs, net	$	13,403	$	19,546	$	32,949

¹_{The Tejon Ranch Public Facilities Financing Authority, or TRPFFA, is a joint powers authority formed by Kern County and Tejon-Castac Water District, or TCWD, to finance public infrastructure within the Company’s Kern County developments. TRPFFA, through bond sales, will reimburse the Company for qualifying infrastructure costs at TRCC.}	¹_{The Tejon Ranch Public Facilities Financing Authority, or TRPFFA, is a joint powers authority formed by Kern County and Tejon-Castac Water District, or TCWD, to finance public infrastructure within the Company’s Kern County developments. TRPFFA, through bond sales, will reimburse the Company for qualifying infrastructure costs at TRCC.}							1The Tejon Ranch Public Facilities Financing Authority, or TRPFFA, is a joint powers authority formed by Kern County and Tejon-Castac Water District, or TCWD, to finance public infrastructure within the Company’s Kern County developments. TRPFFA, through bond sales, will reimburse the Company for qualifying infrastructure costs at TRCC.

The following table summarizes total entitlements for TRCC as of December 31, ~~2017:~~2020:


(in square feet)	Industrial	Commercial Retail
Total entitlements received	19,300,941	956,309
Total entitlements used	5,296,669	637,695
Entitlements available	14,004,272	318,614

(in square feet) Industrial Commercial Retail
Total entitlements received 19,300,941 956,309
Total entitlements used 4,237,149 632,795
Entitlements available 15,063,792 323,514

Commercial/industrial real estate sales:

We believe that our ability to provide fully-entitled, shovel-ready land parcels to support buildings of any size, can provide us with a potential marketing advantage in the future. We continue our marketing efforts targeting industrial users in the Santa Clarita Valley of northern Los Angeles County, and the northern part of the San Fernando Valley for whom we may be an attractive provider due to the limited availability of new product and high real estate costs in these locations. Tenants in these geographic areas are typically users of smaller facilities, but often are looking to expand operations and cannot find larger size buildings in these markets.

The commercial/industrial real estate sales market is highly competitive, with competition throughout California. The principal factors of competition in this industry are price, availability of labor, proximity to the port complexes of Los Angeles and Long Beach and customer base. A potential disadvantage to our development strategy is our distance from the ports of Los Angeles and Long Beach in comparison to the warehouses and distribution centers located in the West Inland Empire.

Our most direct regional competitors are in the Inland Empire, a large industrial area located 60 miles east of Los Angeles, which continues its expansion eastward beyond Riverside and San Bernardino into the Perris, Moreno Valley, and Beaumont regions of Southern California. We also face competition within Northern Los Angeles, which is comprised of the San Fernando Valley and Santa Clarita Valley along with areas north of us in the San Joaquin Valley of California. Strong demand for large distribution facilities is driving development farther east in search for large entitled parcels. As development in the Inland Empire continues to move east and farther away from the ports, our distance from the ports is becoming less of a disadvantage.

During 2020, vacancy rates in the Inland Empire dropped to a historic low of 2.6% compared to 3.5% in 2019, with 2020 net absorption totaling 23,805,058 square feet. Asking rents continued to rise by 5.6% year-over-year. The Inland Empire industrial market has not been negatively impacted by the ongoing COVID-19 pandemic. As lease rates increase in the Inland Empire, we often times have greater pricing advantages due to our lower land basis.

During 2020, vacancy rates in the northern Los Angeles industrial market, which includes the San Fernando Valley and Santa Clarita Valley, increased to 2.3%, compared to 1.4% in 2019. Rents have been increasing for the past seven years, and is forecasted to stabilize at the current level at $0.86 PSF NNN. Industrial vacancy rates are expected to continue to drop, and industrial users seeking larger spaces are having to go further north into neighboring Kern County and particularly, TRCC which has attracted increased attention as market conditions continue to tighten. In 2020, the Los Angeles and Long Beach Port container traffic remained high at 14.69 million Twenty-Foot Equivalent Units, or TEU's compared to 14.57 million TEU in 2019. TEU is a measure of a ship's cargo carrying capacity. The dimensions of one TEU are equal to that of a standard shipping container measuring 20 feet long by 8 feet tall.

Joint Ventures:

Our joint venture with TA/Petro owns and operates two travel and truck stop facilities, restaurants, and five separate gas stations with convenience stores within TRCC-West and TRCC-East.

We are involved in three joint ventures with Majestic to develop, lease, manage, and/or acquire industrial buildings within TRCC. The three joint ventures currently own and operate three industrial buildings occupying over 1.7 million rentable square feet.

At December 31, 2020, we were involved in two joint ventures with Rockefeller Development Group (RDG). The two joint ventures are: (1) 18-19 West LLC, which owns 61.5 acres of land for future development within TRCC-West; and (2) TRCC/Rock Outlet Center LLC, which operates the Outlets at Tejon. Our Five West Parcel, LLC joint venture with RDG was dissolved in the fourth quarter of 2020. In 2019, Five West Parcel, LLC sold the building and land within the joint venture to a third party at a sales price of $29,088,000, recognizing a gain of $17,537,000. Our 18-19 West LLC joint venture entered into a land purchase option agreement with the third-party that purchased the Five West building and land, to purchase lots 18 and 19

at a price of $13.8 million through the option period ending May 21, 2021. If the option is extended to November 21, 2021, the price increases to $15.2 million. The land option expires in the fourth quarter of 2021.

In conjunction with providing relief to certain tenants as a result of the COVID-19 pandemic, the TRCC/Rock Outlet Center has agreed to defer rent for certain tenants due to the closure of the outlet center from March 20, 2020 through May 27, 2020. The following table sets forth information regarding the minimum rents billed and deferred to-date at the TRCC/Rock Outlet Center property level for the year-ended December 31, 2020. TRCC/Rock Outlet Center is continuing to work with tenants on temporary rent payment relief through rent deferrals. We continue to assess the probability of collecting outstanding receivables related to the two tenants with whom we are currently in on-going negotiations. Management will continue to monitor each negotiation diligently, and when determined collectability is not probable, will reserve accordingly.


($ in thousands, except number of tenants)	Tenants2	Rent Billing1		Rent Relief due to COVID-19			Deferred Rent Contractually Due in 2020		Deferred Rent Contractually Due in 2021
Rent Deferral Agreements	8	$	977	$	217		$	24	$	193
Rent Abatement Agreements	17	$	1,413	$	575		N/A3		N/A3
On-Going Deferral Negotiations	2	$	269	$	—		$	—	$	—
	27	2,659		792			24		193

Percentage of Rent Deferred or Abated				30		%

1Amounts shown represent rent billing for tenants that had or are undergoing lease renegotiations as of the year-ended December 31, 2020. Of the total contractual rent billings of $2.7 million, $0.8 million was subject to COVID-19 rent relief, while $1.9 million was contractually due as of December 31, 2020.
2 Excludes percentage rent tenants.
3 Not applicable for rent abatement.

Leasing:

Within our commercial/industrial segment, we lease land to various types of tenants. We currently lease land to two auto service stations with convenience stores, 13 fast-food operations, ~~two~~a full-service restaurants, a motel, an antique shop, and a ~~United States Postal Service facility.~~post office.

In addition, the Company leases several microwave repeater locations, radio and cellular transmitter sites, fiber optic cable routes, and 32 acres of land to Pastoria Energy Facility, L.L.C., or PEF, for an electric power plant.

The sale and leasing of commercial/industrial real estate is very competitive, with competition coming from numerous and varied sources around California. Our most direct regional competitors are in the Inland Empire, a large industrial area located east of Los Angeles which continues its expansion eastward beyond Riverside and San Bernardino including Perris, Moreno Valley, and Beaumont region of Southern California, Northern Los Angeles including both the San Fernando Valley and Santa Clarita Valley, and areas north of us in the San Joaquin Valley of California. The principal factors of competition in this industry are price, availability of labor, proximityIn response to the ~~port complex~~COVID-19 pandemic, tenants began requesting various forms of ~~Los Angeles/Long Beach~~rent relief beginning in March 2020 and ~~customer base. A potential disadvantage~~although the requests range in scope, the most common request is for a full or partial rent deferment for three months. During the twelve months ended December 31, 2020, the Company has agreed to ~~our development strategy is our distance from~~defer rent for certain tenants at TRCC, with the ~~ports~~requirement that a significant amount of ~~Los Angeles and Long Beach in comparison to~~ the ~~warehouses and distribution centers located in the Inland Empire. Strong demand for large distribution facilities is driving development farther east in a search for large entitled parcels.~~

~~During 2017, vacancy rates in the Inland Empire approximated 3.7%, the lowest vacancy rate ever recorded in the Inland Empire. Vacancy is at an all-time low and further declines~~deferred rent will be ~~hard to achieve. This is especially true given that 26.1 million square feet remains~~fully repaid in 2021. The following table sets forth information regarding the ~~construction pipeline. The low vacancy rates have also led to an increase in lease rates of 7.7% within~~minimum rents billed and deferred for the ~~Inland Empire. As lease rates increase in the Inland Empire, we may begin to have greater pricing advantages due to our lower land basis.~~twelve months ended December 31, 2020.

During 2017, vacancy rates in the Northern Los Angeles industrial market, which includes the San Fernando Valley and Santa Clarita Valley, approximated 1.7%. This industrial market continues to see available supply remain at extremely low levels, and while new construction has recently been at higher levels, it still has not been enough to keep pace with strong demand, resulting in vacancy remaining at all-time lows and rental rates still rising rapidly. Demand for industrial space in this market will continue to be driven by domestic and global consumption levels. In 2017, the Los Angeles and Long Beach Port container traffic recorded its highest container total ever with 16.89 million Twenty-Foot Equivalent Units, or TEU's, up 8% from 2016 and 7% higher than its second highest year during 2006. TEU is a measure of a ship's cargo carrying capacity. The dimensions of one TEU are equal to that of a standard shipping container measuring 20 feet long by 8 feet tall.


($ in thousands, except for impacted tenants)	Tenants	Rent Billing1		Deferred Rent due to COVID-19			Deferred Rent Contractually Due in 2020		Deferred Rent Contractually Due in 2021
TRCC Leasing	5	$	1,362	$	104		$	18	$	86
Other Commercial Leases	3	522		$	70		13		57
	8	$	1,884	$	174		$	31	$	143

Percentage of Rent Deferred				9		%

1Amounts shown represent rent billing for tenants that had or are undergoing lease renegotiation for the twelve months ended December 31, 2020. Of the total contractual rent billings of $1.9 million, $0.2 million was subject to COVID-19 rent relief, while $1.7 million was contractually due as of December 31, 2020.

The following table summarizes information with respect to lease expirations for our consolidated entities as of December 31, ~~2017.~~2020.


Year of Lease Expiration	Number of Expiring Leases	RSF of Expiring Leases	Annualized Base Rent1	Percentage of Annual Minimum Rent
2021	6	60,722	$239	3.97%
2022	6	47,614	$383	6.36%
2023	5	4,640	$394	6.54%
2024	—	—	$—	—%
2025	5	60,208	$536	8.90%
2026	3	4,645	$259	4.30%
2027	1	1,801	$62	1.03%
20282	1	—	$14	0.23%
20293	1	1,394,000	$3,794	63.00%
2030	—	—	$—	—%
2031	—	—	$—	—%
Thereafter	4	193,207	$341	5.66%
1 - Annualized base rent is calculated as monthly base rent (cash basis) per the lease, as of the reporting period, multiplied by 12. Annualized base rent shown in thousands.
2 - This lease pertains to a communication lease that does not have defined rentable square feet.
3 - This amount includes 32 acres of the PEF ground lease.

Year of Lease Expiration Number of Expiring Leases RSF of Expiring Leases
Annualized Base Rent¹
Percentage of Annual Minimum Rent
2018 3 55,321 $78 0.69%
2019 1 — $24 0.21%
2020 3 61,495 315 2.76
2021 6 60,722 $229 2.01%
2022 5 46,414 $296 2.59%
2023 2 4,640 213 1.86%
2024 — — — —%
2025 2 4,613 260 2.27
2026 3 4,645 $256 2.24%
2027 1 1,801 $86 0.76%
2028 — — — —%
Thereafter²
6 1,589,905 $3,956 —%
_{1 - Annualized base rent is calculated as monthly base rent (cash basis) per the lease, as of the reporting period, multiplied by 12. Annualized base rent shown in thousands.}
_{2 - This amount includes 32 acres of the PEF ground lease.}

~~Eight leases expired during~~For the ~~year-ended~~year ended December 31, ~~2017. The leases were renewed in 2017~~2020, we had two lease renewals and three lease expirations. These expirations represented less than 5% of annualized base rent.

Please refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for information regarding our ~~2017~~2020 commercial/industrial ~~activity.~~operating results.

~~Joint Ventures:~~

During 2016, we entered into a joint venture operating agreement with Majestic to pursue the development, construction, leasing, and management of an approximately 480,480 square foot industrial building on the Company’s property at Tejon Ranch Commerce Center East. In addition, we entered into a second limited liability company agreement with Majestic Realty Co. for the purchase of, ownership of, and management of a fully leased, 651,909 square foot industrial building located at Tejon Ranch Commerce Center.

We are also involved in multiple joint ventures with several partners. Our joint TA/Petro joint venture, owns and operates two travel and truck stop facilities, restaurants, and five separate gas stations with convenience stores within TRCC-West and TRCC-East. We are involved in three joint ventures with Rockefeller Development Group which includes the following: Five West Parcel LLC, which owns a 606,000 square foot building in TRCC-West that is fully leased to Dollar General, 18-19 West LLC, which owns 61.5 acres of land for future development within TRCC-West, and TRCC/Rock Outlet Center LLC, which operates the Outlets at Tejon.

Real Estate - Resort/Residential

Our resort/residential segment activities include land entitlement, land planning and pre-construction engineering, and land stewardship and conservation activities. We have three major resort/residential communities within this segment: ~~MV, which has entitlement approvals and approved tentative tract map for the first three phases of residential development;~~

•Mountain Village at Tejon Ranch

•Centennial ~~which has zoning and land use designation within the Antelope Valley Area Plan, or AVAP, and the Los Angeles County General Plan, is completing the specific plan process in LA County; and~~ at Tejon Ranch

•Grapevine ~~which is on land owned within Kern County that has entitlement approvals and is in the litigation and permitting phase of the process.~~ at Tejon Ranch

The entitlement process precedes the regulatory approvals necessary for land development and routinely takes several years to complete. The Conservation Agreement we entered into with five major environmental organizations in 2008 is designed to minimize opposition from environmental groups to these projects and eliminate or reduce the time spent in litigation once governmental approvals are received. Litigation by environmental and other special interest groups have been a primary cause of delays and increased costs for real estate development projects in California. For discussion on legal matters pertaining to our developments, see Note 14 (Commitments and Contingencies) of the Notes to Consolidated Financial Statements.

As we embark on our ~~mixed use~~mixed-use master planned communities, we understand that it can take up to 25 years, or longer, to complete from commencement of construction. The entitlement process for development of property in California is complex, lengthy (spanning multiple years) and costly, involving numerous federal, state, and county regulatory approvals. We are unable to determine anticipated completion dates for our real estate development projects with certainty because the time for completion is heavily dependent on the regulatory approvals necessary for land development. Also, as a real estate developer, we are cognizant of the micro- and macro-economic factors that have a significant influence on the real estate sector. As a developer, one would be at an economic disadvantage to bring product to market with no willing or able buyers. This ebb and flow of the economy also plays into the timing of our completion date. Costs will also fluctuate over the life of these projects as a result of the cost of labor and raw materials and the timing of approvals and other activity. The uncertainty of estimated costs to completion is compounded by the potential impact of inflation, which will fluctuate with the equally uncertain completion dates for our projects.

Mountain Village at Tejon Ranch:

MV is planned to be an exclusive, low-density, resort-based community that will provide its owners and guests with a wide variety of recreational opportunities, lodging and spa facilities, putting greens, a range of housing options, and other exclusive services and amenities that are designed to distinguish MV as the resort community of choice for the Southern California market. MV ~~is being developed by Tejon Mountain Village LLC, or TMV LLC, a wholly owned subsidiary of the Company. MV~~ encompasses 26,417 acres, including 5,082 acres for a ~~mixed use development~~mixed-use master planned community to include housing, retail, and commercial components. MV is entitled for 3,450 homes, 160,000 square feet of commercial development, 750 hotel keys, and ~~more than~~ 21,335 acres of open space.

~~During December 2017, the Company received approval of Tentative Tract Maps~~ The first tentative tract map for the ~~first three phases of~~project, which includes 752 residential ~~units of MV.~~ lots, was approved by Kern County in December 2017.

We are working toward delivering the first phase of the 160,000 square foot commercial center that we call Farm Village. Farm Village will serve as the ~~“front door”~~commercial center and community gathering place for MV residents and visitors, as well as the gateway to MV. Farm Village will include fresh culinary offerings, artisan markets, boutique lodging, and an array of trails, gardens, and agriculture that will be intertwined to create the most unique, relaxing and ~~“edu-taining”~~edutaining experience while fulfilling the needs of residents of ~~Mountain Village. The Company has submitted plans~~MV. In April 2018, we obtained commercial site plan approval from Kern County for the first phase of ~~this commercial village to Kern County for review and approval.~~

~~In 2014,~~ the ~~Company acquired full ownership~~Farm Village consisting of ~~TMV LLC through the purchase of DMB TMV LLC's interest in the former joint venture for $70,000,000 in cash.~~

~~The Company's decision to obtain full ownership of MV reflects the Company's growth as a fully integrated real estate company and demonstrates our belief in the future success of the development.~~53,180 square feet.

MV is fully entitled and all necessary permits have been issued to begin development once the mapping process is complete. Timing of MV development in the coming years will be dependent on the strength of both the economy and the residential real estate market. ~~In moving the project forward~~For 2021, we will focus on the ~~preparation~~completion of ~~engineering leading to~~ the final map for the first phases of MV, consumer and market research studies and fine tuning of development business plans as well as defining the capital funding sources for this development. As we complete the final map, we expect to begin exploring funding opportunities for the development of MV. Such funding opportunities could come from a variety of sources, such as joint ventures with financial partners, debt financing, or the Company’s issuance of common stock.

Centennial at Tejon Ranch:

The Centennial development is a ~~mixed use~~mixed-use master planned community development encompassing 12,323 acres of our land within Los Angeles County. ~~Upon completion of~~ Centennial it is ~~estimated that the community will include~~entitled for 19,333 homes and 10.1 million square feet of commercial development. Centennial will ~~also~~ incorporate business districts, schools, retail and entertainment centers, medical facilities and other commercial office and light industrial businesses that, when complete, will create a substantial number of jobs. ~~Centennial~~The project is being developed by Centennial Founders, LLC, a consolidated joint venture in which we have a ~~89.28%~~92.85% ownership interest as of December 31, ~~2017.~~ 2020. Centennial is envisioned to be an ecologically friendly community that will achieve a jobs-housing balance.

In December 2018, the Los Angeles County Board of Supervisors took action to approve the Specific Plan and 30 year Development Agreement for Centennial by a vote of 4-1. In April 2019, the Los Angeles County Board of Supervisors' affirmed their final approval of Centennial project. The Company is working with the County of Los Angeles to address litigation filed in the Los Angeles Superior Court and is currently waiting for the Court's decision.

In 2016, Lewis Investment Company withdrew from the joint venture. The surviving members (TRC, TRI Pointe Homes and CalAtlantic) absorbed the equity of Lewis Investment Company based on their respective proportionate interest in the joint venture at the time of the withdrawal. In 2018, CalAtlantic also withdrew from the joint venture. The ~~withdrawal was~~surviving members (TRC and TRI Pointe Homes, Inc.) absorbed the equity of CalAtlantic based on their respective proportionate interest in the joint venture at the time of the withdrawal. Both withdrawals were deemed an equity transaction between members and had no earnings impact toon the Company. ~~Centennial is envisioned to be an ecologically friendly and commercially viable development.~~

Currently, the Los Angeles County Department of Regional Planning is finalizing responses to comments received during the public review of the Draft Environmental Impact Report for the Company’s Centennial master planned community. The responses will become part of the Final Environmental Impact Report that will be considered first by the Los Angeles County Regional Planning Commission tentatively scheduled in April 2018 and later by the Board of Supervisors.

During 2014, the Los Angeles County Board of Supervisors approved the AVAP. The AVAP is designed to guide future development and conservation in the northern-most region of unincorporated Los Angeles County. Centennial is included in the AVAP as part of the west Economic Opportunity Area, or EOA, where future development would be directed. This particular EOA is located along Highway 138 and encompasses the vast majority of Centennial's proposed boundaries. In June 2015, the Los Angeles County Board of Supervisors gave final approval for the AVAP. The AVAP provides Centennial with land use designation and zoning for residential and commercial development.

Grapevine at Tejon Ranch:

Grapevine is a ~~15,315-acre potential development area~~mixed-use master planned community encompassing 8,010 acres of our lands within Kern County located on the San Joaquin Valley floor, ~~area of our lands,~~ adjacent to TRCC. The 2008 Conservation Agreement allows for the development of up to 12,400 acres in this area. We are currently focusing on 8,010 acres for a mixed use development to include housing, retail, and commercial industrial components. Grapevine ~~has received approval~~is entitled for 12,000 homes, 5.1 million square feet for commercial development, and more than 3,367 acres of open space and parks. The 4,643 acres designated for mixed-use development will include housing, retail, commercial, and industrial components. On December 6, 2016, the Kern County Board of Supervisors unanimously approved the ~~specific plan~~Specific Plan and the Environmental Impact Report, or EIR, for the development of the Grapevine community, which included

approval for land use designation, zoning and a development agreement. ~~Subsequently,~~On December 11, 2018, the Kern County Superior Court ruled that portions of the EIR required corrections and ordered that the County rescind the Grapevine project approvals until a supplemental environmental analysis addressing the corrections was ~~sued related~~completed. On December 10, 2019, the Kern County Board of Supervisors adopted the supplemental re-circulated EIR prepared in response to the ~~approval~~court ruling, and ~~we are working with~~reapproved the development of Grapevine unanimously. On January 10, 2020, an action was filed in Kern County Superior Court pursuant to ~~defend~~CEQA against Kern County, concerning Kern County’s approval of the ~~approved~~December 2019 re-entitlement, including certification of the final EIR. ~~The entire litigation~~On January 22, 2021 the court ruled in favor of the Company and ~~permitting process will take several years~~Kern

County on all issues, and directed Kern County and the ~~investment~~Company to prepare a final judgment reflecting its ruling in favor of ~~several million dollars~~the Company. See Note 14 (Commitments and Contingencies) of the Notes to ~~successfully complete.~~Consolidated Financial Statement for further discussion.

The greatest competition for the Centennial and Grapevine communities will come from California developments in the Santa Clarita Valley, Lancaster, Palmdale, and Bakersfield. The developments in these areas will be providing similar housing product as our developments. The principal factors of competition in this industry are product segmentation, pricing of product, amenities offered, and location. We will attempt to differentiate our developments through our unique setting, land planning and different product offerings. MV will compete generally for discretionary dollars that consumers will allocate to recreational and residential homes.

The following is a summary of the Company's residential real estate developments as of December 31, ~~2017:~~2020:


Community:	Mountain Village	Grapevine	Centennial	Resort	Community:	Mountain Village	Grapevine	Centennial	Resort
Location:	Kern County		Los Angeles County	Residential	Location:	Kern County		Los Angeles County	Residential
Entitlement Status¹:	Entitled	Entitled²	In Progress	Total
Project Status1:					Project Status1:	Entitled			Total
Entitlement Area (acres):	26,417	8,010	12,323	46,750	Entitlement Area (acres):	26,417	8,010	12,323	46,750
Housing Units:	3,450	12,000	19,333	34,783	Housing Units:	3,450	12,000	19,333	34,783
Commercial Development (sqft)³:	160,000	5,100,000	10,100,000	15,360,000
Commercial Development (sqft)2:					Commercial Development (sqft)2:	160,000	5,100,000	10,100,000	15,360,000
Open Areas (acres):	21,335	3,367	5,624	30,326	Open Areas (acres):	21,335	3,367	5,624	30,326
Costs to Date⁴:	$132,034	$28,139	$94,271	$254,444
Costs to Date3:					Costs to Date3:	$146,662	$36,815	$108,600	$292,077

(1) Estimated completion anticipated to be 25 years, or longer, from commencement of construction. To-date construction has not begun.

(2) ~~Kern County was sued related to the approval of the EIR and we are working with Kern County to defend the approved EIR.~~

~~(3)~~ MV also has approval for up to 750 lodging units and 350,000 square feet of facilities in support of two 18-hole golf courses.

~~(4)~~(3) Total estimated project costs are difficult to accurately forecast with any certainty at this time due to finalization of entitlement and mapping processes, as well as final engineering for the developments, and capital funding structure selected. Dollars presented in thousands.

Mineral Resources

Mineral resources consist of oil and gas royalties, rock and aggregate royalties, royalties from a cement operation leased to National Cement Company of California, Inc., or National, and the management of water assets and water infrastructure. We continue to look for opportunities to grow our mineral resource revenues through expansion of leasing and encouraging new exploration. ~~Within~~The management of our water assets ~~we are expanding our resources through new well drilling programs, while at~~consists of the ~~same time looking for opportunities to continue to purchase~~evaluation of near-term highest and best uses, which can include the sale of water ~~as we have in the past. We will look to sell excess water over our internal needs~~ on a temporary basis, ~~until that~~the use of water ~~is needed by us~~for internal purposes, and the storage of water for future use in our ~~real estate and agricultural operations.~~development projects. At the same time we are also evaluating opportunities as they arise for the purchase of additional water assets as we have done in the past.

We receive our royalty interest in cash. Royalty rates are ~~cautiously optimistic that we could see new~~contractually defined and based on a percentage of production ~~activity later~~and are received in ~~2018 as oil prices in Kern County stabilize~~cash. Our royalty revenues fluctuate based on changes in the ~~mid-$50 per barrel range or higher. We expect~~market prices for oil, natural gas, and rock and aggregate product, the increased oil prices will provide some improvements to our 2018 royalty revenues as compared to 2017 royalty revenues. We are expecting water sales for 2018 to improve when compared to the prior year due to ainevitable decline in ~~rain~~production of existing wells and ~~snow in California in late 2017~~quarries, and ~~early 2018, as compared~~other factors affecting the third-party oil and natural gas exploration and production companies that operate on our lands including the cost of development and production.

Estimates of oil and gas reserves on our properties are unknown to ~~the previous winter. Currently, the California State Water Project 2018 allocation is only at 20% of contract water amounts. This factor is also supportive of improved water sales.~~us. We do not make such estimates, and our lessees do not make information concerning reserves available to us.

We lease certain portions of our land to oil companies for the exploration and production of oil and gas. We however do not engage in any oil exploration or extraction activities. As of December 31, ~~2017, 8,824~~2020, 10,332 acres were committed to producing oil and gas leases from which the operators produced and sold approximately ~~263,000~~114,567 barrels of oil and ~~209,000~~207,000 MCF (each MCF being 1,000 cubic feet) of dry gas during ~~2017.~~2020. Our share of production, based upon average royalty rates during the last three years, has been ~~99, 114,~~37, 78, and ~~149,~~89 barrels of oil per day for ~~2017, 2016,~~2020, 2019, and ~~2015,~~2018, respectively. There are ~~310~~313 active oil wells located on the leased land as of December 31, ~~2017.~~2020. Royalty rates on our leases averaged approximately ~~13%~~12% of oil production in ~~2017.~~2020.

~~Estimates~~In 2020, social distancing and California's stay-at-home orders reduced the demand for oil and gasoline within California. The average price per barrel of oil, at one point, decreased 25% from their December 31, 2019 levels. Oil pricing decreased as a result of a surplus of oil in the first half of 2020 impacting the production levels of our lessees. The Company believes that pricing will slowly and ~~gas reserves~~gradually improve once consumers feel safe and the global economy reopens, fully. However, it is very

difficult to predict when this will occur. Thus far in 2021, the price per barrel of oil is 22% higher than its December 31, 2020 level.

In July 2020, our largest oil royalty tenant, California Resources Corporation, or CRC, filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code, intended to allow them to improve their liquidity and debt positions. While in bankruptcy CRC received permission from the courts to allow them to pay lease and oil royalty obligations without interruption. CRC successfully emerged from bankruptcy in October 2020 and is once again being traded on public markets. CRC reduced production in 2020 and we expect as prices improve that we will later in 2021 begin to see increases in production levels. CRC has approved permits and drill sites on our ~~properties~~land and has delayed the start of drilling as it evaluates the market. A positive aspect of our lease with CRC is that the approved drill sites are ~~unknown~~in an area of the ranch where the development and production costs are moderate due to ~~us. We do not make such estimates, and our lessees do not make information concerning reserves available~~the depths being drilled. CRC is current on all payments due to ~~us.~~us through December 31, 2020.

We have approximately 2,000 acres under lease to National, for the purpose of manufacturing Portland cement from limestone deposits found on the leased acreage. National owns and operates a cement manufacturing plant on our property with a capacity of approximately 1,000,000 tons of cement per year. The amount of payment that we receive under the lease is based upon

shipments from the cement ~~plant, which~~plant. In 2020, payments increased ~~during 2017 compared to 2016. The improvement in shipments is~~ due to an increase in ~~road construction activity as compared to the prior years.~~production caused by an increase in regional construction. The term of this lease expires in 2026, but National has options to extend the term for successive periods of 20 and 19 years. Proceedings under environmental laws relating to the cement plant are in process. The Company is indemnified by the current and former tenants, and at this time, we have no cost related to the issues at the cement plant. See Item 3, “Legal Proceedings,” for a further discussion.

We also lease 521 acres to Granite Construction and Griffith Construction for the mining of rock and aggregate product that is used in construction of roads and bridges. The royalty revenues we receive under these leases are based upon the amount of product produced at these sites.

~~Our royalty interests are contractually defined~~Water sales opportunities for 2021 will depend on rain and ~~based on a percentage~~snowfall volume along with California State Water Project, or SWP, allocations. As of ~~production and are received in cash. Our royalty revenues fluctuate based on changes in~~December 31, 2020, the ~~market prices for oil, natural gas, and rock and aggregate product, the inevitable decline in production~~2021 SWP allocation is at 10% of existing wells and quarries, and other factors affecting the third-party oil and natural gas exploration and production companies that operate on our lands including the cost of development and production.contract amounts.

In August 2015, we entered into a water sale agreement with PEF, our current lessee under a power plant lease. ~~Beginning in 2016, PEF may purchase from us up to 2,000 acre-feet of water and from January 2017 through July 2030,~~ PEF may purchase from us up to 3,500 acre feet of water per year through July 2030, with an option to extend the term. PEF is under no obligation to purchase water from us in any year, but is required to pay us an annual option payment equal to 30% of the maximum annual payment. The price of the water under the agreement is ~~$1,088~~$1,279 per acre-foot of annual water in ~~2018,~~2020, subject to 3% annual increases for the duration of the lease agreement. The Company's commitments to sell this water can be met through current water ~~assets.~~sources.

Farming Operations

In the San Joaquin Valley, we farm permanent crops including the following acreage: wine grapes—~~1,186;~~ 835; almonds—~~1,983 (1,379~~2,281 (1,548 in production and ~~604~~733 not in production); and pistachios—1,053. We manage the farming of alfalfa and forage mix on ~~775~~626 acres in the Antelope Valley, and we periodically lease ~~1,000~~720 acres of land that is used for the growing of vegetables but also can be used for the development of permanent crops such as almonds.

The Company's agribusiness operations are deemed essential and have been allowed to operate under California's COVID-19 orders. The Company continues to provide its employees with face masks and safety training to promote a safe working environment. As of the December 31, 2020, COVID-19 has not had a measurable impact on the Company's farming operations.

We sell our farm commodities to several commercial buyers. As a producer of these commodities, we are in direct competition with other producers within the United States, or U.S., and throughout the world. Prices we receive for our commodities are determined by total industry production and demand levels. We attempt to improve price margins by producing high quality crops through proven cultural practices and by obtaining better prices through marketing arrangements with handlers.

Nut and grape crop markets are particularly sensitive to the size of each year’s world crop and the demand for those crops. The industry continues to see strong demand for almonds and pistachios but the continued increase in production has begun to negatively impact prices. Crop prices, especially almonds, are also adversely affected by a strong U.S. dollar which makes U.S. exports more expensive and decreases demand for the products we produce. The U.S. dollar weakened against the Chinese Yuan for most of 2020 as a result of the pandemic, making U.S. nut crops more attractive.

Sales of our grape crop typically occur in the third and fourth quarters of the calendar ~~year, while sales~~year. Sales of our pistachio and almond crops also typically occur in the third and fourth ~~quarter~~quarters of the calendar year, but can occur up to a year or more after each crop is harvested.

In ~~2017,~~2020, we sold ~~51%~~40% of our grape crop to one winery, ~~21%~~38% to a second winery and the remainder to ~~three~~two other

customers. These sales are under ~~long-term~~ contracts ranging from one to 12eight years. In ~~2017,~~2020, our almonds were sold to various commercial buyers, with the largest buyer accounting for ~~50%~~29% of our ~~almond revenues.~~crop. We sold pistachios to ~~two~~three customers with the largest accounting for ~~74%~~62% of our ~~pistachio revenues.~~crop. We do not believe that we would be adversely affected by the loss of any or all of these ~~large~~ buyers because of the markets for these commodities, the large number of buyers that would be available to us, and the fact that the prices for these commodities do not vary based on the identity of the buyer or the size of the contract.

~~Our~~For 2020, the almond industry had record production in excess of 3 billion pounds. The Company’s 2020 almond yields saw a small increase over 2019 levels as a result of putting into service two additional almond crop units. The mix of demand has been changed in the near term as a result of COVID-19 as more product is moving through wholesale markets and less through high end users such as restaurants. This temporary trend, along with the strong 2020 industry production, has negatively impacted pricing. Comparatively, the average price per pound for the 2020 almond crop is $2.02 per pound compared to $2.82 per pound for the 2019 almond crop.

Although 2020 was an on production year for pistachios, unfavorable warm winter conditions adversely impacted our pistachio's blooms and yields. Overall 2020 pistachio yields decreased 45% when compared to 2019 which was a down bearing year. In terms of pricing, our 2020 crop is selling for $2.04 per pound compared to $1.98 in 2019. The impact of lower chill hours has impacted pistachio growers in the southern end of the San Joaquin Valley in similar areas as to where we farm and lower production has been seen in these areas. Overall for California, production is up due to 2020 being an on production year and chill hours being greater in growing areas to the north of our lands.

For wine grapes, yields deceased as a result of removing a 313-acre vineyard in 2020. Overall average pricing for wine grapes has increased slightly because the remaining multi-year wine grape ~~crop~~ sales are highly seasonal with a majority of our sales occurring during the third and fourth quarters. Nut and grape crop markets are particularly sensitive to the size of each year’s world crop and the demand for those crops. Large crops in California and abroad can rapidly depress prices. Crop prices, especially almonds, are also adversely affected by a strong U.S. dollar which makes U.S. exports more expensive and decreases demand for the products we produce. The low value of the U.S. dollar in prior years has helped to maintain strong almond prices in overseas markets, but we are now seeing this change as the U.S. dollar has strengthened against the Euro. The full potential impact ofcontracts have an ~~increasing U.S. dollar to our pricing and revenue is not known at this time.~~overall higher price.

Weather conditions ~~such as warmer than normal winter temperatures such as in 2018,~~ could impact the number of tree and vine dormant hours, which are integral to tree and vine growth. We will not know ~~if there has been a negative~~the impact of current weather conditions on ~~2018~~2021 production until ~~late spring or~~the early summer of ~~2018. We have also seen lighter rain fall during winter of 2017-2018, which could also negatively impact 2018 production.~~2021.

~~Many counties within California including Kern County are again considered to be in a drought condition based on the below average rainfall received~~At this ~~winter. The reduced amount of rain and snow pack has led~~time the State Department of Water Resources ~~or DWR, to announce~~has announced that ~~its~~the estimated water supply ~~delivery~~ for ~~2018~~2021 will be at ~~20%~~10% of full entitlement. This allocation is expected to change based upon winter storms. The

current ~~20%~~10% allocation of ~~state~~ SWP water alone is not enough for us to farm our crops, but our additional water resources, such as groundwater and surface sources, and those of the water districts we are in, should allow us to have sufficient water for our farming needs. It is too early in the year to determine the impact of ~~the 2018~~2021 water supplies and its impact on ~~2018~~2021 California crop production for almonds, pistachios, and wine grapes. See discussion of water contract entitlement and long-term outlook for water supply under Item 2, “Properties.” Also see Note 6,6. (Long-Term Water Assets) of the Notes to Consolidated Financial Statements for additional information regarding our water assets.

Ranch Operations

~~During 2015, the Company reclassified certain revenues and expenses previously classified as commercial/industrial into a new segment called Ranch Operations.~~

Ranch operations consist of game management revenues and ancillary land uses such as grazing leases and filming. Within game management, we operate our High Desert Hunt Club, a premier upland bird hunting club. The High Desert Hunt Club offers over 6,400 acres and 35 hunting fields, each field providing different terrain and challenges. The hunting season runs from mid-October through March. We also sell individual hunting packages as well as seasonal hunting memberships.

Approximately 256,000 acres are used for two grazing leases, which account for 43% of total revenues from ranch operations at December 31, 2020.

Ranch operations also includes Hunt at Tejon, which offers a wide variety of guided big game hunts, including trophy Rocky Mountain elk, deer, turkey and wild pig. We offer guided hunts and memberships for both the Spring and Fall hunting seasons. At December 31, ~~2017,~~2020, game management accounts for ~~41%~~37% of the total revenue from ranch operations.

In addition, the ranch operations segment is in charge of upkeep, maintenance, and security of all 270,000 acres of land.

~~Approximately 256,000 acres are used for two grazing leases, which account for 42% of total revenues from ranch operations at December 31, 2017.~~

General Environmental Regulation

Our operations are subject to federal, state, and local environmental laws and regulations including laws relating to water, air, solid waste, and hazardous substances. Although we believe that we are in material compliance with these requirements, there can be no assurance that we will not incur costs, penalties, and liabilities, including those relating to claims for damages to property or natural resources, resulting from our operations. Environmental liabilities may also arise from claims asserted by adjacent landowners or other third parties. We also expect continued legislation and regulatory development in the area of climate change and greenhouse gases. It is unclear as of this date how any such developments will affect our business. Enactment of new environmental laws or regulations, or changes in existing laws or regulations or the interpretation of these laws or regulations, might require expenditures in the future. We historically have not had material environmental liabilities.

Environmental Sustainability

Environmental stewardship, or sustainability, is one of Tejon Ranch Co.’s core values, along with quality and visionary innovation. This commitment to sustainability manifests itself in many ways across the Company and its operations.

Climate Change

The Company maintains policies intended to both reduce its carbon footprint and proactively sequester, or capture and store, carbon.

•Since 2008, the Company has voluntarily conserved 240,000 acres of its land covered by trees and other vegetation. A recent analysis conducted for the Company by Dudek Environmental Service s determined that this acreage effectively sequesters 3.3 million tons of carbon. That equals the volume of carbon produced in a single year by 2.5 million passenger vehicles-10% of California’s 2019 passenger vehicle fleet.

•Solar power is used significantly within TRCC. For example, in 2019 the Company installed a solar covered parking structure at the Outlets at Tejon. The structure covers 1.85 acres and is projected to offset 83% of the center’s electricity needs for shared spaces and produce 1,076,000 kWh of clean energy every year. In addition, the IKEA distribution center at TRCC features a 1.8 MW photovoltaic solar array covering 370,000 square feet of the warehouse’s rooftop. The system handles the power needs of IKEA’s distribution center and provides power into the electric grid as well.

•The Company has entered into a lease with Calpine Energy, a power generating company, for the development of a 600-acre industrial-sized solar field. Located immediately adjacent to Calpine’s PEF, a natural gas and steam powered generating plant in the San Joaquin Valley portion of the Ranch, the solar array is expected to produce approximately 100 MW of power once fully operational.

•The Company’s three master planned mixed-use residential communities are also designed to make use of renewable energy sources:

◦At Grapevine, 50% or more of its energy supply will be produced on site by renewable sources.

◦All homes in Mountain Village will feature roof-top photovoltaic solar arrays.

◦At Centennial, like Grapevine, at least 50% of the energy supply will be produced by on-site renewable sources.

Air Quality

•The Company has contracted with the San Joaquin Valley Unified Air Pollution Control District (“SJVUAPCD”) to pre-mitigate air emissions related to the Company’s current development at TRCC-East and future development at Mountain Village and Grapevine. As of 2020, the SJVUAPCD had fully offset current air emissions at TRCC-East, as well as future emissions projected to occur at full build-out of the project.

•Nearly two decades ago, the Company helped establish and has continuously supported Valley Clean Air Now (“VCAN”), a non-profit, 501(c)(3) public charity that advances quantifiable and voluntary solutions addressing air pollution in California’s San Joaquin Valley, a region with some of the worst air quality and highest poverty levels in the United States. The Company continues to support VCAN in its mission to improve public health and quality of life in disadvantaged communities located in the region.

◦VCAN’s programs deliver $850 smog repair vouchers and $9,500 in down payment incentives to low-income residents in the region so they can replace high-polluting vehicles with used plug-in or hybrid cars.

◦In the past five years, VCAN has helped more than 35,000 households improve their vehicle emissions by completing over 20,000 smog repairs and providing more than 26,000 smog repair vouchers. Additionally, VCAN’s vehicle replacement program has delivered more than 2,000 plug-in electric vehicles. Based on pre- and post-repair emission capture readings, VCAN’s vehicle repair and replacement work has generated 692 tons of oxides of nitrogen (also known as “NOx”), 71 tons of carbon monoxide, and 90 tons of hydro-carbon emission reductions.

Water Conservation

•At TRCC-East, all water used for irrigation purposes is reclaimed water from the water treatment plant. Landscaping at the Outlets at Tejon consists of drought-tolerant, native planting material.

•Each of the Company’s master planned mixed-use residential communities will feature state-of-the-art water conservation measures, reclaimed water for irrigation, stormwater capture, and drought-tolerant landscaping.

•The Company’s agricultural operations use highly efficient drip irrigation to water its orchards and vineyards.

Customers

During ~~2017,~~2020, our PEF power plant lease accounted for ~~11%~~12% of total revenues. In ~~2016,~~both 2019 and ~~2015~~2018, the PEF power plant lease generated ~~8%, and 7%~~9% of our total ~~revenues, respectively.~~revenues. No other ~~client tenant~~customer represents 5% or more of our revenues in ~~2017~~2020 and ~~2016.~~2018.

Organization

Tejon Ranch Co. is a Delaware corporation incorporated in 1987 to succeed the business operated as a California corporation since 1936.

Employees

At December 31, ~~2017,~~2020, we had ~~131~~85 full-time employees. We believe that we have good relations with our employees. We have adopted a Compliance with State and Federal Statutes, Rules and Regulations Reporting Policy that applies to all of our employees. Its receipt and review by each employee is documented and verified quarterly. None of our employees are covered by a collective bargaining agreement.

Reports

We make available free of charge through our Internet website, www.tejonranch.com, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to these reports filed or to be furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after we electronically file such material with or furnish it to the SEC. We also make available on our website our corporate governance guidelines, charters of our ~~key~~ Board of Directors’ Committees (audit, compensation, nominating and corporate governance, and real estate), and our Code of Business Conduct and Ethics for Directors, Officers, and Employees. These items are also available in printed copy upon request. We intend to disclose in the future any amendments to our Code of Business Conduct and Ethics for Directors, Officers, and Employees, or waivers of such provisions granted to executive officers and directors, on the web site within four business days following the date of such amendment or waiver. Any document we file with the Securities and Exchange Commission, or SEC, may be inspected, without charge, at the SEC’s ~~public reference room at 100 F Street, N.E. Washington, D.C. 20549 or at the SEC’s internet site address at~~ website: http://~~www.sec.gov~~. www.sec.gov.

Information ~~related to the operation of the SEC’s public reference room may be obtained by calling the SEC at 1-800-SEC-0330.~~

about our Executive Officers ~~of the Registrant~~

The following table shows each of our executive officers and the offices held as of March ~~1, 2018,~~3, 2021, the period the offices have been held, and the age of the executive officer.


Name	Office	Held since	Age	Name	Office	Held since	Age
Gregory S. Bielli	President and Chief Executive Officer, Director	2013	57	Gregory S. Bielli	President and Chief Executive Officer, Director	2013	60
Allen E. Lyda	Executive Vice President, Chief Financial Officer	1990	60	Allen E. Lyda	Executive Vice President and Chief Operating Officer	2019	63
Hugh McMahon	Executive Vice President, Real Estate	2014	51	Hugh McMahon	Executive Vice President, Real Estate	2014	54
Joseph N. Rentfro	Executive Vice President, Real Estate	2015	49
Robert D. Velasquez	Senior Vice President, Finance and Chief Accounting Officer	2015	51	Robert D. Velasquez	Senior Vice President, Chief Financial Officer	2019	54
Michael R.W. Houston	Senior Vice President, General Counsel	2016	43

A description of present and prior positions with us, and business experience ~~for the past five years~~ is given below.

Mr. Bielli has been employed by the Company since September 2013. Mr. Bielli joined the Company as President and Chief Operating Officer and became President and Chief Executive Officer on December 17, 2013. Prior to joining the Company, Mr. Bielli was President of Newland Communities' Western Region, a diversified real estate company, and was responsible for overseeing management of all operational aspects of Newland's real estate projects in the region. Mr. Bielli worked with Newland Communities from 2006 through August 2013.

Mr. Lyda has been employed by us since 1990, initially serving as Vice President, Finance and Treasurer. He was elected Assistant Secretary in 1995 and Chief Financial Officer in 1999. Mr. Lyda was promoted to Senior Vice President in 2008, and Executive Vice President in 2012. Mr. Lyda's title was subsequently changed in 2013 to Executive Vice President and Chief Financial Officer to more accurately describe the responsibilities of his office. On January 1, 2019, he was appointed to the role of Chief Operating Officer and ceased serving as the Company's Chief Financial Officer.

Mr. McMahon joined the Company in November 2001 as Director of Financial Analysis. In 2008, Mr. McMahon became Vice President of Commercial/Industrial Development and in December of 2014, was promoted to Senior Vice President of Commercial/Industrial Development and elected as an officer of the Company. In 2015, he was promoted to Executive Vice President. Mr. McMahon's title was subsequently changed to Executive Vice President, Real Estate.

Mr. Rentfro joined the Company on February 27, 2015 and was elected Executive Vice President of Real Estate on March 9, 2015. Mr. Rentfro's prior experiences involved development efforts for a number of major projects within the Emirate of Abu Dhabi in the United Arab Emirates. Notable developments include the Westin Abu Dhabi Golf Resort & Spa, Monte Carlo Beach Club-Saadiyat, Eastern Mangroves Resort and Residences, St. Regis Saadiyat Island Residences, and the Al Yamm and Al Sahel Villas at the Desert Islands Resort & Spa by Anantara. Prior to his work in the Middle East, Mr. Rentfro held executive positions at The St. Joe Company (NYSE: JOE), ascending ultimately to Regional Vice President and General Manager. There he led all efforts related to planning, design, entitlement, development, construction, asset management, marketing and sales for real estate operations within a 330,000-acre region along the Gulf Coast of Northwest Florida.

Mr. Velasquez joined the Company as Vice President of Finance ~~of Tejon Ranchcorp, or TRC, a subsidiary of the Company,~~ in ~~2017.~~2014. Mr. Velasquez's title was subsequently changed, in 2015, to Vice President of Finance and Chief Accounting Officer to more accurately describe the responsibilities of his office. Prior to joining ~~TRC,~~the Company, Mr. Velasquez served as an Executive Director at Ernst & Young in their audit and assurance practice section. Mr. Velasquez worked with Ernst & Young from 1999 through 2014. Mr. Velasquez holds a B.S. in Business Administration ~~with an option in~~– Option: Accounting from California State University, Los Angeles. Mr. Velasquez is a Certified Public Accountant in the state of California. On January 1, 2018 he was promoted to Senior Vice President, Finance and Chief Accounting Officer. On January 1, 2019, he was appointed Chief Financial Officer.

Mr. Houston joined the Company in May 2016 as the Senior Vice President, General Counsel. He previously worked for the City of Anaheim, where he served as City Attorney from 2013 through 2016. His background involves extensive experience in corporate governance, municipal law, real estate, land use and environmental issues. Prior to working for the City of Anaheim, he served as a partner for a Newport Beach, CA-based law firm of Cummins & White from 2011 to 2013, and prior to that, was a partner at Rutan & Tucker, LLP, Costa Mesa, CA.

ITEM 1A. RISK FACTORS

The risks and uncertainties described below are not the only ones facing the Company. 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, also may materially adversely affect our business, financial condition, and results of operations. In addition, to the effects of the COVID-19 pandemic and resulting global disruptions on our business and operations discussed in Item 7 of this Form 10-K and in the risk factors below, additional or unforeseen effects from the pandemic and the global economic climate may give rise to or amplify many of these risks discussed below.

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, including the demand for our products and services, the success of investments in our real estate development, technology and public policy.

Adverse changes in economic conditions in markets where we conduct our operations and where prospective purchasers of our future homes and commercial products 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 and depress prices and cause buyers to cancel their purchase agreements. This, 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 buyers to qualify for financing, which can lead to a decrease in the demand for residential, commercial or industrial sites. 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 require 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 the number of homes and other structures 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 could increase 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. As a result, the prospect 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 could result in denial of the right to develop, or would, by their nature, adversely affect the length of time and the cost required to obtain the

necessary approvals. In addition, adverse decisions arising from any litigation would 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 could 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 greenhouse gas 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 litigation challenging the approval of a project which they usually do by alleging inadequate 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 litigation challenging their approval is expected. Currently, the ~~Grapevine~~Centennial entitlement approval has been opposed through litigation against the Company and ~~litigation has been filed against Kern County as~~Los Angeles County. At Grapevine, the ~~approving governmental entity. 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, emissions of greenhouse gases, water availability and criticism of proposed development in rural areas as being ~~“sprawl”.~~“sprawl.” In addition, California has a specific statutory and regulatory scheme intended to reduce greenhouse gas emissions in the state and efforts to enact federal legislation to address climate change concerns could require further reductions in our projects’ carbon footprint in the future.

Until ~~governmental entitlements~~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, ~~and/or entitlements.~~overcoming litigation, and receiving final maps from local jurisdictions. A delay in ~~obtaining governmental approvals~~achieving these items could lead to additional costs related to these developments and potentially lost opportunities for the sale of lots 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 ~~approvals~~ and ~~entitlements,~~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 harm our results of operations.

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 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 lots may decline as a result of weak economic conditions or restrictive regulations.

We have in the past and may in the future encounter other risks that could impact our ability to develop our land. We have in the past and may ~~also~~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;

•Shortages of materials; and

•Increases in the cost of materials.

A prolonged downturn 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~~litigation 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

•Interest rates

•Consumer confidence

•Demand for the developed product, whether residential or industrial

•Supply of similar product, whether residential or industrial

The process of ~~development of~~ a ~~project~~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.

The inability of a client tenant to pay us rent ~~could~~ adversely ~~affect~~affects our business. Our commercial revenues are derived primarily from rental payments and reimbursement of operating expenses under our leases. If our client tenants fail to make rental payments under their leases, our financial condition and cash flows could 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 client 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 client tenants terminate early or decide not to renew their leases, we may not be able to re-lease the space. Even if client 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 client 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. ~~Our leases allow us to pass along real estate taxes, insurance, utilities, common area, and other operating expenses (including increases thereto) in addition to base rent. However, we~~We cannot be certain that our client tenants will be able to bear the full burden of ~~these higher~~ 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 client tenants, to seek space elsewhere. If operating expenses increase, the availability of other comparable space in the markets we operate in may hinder or limit our ability to increase our ~~rents;~~rents, if operating expenses increase without a corresponding increase in revenues, our profitability could diminish.

From time to time we experience shortages or increased costs of labor and supplies or other circumstances beyond our control ~~there could be~~that cause delays or increased costs within our industrial development, which ~~could~~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. 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.

~~Decreases in the market value of our investments in marketable securities could have an adverse impact on our results of operations.~~ We have a significant amount of funds invested in marketable securities, the market value of which is subject to changes from period to period. Decreases in the market value of our marketable securities could have an adverse impact on our results of operations.

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; ~~actions by the Organization of Petroleum Exporting Countries;~~ 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; 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. ~~Any substantial~~Substantial or extended decline in the price of oil and gas could have a negative impact on our business, liquidity, financial condition and results of operations. Substantial or extended declines in future natural gas or crude oil prices ~~would~~could have ~~a material~~an adverse effect on our future business, liquidity, financial condition and results of operations, cash flows, liquidity or ability to finance planned capital expenditures and commitments. Furthermore, substantial, extended decreases in natural gas and crude oil prices may cause us to delay development projects and could negatively impact our ability to borrow, our cost of capital and our ability to access capital markets, increase our costs under our revolving credit facility, and limit our ability to execute aspects of our business plans.operations.

Our reserves and production will decline from their current levels. The rate of production from oil and natural gas properties generally decline as reserves are produced. 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.

~~Terrorist attacks~~Natural and man-made disasters, public health crises, political instability, and other potentially catastrophic events may have an adverse impact on our business and operating results and could decrease the value of our assets. ~~Terrorist~~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. ~~Future terrorist attacks~~Catastrophic events occurring anywhere in the world may result in declining economic activity, which could reduce the demand for and the value of our properties. To the extent that ~~future terrorist attacks~~catastrophic events impact our client 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.

Our results of operation have been and may continue to be adversely affected by the ongoing COVID-19 pandemic. In March 2020, the World Health Organization declared the outbreak of COVID-19, a novel strain of coronavirus first identified in Wuhan, China in December 2019, a pandemic. This outbreak, which has spread widely throughout the United States and nearly all other regions of the world, has prompted federal, state and local governmental authorities in the United States to declare states of emergency and institute preventative measures to contain and/or mitigate the public health effects. These

preventative measures, which include quarantines, shelter-in-place orders and similar mandates that substantially restrict daily activities for many individuals, as well as orders calling for the closure and/or curtailment of operations for many businesses, have caused and continue to cause significant disruption to businesses in affected areas, as well as the financial markets both globally and in the United States, more broadly.

On a broader scale, we may also be materially and adversely affected by the disruptions to U.S. and local economies that result from the COVID-19 pandemic, including reduced consumer confidence, unemployment levels, inflation and fluctuating interest rates. The possibility of a prolonged recession or economic downturn could result in, among other things, a decrease in demand and consumer goods; diminished value of our real estate investments, including potential impairments.

Ultimately, the prolonged effects of the COVID-19 pandemic on our business and results of operation, which are highly uncertain and cannot be predicted, will depend upon future developments, including the widespread acceptance and dissemination of vaccines amongst the broader population; the duration and severity of existing social distancing and shelter-in-place orders even after vaccines are widespread and available; further mitigation strategies taken by applicable government authorities; adequate treatments and the prevalence of widespread immunity to COVID-19; the impacts on our supply chain; the health of our employees, service providers and trade partners; and the reactions of U.S. and global markets and their effects on consumer confidence and spending. Such adverse effects, however, may also include decreases in: oil prices, commodity prices, and traffic, which our commerce center is highly dependent on, which may continue to impact our 2021 results of operations.

Failure to maintain effective internal control over financial reporting could have a material adverse effect on our business, results of operations, financial condition, and stock price. Pursuant to the Sarbanes-Oxley Act of 2002, we are required to provide a report by management on internal control over financial reporting, including management’s assessment of

the effectiveness of internal control. Changes to our business will necessitate ongoing changes to our internal control systems and processes. Internal control over financial reporting may not prevent or detect misstatement because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud. Therefore, even effective internal controls can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements. If we fail to maintain the adequacy of our internal controls, including any failure to implement required new or improved controls, or if we experience difficulties in their implementation, our business, results of operations, and financial condition could be materially harmed, and we could fail to meet our reporting obligations and there could be a material adverse effect on our stock price.

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 against damages 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 ~~the~~our security ~~of Tejon's~~ and ~~its~~our customers', partners', suppliers' and third-party service providers' products, systems and networks and the confidentiality, availability and integrity of ~~Tejon's and its customers'~~the data. ~~While we attempt to mitigate these risks by employing a number of measures, including employee training, monitoring and testing, and maintenance of protective systems and contingency plans, we~~We remain potentially vulnerable to additional known or unknown ~~threats.~~threats despite 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. ~~Despite our~~Our efforts to protect sensitive, confidential or personal data or information, we may benonetheless 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 recently-passed 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 farm lands 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.

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 industrial 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~~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, and equity offerings to meet current working capital needs, entitlement investment, and investment within our developments. ~~While the current economy is seen as strong, any~~Any slowdown in the 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. These competing interests lead to the difficult challenges 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 long-term debt 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 credit facility contains financial covenants requiring the maintenance of a maximum total liabilities to tangible net worth not greater than .75 to 1 at each quarter end, a debt service coverage ratio not less than 1.25 to 1.00, and a minimum level of liquidity of $20,000,000, including any unused portion of our revolving credit facility. 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.

Uncertainty relating to the LIBOR calculation process and potential phasing out of LIBOR in the future may adversely affect the value of any outstanding debt instruments. National and international regulators and law enforcement agencies have conducted investigations into a number of rates or indices known as “reference rates.” Actions by such regulators and law enforcement agencies may result in changes to the manner in which certain reference rates are determined, their discontinuance, or the establishment of alternative reference rates. In particular, on July 27, 2017, the Chief Executive of the U.K. Financial Conduct Authority (the “FCA”), which regulates LIBOR, announced that the FCA will no longer persuade or compel banks to submit rates for the calculation of LIBOR after 2021. Such announcement indicates that the continuation of LIBOR on the current basis cannot and will not be guaranteed after 2021. As a result, it appears highly likely that LIBOR will be discontinued or modified by 2023.

We have borrowing arrangements with financial institutions that calculate interest based on LIBOR. At this time, it is not possible to predict the effect that these developments, any discontinuance, modification or other reforms to LIBOR or any other reference rate, or the establishment of alternative reference rates may have on LIBOR, other benchmarks, or LIBOR-based debt instruments. Uncertainty as to the nature of such potential discontinuance, modification, alternative reference rates or other reforms may materially adversely affect the trading market for securities linked to such benchmarks. Furthermore, the use of alternative reference rates or other reforms could cause the interest rate calculated for the LIBOR-based debt instruments to be materially different than expected. Lastly, we may need to renegotiate any credit agreements extending beyond 2021 that utilize LIBOR as a factor in determining the interest rate to replace LIBOR with the new standard that is established. There is currently no definitive information regarding the future utilization of LIBOR or of any particular replacement rate. As such, potential effect of any such event on our business, financial condition and results of operations cannot yet be determined.

MARKET RISKS

Market risk relates to the functioning of the marketplace. Many factors affect market ~~function;~~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 ~~February 28, 2018,~~March 3, 2021, directors and members of our executive management team beneficially owned or controlled approximately ~~30%~~21.6% 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.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Land

Our ~~approximate~~approximately 270,000 acres include portions of the San Joaquin Valley, portions of the Tehachapi Mountains and portions of the western end of the Antelope Valley. Each of our five ~~major~~reporting segments use various portions of this land. A number of key transportation and utility facilities cross our land, including Interstate 5, California Highways 58, 138 and 223, the California Aqueduct (which brings water from Northern California), and various transmission lines for electricity, oil, natural gas and communication systems. Our corporate offices are located on our property.

Approximately 247,000 acres of our land are located in Kern County, California. The Kern County general plan, or the “General Plan,” for this land contemplates continued commercial, resource utilization, farming, grazing and other agricultural uses, as well as certain new developments and uses, including residential and recreational facilities. While the General Plan is intended to provide guidelines for land use and development, it is subject to amendment to accommodate changing circumstances and needs. We have three major master planned real estate projects in Kern ~~County that have received entitlement approvals from Kern~~ County: ~~Mountain Village,~~MV, TRCC and Grapevine.

The remainder of our land, approximately 23,000 acres, is in Los Angeles County. This area is accessible from Interstate 5 via Highway 138. Los Angeles County has adopted general plan policies that contemplate future residential development of portions of this land, subject to further assessments of environmental and infrastructure constraints. WeIn 2019, the Los Angeles County Board of Supervisors' affirmed their final approval of Centennial, and now the 19,333 residential units are ~~currently pursuing specific plan entitlement for Centennial on 12,323 acres of this land.~~fully entitled. See Item 1, “Business—Real Estate Development Overview.”

Portions of our land consist of mountainous terrain, much of which is not presently served by paved roads or by utility or water lines. Much of this property is included within the Conservation Agreement we entered into with five of the major environmental organizations in June 2008. As we receive entitlement approvals over the life span of our developments we will dedicate conservation easements on 145,000 acres of this land, which will preclude future development of the land. This acreage includes many of the most environmentally sensitive areas of our property and is home to many plant and wildlife species whose environments will remain undisturbed.

Any significant development on our currently undeveloped land would involve the construction of roads, utilities and other expensive infrastructure and would have to be done in a manner that accommodates a number of environmental concerns, including endangered species, wetlands issues, and greenhouse gas emissions. Accommodating these environmental concerns, could possibly limit development of portions of the land or result in substantial delays or certain changes to the scope of development in order to obtain governmental approval.

Water Operations

Our existing long-term water contracts with the Wheeler Ridge-Maricopa Water Storage District, or WRMWSD, provide for water entitlements and deliveries from the SWP, to our agricultural and municipal/industrial operations in the San Joaquin Valley. The terms of these contracts extend to 2035. Under the contracts, we are entitled to annual water for 5,496 acres of land, or 15,547 acre-feet of water subject to SWP allocations, which is adequate for our present farming operations. It is assumed, that at the end of the current contract period all water contracts will be extended for approximately the same amount of annual water.

In addition to the WRMWSD contract water entitlements, we have an additional water entitlement from the SWP sufficient to service a substantial amount of future residential and/or commercial development in Kern County. ~~The Tejon-Castac Water District, or~~ TCWD, a local water district serving our land in the district and land we have sold in TRCC, has 5,749 acre-feet of SWP entitlement (also called Table A amount), subject to SWP allocations. In addition, TCWD has ~~49,184~~61,054 acre-feet of water stored in Kern County water banks. Both the entitlement and the banked water are the subject of a long-term water supply contract extending to 2035 between TCWD and ~~our~~the Company. TCWD is the water supplier to TRCC, and will be the principal water supplier for any significant ~~mixed use~~mixed-use development in MV. TCWD will also be the water district that provides services to Grapevine.

We have a 150-acre water bank consisting of nine ponds on our land in southern Kern County. Water is pumped into these ponds and then percolates into underground aquifers. Since 2006, we have banked ~~31,497~~50,349 acre-feet of water from the Antelope Valley-East Kern Water Agency, or AVEK, which has been pumped from the California aqueduct and is currently retained in this water bank. ~~In 2007 and 2008 we contracted for 2,362 additional acre-feet of water from AVEK, which was delivered in full in 2017.~~ We anticipate adding additional water to the water bank in the future, as water is available. ~~In 2010 we began participating with AVEK in a water-banking program and we have 13,033 acre-feet of water to our credit in this program.~~

Over time we have also purchased water for our future use or sale. In 2008 we purchased 8,393 acre-feet of transferable water and in 2009 we purchased an additional 6,393 acre-feet of transferable water, all of which is currently held on our behalf by AVEK or has been placed in our water bank. We ~~also~~ have secured SWP entitlement under long-term SWP water contracts within the Tulare Lake Basin Water Storage District and the Dudley-Ridge Water District, totaling 3,444 acre-feet of SWP entitlement annually, subject to SWP allocations. These contracts extend through 2035. On November 6, 2013, the Company completed the acquisition of a water purchase agreement that will allow and require the Company to purchase 6,693 acre-feet of water each year from the Nickel Family, LLC, or Nickel, through the Kern County Water Agency. The aggregate purchase price was $18,700,000 and was paid one-half in cash and one-half in shares of Company Common Stock. The number of shares of Common Stock delivered was determined based on the volume weighted average price of Common Stock for the ten trading days that ended two days prior to closing, which calculated to be 251,876 shares of Common Stock.

The initial term of the water purchase agreement with Nickel runs through 2044 and includes a Company option to extend the contract for an additional 35 years. This contract allows us to purchase water each year. The purchase cost of water in ~~2017~~2020 was ~~$717~~$793 per acre-foot. Purchase costs are subject to annual cost increases based on the greater of the consumer price index and 3%, resulting in a ~~2018~~2021 purchase cost of ~~$738~~$817 per acre-foot.

The water purchased will ultimately be used in the development of the Company’s land for commercial/industrial development, residential development, and farming. Interim uses may include the sale of portions of this water to third party users on an annual basis until the water is fully used for the Company’s internal uses.

During ~~2017,~~2020, SWP allocations were ~~85%~~20% of contract levels, and WRMWSD was able to supply us with water from various sources that when combined with our water sources provided sufficient water to meet our farming and real estate demands. In some years, there is also sufficient runoff from local mountain streams to allow us to capture some of this water in reservoirs and utilize it to offset some of the SWP water. In years where the supply of water is sufficient, both WRMWSD and TCWD are able to bank (percolate into underground aquifers) some of their excess supplies for future use. At this time, Wheeler Ridge expects to be able to deliver our entire contract water entitlement in any year that the SWP allocations exceed 30% by drawing on its ground water wells and water banking assets. Based on historical records of water availability, we do not believe we have material problems with our water supply. However, if SWP allocations are less than 30% of our entitlement in any year, or if shortages continue for a sustained period of several years, then WRMWSD may not be able to deliver 100% of our entitlement and we will have to rely on our own ground water sources, mountain stream runoff, water transfer from other sources, and water banking assets to supply the needs of our farming and development activities. Water from these sources may be more expensive than SWP water because of pumping costs and/or transfer costs. A ~~20%~~10% preliminary SWP water allocation has been made by the California Department of Water Resources, or DWR, for ~~2018.~~2021. The current ~~20%~~10% allocation of SWP water is not enough for us to farm our crops, but our additional water resources, such as groundwater and surface sources, and those of the water districts we are in, should allow us to have sufficient water for our farming ~~needs.~~needs for the next year.

All SWP water contracts require annual payments related to the fixed and variable costs of the SWP and each water district, whether or not water is used or available. WRMWSD and TCWD contracts also establish a lien on benefited land.

Portions of our property also have available groundwater, which we believe would be sufficient to supply commercial development in the Interstate 5 corridor and support current agricultural operations. Ground water in the Antelope Valley Basin is the subject to an adjudication of ~~litigation. See Item 3, “Legal Proceedings” for additional information about this litigation. Please refer to "Note 14 (Commitments and Contingencies)" for further discussion.~~the water basin that limits groundwater pumping.

~~A new development with respect to groundwater is the~~The Sustainable Groundwater Management Act, or SGMA, ~~which~~is a sustainable groundwater framework that became effective January 1, 2015. For the water districts in which the Company participates in the San Joaquin Valley, Groundwater Sustainability Plans are to be developed by ~~2020.~~2020 and 2022. Through these plans it will have to be demonstrated to the satisfaction of the Department of Water Resources, that the basins are "sustainable" and in balance by 2040, which could ultimately lead to restrictions on the use of groundwater. The Company's Kern County agricultural lands and development lands are located in the White Wolf Basin and the Castac Lake Basin, which ~~is a basin~~are basins that isare currently not over-drafted, so there is no anticipation at this time of any restriction related to manageable uses of ground water. However, the Company's lands are in relatively good condition because of the diverse inventory of surface water supplies and banked water that the Company has access to as mentioned above.

There have been many environmental challenges regarding the movement of SWP water through the Sacramento Delta. Operation of the Delta pumps are of primary importance to the California water system because these pumps are part of the system that moves water from Northern California to Southern California. Biological Opinions, or ~~BOs,~~BiOps, issued by the U.S. Fish and Wildlife Service, or FWS, and National Marine Fisheries Service, or NMFS, in 2008 and 2009 ~~contain~~contained restrictions on pumping from the ~~Delta. These BOs are being~~Delta and were challenged in the courts by both water agencies and environmental groups, which challenges were for the most part unsuccessful. ~~There are many groups, governmental and private, working together to develop~~Since then a ~~solution in the future to mitigate the curtailment~~number of ~~water~~developments have occurred that affect or potentially affect SWP supplies from the Delta.

One development concerns the Coordinated Operation Agreement, or COA, that DWR and the Bureau of Reclamation, or the Bureau, which operates pumps in the Delta to supply water to its Central Valley Project, or CVP, entered into in 1986. The COA governs the concurrent state and federal pumping operations in the Delta. DWR and the Bureau renegotiated the COA in late 2018 to bring the COA up to date with various physical and legal changes that occurred over the course of thirty years. The renegotiated COA has generally resulted in reduced deliveries to SWP contractors.

Another is DWR’s plan for construction of a facility to convey water through the Delta in the form of a tunnel system that would divert water at or near the northern end of the Delta and convey the water underground via tunnel for delivery at or near the southern end of the Delta. Originally envisioned as a two-tunnel system known as California WaterFix, that project was rescinded and has been replaced with a proposed downsized single-tunnel system referred to as the Delta Conveyance Project, or DCP. As of January, 2020, DWR has begun the environmental review process for the DCP by issuance of a Notice of Preparation of an EIR under CEQA, and DWR has been negotiating an agreement in principle with the SWP Contractors for terms of an amendment to the SWP long-term water supply contracts that if approved would provide for addition of the DCP to the SWP. The DCP is intended to increase the amount of water available for delivery through the Delta, particularly in wet years.

Another is the Reinitiation of Consultation on the Coordinated Long Term Operation of the Central Valley Project and State Water Project. This is a process that DWR and the Bureau jointly requested in 2016. It has resulted in new federal FWS and NMFS BiOps under Federal Endangered Species Act, or ESA, which are intended to enhance reliability of water available for pumping out of the Delta based on updated best available science. The State of California has noticed its intent to file a legal challenge to the new BiOps, which are currently being challenged in court by various non-governmental organizations under the ESA. Consequently, it is uncertain whether and when operations under the new BiOps will take effect.

Historic SWP restrictions on the right to use agricultural water entitlement for municipal purposes were removed in 1995. For this purpose, “municipal” use includes residential and industrial use. Therefore, although only 2,000 of ~~TCWD's~~TCWD’s 5,749 acre-feet of entitlement are labeled for municipal use, there is no practical restriction on ~~TCWD's~~TCWD’s ability to deliver the remaining water to residential or commercial/industrial developments.

Other Activities

~~The Tejon Ranch Public Facilities Financing Authority, or~~ TRPFFA is a joint powers authority formed by Kern County and TCWD to finance public infrastructure within the Company’s Kern County developments. TRPFFA has created two Community Facilities Districts, or CFDs, the West CFD and the East CFD. The West CFD has placed liens on 420 acres of the Company’s land to secure payment of special taxes related to $28,620,000 of bond debt sold by TRPFFA for TRCC-West. The East CFD has placed liens on 1,931 acres of the Company’s land to secure payments of special taxes related to ~~$55,000,000~~$75,965,000 of bond debt sold by TRPFFA for TRCC-East. At TRCC-West, the West CFD has no additional bond debt approved for issuance. At TRCC-East, the East CFD has ~~$65,000,000~~$44,035,000 of additional bond debt authorized by TRPFFA. Proceeds from the sales of these bonds are to reimburse the Company for public infrastructure related to TRCC-East. ~~During 2016, we received $6,155,000 in reimbursement from the East CFD bonds.~~

~~In 2017~~

We paid $2,550,000 and ~~2016, we paid $2,578,000 and $2,585,000~~$2,569,000 in special taxes related to the ~~CFDs.~~CFDs in 2020 and 2019, respectively. As development continues to occur at TRCC, new owners of land and new lease tenants, through triple net leases, will bear an increasing portion of the assessed special tax. It is expected that we will have special tax payments in ~~2018~~2021 of ~~$2,570,000,~~$2,473,000, but this could change in the future based on the amount of bonds outstanding within each CFD and the amount of taxes paid by other owners and tenants. The assessment of each individual property sold or leased is not determinable at this time because it is based on the current tax rate and the assessed value of the property at the time of sale or on its assessed value at the time it is leased to a third-party. Accordingly, the Company is not required to recognize an obligation at December 31, ~~2017.~~2020.

ITEM 3. LEGAL PROCEEDINGS

The Company is involved in various legal matters arising out of its operations in the normal course of business. None of these matters are expected, individually or in the aggregate, to have a material adverse effect on the Company.

For a discussion of legal proceedings, see Note 14 (Commitments and Contingencies) of the Notes to the Consolidated Financial Statements.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

PART II


~~ITEM 5.~~	~~MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES~~

~~The following table shows the high and low sale prices for our~~ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our Common Stock ~~which~~ trades under the symbol TRC on the New York Stock ~~Exchange, for each calendar quarter during the last two years:~~

2017 2016
Quarter High Low High Low
First $ 26.04
$ 20.58
$ 21.58
$ 16.85
Second $ 24.18
$ 19.90
$ 24.90
$ 19.50
Third $ 21.94
$ 19.67
$ 26.99
$ 22.00
Fourth $ 22.81
$ 18.59
$ 27.99
$ 21.13
Exchange.

As of February 28, ~~2018,~~2021, there were ~~374~~279 registered owners of record of our Common Stock.

No cash dividends were paid in ~~2017~~2020 or ~~2016~~2019 and at this time there is no intention of paying cash dividends in the future.

On October 13, 2014, the Tejon Ranchcorp, a subsidiary of the Company, entered into an Amended and Restated Credit Agreement, a Term Note and a Revolving Line of Credit Note. This credit facility contains customary negative covenants that limit the ability of the Company to, among other things, pay dividends or repurchase stock to the extent that immediately following any such dividend or repurchase of stock, total liabilities divided by tangible net worth (Stockholders Equity) is not greater than 0.75 to 1.0.

For information regarding equity compensation plans pursuant to Item 201(d) of Regulation S-K, please see Item 11, “Executive Compensation” and Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of this Form 10-K, below.

The annual stockholder performance graph will be provided separately in our annual report to stockholders.

ITEM 6. SELECTED FINANCIAL DATA


($ in thousands)	2020		2019		2018		2017		2016
Total revenues, including investment and other income (loss)	$	40,155	$	48,938	$	46,904	$	35,442	$	46,899
(Loss) income from operations before equity in earnings of unconsolidated joint ventures	$	(4,422)	$	(2,016)	$	1,721	$	(7,331)	$	(5,845)
Equity in earnings of unconsolidated joint ventures	$	4,504	$	16,575	$	3,834	$	4,227	$	7,098
Net (loss) income	$	(747)	$	10,579	$	4,235	$	(1,821)	$	757
Net (loss) attributable to noncontrolling interests	$	(7)	$	(1)	$	(20)	$	(24)	$	(43)
Net (loss) income attributable to common stockholders	$	(740)	$	10,580	$	4,255	$	(1,797)	$	800

Total assets	$	536,349	$	539,422	$	529,048	$	518,199	$	439,541
Long-term debt	$	57,078	$	61,897	$	65,915	$	69,959	$	73,867
Equity	$	445,331	$	445,624	$	434,672	$	426,810	$	334,709
Net (loss) income per share attributable to common stockholders, diluted	$	(0.03)	$	0.40	$	0.16	$	(0.08)	$	0.04

2017 2016 2015 2014 2013
Total revenues from operations, including interest and other income $ 36,272
$ 47,236
$ 52,056
$ 52,291
$ 46,345
(Loss) income from operations before equity in earnings of unconsolidated joint ventures $ (6,929 ) $ (6,247 ) $ (2,287 ) $ 3,165
   $ 2,183
Equity in earnings of unconsolidated joint ventures $ 4,227
$ 7,098
$ 6,324
$ 5,294
   $ 4,006
Net (loss) income $ (1,579 ) $ 515
$ 2,912
$ 5,762
   $ 4,103
Net (loss) income attributable to noncontrolling interests $ (24 ) $ (43 ) $ (38 ) $ 107
$ (62 )
Net (loss) income attributable to common stockholders $ (1,555 ) $ 558
$ 2,950
$ 5,655
   $ 4,165

Total assets $ 518,199
$ 439,701
$ 431,919
$ 431,923
   $ 342,879
Long-term debt $ 69,959
$ 73,867
$ 74,215
$ 74,459
   $ 4,693
Equity $ 426,810
$ 334,467
$ 331,308
$ 324,333
   $ 320,187
Net (loss) income attributable to common stockholders per share, diluted $ (0.07 ) $ 0.03
$ 0.14
$ 0.27
   $ 0.20


~~ITEM 7.~~	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)1 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 industrial and 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 entitlement and development of land for commercial/industrial and resort/residential uses 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 five ~~operating~~reporting segments: commercial/industrial real estate development; resort/residential real estate development; mineral resources; farming; and ranch operations.

Our commercial/industrial real estate ~~development~~ segment generates revenues from building, land lease activities, and land and building sales. The primary commercial/industrial development is TRCC. The resort/residential real estate development segment is actively involved in the land entitlement and development process internally and through a joint ~~venture entities.~~venture. Within our resort/residential segment, the three active ~~mixed use~~mixed-use master plan developments 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 and sales of water. The farming segment produces revenues from the sale of wine grapes, almonds, and pistachios. Lastly, the ranch operation segment consists of game management revenues and ancillary land uses such as grazing leases and filming.

Financial Highlights

For ~~2017,~~2020, net loss attributable to common stockholders was ~~$1,555,000~~$747,000 compared to net income attributed to common stockholders of ~~$558,000~~$10,580,000 in ~~2016. Factors driving~~2019. Our commercial/industrial segment greatly influenced our 2020 operating results. Over the ~~change include:~~comparative period, commercial/industrial segment revenues and results from our commercial joint ventures declined $7,256,000 and $12,071,000, respectively. The decline is primarily attributed to the fact that in 2019, there were several major real estate asset contributions and sales made by the Company to its joint ventures, as described below, that did not occur in 2020. From a joint venture operations standpoint, our share of TA/Petro operating results declined $3,088,000 after experiencing the effects of California's stay-at-home orders and other social distancing initiatives. Those factors resulted in lower fuel volumes that led to lower fuel margins. Additionally, TA/Petro had closed down its full service restaurants for most of the year as capacity limitations made operating economically unfeasible. Our farming segment saw a $5,465,000 decline in revenues as a result of lower pistachio bonuses, pistachio yields, and a decline in ~~farming~~almond pricing. Declines in revenues of $2,214,000 resulting from a decline in pistachio production in excess of 2,200,000 pounds, a decline in mineral resource revenues of $8,170,000 resulting from decreased sales opportunities for water in 2017 when compared to 2016, and a decrease in income from unconsolidated joint ventures of $2,871,000. From anwere partially offset by lower commercial expense, ~~perspective, expenses decreased $10,282,000~~ as a result of reduced ~~water~~cost of sales of $5,839,000 and ~~our staff rightsizing initiatives.~~

~~For 2016, net~~ income ~~attributable to common stockholders was $558,000 compared to $2,950,000 in 2015. Factors driving~~taxes of $3,151,000. Additionally, the ~~change include: a decline in farming revenues of $5,188,000 resulting~~Company benefited from declines in commodity prices and a decline of mineral resource revenues of $963,000 resulting from falling oil prices in 2016. Offsetting the decline in net income were the following factors: an increase in commercial real estate revenues of $1,166,000 resulting from a land sale, and increased rents,recognizing a gain on sale of building and land ~~located in Rancho Santa Fe, California~~ of ~~$1,044,000, an overall~~$1,331,000 along with experiencing a $1,934,000 reduction in ~~total expenses~~other expense primarily associated with the disposal of ~~$860,000,~~a wine grape vineyard in 2019.

For 2019, net income attributable to common stockholders was $10,580,000 compared to net income attributed to common stockholders of $4,255,000 in 2018. Over the comparative period, commercial/industrial segment revenues and results from our commercial joint ventures improved $7,822,000 and $12,741,000, respectively. Improvements in commercial revenues were attributed to land and building contributions to two joint ventures, while our joint ventures improved because of improved fuel and non-fuel margins within our TA/Petro joint venture along with recognizing a substantial gain stemming from the sale

of the building and land previously held by our Five West Parcel joint venture. These improvements were offset by reduced mineral resources revenues of $4,604,000 resulting from a lack of water sales opportunities due to the wet 2019 winter rain season, an increase in ~~income from unconsolidated~~commercial/industrial expenses of $6,715,000 as a result of land and building costs associated with the joint ~~ventures~~venture contributions discussed earlier, and a $1,765,000 increase in other losses associated with the abandonment of ~~$774,000.~~

~~For the year ended December 31, 2017 we had~~a wine grape vineyard that will no ~~material lease renewals.~~longer be farmed and pension related expenses.

During ~~2018,~~2021, we will continue to invest funds ~~toward the achievement of entitlements,~~towards litigation defense, permits, and maps for our ~~land~~master plan mixed-use developments and for master project infrastructure and vertical development within our active commercial and industrial development. Securing entitlements for our land is a long, arduous process that can take several years and ~~often~~ 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, ~~and~~ the timing of land sales ~~of land~~ and the leasing of land and/or industrial space within our industrial ~~developments.~~

~~During the fourth quarter of 2015, the Company reclassified revenues~~developments, and expenses previously classified as commercial/industrial into a new segment called Ranch Operations. Ranch Operations is comprised of grazing leases, game management, and other ancillary services supporting the ranch.

equity in earnings realized 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 operating segment of the business and is followed by a discussion of our financial position. It is useful to read the business segment information in conjunction with Note 16 ~~(Operating~~(Reporting Segments and Related Information) of the Notes to Consolidated Financial Statements.

Critical Accounting Policies

The preparation of our consolidated financial statements in accordance with generally accepted accounting principles in the United States, or GAAP, requires us to make estimates and judgments that affect the reported amounts of 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, or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. On an on-going 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, and stock ~~compensation, our future ability to utilize deferred tax assets, and defined benefit retirement plans.~~compensation. 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. See also Note 1 (Summary of Significant Accounting Policies) of the Notes to Consolidated Financial Statements, which discusses accounting policies that we have selected from acceptable alternatives.

We believe the following critical accounting policies reflect our more significant judgments and estimates used in the preparation of the consolidated financial statements:

Revenue Recognition – The Company’s revenue is primarily derived from lease revenue from our rental portfolio, royalty revenue from mineral leases, sales of farm crops, sales of water, and land sales. Revenue from leases with rent concessions or fixed escalations is recognized on a straight-line basis over the initial term of the related lease unless there is a considerable risk as to collectability. The financial terms of leases are contractually defined. Lease revenue is not accrued when a tenant vacates the premises and ceases to make rent payments or files for bankruptcy. Royalty revenues are contractually defined as to the percentage of royalty and are tied to production and market prices. Our royalty arrangements generally require payment on a monthly basis with the payment based on the previous month’s activity. We accrue monthly royalty revenues based upon estimates and adjust to actual as we receive payments.

From time to time the Company sells easements over its land. The easements are either in the form of rights of access granted for such things as utility corridors or are in the form of conservation easements that generally require the Company to divest its rights to commercially develop a portion of its land, but do not result in a change in ownership of the land or restrict the Company from continuing other revenue generating activities on the land. Sales of ~~conservation~~ easements are accounted for in accordance with ~~Staff~~the five-step model under Accounting ~~Bulletin~~Standards Codification Topic ~~13 - Revenue Recognition,~~606, or ~~SAB Topic 13.~~

ASC 606. The five-step model requires that we (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) we satisfy the performance obligation. Since ~~conservation~~ easements generally do not impose any significant continuing

performance obligations on the Company, revenue from ~~conservation~~ easement sales ~~have been~~are generally recognized ~~when the four criteria outlined in SAB Topic 13 have been met, which generally occurs~~ in the period the sale has closed and consideration has been received.

In recognizing revenue from land sales, the Company follows ASC 606 to achieve the ~~provisions~~core principle that an entity recognizes revenue to depict the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in ~~Accounting Standards Codification 976,~~exchange for those goods or services. The adoption of ASC ~~976, “Real Estate – Retail Land” to record these~~606 on January 1, 2018 impacted our accounting for land sales. Upon the adoption of ASC ~~976 provides specific sales recognition criteria to determine when~~606, for any future land sales ~~revenue can be recorded. For example, ASC 976~~with multiple performance obligations, the standard generally requires the Company to allocate the transaction price to the performance obligations in proportion to their standalone selling prices (i.e., on a ~~land sale to be consummated with a sufficient down payment of at least 20% to 25% of the sales~~relative standalone selling price depending upon the type and timeframe for development of the property sold, and that any receivable from the sale cannot be subject to future subordination. In addition, the seller cannot retain any material continuing involvement in the property sold or be required to develop the property in the future.basis) not total costs.

estimate of what the final market price ~~will~~may be by marketers and handlers of the orchard crops. These market price estimates are updated through the crop payment cycle as new information is received as to the final settlement price for the crop sold. These estimates are adjusted to actual upon receipt of final payment for the crop. This method of recognizing revenues on the sale of orchard crops is a standard practice within the agribusiness community.

Actual final crop selling prices are not determined for several months following the close of our fiscal year due to supply and demand fluctuations within the orchard crop markets. Adjustments for differences between original estimates and actual revenues received are recorded during the period in which such amounts become known.

Impairment of Long-Lived Assets – We evaluate our property and equipment and 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. When events or changes in circumstances indicate that the carrying value of assets contained in our financial statements may not be recoverable.

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 continued 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 current accumulated costs. We use our internal forecasts and business plans to estimate future prices, absorption, production, and costs. We develop our forecasts based on recent sales data, historical absorption and production data, input from marketing consultants, as well as discussions with commercial real estate brokers and potential purchasers of our farming products.

The impairment calculation 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 ~~discussion~~depreciable long-lived asset, the new cost basis will be depreciated (amortized) over the remaining useful life of ~~implementation~~that asset. Restoration of ~~Accounting Standards Update (ASU) 2014-09 “Revenue~~a previously recognized impairment loss is prohibited. If actual results are not consistent with ~~Contracts~~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 ~~Customers (Topic 606),” see Note 1 (Summary~~period to period; it requires management to make assumptions about future prices, production, and costs, and the potential impact of ~~Significant Accounting Policies) of~~a loss from impairment could be material to our earnings. Management’s assumptions regarding future cash flows from real estate developments and farming operations have fluctuated in the ~~Notes~~past due to changes in prices, absorption, production and costs and are expected to continue to do so in the ~~Consolidated Financial Statements.~~future as market conditions change.

Capitalization of Costs - The Company capitalizes direct construction and development costs, including predevelopment costs, interest, property taxes, insurance, and indirect project costs that are clearly associated with the acquisition, development, or construction of a project. Costs currently capitalized that in the future would be related to any abandoned development opportunities will be written off if we determine such costs do not provide any future benefits. Should development activity decrease, a portion of interest, property taxes, and insurance costs would no longer be eligible for capitalization, and would be expensed as incurred.

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 ~~follow ASC 976 to~~ 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.

~~Impairment of Long-Lived Assets –~~ We evaluate our property and equipment and development projects for impairment when events or changes in circumstances indicate that the carrying value of assets contained in our financial statements may not be recoverable. The impairment calculation 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.

We currently operate in five segments: commercial/industrial real estate development, resort/residential real estate development, mineral resources, farming, and ranch operations. At this time, there are no assets within any of our segments that we believe are in danger of being impaired due to market conditions.

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 and farming operations have fluctuated in the past due to changes in prices, absorption, production and costs and are expected to continue to do so in the future as market conditions change.

In estimating future prices, absorption, production, and costs, we use our internal forecasts and business plans. We develop our forecasts based on recent sales data, historical absorption and production data, input from marketing consultants, as well as discussions with commercial real estate brokers and potential purchasers of our farming products.

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.

~~Defined Benefit Retirement Plans –~~ The plan obligations and related assets of our defined benefit retirement plan are presented in Note 15 (Retirement Plans) of the Notes to Consolidated Financial Statements. Plan assets, which consist primarily of marketable equity and debt instruments, are valued using level one and level two indicators, which are quoted prices in active markets and quoted prices for similar types of assets in active markets for the investments. Pension benefit obligations and the related effects on operations are calculated using actuarial models. The estimation of our pension obligations, costs and liabilities requires that we make use of estimates of present value of the projected future payments to all participants, taking into consideration the likelihood of potential future events such as salary increases and demographic experience. These assumptions may have an effect on the amount and timing of future contributions.

~~The assumptions used in developing the required estimates include the following key factors:~~

~~Discount rates;~~

~~Salary growth;~~

~~Retirement rates;~~

~~Expected contributions;~~

~~Inflation;~~

~~Expected return on plan assets; and~~

~~Mortality rates~~

The discount rate enables us to state expected future cash flows at a present value on the measurement date. In determining the discount rate, the Company utilizes the yield on high-quality, fixed-income investments currently available with maturities corresponding to the anticipated timing of the benefit payments. Salary increase assumptions are based upon historical experience and anticipated future management actions. To determine the expected long-term rate of return on pension plan assets, we consider the current and expected asset allocations, as well as historical and expected returns on various categories of plan assets. At December 31, 2017, the weighted-average actuarial assumption of the Company’s defined benefit plan consisted of a discount rate of 3.7% and a long-term rate of return on plan assets of 7.5%. For the years beginning with 2017, there are no assumed salary increase factors included in the plan assumptions due to the plan being amended to freeze future benefits. The effects of actual results differing from our assumptions and the effects of changing assumptions are recognized as a component of other comprehensive income, net of tax. Amounts recognized in accumulated other comprehensive income are adjusted as they are subsequently recognized as components of net periodic benefit cost. If we were to assume a 50-basis point change in the discount rate used, our projected benefit obligation would change approximately $800,000.

Stock-Based Compensation - We apply the recognition and measurement principles of ASC 718, “Compensation – Stock Compensation” in accounting for long-term stock-based incentive plans. Our stock-based compensation plans include both restricted stock units and restricted stock grants. We have not issued any stock options to employees or directors since January 2003, and our ~~2017~~2020 financial statements do not reflect any compensation expenses for stock options. All stock options issued in the past have been exercised or forfeited.

We make stock awards to employees based upon time-based criteria and through the achievement of performance-related objectives. Performance-related objectives are either stratified into threshold, target, and maximum goals or based on the achievement of a milestone event. These stock awards are currently being expensed over the expected vesting period based on each performance criterion. We make estimates as to the number of shares that will actually be granted based upon estimated ranges of success in meeting the defined performance measures. If our estimates of performance shares vesting were to change by 25%, stock compensation expense would increase or decrease by approximately ~~$400,000~~$22,000 depending on whether the change in estimate increased or decreased shares vesting. The Company also has performance share grants that contain both performance-based and market-based conditions. Compensation cost for these awards is recognized based on either the achievement of the performance-based conditions, if they are considered probable, or if they are not considered probable, on the achievement of the market-based condition. Failure to satisfy the threshold performance conditions will result in the forfeiture of shares. Forfeiture of share awards with service conditions or performance-based restrictions results in a reversal of previously recognized share-based compensation expense. For 2020, forfeiture of such awards would have resulted in a stock compensation savings of $1,334,000. Forfeiture of share awards with market-based restrictions does not result in a reversal of previously recognized share-based compensation expense.

See Note ~~11,~~11. (Stock Compensation - Restricted Stock and Performance Share Grants), of the Notes to Consolidated Financial Statement for total ~~2017~~2020 stock compensation expense related to stock grants.

Fair Value Measurements – The Financial Accounting Standards Board's, or FASB, authoritative guidance for fair value measurements of certain financial instruments defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Fair value is defined as the exchange (exit) price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This guidance establishes a three-level hierarchy for fair value measurements based upon the inputs to the valuation of an asset or liability. Observable inputs are those which can be easily seen by market participants while unobservable inputs are generally developed internally, utilizing management’s estimates and assumptions:

•Level 1 – Valuation is based on quoted prices in active markets for identical assets and liabilities.

•Level 2 – Valuation is determined from quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar instruments in markets that are not active, or by model-based techniques in which all significant inputs are observable in the market.

•Level 3 – Valuation is derived from model-based techniques in which at least one significant input is unobservable and based on our own estimates about the assumptions that market participants would use to value the asset or liability.

When available, we use quoted market prices in active markets to determine fair value. We consider the principal market and nonperformance risk associated with our counterparties when determining the fair value measurement. Fair value measurements are used for marketable securities, investments within the pension plan and hedging instruments.

Recent Accounting Pronouncements

For discussion of recent accounting pronouncements, see Note 1 (Summary of Significant Accounting Policies) of the Notes to Consolidated Financial Statements.

Results of Operations by Segment

We evaluate the performance of our ~~operating~~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)	2020		2019		2018
Commercial/industrial revenues
Pastoria Energy Facility Lease	$	4,584	$	4,573	$	4,056
TRCC Leasing	1,744		1,815		1,760
TRCC management fees and reimbursements	715		1,172		822
Commercial leases	580		658		692
Communication leases	927		924		904
Landscaping and other	986		1,029		736
Land sales	—		6,621		—
Total commercial revenues	$	9,536	$	16,792	$	8,970
Total commercial expenses	$	7,122	$	12,961	$	6,246
Operating income from commercial/industrial	$	2,414	$	3,831	$	2,724

2020 Operational Highlights:

•During ~~2017,~~2020, commercial/industrial segment revenues decreased ~~$35,000,~~$7,256,000, or 0%43%, ~~when compared~~from $16,792,000 in 2019 to 2016. The Pastoria lease revenues increased $242,000, or 7%, when compared to 2016, we also experienced an increase of $366,000, or 18%, in leasing revenues within TRCC. These increases were offset by a decrease in commercial lease revenues of $354,000, or 22%, as a result$9,536,000. During 2020, the Company did not have any land sales, which contributed $6,621,000 of the ~~sale~~decrease. Additionally, management fees and reimbursements decreased $457,000 primarily because there were no real estate construction projects in ~~2016 of an investment asset. During 2017, we satisfied our performance obligation relating to the land sale which occurred in 2016 and recognized the remaining deferred revenue in 2017.~~2020.

•Commercial/industrial real estate segment expenses decreased ~~$571,000,~~$5,839,000, or 8%45%, from ~~$7,100,000~~$12,961,000 in ~~2016~~2019 to ~~$6,529,000 during 2017.~~ $7,122,000 in 2020. In the absence of land sales, there was a $4,745,000 decrease in land cost of sales. The remainder of the decrease is attributed to lower fixed water assessments from TCWD.

•Please refer to Item 1, “Business – Real Estate Development Overview” for discussion over minimum rent deferrals that resulted from the COVID-19 pandemic.

2019 Operational Highlights:

•During ~~2017, payroll, overhead, and bonuses decreased $269,000~~2019, commercial/industrial segment revenues increased $7,822,000, or 87%, from $8,970,000 in 2018 to $16,792,000. The increase was primarily attributable to revenues of $6,621,000 recognized as a result of asset contributions to unconsolidated joint ventures of 1) land, and 2) land and building. We contributed 34.85 acres to TRC-MRC 3, with recognized revenues of $4,317,000, and a 4,900 square-foot multi-tenant building and land to our ~~staff right sizing.~~ TA/Petro joint venture, with recognized revenues of $2,303,000. Please refer to Note 17 (Investment in Unconsolidated and Consolidated Joint Ventures) for additional discussion.

•Also contributing to the ~~decrease~~increase in commercial/industrial revenues was a $517,000 increase in PEF revenues which was primarily associated with a catch-up of its 2018 spark spread revenues that were ~~reductions in professional services and repairs and maintenance costs of $149,000 and $153,000 respectively.~~above original estimates.

During 2016, commercial/industrial segment revenues increased $1,166,000, or 14% when compared to 2015. In October 2016, we sold unimproved real property located at TRCC-East for $1,193,000. We recognized $710,000 of the revenues in 2016 and recognized the remainder during the first half of 2017 upon completion of the performance obligations. Also in 2016, we placed into service a multi-tenant building leased to Baja Fresh and Habit Burger increasing lease revenue by $266,000. Lastly, we recognized additional leasing revenues of $48,000 from Starbucks and Pieology given that they were not placed into service until the latter part of the second quarter of 2015.

•Commercial/industrial real estate segment expenses ~~were $7,100,000 during 2016, an increase~~increased $6,715,000, or 108%, from $6,246,000 in 2018 to $12,961,000 in 2019. During 2019, as a result of ~~$406,000, or 6%, compared to~~ the ~~same period in 2015. During 2016, there were increases in professional services~~two land and ~~repairs~~building contributions mentioned above, the Company recorded cost of land and ~~maintenance~~building sale of ~~$126,000 and $108,000, respectively.~~$4,748,000. Additionally, the ~~basis in the land sold was $95,000.~~

The logistics operators currently located within TRCC have demonstrated success in serving all of California and the western region of the United States, and we are building from their success in our marketing efforts. We will continue to focus our marketing strategy for TRCC-East and TRCC-West on the significant labor and logistical benefits of our site, the pro-business approach of Kern County, and the demonstrated success of the current tenants and owners within our development. Our strategy fits within the logistics model that many companies are using, which favors large, centralized distribution facilities which have been strategically located to maximize the balance of inbound and outbound efficiencies, rather than a number of decentralized smaller distribution centers. The world class logistics operators located within TRCC have demonstrated success through utilization of this model. With access to markets of over 40 million people for next-day delivery service, they areCompany also demonstrating success with e-commerce fulfillment. We believe that our ability to provide fully-entitled, shovel-ready land parcels to support buildings of any size, especially buildings 1.0 million square feet or larger, can provide us with a potential marketing advantage in the future. We are also expanding our marketing efforts to include industrial users in the Santa Clarita Valley of northern Los Angeles County, and the northern part of the San Fernando Valley due to the limited availability of new product and high real estate costs in these locations. Tenants in these geographic areas are typically users of relatively smaller facilities. In pursuit of such opportunities, the Company, in 2017, completed development of a 480,480 square foot, state-of-the-art distribution facility with Majestic Realty Co. The Company and Majestic Realty Co. are in the process of fully leasing this industrial building.

A potential disadvantage to our development strategy is our distance from the ports of Los Angeles and Long Beach in comparison to the warehouse/distribution centers located in the Inland Empire, a large industrial area located east of Los Angeles, which continues its expansion eastward beyond Riverside and San Bernardino, to include Perris, Moreno Valley, and Beaumont. As development in the Inland Empire continues to move east and farther away from the ports, our potential disadvantage of our distance from the ports is being mitigated. Strong demand for large distribution facilities is driving development farther east in a search for large entitled parcels.

During 2017, vacancy rates in the Inland Empire approximated 3.7%, the lowest vacancy rate ever recorded in the Inland Empire. Vacancy is at an all-time low and further declines will be hard to achieve. This is especially true given that 26.1 million square feet remains in the construction pipeline. The low vacancy rates have also led toexperienced an increase in ~~lease rates~~fixed water assessments of ~~7.7% within the Inland Empire. As lease rates increase in the Inland Empire,~~$1,958,000.

For 2021, we ~~may begin to have greater pricing advantages due to our lower land basis.~~

During 2017, vacancy rates in the northern Los Angeles industrial market, which includes the San Fernando Valley and Santa Clarita Valley, approximated 1.7%. This industrial market continues to see available supply remain at extremely low levels, and while new construction has recently been at higher levels, it still has not been enough to keep pace with strong demand, resulting in vacancy remaining at all-time lows and rental rates still rising rapidly. Demand for industrial space in this market will continue to be driven by domestic and global consumption levels. In 2017, the Los Angeles and Long Beach Port container traffic recorded its highest container total ever with 16.89 million Twenty-Foot Equivalent Units, or TEU's, up 8% from 2016 and 7% higher than its second highest year during 2006. TEU is a measure of a ship's cargo carrying capacity. The dimensions of one TEU are equal to that of a standard shipping container measuring 20 feet long by 8 feet tall.

We expect the commercial/industrial segment to continue to experience costs, net of amounts capitalized, primarily related to professional service fees, marketing costs, commissions, planning costs, and staffing 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. TCWD water assessments may vary depending on water availability and its ability to sell 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 could continue over several years as we develop our land holdings. 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

~~In 2017,~~Our resort/residential segment ~~expenses increased $325,000 primarily due to reduced capitalization of payroll~~activities include defending entitlements, land planning and ~~overhead costs that in the prior years were identified to be incremental to~~pre-construction engineering and conservation activities for our ~~mixed use master plan development~~Centennial, Grapevine, and MV projects.

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

2020 Operational Highlights:

•In ~~2016,~~2020, resort/residential segment expenses ~~declined $719,000 primarily due~~decreased $635,000 to ~~additional capitalization of~~$1,612,000, or 28%, when compared to $2,247,000 in 2019. The decrease is attributed to an $801,000 decrease in professional services as there were fewer strategic planning efforts in 2020. This decrease was partially offset by a $171,000 increase in payroll and overhead costs, net of ~~$475,000 that~~capitalization, as a result of right sizing initiatives and the issuance of performance based stock compensation.

2019 Operational Highlights:

•In 2019, resort/residential segment expenses increased $717,000 to $2,247,000, or 47%, when compared to $1,530,000 in 2018. The higher expenses were ~~identified~~attributable to ~~be incremental to our master plan development projects. In addition, there were decreases~~an increase in professional ~~service and fees~~services of ~~$261,000.~~

~~Our resort/residential segment activities include land entitlement, land~~$720,000 associated with strategic planning ~~and pre-construction engineering and conservation activities. We have three major resort/residential communities within this segment: Centennial, Grapevine, and MV.~~

For Centennial, Los Angeles County is currently reviewing the EIR, the responses will become part of the Final Environmental Impact Report that will be considered first by the Los Angeles County Regional Planning Commission tentatively in April 2018 and later by the Board of Supervisors.

For Grapevine, we are working with Kern County to defend litigation related to the approved EIR. The entire litigation and permitting process will take several years and the investment of several million dollars to successfully complete.

For MV, we have a fully permitted and entitled project and received approval of a Tentative Tract Map for our first phases of development in December 2017. The timing of MV development in the coming years will be dependent on the strength of both the economy and the second home real estate market. In moving the project forward, we will focus on the preparation of engineering leading to the final map for the first phases of MV, consumer and market research studies and fine tuning of development business plans as well as defining the capital funding sources for this development.efforts.

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 forward with ~~entitlement and~~ permitting activities for the above communities and continue to meet our obligations under the Conservation Agreement. 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 ~~possibility~~length of time related to litigation ~~upon approval of our entitlements in the future,~~defense, and the status of the economy. We will also continue to

evaluate land resources to determine the highest and best use for our land holdings. 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 are continuously 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 ~~California~~ economy ~~continues to improve~~stabilizes, we believe the perception of land values will also begin to ~~improve and the long-term~~improve. Long-term macro fundamentals, ~~that support housing demand in our region,~~ primarily ~~California~~California's population growth and household formation will also ~~improve.~~support housing demand in our region. California also has a significant documented housing shortage, which we believe our communities will help ease as the population base within California continues to grow.

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

Mineral Resources


($ in thousands)	2020		2019		2018
Mineral resources revenues
Oil and gas	$	654	$	1,842	$	2,278
Rock aggregate	1,407		1,467		1,143
Cement	2,214		1,908		1,695
Exploration leases	100		101		102
Water sales	5,909		3,997		9,142
Reimbursables and other	452		476		35
Total mineral resources revenues	$	10,736	$	9,791	$	14,395
Total mineral resources expenses	$	6,414	$	5,818	$	6,223
Operating income from mineral resources	$	4,322	$	3,973	$	8,172


	2020	2019	2018
Oil and gas
Oil production (barrels)	114,567	220,000	250,000
Average price per barrel	$46.00	$61.00	$67.00
Blended royalty rate	11.7%	13.2%	13.4%
Natural gas production (millions of cubic feet)	207,000	312,000	241,000
Average price per thousand cubic feet	$1.06	$1.58	$0.76
Blended royalty rate	11.7%	13.2%	13.4%

Water
Water sold in acre-feet	5,022	4,482	9,442
Average price per acre-feet	$1,177	$750	$968

Cement
Tons sold	1,253,000	1,117,000	1,154,000
Average price per ton	$1.77	$1.71	$1.47

Rock/Aggregate
Tons sold	1,272,000	1,283,000	1,168,000
Average price per ton	$1.11	$1.03	$0.98

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.

2017 2016 2015
Oil and gas
Oil production (barrels) 263,000
301,000
445,000
Average price per barrel $ 45.00
$ 37.00
$ 45.00
Blended royalty rate 13.7 % 13.7 % 13.7 %
Natural gas production (millions of cubic feet) 209,000
238,000
315,000
Average price per thousand cubic feet $ 0.74
$ 0.56
$ 1.58
Blended royalty rate 14.5 % 14.4 % 14.1 %

Water
Water sold in acre-feet 939
7,285
7,922
Average price per acre-feet $ 1,181
$ 1,317
$ 1,284

Cement
Tons sold 1,063,000
909,000
961,000
Average price per ton $ 1.52
$ 1.41
$ 1.31

Rock/Aggregate
Tons sold 1,222,000
1,397,000
1,181,000
Average price per ton $ 0.88
$ 0.85
$ 0.73

~~2017~~2020 Operational Highlights:

•Revenues from our mineral resources segment increased $945,000, or 10%, to $10,736,000 in 2020 when compared to $9,791,000 in 2019. The increase is attributed to a $1,912,000 increase in water sales. During 2019, the Company had an unfavorable water sales adjustment of $1,050,000 that was tied to an increase in SWP allocation levels, which adversely affected sales pricing. In 2020 however, SWP allocation levels were much lower, which in turn improved pricing, resulting in additional water sales revenues. Lastly, there were 540 additional acre-feet of water sold during 2020 when compared to 2019.

•There was an increase in cement royalties of $306,000 resulting from increased demand from the Company's tenant, National Cement as a result of an increase in road infrastructure projects.

•Offsetting the favorable revenue increases was a $1,188,000 decrease in oil and gas royalties resulting from lower prices for much of 2020 and lower demand driven by social distancing initiatives such as California's stay-at-home orders.

•Mineral resource expense increased $596,000, or 10%, to $6,414,000 in 2020 when compared to $5,818,000 in 2019. Of the $596,000 increase, $469,000 is attributed to increased water cost of sales as a result of selling additional water. The remainder is attributed to an increase in property taxes that occurred because of higher mineral assessments on the Company's land.

2019 Operational Highlights:

•Revenues from our mineral resources segment decreased ~~$8,170,000,~~$4,604,000, or ~~58%~~32%, to ~~$5,983,000~~$9,791,000 in ~~2017~~2019 when compared to ~~$14,153,000~~$14,395,000 in ~~2016. During~~2018. This decrease was primarily attributed to fewer water sale opportunities after the ~~2016/2017~~wet 2019 winter ~~California experienced above normal~~ rain ~~fall~~season which reduced revenues by $5,145,000 in 2019.

•Oil and ~~snow levels, resulting in a reduction in water market activity throughout the state adversely impacting water sales opportunities.~~

~~This resulted in an $8,347,000 decline in water sales. The reduced water sales accordingly~~gas royalties decreased mineral resources expenses associated with the cost of sales of water by $4,832,000. California has historically experienced decades-long droughts, the rain falls in 2017 do not appear to be repeating in 2018, which leads some to believe the drought may be returning, suggesting water opportunities in 2018 can see improvements. This also lends itself to a volatile water market that can change from year-to-year based on rain and snow levels.

~~We experienced improvements in cement production~~$436,000 as a result of ~~increased demand~~lower production driven by a lower price per barrel of oil overall for the year.

•Offsetting the revenue declines were increases in rock aggregate and ~~pricing during 2017 compared to 2016. The improvement in shipments is due to an increase in road construction activity as compared to the prior years.~~

~~Despite falling production, we experienced improvements for oil~~cement royalties of $324,000 and ~~gas royalties~~$213,000, respectively, as a result of ~~improved oil prices. Please refer to above table for current and historical production volume and pricing.~~an increase in regional construction.

~~2016 Operational Highlights:~~

~~Revenues~~•Mineral resource expense decreased ~~$963,000,~~$405,000, or 6%7%, to ~~$14,153,000~~$5,818,000 in ~~2016~~2019 when compared to ~~$15,116,000~~$6,223,000 in ~~2015. The decrease~~2018, which is ~~primarily due to~~ a ~~$1,112,000 decrease in oil royalty revenues driven by lower average prices for a barrel of oil, which then led to declines in production.~~

Also in 2016, we sold 7,285 acre-feet of water compared to 7,922 acre-feet in 2015 reducing water revenues by $570,000. Offsetting those amounts were improvements in cement, sand, and rock royalties of $330,000 and reimbursable costs and other of $364,000.

Expenses during 2016 increased $400,000 compared to 2015, primarily due to increases in payroll and salaries of $125,000 and fuel costs of $94,000 related to transferring and banking water. The remainderdirect result of the ~~increase can be attributed to increases in other expenses including property taxes, professional services, and fees.~~reduced water sales previously discussed.

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

Farming


($ in thousands)	2020		2019		2018
Farming revenues
Almonds	$	5,021	$	7,310	$	5,744
Pistachios	5,636		7,466		7,880
Wine grapes	2,589		3,740		3,683
Hay	419		468		297
Other	201		347		959
Total farming revenues	$	13,866	$	19,331	$	18,563
Total farming expenses	$	15,103	$	15,251	$	16,028
Operating Income from farming	$	(1,237)	$	4,080	$	2,535


	December 31, 2020					December 31, 2019					Change
($ in thousands)	Revenue		Quantity Sold2	Average Price		Revenue		Quantity Sold2	Average Price		Revenue		Quantity Sold2	Average Price
ALMONDS (lbs.)
Current year crop	$	4,207	2,078	$	2.02	$	6,359	2,252	$	2.82	$	(2,152)	(174)	$	(0.80)
Prior crop years	783		405	$	1.93	568		227	2.50		215		178	(0.57)
Prior crop price adjustment	—					(61)					61
Signing bonus	31					28					3
Crop Insurance	—					416					(416)
Subtotal Almonds1	$	5,021	2,483	$	2.01	$	7,310	2,479	$	2.79	$	(2,289)	4	$	(0.78)
PISTACHIOS (lbs.)
Current year crop	$	932	456	$	2.04	$	1,624	819	$	1.98	$	(692)	(363)	$	0.06
Prior crop years	25		13	1.92		976		558	1.75		(951)		(545)	0.17
Prior crop price adjustment	890					3,807					(2,917)
Crop Insurance	3,789					1,059					2,730
Subtotal Pistachios1	$	5,636	469	$	2.04	$	7,466	1,377	$	1.89	$	(1,830)	(908)	$	0.15
WINE GRAPES (tons)
Current year crop	$	2,589	9	$	287.67	$	3,730	14	$	266.43	$	(1,141)	(5)	$	21.24

Crop Insurance	—					10					(10)
Subtotal Wine Grapes	$	2,589	9	$	287.67	$	3,740	14	$	266.43	$	(1,151)	(5)	$	21.24
Other
Hay	$	419				$	468				$	(49)
Other farming revenues	201					347					(146)
Total farming revenues	$	13,866				$	19,331				$	(5,465)

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.

2020 Operational Highlights:

•During 2020, farming segment revenues decreased $5,465,000, or 28%, from $19,331,000 in 2019 to $13,866,000 in 2020. The factors contributing to this decrease is as follow:

◦Almond revenues decreased $2,289,000 as a result of lower pricing. California's 2020 almond crop yielded in excess of 3 billion pounds, surpassing all previous production records. The increased yields were driven by favorable blooms along with new almond plantings coming into production throughout California in recent years. The mix of demand has been changed in the near term as a result of COVID-19 as more product is moving through wholesale markets and less through high end users such as restaurants. The global demand for ~~additional information regarding oil barrels per day production.~~

Although oil prices improved during the fourth quarter of 2017 and throughout the early part of 2018, we expect our largest tenant, California Resources Corporation, or CRC, to continue its program of producing from current active wells at lower levels with no near-term intent to begin new drilling programs until oil prices stabilize at the current higher levels. CRC has approved permits and drill sites on our land and has delayed the start of drillingalmonds remains as strong as it ~~evaluates~~was prior to the ~~market. A positive aspect~~pandemic, with India and China being the largest importer of ~~our lease with CRC is that~~California almonds. Although COVID-19 disrupted international trade during its early onset, it ultimately had a sparing effect on the ~~approved drill sites~~Company's sales volumes. The aforementioned factors discussed are ~~in an area~~the primary drivers of the ~~ranch where the development and production costs are moderate due to the depths being drilled. During 2017, CRC executed a new exploration lease with us covering 1,524 acres. With the~~ overall ~~improvement in prices, we could see an improvement in royalty revenue. Thus far in 2018, oil prices have improved and are within 5% of West Texas Intermediate pricing.~~

~~Since we only receive royalties based on tenant production and market prices and do not produce oil, we do not have information as to the potential size of oil reserves.~~

Our royalty revenues are contractually defined and based on a percentage of production and are received in cash. Royalty revenues fluctuate based on changes in market price for oil, gas, rock and aggregate, and Portland cement. In addition, royalty revenue is impacted by new production, the inevitable decline in ~~production in existing wells, and rock and limestone quarries, and the cost of development and production.~~pricing.

~~Farming~~

December 31, 2017 December 31, 2016 Change
($ in thousands) Revenue
Quantity Sold²
Average
Price Revenue
Quantity Sold²
Average
Price Revenue Quantity Sold Average
Price
ALMONDS (lbs.)
Current year crop $ 5,221
2,033
$ 2.57
$ 5,282
2,106
$ 2.51
$ (61 ) (73 ) $ 0.06
Prior year crops 729
315
$ 2.31
1,363
454
3.00
(634 ) (139 ) (0.69 )
Prior crop price adjustment 352

653
(301 )
Signing bonus 25
75
(50 )
Subtotal Almonds¹
$ 6,327
2,348
$ 2.53
$ 7,373
2,560
$ 2.60
$ (1,046 ) (212 ) $ (0.07 )
PISTACHIOS (lbs.)
Current year crop $ 1,288
643
$ 2.00
$ 5,844
2,883
$ 2.03
$ (4,556 ) (2,240 ) $ (0.03 )
Prior year crops 1,007
247
4.08
274
47
5.83
733
200
(1.75 )
Prior crop price adjustment 1,452
81
1,371

Crop Insurance 776
—
776

Subtotal Pistachios¹
$ 4,523
890
$ 2.58
$ 6,199
2,930
$ 2.09
$ (1,676 ) (2,040 ) $ 0.49
WINE GRAPES (tons)
Current year crop $ 4,131
15
$ 275.40
$ 3,725
14
$ 266.07
$ 406
1
$ 9.33
Crop Insurance —
$ 19
(19 )
Subtotal Wine Grapes $ 4,131
15
$ 275.40
$ 3,744
14
$ 266.07
$ 387
1
$ 9.33
Other
Hay $ 456
$ 520
$ (64 )

Other farming revenues 997
812
185

Total farming revenues $ 16,434
$ 18,648
$ (2,214 )

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.

~~2017 Operational Highlights:~~

~~During 2017, farming~~◦Pistachio revenues decreased ~~$2,214,000 from $18,648,000 in 2016 to $16,434,000 in 2017. When compared to 2016, pistachio revenues decreased $1,676,000. In comparison to 2016, which~~$1,830,000. Although 2020 was not a ~~near record year in terms of yield, fiscal 2017 was an alternate~~ down bearing year for ~~pistachios. Additionally,~~pistachios, the ~~warm winter reduced the number of~~crop did not receive adequate chilling hours ~~the trees were dormant. We experienced similarly low yields in 2015~~ as a result of the ~~mild 2015~~warm 2020 winter. ~~The~~Crops with inadequate chilling hours will have depressed yields and blooms. As a hedge against below average production for its almond and pistachio crops, the Company purchases crop production insurance ~~to mitigate weather-related reductions in~~annually. This insurance will pay for reduced production if crop production ~~which mitigated $776,000~~in the year falls below the insured levels. The Company filed a claim with its insurance provider in order to recuperate a portion of ~~total crop costs.~~

~~Almond~~the reduced production revenues ~~decreased~~ ~~$1,046,000~~ as a result of ~~both commodity pricing and overall units sold. Given~~lost production. The insurance claim in the ~~timing~~amount of ~~2017~~$3,789,000 was collected during the fourth quarter.

◦Wine grape revenues decreased $1,151,000 due to less production, which was the result of removing a 313 acre vineyard. The vineyard was removed in 2020 as there was no longer interest for its fruit. The Company in late 2020 acquired a new sales contract for a different variety of grapes, resulting in the development of a new vineyard, which will ultimately replace this lost revenue stream.


	December 31, 2019					December 31, 2018					Change
($ in thousands)	Revenue		Quantity Sold2	Average Price		Revenue		Quantity Sold2	Average Price		Revenue		Quantity Sold2	Average Price
ALMONDS (lbs.)
Current year crop	$	6,359	2,252	$	2.82	$	4,476	1,717	$	2.61	$	1,883	535	$	0.21
Prior crop years	568		227	2.50		1,234		412	$	3.00	(666)		(185)	(0.50)
Prior crop price adjustment	(61)					—					(61)
Signing bonus	28					34					(6)
Crop Insurance	416					$	—				$	416
Subtotal Almonds1	$	7,310	2,479	$	2.79	$	5,744	2,129	$	2.68	$	1,566	350	$	0.11
PISTACHIOS (lbs.)
Current year crop	$	1,624	819	$	1.98	$	7,251	3,615	$	2.01	$	(5,627)	(2,796)	$	(0.03)
Prior crop years	976		558	1.75		518		120	4.32		458		438	(2.57)
Prior crop price adjustment	3,807					111					3,696
Insurance	1,059					—					1,059
Subtotal Pistachios1	$	7,466	1,377	$	1.89	$	7,880	3,735	$	2.08	$	(414)	(2,358)	$	(0.19)
WINE GRAPES (tons)
Current year crop	$	3,730	14	$	266.43	$	3,683	14	$	263.07	$	47	—	$	3.36
Insurance	10					—					10
Subtotal Wine Grapes	$	3,740	14	$	266.43	$	3,683	14	$	263.07	$	57	—	$	3.36
Other
Hay	$	468				$	297				$	171
Other farming revenues	347					959					(612)
Total farming revenues	$	19,331				$	18,563				$	768

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.

2019 Operational Highlights:

•During 2019, farming revenues increased $768,000, or 4%, from $18,563,000 in 2018 to $19,331,000 in 2019. When compared to 2018, almond revenues increased by $1,566,000 primarily from improved 2019 almond crop yields, which increased the amount of inventory available for sale.

•Offsetting the increased almond sales ~~management will carryforward 472,541 pounds to sell~~were reductions in ~~future periods. In comparison,~~pistachio revenues of $414,000, which is a result of having lower yields during the 2019 down bearing cycle. Although the Company ~~carried forward 338,845 pounds~~received insurance proceeds for the loss and a one-time price adjustment on the 2018 pistachio crop, they were not enough to recuperate lost revenues. Also contributing to the decline in ~~2017.~~

~~Farming expenses decreased $2,472,000, or 13% during 2017 compared to 2016. In 2017, we had reduced~~farming revenues were declines in other farming revenues of $612,000 which were primarily a result of having fewer water ~~costs of $1,584,000 when compared to 2016. The decrease is attributed to heavy rains during the 2017 winter along with credits received~~use reimbursements from ~~the local water district, through the State Water Project. Despite the reduced revenues discussed above, reduced water and farming costs increased~~a farm ~~operating profits by $258,000 when compared to 2016.~~

~~We experienced reduced cost of sales for our wine grapes and almonds of $342,000 and $751,000, respectively,~~land lease as a result of ~~reduced cultural costs largely tied~~having fewer acres leased.

•Farming expenses decreased $777,000, or 5%, to ~~lower weed and pest control costs.~~

December 31, 2016 December 31, 2015 Change
($ in thousands) Revenue
Quantity Sold²
Average
Price Revenue
Quantity Sold²
Average
Price Revenue Quantity Sold Average
Price
ALMONDS (lbs.)
Current year crop $ 5,282
2,106
$ 2.51
$ 7,377
2,210
$ 3.34
$ (2,095 ) (104 ) $ (0.83 )
Prior year crops 1,363
454
3.00
3,601
916
$ 3.93
(2,238 ) (462 ) (0.93 )
Prior crop price adjustment 653
1,260
(607 )
Signing bonus 75
—
75

Subtotal Almonds¹
$ 7,373
2,560
$ 2.60
$ 12,238
3,126
$ 3.51
$ (4,865 ) (566 ) $ (0.91 )
PISTACHIOS (lbs.)
Current year crop $ 5,844
2,883
$ 2.03
$ 183
64
$ 2.86
$ 5,661
2,819
$ (0.83 )
Prior year crops 274
47
5.83
1,271
214
5.94
(997 ) (167 ) (0.11 )
Prior crop price adjustment 81
2,271
(2,190 )
Insurance —
2,700
(2,700 )
Subtotal Pistachios¹
$ 6,199
2,930
$ 2.09
$ 6,425
278
$ 5.23
$ (226 ) 2,652
$ (3.14 )
WINE GRAPES (tons)
Current year crop $ 3,725
14
$ 266.07
$ 4,338
16
$ 271.13
$ (613 ) (2 ) $ (5.06 )
Insurance 19
—
19

Subtotal Wine Grapes $ 3,744
14
$ 266.07
$ 4,338
16
$ 271.13
$ (594 ) (2 ) $ (5.06 )
Other
Hay $ 520
$ 749
$ (229 )
Other farming revenues 812
86
726

Total farming revenues $ 18,648
$ 23,836
$ (5,188 )

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.

~~2016 Operational Highlights:~~

~~During 2016, farming revenues decreased by $5,188,000 from $23,836,000 in 2015 to $18,648,000 in 2016.~~

An overall reduction in market price for 2016-year almonds along with management's decision to sell more crops in 2015, taking advantage of higher prices, reduced almond revenues by $4,865,000. In 2016, the California almond industry had strong yields, driving prices downward.

We recovered from the mild winter of 2015 that adversely affected our 2015 pistachio crop yields. Total 2016 crop yield was at a recent historical high of 3,200,000 pounds. Despite the robust 2016 yields, a decline in market prices lowered pistachio revenues by $226,000$15,251,000 when compared to ~~2015 revenues, which were primarily generated through insurance proceeds and market price adjustments. In 2016, the California pistachio industry had strong yields, driving prices downward.~~

~~Improvement~~$16,028,000 in ~~other revenues is driven by a new farm land lease and recoverable costs related to the lease.~~

Farming expenses decreased $311,000, or 2% during 2016 compared to 2015. In 2016, almond costs decreased $1,019,000 or 15% as we spent less time pruning trees, applying pesticides, and removing mummies, all of which are time and labor intensive.2018. The decrease was primarily attributed to reductions in ~~almond~~WRMWSD water holding costs ~~were~~of $1,642,000 as a result of the wet 2019 rain season offset by an increase in ~~wine grape~~pruning costs of ~~$260,000 as a result of a 10% increase in the number of acres farmed and an increase in fixed water~~$460,000, harvest costs of ~~$256,000 paid to WRMWSD.~~

~~Thus far in 2018, the prices for our crops, especially almonds~~$313,000, and ~~pistachios, remain consistent with 2017 levels. All~~hulling costs of our crops are sensitive to the size of each year’s world crop. Large crops in California and abroad can depress prices. Our long-term projection is that crop production, especially of almonds and pistachios will continue to increase on a statewide basis over time because of new plantings, which could negatively impact future prices if the growth in demand does not keep pace with production.

An unknown factor related to future statewide production and the continuation of new plantings will be how new state ground water management laws impact the amount of farming land in production over the next five to ten years, which could eventually reduce production. The rains and snow of 2018 are not expected to significantly impact the ground water basins within the Central Valley of California, and therefore could lead to a reduction in crop production. We are less impacted due to our water sources and the ground water basin we are in. We have had a relatively mild winter thus far, which could possibly impact our almond and pistachio production due to a low level of dormant hours. Dormant hours allow the trees to rest, which enhances the growth of the tree and production. It is too early to project 2018 crop yields and what impact that may have on prices later in 2018.

Water delivery and water availability continues to be a long-term concern within California. Any limitation of delivery of SWP water and the absence of available alternatives during drought periods could potentially cause permanent damage to orchards and vineyards throughout California. While this could impact us, we believe we have sufficient water resources available to meet our requirements in 2018. Please see our discussion on water in Item 2, "Properties - Water Operations."

The DWR announced its 2018 estimated water supply delivery at 20% of full entitlement. The current 20% allocation of SWP water is not enough for us to farm our crops, but our additional water resources, such as groundwater and surface sources, and those of the water districts we are in should allow us to have sufficient water for our farming needs. See Note 6 (Long-Term Water Assets) of the Notes to Consolidated Financial Statements for additional information regarding our water assets.$281,000.

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

Ranch Operations


($ in thousands)	2020		2019		2018
Ranch operations revenue
Game management and other 1	$	2,097	$	2,020	$	2,171
Grazing	1,595		1,589		1,520
Total ranch operations revenues	$	3,692	$	3,609	$	3,691
Total ranch operations expenses	$	4,896	$	5,316	$	5,451
Operating loss from ranch operations	$	(1,204)	$	(1,707)	$	(1,760)
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.

2020 Operational Highlights:

•Revenues from ranch operations increased ~~$499,000~~$83,000, or 2%, from ~~$3,338,000~~$3,609,000 in ~~2016~~2019 to ~~$3,837,000~~$3,692,000 in ~~2017. When compared~~2020, which is primarily attributed to ~~2016, we experienced~~ an increase in ~~grazing leases~~guided hunts of ~~$490,000 due to the fact that a drought clause was in effect during the 2016 drought.~~$121,000.

•Ranch operations expenses decreased ~~$323,000~~$420,000, or 8%, to ~~$5,411,000~~$4,896,000 in ~~2017~~2020 from ~~$5,734,000~~$5,316,000 in ~~2016.~~2019. The decrease is primarily attributed to reduced payroll and overhead ~~and incentive based compensation~~expenses of ~~$119,000 primarily~~$332,000 as a result of ~~a staff rightsizing. The~~the Company's right sizing efforts. This segment also ~~saw a decrease~~had notable decreases in ~~repairs~~fuel costs and ~~maintenance costs~~fees of ~~$106,000.~~$56,000 and $60,000, respectively.

2019 Operational Highlights:

•Revenues from ranch operations decreased ~~$585,000~~$82,000, or 2%, from ~~$3,923,000~~$3,691,000 in ~~2015~~2018 to ~~$3,338,000~~$3,609,000 in ~~2016.~~2019. The ~~decline~~decrease is primarily attributed to ~~a $362,000 decrease~~reduced membership revenues of $143,000, partially offset by an increase in ~~game management revenues. The on-going California drought has had an adverse effect on the quality and availability~~grazing lease revenues of harvestable game due to shortages in food supplies. Also contributing to the decrease is a drought clause within our grazing leases taking effect amidst the California drought, which reduced revenues by $297,000. Improvements from other revenue sources, such as filming location fees offset the declines noted by $67,000.$69,000.

•Ranch operations expenses decreased ~~$378,000~~$135,000, or 2%, to ~~$5,734,000~~$5,316,000 in ~~2016~~2019 from ~~$6,112,000~~$5,451,000 in ~~2015.~~2018. The ~~drought as discussed above, has~~decrease was mainly attributed to reduced ~~hunt volume~~payroll expense of $183,000, partially offset by an increase in ~~2016, thus reducing related costs such as payroll, supplies, fuel,~~repair and ~~other services.~~maintenance expense of $49,000.

Other Income

Total other income ~~decreased $1,044,000~~increased $2,910,000, or 497%, from a loss of $585,000 in 2019 to ~~$615,000, or 63%, during 2017 from $1,659,000~~income of $2,325,000 in ~~2016. The change resulted from~~2020. In 2019, the ~~fact~~Company recognized asset abandonment costs of $1,604,000, that was primarily related to a wine grape vineyard consisting of 313 acres. There were no similar abandonment costs recorded in ~~November 2016, we~~2020. Also in 2020, the Company sold building and land ~~located~~that was previously operated by a fast food tenant to its joint venture, Petro Travel Plaza LLC. The Company received a cash distribution of $2,000,000 from the joint venture, and realized a Gain on Sale of Real Estate of $1,331,000. Offsetting these favorable variances in ~~Rancho Santa Fe, California for $4,700,000, recognizing~~other income was a ~~gain of $1,044,000.~~$355,000 decrease in investment income that resulted from not reinvesting maturing securities in order to fund the Company's major development projects.

Total other income ~~increased $750,000~~decreased $1,870,000, or 146%, from $1,285,000 in 2018 to ~~$1,659,000, or 83%, during 2016 from $909,000~~a loss of $585,000 in ~~2015, primarily as~~2019. This was mainly attributable to asset abandonment costs of $1,604,000 that were overwhelmingly related to the abandonment of a ~~result~~wine grape vineyard, consisting of ~~the gain from the Rancho Santa Fe sale of $1,044,000. Offsetting the gain from Rancho Santa Fe, California is a reduction of interest and other income of $294,000.~~313 acres, that will no longer be farmed.

Corporate Expenses

Corporate general and administrative costs ~~decreased $2,409,000,~~increased $69,000, or ~~19%~~0.7%, to $9,430,000 during ~~2017~~2020 when compared to ~~2016. In 2017, we had a reduction~~$9,361,000 in ~~payroll, overhead, and incentive based~~2019. The increase is attributed to an $1,182,000 increase in stock compensation ~~(both share-based and cash bonus) of $1,603,000 which was primarily a result of a staff rightsizing that occurred during the second quarter of 2017. We also benefited from savings of $924,000~~ as a result of ~~reduced legal and information technology related~~implementing a new performance stock compensation plan. This increase was offset by a $546,000 decrease in payroll as a result of temporary cost cutting measures resulting from the COVID-19 pandemic, a $426,000 decrease in professional services, ~~costs.~~and a $139,000 decrease in depreciation.

Corporate general and administrative costs decreased ~~$258,000,~~$344,000, or 2%3.5%, to $9,361,000 during ~~2016~~2019 when compared to ~~2015. In 2016, we did not recognize~~$9,705,000 in 2018. The decrease was primarily attributable to a ~~one-time-non-cash pension settlement charge~~decrease in depreciation and amortization of ~~$536,000 as we did in 2015, as a result~~$231,000 and software licenses of lump sum payment to retired former employees. which is discussed below. In addition, personnel levels decreased resulting in decreased payroll and salaries of $415,000. Offsetting the decreases include an increase in stock compensation of $532,000 resulting from meeting performance milestones and issuing new performance grants.$149,000.

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 ~~will~~can become a significant part of our ~~operational activity~~operations within the resort/residential segment. As we expand our current ventures and add new joint ventures, these investments will become a growing revenue source for the Company.


($ in thousands)	2020		2019		2018
Equity in earnings (loss)
Petro Travel Plaza Holdings LLC	$	5,722	$	8,810	$	5,803
Five West Parcel, LLC	(2)		9,119		389
18-19 West, LLC	(68)		(53)		(51)
TRCC/Rock Outlet Center, LLC	(2,090)		(1,921)		(2,323)
TRC-MRC 1, LLC	64		46		(249)
TRC-MRC 2, LLC	678		575		265
TRC-MRC 3, LLC	200		(1)		—
Equity in earnings of unconsolidated joint ventures, net	$	4,504	$	16,575	$	3,834

2020 Operational Highlights:

During ~~2017,~~2020, equity in earnings from unconsolidated joint ventures decreased ~~$2,871,000~~$12,071,000, or 73%, to ~~$4,227,000~~$4,504,000 when compared to ~~$7,098,000~~$16,575,000 in ~~2016.~~2019.

•Five West Parcel, LLC's operating results declined $9,121,000 when compared to 2019 because the joint venture in 2020 was focused on dissolution, which was completed in 2020. In 2019, the joint venture sold its building and land for $29,088,000, and recognized a gain of $17,537,000. The Company was entitled to 50% of the gain in 2019, explaining the year-over-year variance.

•There was a ~~$995,000~~$3,088,000 decrease in our share of earnings from our TA/Petro joint venture. This joint venture was impacted by California's stay-at home orders for most of 2020. As travelers were discouraged from travelling during the holidays, fuel sales volumes saw a 10% decline, causing a 22% decline in fuel margins. In addition, indoor dining restrictions forced the joint venture's full service restaurants to close which resulted in a 77% decline in revenues and a 78% decline in restaurant operating margins.

2019 Operational Highlights:

During 2019, equity in earnings from unconsolidated joint ventures increased $12,741,000 to $16,575,000 when compared to $3,834,000 in 2018.

•Five West Parcel, LLC had the most significant increase in equity in earnings at $9,118,611, resulting from the gain on sale of a building and land previously held by the joint venture. The ~~decline~~joint venture had owned and leased a 606,000 square foot building, the joint venture's primary asset, to Dollar General, and the building was ~~driven by increased operating costs and depreciation associated with new offerings at TA/Petro, a one time charge of $200,000 related~~sold to a ~~workers' compensation claim, and~~third party in November 2019 for a ~~decline in gas fuel margins.~~purchase price of $29,088,000, realizing a gain of $17,537,000 at the joint venture level.

•There was a ~~$989,000 decrease~~$8,804,197 increase in our share of earnings from our TA/Petro joint venture. The improvement was mainly driven by a 38% increase in fuel margins resulting from lower cost of fuel sales when compared to the prior year.

•Our share of the loss within the TRCC/Rock Outlet joint ~~venture. The decrease was attributable~~venture decreased $402,000 due to ~~write-off of~~the continuing improvement in average sales per vehicle. In addition, the joint venture also had less accelerated amortization on tenant allowances ~~and other leasing costs associated with lease terminations. The departing tenants have struggled nationally~~ in ~~recent years as a result of the retail slump and do not represent the overall performance of~~2019. The Outlets at ~~Tejon.~~


◦	During 2017, sales per occupied square foot increased 13% as compared to 2016 as a result of increased tour bus traffic and improved conversion rates from shoppers. The conversion rate is the percentage of users who take a desired action. Operationally, The Outlets at Tejon is continually identifying new and desirable tenants to better serve ~~its target demographic.~~

◦

During the second quarter, Express, a nationally recognized brand focusing on men's and women's fashion commenced operations occupying a space approximating 7,828 square feet. On July 14, 2017, TRCC/Rock Outlets executed a lease with Old Navy for a space approximating 12,500 square feet. On July 21, 2017, Samsonite, a worldwide leader in superior travel bags and luggage, took possession of a vacated unit and immediately commenced operations.

~~TRC-MRC 2,~~ a ~~joint venture which was formed during~~wider demographic. In 2019, the ~~third quarter of 2016, had an additional $839,000 loss~~Outlets at Tejon attracted new tenants such as ~~compared to 2016.~~ The increase in loss was driven by non-cash GAAP losses stemming from purchase accounting adjustments, despite generating positive net operating income. Please refer to "Non-GAAP Measures" for further financial discussion on our joint ventures.Children's Place and Cosmetics Company Store.

During 2016, equity in earnings from unconsolidated joint ventures grew to $7,098,000, or an increase of $774,000, compared to $6,324,000 in 2015. TA/Petro, when compared to 2015, contributed an additional $868,000 in earnings from unconsolidated joint ventures. The improvement in operations within the TA/Petro joint venture was driven by an increase in diesel volumes of 1.5 million gallons and gas volumes of 1.0 million gallons.

Income Taxes

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as U.S. Tax Reform. U.S. Tax Reform makes broad and complex changes to the U.S. tax code, including, but not limited to, (i) reducing the U.S. federal statutory tax rate from 35% to 21%; (ii) requiring companies to pay a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries; (iii) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (iv) requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations; (v) eliminating the corporate alternative minimum tax (AMT) and changing how existing AMT credits can be realized; (vi) creating the base erosion anti-abuse tax (BEAT), a new minimum tax; (vii) creating a new limitation on deductible interest expense; (viii) changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017, and (ix) modifying the officer’s compensation limitation.

The provision for income taxes for fiscal year 2017 includes a $54,000 estimated tax expense as a result of the revaluation of U.S. federal net deferred tax assets from 34% to 21% due to the enactment of U.S. Tax Reform. The final impact of U.S. Tax Reform may differ from these estimates, due to, among other things, changes in interpretations, analysis and assumptions made by management, additional guidance that may be issued by the U.S. Department of the Treasury and the Internal Revenue Service, and any updates or changes to estimates we have utilized to calculate the transition impact. Therefore, our accounting for the elements of U.S. Tax Reform is incomplete. However, we were able to make reasonable estimates of the effects of U.S. Tax Reform.

For the twelve months ended December 31, ~~2017,~~2020, the ~~Company incurred a net income tax benefit of $1,123,000 compared to a~~Company's net income tax expense ~~of $336,000~~was $829,000 compared $3,980,000 for the twelve months ended December 31, ~~2016.~~2019. These represent effective income tax rates of approximately ~~42%~~1,011% and ~~39%~~27% for the twelve months ended December 31, ~~2017~~2020 and, ~~2016,~~2019, respectively. Our effective income tax rate for the year ended December 31, ~~2017~~2020 was higher than the federal statutory rate in the United States, ~~primarily due~~a result of permanent differences arising from stock compensation and non-deductible compensation under Section 162(m) of the Tax Cuts and Jobs Act of 2017. The discrete item associated with stock grants was triggered when stock grants were issued to ~~effects~~participants at a price less than the original grant price, causing a deferred tax shortfall. The shortfall recognized during the year represents the reversal of ~~recent~~excess deferred tax ~~law changes, state taxes, and other permanent differences.~~assets recognized in prior periods. The ~~effective~~recognition of the shortfall is not anticipated to have an impact on the Company's current income tax ~~rate was impacted by the aforementioned revaluation of net deferred assets related to the U.S. Tax Reform.~~payable. As of December 31, ~~2017~~2020 and ~~2016~~2019 we had an income tax receivable of ~~$1,804,000~~$1,497,000 and ~~$468,000,~~$856,000, respectively. ~~For more detail, see Note 5, Income Taxes, of the Notes to Consolidated Financial Statements, included this Annual Report on Form 10-K.~~

As of December 31, ~~2017 (and after the aforementioned revaluation),~~2020, we had net deferred tax ~~assets~~liabilities of ~~$1,562,000.~~$925,000. Our largest deferred tax assets were made up of temporary differences related to the capitalization of costs, pension adjustments, interest rate swap, and stock ~~grant expense.~~compensation. Deferred tax liabilities consist of depreciation, deferred gains, joint venture differences, cost of ~~sale allocations,~~sales adjustments, and straight-line rent. 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 total~~did not make any income tax payments ~~of $0~~ in ~~2017~~2020 and ~~$$1,750,000 during 2016.~~$4,645,000 in 2019. The Company received refunds of ~~$124,000~~$1,314,000 in ~~2017~~2020 and ~~$615,000~~$1,345,000 in ~~2016.~~2019.

For more detail, see Note 12. (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 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, we will continue to make investments in our real estate segments to secure land entitlement approvals, build infrastructure for our developments, ensure adequate future water supplies, and provide funds for general land development activities. Within our farming segment, we will make investments as needed to improve efficiency and add capacity to its operations when it is profitable to do so.

Grapevine communities and costs related to the preparation of the development of MV. The rights offering concluded on October 27, 2017, with the Company raising $89,867,000, net of offering costs, from the sale of 5,000,000 shares at $18.00 per share.

Our cash and cash equivalents and marketable securities totaled approximately ~~$90,975,000~~$58,091,000 at December 31, ~~2017, an increase~~2020, a decrease of ~~$63,042,000,~~$8,099,000, or ~~226%~~12%, from the corresponding amount at the end of ~~2016.~~2019.

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


($ in thousands)	2020		2019		2018
Operating activities	$	15,481	$	16,045	$	14,354
Investing activities	$	19,778	$	828	$	(13,246)
Financing activities	$	(7,045)	$	(5,675)	$	(5,307)

($ in thousands) 2017 2016 2015
Operating activities $ 9,830
$ 5,585
$ 16,968
Investing activities $ (68,214 ) $ (10,242 ) $ (12,661 )
Financing activities $ 77,233
$ 3,985
$ (8,015 )

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 resource segment. During ~~2017,~~2020, our operations generated $15,481,000 in cash. A portion of these receipts came from distributions of $6,222,000 from our Five West Parcel, TA/Petro and Majestic joint ventures, while another $5,427,000 came in the form of farming receivable collections.

During 2019, our operations provided ~~$9,830,000 of~~$16,045,000 in cash primarily attributable to ~~operating~~strong results from our commercial joint ventures. We received total distributions of $15,381,000 from our Five West Parcel, TA/Petro and Majestic joint ventures.

During 2020, investing activities provided $19,778,000, which was largely attributed to marketable securities maturities of $41,843,000. The maturities were used to fund capital expenditures of $22,259,000 that was primarily related to our real estate development. Of the $22,259,000, we spent $4,132,000 on general planning and final map preparation for Phase 1 of MV, $3,635,000 on litigation defense for Centennial, and $1,997,000 on re-entitlement and litigation for Grapevine. At TRCC, we primarily used $7,128,000 to expand water infrastructure at TRCC and early entitlement efforts for TRCC Residential. All real estate capital expenditures are inclusive of capitalized interest, payroll and overhead. Our mineral resources segment spent $3,568,000 to acquire water for use as needed and ~~commercial real estate activities. We also received~~for our future residential developments. Lastly, our farming segment had cash outlays of $5,145,000 for developing new almond orchards and replacing old farm equipment.

During 2019, investing activities provided $828,000 of cash, which was largely attributed to marketable securities maturities of $53,418,000, reimbursements from the community financing district of $4,180,000, and distributions from our unconsolidated joint ventures of $3,457,000. Offsetting the increase were investments in marketable securities of $28,219,000 and capital expenditures of $25,222,000. Of the $25,222,000, we spent $4,691,000 on planning and permitting for MV, $4,403,000 on the final approval of the specific plan for Centennial, and $3,717,000 on re-entitlement and litigation for Grapevine. At TRCC, we used $8,690,000 on continued expansion of water infrastructure at TRCC and construction of a ~~$7,200,000 distribution from~~new multi-tenant building that was subsequently contributed to our TA/Petro joint venture. ~~Please refer to "Results of Operations by Segment" for further discussion on our operating results.~~

~~During 2016, our operations provided $5,585,000 of cash primarily attributable to operating results from mineral resources, and commercial~~All real estate ~~activities. We also received a $4,500,000 distribution from our TA/Petro joint venture. Please refer to "Results of Operations by Segment" for further discussion on our operating results.~~

During 2017, investing activities used $68,214,000. During 2017, we invested a portion of our proceeds from the rights offering, totaling $52,716,000, into marketable securities. We also had $21,709,000 in capital expenditures ~~associated with real estate~~are inclusive of capitalized interest, payroll and farm crop development. Of the $21,709,000 we spent $5,462,000 on tentative tract maps for MV, $4,831,000, on entitlement, and land planning activities for Centennial, and $3,938,000 on litigation defense and permitting activities for the Grapevine project. At TRCC we used $4,638,000 on continued expansion and infrastructure related to Wheeler Ridge Road and indirect costs supporting all ongoing infrastructure projects, such as expansion of water treatment facilities.overhead. Our farming segment had cash outlays of ~~$2,129,000~~$3,362,000 for developing new almond orchards and ~~purchase of replacement~~replacing old farm equipment. Lastly, we purchased water through our annual water contracts, using ~~$4,717,000. Offsetting our cash outlays were maturity of marketable securities of $8,126,000,~~$3,686,000 and ~~distributions from our joint venture partners of $3,114,000.~~

During 2016, investing activities used $10,242,000 of cash primarily as a result of $26,380,000 in real estate and equipment expenditures. Of the $26,380,000 we spent $5,253,000, $5,244,000, $5,516,000 on pre-development and entitlement costs on our Centennial, MV, and Grapevine projects, respectively. At TRCC we used $5,196,000 for supporting infrastructure projects. Our farming segment cash outlay was $2,006,000 for developing new almond crops and acquiring farm equipment. We invested ~~$2,161,000~~$3,100,000 into our mineral resources division primarily to develop two new water wells. The remainder of the capital investments primarily relate to capital equipment used as part of our ranch operations and corporate segments. Outside of capital projects, we acquired $5,983,000 in marketable securities and contributed $2,000,000 tounconsolidated joint ventures with Majestic. Offsetting our cash outlays are maturities and sales of marketable securities of $11,750,000, distributions from our joint venture partners of $1,600,000, and reimbursements from TRPFFA for qualifying infrastructure projects of $6,155,000,ventures.

Our estimated capital investment for ~~2018~~2021 is primarily related to our real estate projects as it was in ~~2017.~~2020. These estimated investments include approximately ~~$8,110,000~~$7,163,000 of infrastructure development at TRCC-East ~~and West~~ to support continued commercial retail and industrial development and ~~to expand~~expanding water facilities to support future anticipated absorption. ~~It is assumed we will invest up to $800,000 into the Majestic joint venture as equity for tenant improvement and lease-up purposes.~~ We are also investing approximately ~~$3,624,000~~$4,465,000 to ~~begin development of~~continue developing new almond orchards, wine grape vineyards, and ~~acquiring new~~replacing old farming equipment. The farm investments are part of a long-term farm management program to redevelop declining orchards and vineyards allowing the Company to maintain and improve future farm revenues. We expect to possibly invest up to ~~$18,462,000~~$10,174,000 for permitting activities, litigation defense, predevelopment activities and land planning ~~entitlement activities, litigation related to entitlement approvals, federal and state agency permitting activities, and development activities~~design at MV, Centennial, and Grapevine during ~~2018.~~2020. The timing of these investments is dependent on our coordination efforts with Los Angeles County regarding ~~entitlement~~litigation efforts for Centennial, finalizing litigation and limited permitting activities for Grapevine, and final maps, civil engineering, land planning and design, for MV. Our plans also include ~~$6,224,000~~$4,544,000 for payment of annual water ~~infrastructure~~inventory and water related investments. We are also planning to potentially invest up to ~~$300,000~~$386,000 in the normal replacement of operating equipment, such as ranch equipment, and ~~updates to our information technology systems.~~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, ~~2017~~2020 and ~~2016,~~2019, of ~~$3,478,000~~$2,713,000 and ~~$3,381,000,~~$2,818,000, respectively, is classified in real estate development. We also capitalized payroll costs related to development, pre-construction, and construction projects which aggregated ~~$2,809,000~~$3,520,000 and ~~$2,656,000~~$3,706,000 for the years ended December 31, ~~2017~~2020 and ~~2016,~~2019, respectively. Expenditures for repairs and maintenance are expensed as incurred.

During ~~2017,~~2020, financing activities ~~provided $77,233,000 through the rights offering discussed previously. A portion~~used $7,045,000, which is comprised of ~~the proceeds from the Rights Offering were used to payoff $17,000,0000 outstanding~~long-term debt repayments of $4,819,000 and tax payments on ~~our line-of-credit.~~vested stock grants of $2,226,000.

During ~~2016,~~2019, financing activities ~~provided $3,985,000~~used $5,675,000 primarily through ~~$20,700,000 in drawdowns from our line-of-credit offset by paydowns~~repayments of ~~$13,815,000~~long-term debt of $4,004,000 and tax payments on ~~our line-of-credit and long-term borrowings.~~vested stock grants of $1,671,000.

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 twelve months to fund internal operations. As we move forward with the completion of the ~~entitlement process~~litigation, permitting and engineering design for our master planned communities and prepare to move into the development stage, we will need to secure additional funding through the issuance of equity and secure other forms of financing such as joint ventures and possibly debt financing.

Capital Structure and Financial Condition

At December 31, ~~2017,~~2020, total capitalization at book value was ~~$496,630,000~~$502,213,000 consisting of ~~$69,820,000~~$56,882,000 of debt, net of deferred financing costs, and ~~$426,810,000~~$445,331,000 of equity, resulting in a debt-to-total-capitalization ratio of approximately ~~14.0%~~11.3%, representing a decrease when compared to the debt-to-total-capitalization ratio of ~~19.6%~~13.1% at December 31, ~~2016.~~2019.

On October 13, 2014, the Company as borrower, entered into an Amended and Restated Credit Agreement, a Term Note and a Revolving Line of Credit Note, with Wells Fargo, or collectively the Credit Facility. The Credit Facility ~~adds~~added a $70,000,000 term loan, or Term Loan, to the then existing $30,000,000 revolving line of credit, or RLC. ~~Funds from~~In August 2019, the Company amended the Term ~~Loan were used~~Note (Amended Term Note) and extended its maturity to ~~finance~~June 2029 and amended the ~~Company's purchase of DMB TMV LLC’s interest in MV as disclosed in~~ RLC to expand

the ~~Current Report on Form 8-K filed on July 16, 2014.~~ capacity from $30,000,000 to $35,000,000 and extend the maturity to October 2024.

The Amended Term Loan had ~~a $66,046,000~~an outstanding balance of $54,887,000 as of December 31, ~~2017.~~ 2020 and an outstanding balance of $58,768,000 as of December 31, 2019. The interest rate per annum applicable to the Amended Term Note is LIBOR (as defined in the Term Note) plus a margin of 170 basis points. The interest rate for the Amended Term Note has been fixed at 4.16% through the use of an interest rate swap agreement. The Amended Term Note requires monthly amortization payments, with the outstanding principal amount due June 5, 2029. The Amended Term Note is secured by the Company’s farmland and farm assets, which include equipment, crops and crop receivables; the PEF power plant lease and lease site; and related accounts and other rights to payment and inventory.

The RLC had no outstanding balance at December 31, 2020 and December 31, 2019. At the Company’s option, the interest rate on this line of credit can float at 1.50% over a selected LIBOR rate or can be fixed at 1.50% above LIBOR for a fixed rate term. During the term of this RLC, the Company can borrow at any time and partially or wholly repay any outstanding borrowings and then re-borrow, as necessary.

Any future borrowings under the RLC will be used for ongoing working capital requirements and other general corporate purposes. To maintain availability of funds under the RLC, undrawn amounts under the RLC will accrue a commitment fee of 10 basis points per annum. The Company's ability to borrow additional funds in the future under the RLC is subject to compliance with certain financial covenants and making certain representations and ~~warranties. At the Company’s option, the interest rate on the RLC can float at 1.50% over a selected LIBOR rate or can be fixed at 1.50% above LIBOR for a fixed rate term. During the term~~warranties, which are typical in this type of this credit facility (which matures in September 2019), we can borrow at any time and partially or wholly repay any outstanding borrowings and then re-borrow, as necessary. The outstanding balance on the RLC was $0 and $7,700,000 as of December 31, 2017 and 2016, respectively.borrowing arrangement.

The ~~interest rate per annum applicable to~~Amended Note and RLC, collectively the Term Loan is LIBOR (as defined in the Term Note) plus a margin of 170 basis points. The interest rate for the term of the note has been fixed through the use of an interest rate swap at a rate of 4.11%. We utilize an interest rate swap agreement to hedge our exposure to variable interest rates associated with our term loan. The Term Loan required interest only payments for the first two years of the term and thereafter requires monthly amortization payments pursuant to a schedule set forth in the Term Note, with the final outstanding principal amount due October 5, 2024. TRC may make voluntary prepayments on the Term Loan at any time without penalty (excluding any applicable LIBOR or interest rate swap breakage costs). Each optional prepayment will be applied to reduce the most remote principal payment then unpaid. The Credit Facility is secured by TRC’s farmland and farm assets, which include equipment, crops and crop receivables and the power plant lease and lease site, and related accounts and other rights to payment and inventory.

~~The~~Amended Credit Facility, requires compliance with three financial covenants: ~~(a)~~(i) total liabilities divided by tangible net worth not greater than 0.75 to 1.0 at each quarter end; ~~(b)~~(ii) a debt service coverage ratio not less than 1.25 to 1.00 as of each quarter end on a rolling four quarter basis; and ~~(c)~~(iii) maintain liquid assets equal to or greater than ~~$20,000,000.~~$20,000,000, including availability on the RLC. At December 31, ~~2017, we were~~2020 and December 31, 2019, the Company was in compliance with ~~the~~all financial covenants.

The Amended Credit Facility also contains customary negative covenants that limit the ability of ~~TRC~~the Company to, among other things, make capital expenditures, incur indebtedness and issue guaranties, consummate certain assets sales, acquisitions or mergers, make investments, pay dividends or repurchase stock, or incur liens on any assets.

The Amended Credit Facility contains customary events of default, including: failure to make required payments; failure to comply with terms of the Amended Credit Facility; bankruptcy and insolvency; and a change in control without consent of the bank (which consent will not be unreasonably withheld). The Amended Credit Facility contains other customary terms and conditions, including representations and warranties, which are typical for credit facilities of this type.

We also have a $4,750,000 promissory note agreement with principal and interest due ~~monthly starting on October 1, 2013.~~monthly. The interest rate on this promissory note is 4.25% per annum, with principal and interest payments ending on September 1, 2028. ~~The balance as of December 31, 2017 is $3,695,000.~~ The proceeds from this promissory note were used to eliminate debt that had been previously used to provide long-term financing for a building being leased to Starbucks and provide additional working capital for future investment. In March 2020, the Company made an additional payment of $687,000 that was applied to the principal of the note. Subsequent principal and interest payments were reduced to $28,000 per month. The additional principal payment was tied to the release of collateral, which in April 2020 was contributed to Petro Travel Plaza LLC. The balance of this long-term debt instrument included in "Notes payable" above approximates the fair value of the instrument. The balance as of December 31, 2020 is $2,191,000.

Our current and future capital resource requirements will be provided primarily from current cash and marketable securities, cash flow from on-going operations, distributions from joint ventures, proceeds from the sale of developed and undeveloped 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”), and the issuance of common stock. In ~~April 2016,~~May 2019, we filed an updated shelf registration statement on Form S-3 that went effective in May ~~2016.~~2019. Under the shelf registration statement, we may offer and sell in the future one or more

offerings, 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 the funding ~~need.~~

~~On August 7, 2013,~~needs of the Company announced that its Board of Directors declared a dividend of 3,000,000 warrants to purchase shares of Company common stock, par value $0.50 per share, or Warrants, to holders of record of Common Stock as of August 21, 2013, the Record Date. The Warrants were distributed to shareholders on August 28, 2013. Each Warrant entitled the holder to purchase one share of Common Stock at an initial exercise price of $40.00 per share and expired unexercised on August 31, 2016.Company.

As noted above, at December 31, ~~2017,~~2020, we had ~~$90,975,000~~$58,091,000 in cash and securities and as of the filing date of this Form 10-K, we ~~have $30,000,000~~had $35,000,000 available on credit lines to meet any short-term liquidity needs.

We continue to expect that substantial investments will be required in order to develop our land assets. In order 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 the issuance of common stock. We will use a combination of the above funding sources to properly match funding requirements with the assets or development project being funded. As we move into 2021, 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, ~~2017,~~2020, to be paid over the next five years:


	Payments Due by Period											Payments Due by Period
($ in thousands)	Total		Less than a year		1-3 years		3-5 years		More than 5 years		($ in thousands)	Total		Less than a year		1-3 years		3-5 years		More than 5 years
Contractual Obligations:											Contractual Obligations:
Estimated water payments	$	261,992	$	8,884	$	18,218	$	18,846	$	216,044	Estimated water payments	$	276,146	$	10,194	$	21,314	$	22,613	$	222,025
Long-term debt	69,959		4,004		8,241		8,915		48,799		Long-term debt	57,078		4,295		9,170		10,016		33,597
Interest on long-term debt	15,494		2,775		5,056		4,348		3,315		Interest on long-term debt	12,905		2,281		4,005		3,204		3,415

Cash contract commitments	7,500		5,291		1,138		—		1,071		Cash contract commitments	4,866		2,657		1,138		—		1,071
Defined Benefit Plan	3,658		200		546		585		2,327		Defined Benefit Plan	4,378		299		666		843		2,570
SERP	4,958		526		979		956		2,497		SERP	5,233		527		1,038		1,040		2,628
Tejon Ranch Conservancy	3,200		800		1,600		800		—		Tejon Ranch Conservancy	800		800		—		—		—
Financing fees	163		163		—		—		—		Financing fees	163		163		—		—		—
Operating lease											Operating lease	32		21		11		—		—
Total contractual obligations	$	366,924	$	22,643	$	35,778	$	34,450	$	274,053	Total contractual obligations	$	361,601	$	21,237	$	37,342	$	37,716	$	265,306

The categories above include purchase obligations and other long-term liabilities reflected on our balance sheet under GAAP. A “purchase obligation” is defined in Item 303(a)(5)(ii)(D) of Regulation S-K as “an agreement to purchase goods or services that is enforceable and legally binding the registrant that specifies all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction.” Based on this definition, 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.

Our financial obligations to the Tejon Ranch Conservancy are prescribed in the Conservation Agreement. Our advances to the Tejon Ranch Conservancy are dependent on the occurrence of certain events and their timing, and are therefore subject to change in amount and period. The amounts included above are the minimum amounts we anticipate contributing through the year 2021, at which time our current contractual obligation terminates.

As discussed in Note 15 (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 ~~2017,~~2020, we made pension contributions of $165,000 and it is projected that we will make a similar contribution in ~~2018.~~2021.

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 during the second quarter of 2014 by a consultant, related to the entitlement of the Grapevine Development Area. The Company exited a consulting contract during the second quarter of 2014 related to the Grapevine Development and is obligated to pay an earned incentive fee at the time of successful receipt of litigated project 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 contract, which obligates us to purchase 6,693 acre-feet of water annually through 2044 and SWP contracts with Wheeler Ridge Maricopa Water Storage District, Tejon-Castac Water District, 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.

Our operating lease obligations are for office equipment, several vehicles, and a temporary trailer providing office space and average approximately $25,000 per month. At the present time, we do not have any capital lease obligations or purchase obligations outstanding.

Off-Balance Sheet Arrangements

The following table shows contingent obligations we have with respect to the CFDs.


	Amount of Commitment Expiration Per Period
($ in thousands)	Total		< 1 year		2 -3 Years		4 -5 Years		After 5 Years
Other Commercial Commitments:
Standby letter of credit	$	4,468	$	4,468	$	—	$	—	$	—
Total other commercial commitments	$	4,468	$	4,468	$	—	$	—	$	—

Amount of Commitment Expiration Per Period
($ in thousands) Total < 1 year 2 -3 Years 4 -5 Years After 5 Years
Other Commercial Commitments:
Standby letter of credit $ 4,921
$ —
$ 4,921
$ —
$ —
Total other commercial commitments $ 4,921
$ —
$ 4,921
$ —
$ —

The Tejon Ranch Public Facilities Financing Authority, or TRPFFA, is a joint powers authority formed by Kern County and TCWD to finance public infrastructure within the Company’s Kern County developments. TRPFFA created two ~~CFDs,~~CFD's, the West CFD and the East CFD. The West CFD has placed liens on 420 acres of the Company’s land to secure payment of special taxes related to $28,620,000 of bond debt sold by TRPFFA for TRCC-West. The East CFD has placed liens on 1,931 acres of the Company’s land to secure payments of special taxes related to ~~$55,000,000~~$75,965,000 of bond debt sold by TRPFFA for TRCC-East. At TRCC-West, the West CFD has no additional bond debt approved for issuance. At TRCC-East, the East CFD has approximately ~~$65,000,000~~$44,035,000 of additional bond debt authorized by TRPFFA.

In connection with the sale of bonds there is a standby letter of credit for ~~$4,921,000~~$4,468,000 related to the issuance of East CFD bonds. The standby letter of credit is in place to provide additional credit enhancement and cover approximately two ~~year's~~years' worth of interest on the outstanding bonds. This letter of credit will not be drawn upon unless the Company, as the largest landowner in the CFD, fails to make its property tax payments. As development occurs within TRCC-East there is a mechanism in the bond documents to reduce the amount of the letter of credit. The Company believes that the letter of credit will never be drawn upon. This letter of credit is for a two-year period of time and will be renewed in two-year intervals as necessary. The annual cost related to the letter of credit is approximately ~~$83,000.~~$68,000. The assessment of each individual property sold or leased within each CFD is not determinable at this time because it is based on the current tax rate and the assessed value of the property at the time of sale or on its assessed value at the time it is leased to a third-party. Accordingly, the Company is not required to recognize an obligation at December 31, ~~2015.~~2020.

At December 31, ~~2017,~~2020, aggregate outstanding debt of unconsolidated joint ventures was ~~$114,272,000.~~$133,775,000. We guarantee ~~$98,993,000~~$118,484,000 of this debt, relating to our joint ventures with Rockefeller and Majestic. Because of positive cash flow generation within the Rockefeller and Majestic joint ventures, we do not expect the guarantee to ever be called upon. We do not provide a guarantee on the ~~$15,279,000~~$15,291,000 of debt related to our joint venture with TA/Petro.

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.~~expense and asset abandonment charges. 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.~~expense, and abandonment charges. 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.


	Year-Ended December 31,
($ in thousands)	2020		2019		2018
Net (loss) income	$	(747)	$	10,579	$	4,235
Net loss attributed to non-controlling interest	(7)		(1)		(20)
Interest, net
Consolidated interest income	(884)		(1,239)		(1,344)
Our share of interest expense from unconsolidated joint ventures	1,902		2,785		2,519
Total interest, net	1,018		1,546		1,175
Income tax expense	829		3,980		1,320
Depreciation and amortization
Consolidated	4,938		5,036		5,424
Our share of depreciation and amortization from unconsolidated joint ventures	4,419		4,135		4,328
Total depreciation and amortization	9,357		9,171		9,752
EBITDA	10,464		25,277		16,502
Stock compensation expense	4,494		3,198		3,248
Asset abandonment charges	—		1,604		—
Adjusted EBITDA	$	14,958	$	30,079	$	19,750

Year-Ended December 31,
($ in thousands) 2017 2016 2015
Net (loss) income $ (1,579 ) $ 515
$ 2,912
Net (loss) attributed to non-controlling interest (24 ) (43 ) (38 )
Interest, net
Consolidated interest income (462 ) (457 ) (528 )
Our share of interest expense from unconsolidated joint ventures 1,730
1,449
1,113
Total interest, net 1,268
992
585
Income tax (benefit) expense (1,123 ) 336
1,125
Depreciation and amortization:
Consolidated 4,551
4,549
5,090
Our share of depreciation and amortization from unconsolidated joint ventures 5,419
3,630
2,878
Total depreciation and amortization 9,970
8,179
7,968
EBITDA 8,560
10,065
12,628
Stock compensation expense 3,552
4,585
3,757
Adjusted EBITDA $ 12,112
$ 14,650
$ 16,385

Net operating income (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.


($ in thousands)	Year-Ended December 31,
Net operating income	2020		2019		2018
Pastoria Energy Facility	$	4,576	$	4,573	$	4,056
TRCC	1,290		1,488		1,439
Communication leases	911		912		894
Other commercial leases	557		650		670
Total Commercial/Industrial net operating income	$	7,334	$	7,623	$	7,059

($ in thousands) Year-Ended December 31,
Net operating income 2017 2016 2015
Pastoria Energy Facility 3,854
3,612
3,694
TRCC 1,447
1,327
1,346
Communication leases 799
795
788
Other commercial leases 618
817
758
Total Commercial/Industrial net operating income 6,718
6,551
6,586


	Year-Ended December 31,										Year-Ended December 31,
($ in thousands)	2017			2016			2015			($ in thousands)	2020		2019		2018
Commercial/Industrial operating income	$2,874			$2,338			$1,578			Commercial/Industrial operating income	$	2,414	$	3,831	$	2,724
Plus: Commercial/Industrial depreciation and amortization	615			585			552			Plus: Commercial/Industrial depreciation and amortization	486		517		651
Plus: General, administrative and other expenses	5,570			6,084			6,011			Plus: General, administrative and other expenses	6,137		11,907		5,241
Less: Other revenues including land sales	(2,341		)	(2,456		)	(1,522		)	Less: Other revenues including land sales	(1,703)		(8,632)		(1,557)
Total Commercial/Industrial net operating income	$	6,718		$	6,551		$	6,619		Total Commercial/Industrial net operating income	$	7,334	$	7,623	$	7,059

The Company utilizes ~~net operating income (NOI)~~NOI of unconsolidated joint ventures as a measure of financial or operating performance that is not specifically defined by ~~GAAP in the United States.~~GAAP. We believe ~~net operating income~~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 ~~net operating income~~NOI of unconsolidated joint ventures.


	Year-Ended December 31,
($ in thousands)	2020		2019		2018
Net income of unconsolidated joint ventures	$	7,099	$	30,213	$	5,734
Plus: Interest expense of unconsolidated joint ventures	5,154		5,438		4,912
Operating income of unconsolidated joint ventures	12,253		35,651		10,646
Plus: Depreciation and amortization of unconsolidated joint ventures	8,323		7,773		8,125
Less: Gain on sale of asset	—		(17,537)		—
Net operating income of unconsolidated joint ventures	$	20,576	$	25,887	$	18,771

Year-Ended December 31,
($ in thousands) 2017 2016 2015
Net income of unconsolidated joint ventures $ 6,371
$ 11,782
$ 10,523
Interest expense of unconsolidated joint ventures 3,364
2,757
2,135
Operating income of unconsolidated joint ventures 9,735
14,539
12,658
Depreciation and amortization of unconsolidated joint ventures 10,361
6,832
5,425
Net operating income of unconsolidated joint ventures $ 20,096
$ 21,371
$ 18,083

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk represents the risk of loss that may impact the financial position, results of operations, or cash flows of the Company due to adverse changes in financial or commodity market prices or rates. We are exposed to market risk in the areas of interest rates and commodity prices.

Financial Market Risks

Our exposure to financial market risks includes changes to interest rates and credit risks related to marketable securities, interest rates related to our outstanding indebtedness and trade receivables.

The primary objective of our investment activities is to preserve principal while at the same time maximizing yields and prudently managing risk. To achieve this objective and limit interest rate exposure, we limit our investments to securities with a maturity of less than five years and an investment grade rating from Moody’s or Standard and Poor’s. See Note 3 (Marketable Securities) of the Notes to Consolidated Financial Statements.

Our current RLC has no outstanding balance. The interest rate on the RLC can either float at 1.50% over a selected LIBOR rate or can be fixed at 1.50% above LIBOR for a fixed term for a limited period of time and change only at maturity of the fixed rate portion. The floating rate and fixed rate options within our RLC help us manage our interest rate exposure on any outstanding balances.

We are exposed to interest rate risk on our long-term debt. Long-term debt consists of two term loans, one for ~~$66,046,000 that~~$54,887,000 and is tied to LIBOR plus a margin of 1.70%. The interest rate for the term of this loan has been fixed through the use of an interest rate swap that fixed the rate at ~~4.11%~~4.16%. The outstanding balance on the second term loan is ~~$3,695,000~~$2,191,000 and has a fixed rate of 4.25%. We believe it is prudent at times to limit the variability of floating-rate interest payments and have from time-to-time entered into interest rate swap arrangements to manage those fluctuations, as we did with the ~~new loan.~~Term Loan.

Market risk related to our farming inventories ultimately depends on the value of almonds, grapes, and pistachios at the time of payment or sale. Credit risk related to our receivables depends upon the financial condition of our customers. Based on historical experience with our current customers and periodic credit evaluations of our customers’ financial conditions, we believe our credit risk is minimal. Market risk related to our farming inventories is discussed below in the section pertaining to commodity price exposure.

The following tables provide information about our financial instruments that are sensitive to changes in interest rates. The tables present our debt obligations and marketable securities and their related weighted-average interest rates by expected maturity dates.

~~Interest Rate Sensitivity Financial Market Risks~~

~~Principal Amount by Expected Maturity~~

~~At December 31, 2017~~

~~(In thousands except percentage data)~~

2018 2019 2020 2021 2022 Thereafter Total Fair Value
Assets:
Marketable securities $ 20,227
$ 30,315
$ 20,420
$ 36
$ 68
$ —
$ 71,066
$ 70,868
Weighted average interest rate 1.61 % 1.83 % 2.02 % — % — % — % 1.83 %
Liabilities:
Long-term debt ($4.75M note) $ 277
$ 289
$ 302
$ 315
$ 328
$ 2,184
$ 3,695
$ 3,695
Weighted average interest rate 4.25 % 4.25 % 4.25 % 4.25 % 4.25 % 4.25 % 4.25 %
Long-term debt ($70.0M note) $ 3,563
$ 3,715
$ 3,881
$ 4,051
$ 4,221
$ 46,615
$ 66,046
$ 66,046
Weighted average interest rate 4.11 % 4.11 % 4.11 % 4.11 % 4.11 % 4.11 % 4.11 %
Long-term debt (other) $ 163
$ 55
$ —
$ —
$ —
$ —
$ 218
$ 218
Weighted average interest rate 3.35 % 3.35 % — % — % — % — % 3.35 %

Interest Rate Sensitivity Financial Market Risks

Principal Amount by Expected Maturity

At December 31, ~~2016~~2020

(In thousands except percentage data)


	2021	2022	2023	2024	2025	Thereafter	Total	Fair Value
Assets:
Marketable securities	$2,766	$—	$—	$—	$—	$—	$2,766	$2,771
Weighted average interest rate	0.99%	—%	—%	—%	—%	—%	0.99%
Liabilities:


Long-term debt ($4.75M note)	$244	$254	$265	$277	$289	$862	$2,191	$2,191
Weighted average interest rate	4.25%	4.25%	4.25%	4.25%	4.25%	4.25%	4.25%
Long-term debt ($70.0M note)	$4,051	$4,221	$4,429	$4,624	$4,825	$32,737	$54,887	$54,887
Weighted average interest rate	4.16%	4.16%	4.16%	4.16%	4.16%	4.16%	4.16%

2017 2018 2019 2020 2021 Thereafter Total Fair Value
Assets:
Marketable securities $ 6,979
$ 13,787
$ 6,007
$ —
$ —
$ —
$ 26,773
$ 26,675
Weighted average interest rate 1.32 % 1.59 % 1.73 % — % — % — % 1.55 %
Liabilities:
Revolving line of credit $ 7,700
$ —
$ —
$ —
$ —
$ —
$ 7,700
$ 7,700
Weighted average interest rate 2.26 % — % — % — % — % — % — %
Long-term debt ($4.75M note) $ 266
$ 277
$ 289
$ 302
$ 315
$ 2,512
$ 3,961
$ 3,961
Weighted average interest rate 4.25 % 4.25 % 4.25 % 4.25 % 4.25 % 4.25 % 4.25 %
Long-term debt ($70.0M note) $ 3,393
$ 3,563
$ 3,715
$ 3,881
$ 4,051
$ 50,836
$ 69,439
$ 69,439
Weighted average interest rate 4.11 % 4.11 % 4.11 % 4.11 % 4.11 % 4.11 % 4.11 %
Long-term debt (other) $ 195
$ 218
$ 54
$ —
$ —
$ —
$ 467
$ 467
Weighted average interest rate 3.35 % 3.35 % 3.35 % — % — % — % 3.35 %

Interest Rate Sensitivity Financial Market Risks

Principal Amount by Expected Maturity

At December 31, 2019

(In thousands except percentage data)


	2020	2021	2022	2023	2024	Thereafter	Total	Fair Value
Assets:
Marketable securities	$38,133	$900	$—	$—	$—	$—	$39,033	$39,084
Weighted average interest rate	2.03%	2.06%	—%	—%	—%	—%	2.03%
Liabilities:


Long-term debt ($4.75M note)	$302	$315	$328	$343	$357	$1,484	$3,129	$3,129
Weighted average interest rate	4.25%	4.25%	4.25%	4.25%	4.25%	4.25%	4.25%
Long-term debt ($70.0M note)	$3,881	$4,051	$4,221	$4,429	$4,624	$37,562	$58,768	$58,768
Weighted average interest rate	4.16%	4.16%	4.16%	4.16%	4.16%	4.16%	4.16%

Our risk with regard to fluctuations in interest rates has decreased slightly related to marketable securities since these balances have decreased compared to the prior year.

Commodity Price Exposure

As of December 31, ~~2017,~~2020, we have exposure to adverse price fluctuations associated with certain inventories and accounts receivable. Farming inventories consist of farming cultural and processing costs related to ~~2017~~2020 and ~~2016~~2019 crop production. The farming costs inventoried are recorded at actual costs incurred. Historically, these costs have been recovered each year when that year’s crop harvest has been sold.

With respect to accounts receivable, the amount at risk relates primarily to farm crops. These receivables are recorded ~~as estimates of the prices that ultimately will be received for the crops.~~based on estimated final pricing. The final price is generally not known for several months following the close of our fiscal year. Of the ~~$7,608,000 of~~$4,592,000 in outstanding accounts receivable ~~outstanding~~ at December 31, ~~2017, $3,670,000,~~2020, $646,000 or ~~48%~~14%, is at risk tofor changing prices. Of the amount at risk, ~~to changing prices, $747,000~~$646,000 is attributable to ~~pistachios, and $2,716,000 is attributable to almonds.~~pistachios.

The price estimated for recording accounts receivable for pistachios recorded at December 31, ~~2017~~2020 was ~~$2.00~~$2.04 per pound, as compared to ~~$2.03~~$1.98 per pound at December 31, ~~2016.~~2019. For each $0.01 change in the price per pound of pistachios, our receivable for pistachios increases or decreases by ~~$40.20.~~$3,200. Although the final price per pound of pistachios (and therefore the extent of the risk) is not presently known, over the last three years prices have ranged from ~~$2.88~~$1.98 to $4.25. With respect to almonds, the price estimated for recording the receivable was $2.57 per pound, as compared to $2.51 per pound at December 31, 2016. For each $0.01 change in the price of almonds, our receivable for almonds increases or decreases by $54. The range of final prices over the last three years for almonds has ranged from $2.51 to $3.97 per pound.$2.04.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The response to this Item is submitted in a separate section of this Form 10-K.


~~ITEM 9.~~	~~CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE~~

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES


~~(a)~~	~~Evaluation of Disclosure Controls and Procedures~~

(a)Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer, Chief Financial ~~Officer, Chief Accounting~~ Officer and Controller, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective as of December 31, 2020 in ensuring that all information required in the reports we file or submit under the Exchange Act was accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure and was recorded, processed, summarized and reported within the time period required by the rules and regulations of the SEC.


~~(b)~~	~~Changes in Internal Control Over Financial Reporting~~

(b)Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 under the Exchange Act that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

See Management’s Report on Internal Control Over Financial Reporting and the Report of Independent Registered Public Accounting Firm On Internal Control over Financial Reporting following ITEM 15(a)(2) - FINANCIAL STATEMENT SCHEDULES of this Form 10-K.

ITEM 9B. OTHER INFORMATION

~~None.~~TRC issued a press release on March 3, 2021 for the fourth-quarter and year-ended December 31, 2020 financial results.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information as to our Executive Officers is set forth in Part I, Item 1 of this Form 10-K under ~~“Executive Officers of the Registrant.~~“Information about our Executive Officers.” The other information required by this Item is incorporated by reference from the definitive proxy statement to be filed by us with the SEC with respect to our ~~2018~~2021 Annual Meeting of Stockholders and will be found under the captions ~~"The~~“The Election of Directors,~~" "Section 16(a) Beneficial Ownership Reporting Compliance," "Code~~” “Code of Business Conduct and Ethics and Corporate Governance Guidelines,"” “Corporate Governance Matters” and, ~~"Corporate Governance Matters."~~if applicable, “Delinquent Section 16(a) Reports.”

ITEM 11. EXECUTIVE COMPENSATION

Information required by this Item is incorporated by reference from the definitive proxy statement to be filed by us with the SEC with respect to our ~~2018~~2021 Annual Meeting of Stockholders and will be found under the captions ~~"Compensation~~“Compensation Discussion and Analysis,"” and ~~"Compensation~~“Compensation Committee Report."”

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS


~~(a)~~	~~Security Ownership of Certain Beneficial Owners and Management.~~

(a)Security Ownership of Certain Beneficial Owners and Management.

Information required by this Item with respect to security ownership of certain beneficial owners and management is incorporated by reference from the definitive proxy statement to be filed by us with the SEC with respect to our ~~2018~~2021 Annual Meeting of Stockholders and will be found under the caption "Stock Ownership of Certain Beneficial Owners and Management."


~~(b)~~	~~Securities Authorized for Issuance under Equity Compensation Plans.~~

(b)Securities Authorized for Issuance under Equity Compensation Plans.

The following table shows aggregated information as of December 31, ~~2017~~2020 with respect to all of our compensation plans under which our equity securities were authorized for issuance. At December 31, ~~2017,~~2020, we had, and we presently have, no other compensation contracts or arrangements for the issuance of any such equity securities and there were then, and continue to be, no compensation plans, contracts or arrangements which were not approved by our stockholders. More detailed information

with respect to our compensation plans is included in Note 11 (Stock Compensation - Restricted Stock and Performance Share Grants) of the Notes to Consolidated Financial Statements.

Equity Compensation Plans Approved by Security Holders

Equity
compensation plans
approved by
security holders *

Number of securities to be
issued upon exercise of
outstanding grants

Weighted-average
exercise price of
outstanding grants

Number of securities remaining
available for future issuance
under equity compensation
plans (excluding securities
reflected in column (a))

(a)

(b)

(c)

Restricted stock
grants and restricted
stock units at target
goal achievement

840,307

Final price determined
at time of vesting

513,214

Equity
compensation plans
approved by
security holders *

Number of securities to be
issued upon exercise of
outstanding grants

Weighted-average
exercise price of
outstanding grants

Number of securities remaining
available for future issuance
under equity compensation
plans (excluding securities)
reflected in column (a)
(a) (b) (c)
Restricted stock
grants and restricted
stock units at target
goal achievement
536,860
Final price determined
at time of vesting
826,886

* The Company does not use equity compensation plans that have not been approved by the security holders.


~~ITEM 13.~~	~~CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE~~

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information required by this Item is incorporated by reference from the definitive proxy statement to be filed by us with the SEC with respect to our ~~2018~~2021 Annual Meeting of Stockholders and will be found under the captions ~~"Related~~“Related Person ~~Transactions"~~Transactions” and ~~"Corporate~~“Corporate Governance Matters."”

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Documents filed as part of this report:
Page Number
1
Consolidated Financial Statements:
1.1

Management's Report on Internal Control Over Financial Reporting

67

Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting

68

Report of Independent Registered Public Accounting Firm

69
1.2

Consolidated Balance Sheets – Years Ended December 31, 2017 and 2016

70
1.3

Consolidated Statements of Operations - Years Ended December 31, 2017, 2016 and 2015

71
1.4

Consolidated Statement of Comprehensive (Loss) Income - Years Ended December 31, 2017, 2016 and 2015

72
1.5

Consolidated Statements of Equity - Years Ended December 31, 2017, 2016 and 2015

73
1.6

Consolidated Statements of Cash Flows - Years Ended December 31, 2017, 2016 and 2015

74
1.7

Notes to Consolidated Financial Statements

75
2
Supplemental Financial Statement Schedules:
None.
3
Exhibits:
3.1
Restated Certificate of Incorporation FN 1

3.2

Amended and Restated Bylaws
FN 2

4.1

Form of First Additional Investment Right
FN 3

4.2

Form of Second Additional Investment Right
FN 4

4.3

Registration and Reimbursement Agreement
FN 5

10.1
Water Service Contract with Wheeler Ridge-Maricopa Water Storage District (without exhibits), amendments originally filed under Item 11 to Registrant's Annual Report on Form 10-K FN 6

10.7

*Severance Agreement
FN 7

10.8

*Director Compensation Plan
FN 7

10.9

*Amended and Restated Non-Employee Director Stock Incentive Plan
FN 8


(a) Documents filed as part of this report:			Page Number
1	Consolidated Financial Statements:
	1.1	Management's Report on Internal Control Over Financial Reporting	71
		Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting	72
		Report of Independent Registered Public Accounting Firm	73
	1.2	Consolidated Balance Sheets – Years Ended December 31, 20 20 and 2019	76
	1.3	Consolidated Statements of Operations - Years Ended December 31, 20 20 , 201 9 and 2018	77
	1.4	Consolidated Statements of Comprehensive Income (Loss) - Years Ended December 31, 20 20 , 201 9 and 2018	78
	1.5	Consolidated Statements of Equity - Years Ended December 31, 20 20 , 201 9 and 2018	79
	1.6	Consolidated Statements of Cash Flows - Years Ended December 31, 2020 , 201 9 and 2018	80
	1.7	Notes to Consolidated Financial Statements	82
2	Supplemental Financial Statement Schedules:
	None.
3	Exhibits:
	3.1	Restated Certificate of Incorporation	FN 1
	3.2	Amended and Restated Bylaws	FN 2





	4.3	Registration and Reimbursement Agreement	FN 5
	4.4	Description of Securities	Filed herewith
	4.5	Form of Indenture for Debt	FN 36
	10.1	Water Service Contract with Wheeler Ridge-Maricopa Water Storage District (without exhibits), amendments originally filed under Item 11 to Registrant's Annual Report on Form 10-K	FN 6

	10.7	*Severance Agreement	FN 7

	10.8	*Director Compensation Plan	FN 7

	10.9	*Amended and Restated Non-Employee Director Stock Incentive Plan	FN 8

10.9(1)

*Stock Option Agreement Pursuant to the Non-Employee Director Stock Incentive Plan

FN 7

10.10

*Amended and Restated 1998 Stock Incentive Plan

FN 9

10.10(1)

*Stock Option Agreement Pursuant to the 1998 Stock Incentive Plan

FN 7

10.12

~~10.12~~

Ground Lease ~~Agreement~~ with Pastoria Energy Facility L.L.C.

FN 10

10.15

Form of Securities Purchase Agreement

FN 11

10.16

Form of Registration Rights Agreement

FN 12

10.17

*2004 Stock Incentive Program

FN 13

10.18

*Form of Restricted Stock Agreement for Directors

FN 13

10.19

*Form of Restricted Stock Unit Agreement

FN 13

10.23

Limited Liability Company Agreement of Tejon Mountain Village LLC ~~Operating Agreement~~

FN 14

10.24

Tejon Ranch Conservation and Land Use Agreement

FN 15

10.25

Second Amended and Restated Limited Liability Agreement of Centennial Founders, LLC

FN 16

10.26

*Executive Employment Agreement - Allen E. Lyda

FN 17

10.27

Limited Liability Company Agreement of TRCC/Rock Outlet Center LLC

FN 18

10.28

Warrant Agreement

FN 19

10.29

Amendments to Limited Liability Company Agreement of Tejon Mountain Village LLC

FN 20

10.30

Membership Interest Purchase Agreement - ~~TMV~~T ejon M ountain V illage LLC

FN 21

10.31

Amended and Restated Credit Agreement

FN 22

10.32

Term Note

FN 22

10.33

Revolving Line of Credit

FN 22

10.34

Amendments to Lease Agreement with Pastoria Energy Facility L.L.C.

FN 23

10.35

Water Supply Agreement with Pastoria Energy Facility L.L.C.

FN 24

~~10.36~~

*Separation Agreement - Gregory J. Tobias

~~FN 25~~

~~10.37~~

~~Limited Liability Agreement of TRC-MRC 2, LLC~~

~~FN 26~~

~~10.38~~

~~Limited Liability Agreement of TRC-MRC 1, LLC~~

~~FN 27~~

~~10.39~~

~~Centennial Redemption and Withdrawal Agreement~~

~~FN 28~~

10.37

Limited Liability Company Agreement of TRC-MRC 2, LLC

FN 26

~~10.40~~

10.38

Limited Liability Company Agreement of TRC-MRC 1, LLC

FN 27

10.39

Centennial Founders, LLC Redemption and Withdrawal Agreement - Lewis Tejon Member

FN 28

10.40

First Amendment to Second Amended and Restated Limited Liability Company Agreement of Centennial Founders, LLC

FN 29

10.41

Second Amendment to Second Amended and Restated Limited Liability Company Agreement of Centennial Founders, LLC

FN 30

2110.42

Limited Liability Company Agreement of TRC-MRC 3, LLC

FN 31

10.43

Fourth Amendment to Second Amended and Restated Limited Liability Company Agreement of Centennial Founders, LLC

FN 32

10.44

Centennial Founders, LLC Redemption and Withdrawal Agreement - CalAtlantic

FN 33

10.45

Amended Revolving Line of Credit

FN 34

10.46

Amended Term Note

FN 35

10.47

Executive Severance Agreement - Executive Severance Agreement - Gregory S. Bielli S. Bielli

FN 37

List of Subsidiaries of Registrant

Filed herewith

23.1

Consent of Deloitte & Touche LLP, independent registered public accounting firm (Los Angeles, CA)

Filed herewith

23.2

Consent of Ernst & Young Consent of Ernst & Young LLP, independent registered public accounting firm (Los Angeles, CA), independent registered public accounting firm (Los Angeles, CA)

Filed herewith

23.3

~~23.2~~

Consent of RSM US LLP, independent registered public accounting firm

Filed herewith

31.1

Certification as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Filed herewith

31.2

Certification as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Filed herewith

~~31.3~~32

~~Certification as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~

~~Filed herewith~~

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Filed herewith

~~99.1~~

99.1

Financial Statements of Petro Travel Plaza Holdings LLC

Filed herewith

101.INS

~~101.INS~~

XBRL Instance Document.

Filed herewith

101.SCH

XBRL Taxonomy Extension Schema Document.

Filed herewith

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document.

Filed herewith

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document.

Filed herewith

101.LAB

XBRL Taxonomy Extension Label Linkbase Document.

Filed herewith

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document.

Filed herewith

Management contract, compensatory plan or arrangement.




FN 1		This document, filed with the Securities and Exchange Commission in Washington D.C. (file number ~~1-7183) under Item 14~~333-231032) as Exhibit 99.1 to our ~~Annual~~Current Report on Form ~~10-K for year ended December 31, 1987,~~8-K filed on May 26, 2020, is incorporated herein by reference. ~~This Exhibit was not filed with the Securities and Exchange Commission in an electronic format.~~
FN 2			This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 99.1 to our Current Report on Form 8-K filed on ~~September 20, 2017,~~May 26, 2020, is incorporated herein by reference.
~~FN 3~~	This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 4.3 to our Current Report on Form 8-K filed on May 7, 2004, is incorporated herein by reference.



~~FN 4~~						This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number I-7183) as Exhibit 4.4 to our Current Report on Form 8-K filed on May 7, 2004, is incorporated herein by reference.


FN 5						This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 4.1 to our Current Report on Form 8-K filed on December 20, 2005, is incorporated herein by reference.
FN 6						This document, filed with the Securities and Exchange Commission in Washington D.C. (file number 1-7183) under Item 14 to our Annual Report on Form 10-K for year ended December 31, 1994, is incorporated herein by reference. This Exhibit was not filed with the Securities and Exchange Commission in an electronic format.
FN 7						This document, filed with the Securities and Exchange Commission in Washington D.C. (file number 1-7183) under Item 14 to our Annual Report on Form 10-K, for the period ending December 31, 1997, is incorporated herein by reference.
FN 8						This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.9 to our Annual Report on ~~form~~Form 10-K for the year ended December 31, 2008, is incorporated herein by reference.
FN 9						This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.10 to our Annual Report on ~~form~~Form 10-K for the year ended December 31, 2008, is incorporated herein by reference
FN 10						This document filed with the Securities and Exchange Commission in Washington D.C. (file number 1-7183) as Exhibit 10.16 to our Annual Report on Form 10-K for the year ended December 31, 2001, is incorporated herein by reference.
FN 11						This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 4.1 to our Current Report on Form 8-K filed on May 7, 2004, is incorporated herein by reference.
FN 12						This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 4.2 to our Current Report on Form 8-K filed on May 7, 2004, is incorporated herein by reference.
FN 13						This document, filed with the Securities and Exchange Commission in Washington D.C. (file number 1-7183) as Exhibits 10.21-10.23 to our Annual Report on Form 10-K for the year ended December 31, 2004, is incorporated herein by reference.
FN 14						This document, filed with the Securities and Exchange Commission in Washington D.C. (file number 1-7183) as Exhibit 10.24 to our Current Report on Form 8-K filed on May 24, 2006, is incorporated herein by reference.
FN 15						This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.28 to our Current Report on Form 8-K filed on June 23, 2008, is incorporated herein by reference.
FN 16						This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.25 to our Quarterly Report on Form 10-Q for the period ending June 30, 2009, is incorporated herein by reference.
FN 17						This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.26 to our Quarterly Report on Form 10-Q for the period ending March 31, 2013, is incorporated herein by reference.
FN 18						This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.27 to our Current Report on Form 8-K filed on June 4, 2013, is incorporated herein by reference.
FN 19						This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.1 to our Current Report on Form 8-K filed on August 8, 2013, is incorporated herein by reference.
FN 20						This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.29 to our Amended Annual Report on Form 10-K/A for the year ended December 31, 2013, is incorporated herein by reference.
FN 21						This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.30 to our Current Report on Form 8-K filed on July 16, 2014, is incorporated herein by reference.
FN 22						This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibits 10.31-10.33 to our Current Report on Form 8-K filed on October 17, 2014, is incorporated herein by reference.
FN 23						This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.34 to our Annual Report on Form 10-K for the year ended December 31, 2014, is incorporated herein by reference.


FN 24
~~FN 24~~	This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.35 to our Quarterly Report on Form 10-Q for the period ending June 30, 2015, is incorporated herein by reference.
~~FN 25~~		This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.36 to our Quarterly Report on Form 10-Q for the period ending September 30, 2015, is incorporated herein by reference.


FN 26	This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.37 to our Quarterly Report on Form 10-Q for the period ending June 30, 2016, is incorporated herein by reference.
FN 27	This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.38 to our Quarterly Report on Form 10-Q for the period ending September 30, 2016, is incorporated herein by reference.
FN 28	This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.39 to our Annual Report on Form 10-K for the year ended December 31, 2016, is incorporated herein by reference.
FN 29	This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.40 to our Annual Report on Form 10-K for the year ended December 31, 2016, is incorporated herein by reference.
FN 30	This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.41 to our Annual Report on Form 10-K for the year ended December 31, 2016, is incorporated herein by reference.
FN 31	This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.42 to our Quarterly Report on Form 10-Q for the period ending September 30, 2018, is incorporated herein by reference.
~~(b)~~FN 32	This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.43 to our Annual Report on Form 10-K for the year ended December 31, 2018, is incorporated herein by reference.
FN 33	This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.44 to our Annual Report on Form 10-K for the year ended December 31, 2018, is incorporated herein by reference.
FN 34	This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.45 to our Quarterly Report on Form 10-Q for the period ending September 30, 2019, is incorporated herein by reference.
FN 35	This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.46 to our Quarterly Report on Form 10-Q for the period ending September 30, 2019, is incorporated herein by reference.

FN 36	This document, filed with the Securities and Exchange Commission in Washington D.C. (file number 333-231032) as Exhibit 4.6 to our Registration Statement on Form S-3 filed on April 25, 2019, is incorporated herein by reference.
FN 37	This document, filed with the Securities and Exchange Commission in Washington, D.C. (file number 1-7183) as Exhibit 10.47 to our Annual Report on Form 10-K for the year ended December 31, 2019, is incorporated herein by reference.


(b) Exhibits. The exhibits being filed with this report are attached at the end of this report.
(c)		Financial Statement Schedules - The response to this portion of Item 15 is submitted as a separate section of this report.

ITEM 16. FORM 10-K SUMMARY

Not applicable.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

TEJON RANCH CO.

March ~~12, 2018~~3, 2021

~~BY:~~By:

/s/ Gregory S. Bielli

Date

Gregory S. Bielli

President and Chief Executive Officer

(Principal Executive Officer)

~~March 12, 2018~~

~~BY:~~

~~/s/ Allen E. Lyda~~

March 3, 2021

By:

~~Allen E. Lyda~~

~~Executive Vice President and Chief Financial Officer~~

~~(Principal Financial Officer)~~

~~March 12, 2018~~

~~BY:~~

/s/ Robert D. Velasquez

Date

Robert D. Velasquez

Senior Vice President of Finance and Chief ~~Accounting~~Financial Officer

(Principal Financial and Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.

Name

Capacity

Date

~~Name~~

~~Capacity~~

~~Date~~

/s/ Steven A. Betts
Steven A. Betts

Director

March 3, 2021

/s/ Gregory S. Bielli
Gregory S. Bielli

Director

March 3, 2021

/s/ ~~Robert A. Alter~~Jean Fuller

~~Robert A. Alter~~Jean Fuller

Director

March ~~12, 2018~~3, 2021

~~/s/ Steven A. Betts~~
~~Steven A. Betts~~

~~Director~~

~~March 12, 2018~~

~~/s/ Gregory S. Bielli~~
~~Gregory S. Bielli~~

~~Director~~

~~March 12, 2018~~

/s/ Anthony L. Leggio

Anthony L. Leggio

Director

March ~~12, 2018~~3, 2021

/s/ Norman Metcalfe

Norman Metcalfe

Director

March ~~12, 2018~~3, 2021

/s/ Frawn Morgan
Frawn Morgan

Director

March 3, 2021

/s/ Geoffrey Stack

Geoffrey Stack

Director

March ~~12, 2018~~3, 2021

/s/ Daniel R. Tisch

Daniel R. Tisch

Director

March ~~12, 2018~~3, 2021

~~/s/ Frederick C.Tuomi~~
~~Frederick C. Tuomi~~

~~Director~~

~~March 12, 2018~~

/s/ Michael H. Winer

Michael H. Winer

Director

March ~~12, 2018~~3, 2021

Annual Report on Form 10-K

Item 8, Item 15(a) (1) and (2), (b) and (c)

List of Financial Statements and Financial Statement Schedules

Financial Statements

Certain Exhibits

Year Ended December 31, ~~2017~~2020

Tejon Ranch Co.

~~Lebec,~~Tejon Ranch, California

Form 10-K - Item 15(a)(1) and (2)

Tejon Ranch Co. and Subsidiaries

Index to Financial Statements and Financial Statement Schedules

ITEM 15(a)(1) - FINANCIAL STATEMENTS

The following consolidated financial statements of Tejon Ranch Co. and subsidiaries are included in Item 8:

ITEM 15(a)(2) - FINANCIAL STATEMENT SCHEDULES

All schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.

Management’s Report on Internal Control Over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of internal control over financial reporting. As defined in Rule 13a-15(f) of the Exchange Act, internal control over financial reporting is a process designed by, or supervised by, the Company’s principal executive and principal financial officers and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

The Company’s internal control over financial reporting is supported by written policies and procedures, that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of the Company’s management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In connection with the preparation of the Company’s annual financial statements, under the supervision and with the participation of the Company’s management, including its Chief Executive Officer ~~Chief Financial Officer,~~ and Chief ~~Accounting~~Financial Officer, management of the Company has undertaken an assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, ~~2017~~2020 based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework), or COSO. Management’s assessment included an evaluation of the design of the Company’s internal control over financial reporting and testing of the operational effectiveness of the Company’s internal control over financial reporting.

Based on this assessment, management did not identify any material weakness in the Company’s internal control, and management has concluded that the Company’s internal control over financial reporting was effective as of December 31, ~~2017.~~2020.

~~Ernst~~Deloitte & ~~Young~~Touche LLP, the independent registered public accounting firm that audited the Company’s financial statements included in this report, has issued a report on the effectiveness of internal control over financial reporting, a copy of which follows.

Report of Independent Registered Public Accounting Firm

To the ~~Shareholders~~stockholders and the Board of Directors of Tejon Ranch Co. ~~and Subsidiaries~~

Opinion on Internal Control over Financial Reporting

We have audited ~~Tejon Ranch Co. and subsidiaries’~~the internal control over financial reporting of Tejon Ranch Co. and subsidiaries (the “Company”) as of December 31, ~~2017,~~2020, based on criteria established in Internal ~~Control-Integrated~~Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission ~~(2013 Framework) (the COSO criteria)~~(COSO). In our opinion, ~~Tejon Ranch Co. and subsidiaries (the Company)~~the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, ~~2017,~~2020, based on ~~the COSO criteria.~~criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also ~~have~~ audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated ~~balance sheets~~financial statements as of and for the year ended December 31, 2020, of the Company as of December 31, 2017 and 2016, and the related consolidated statements of income, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2017, and the related notes and schedules and our report dated March ~~12, 2018~~3, 2021, expressed an unqualified opinion ~~thereon.~~on those financial statements based on our audit and the report of the other auditors.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the USU.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control ~~Over~~over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ ~~Ernst~~DELOITTE & ~~Young~~TOUCHE LLP

Los Angeles, California

March ~~12, 2018~~

3, 2021

Report of Independent Registered Public Accounting Firm

To the ~~Shareholders~~stockholders and the Board of Directors of Tejon Ranch Co. ~~and Subsidiaries~~

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Tejon Ranch Co. and subsidiaries (the ~~Company)~~"Company") as of December 31, ~~2017~~2020 and ~~2016, and~~2019, the related consolidated statements of ~~income,~~operations, comprehensive (loss) income, equity, and cash flows, for each of the ~~three~~two years in the period ended December 31, ~~2017,~~2020, and the related notes ~~and schedules~~ (collectively referred to as the ~~“consolidated financial statements”~~"financial statements"). In our opinion, based on our audits and the ~~consolidated~~report of the other auditors, the financial statements present fairly, in all material respects, the financial position of the Company atas of December 31, ~~2017~~2020 and ~~2016,~~2019, and the results of its operations and its cash flows for each of the ~~three~~two years in the period ended December 31, ~~2017,~~2020, in conformity with ~~U.S.~~accounting principles generally accepted ~~accounting principles.~~in the United States of America.

We did not audit the financial statements of Petro Travel Plaza Holdings LLC (“Petro”), the Company's investment in which is accounted for by use of the equity method. The accompanying financial statements of the Company include its equity investment in Petro of $23,358,000 and $23,636,000 as of December 31, 2020 and 2019, respectively, and its equity earnings in Petro of $5,722,000 and $8,810,000, for the years ended December 31, 2020 and 2019, respectively. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for Petro, is based solely on the report of the other auditors.

We have also ~~have~~ audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, ~~2017,~~2020, based on the criteria established in Internal ~~Control-Integrated~~Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission ~~(2013 Framework)~~ and our report dated March ~~12, 2018,~~3, 2021, expressed an unqualified opinion ~~thereon.~~on the Company's internal control over financial reporting based on our audit.

Basis for Opinion

These financial statements are the responsibility of the ~~Company’s~~Company's management. Our responsibility is to express an opinion on the ~~Company’s~~Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures ~~include~~included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits and the report of the other auditors provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Real Estate— Real Estate Development - Refer to Notes 1, 5, 14, and 16 to the financial statements

Critical Audit Matter Description

The Company’s evaluation of real estate development 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. When events or changes in circumstances exist, the Company evaluates the real estate development for impairment by comparing undiscounted future cash flows expected to be generated over the life of the real estate development to the respective carrying amount. If the carrying amount of the real estate development exceeds the undiscounted future cash flows, an analysis is performed to determine the fair value of the asset.

The Company makes 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 continued 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 current accumulated costs. In addition, the Company is currently involved in numerous litigation matters related to the entitlement of the property and must continue to use judgment when evaluating the likelihood that these legal matters will be resolved and that the necessary entitlements will be obtained. Changes in these assumptions could have a significant impact on the real estate development identified for further analysis and any impairments identified could be material to the Company’s earnings. Further, the facts and circumstances utilized to make these assumptions may change from period to period. For the year ended December 31, 2020, no impairment loss has been recognized on any real estate development.

We identified the determination of impairment indicators for real estate development as a critical audit matter due to the quantitative significance of real estate development and because of the assumptions management makes when determining whether events or changes in circumstances have occurred indicating that the carrying amounts of any real estate development may not be recoverable. This required a high degree of auditor judgment when performing audit procedures to evaluate whether management appropriately identified impairment indicators.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the evaluation of real estate development for possible indications of impairment included the following, among others:

•We tested the effectiveness of the controls over management’s identification of possible circumstances that may indicate that the carrying amounts of any real estate development is no longer recoverable, including controls over management’s evaluation of the entitlement process, government regulation, litigation, geographical demand for new housing and market conditions related to pricing of new homes.

•We read and evaluated management’s documentation, including relevant accounting policies and information obtained by management from outside sources.

•We evaluated management’s impairment analysis by:

◦Testing the real estate development for possible indications of impairment, including searching for adverse asset-specific and/or market conditions by reviewing publicly available information on home values and land values in the surrounding regions of the development, periodicals and news information relating to the Southern California housing market, other independent market data, including considerations of the demand for housing in the market and changes to comparable home prices

◦We obtained letters from legal counsel and performed inquiries with the Company’s in-house legal counsel in order to evaluate any changes in the status of the litigation matters affecting the development properties and the potential impact on the ability to recover the accumulated costs, including any relevant government regulations and/or other matters impacting the entitlement process.

◦Developing an independent expectation of impairment indicators and comparing such expectation to management’s analysis.

/s/ DELOITTE & TOUCHE LLP

Los Angeles, California

March 3, 2021

We have served as the Company's auditor since 2019.

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Tejon Ranch Co.

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of operations, comprehensive income, equity, and cash flows of Tejon Ranch Co. and subsidiaries (the Company) for the year ended December 31, 2018, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the results of operations and cash flows of the Company for the year ended December 31, 2018, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We ~~have~~ served as the Company’s auditor ~~since~~from 1953 to 2019.

Los Angeles, California

March ~~12, 2018~~1, 2019

Tejon Ranch Co. and Subsidiaries

Consolidated Balance Sheets

($ in thousands)


	December 31							December 31
	2017			2016				2020		2019
ASSETS							ASSETS
Current Assets:							Current Assets:
Cash and cash equivalents	$	20,107		$	1,258		Cash and cash equivalents	$	55,320	$	27,106
Marketable securities - available-for-sale	70,868			26,675			Marketable securities - available-for-sale	2,771		39,084
Accounts receivable	7,608			8,740			Accounts receivable	4,592		9,950
Inventories	2,469			3,084			Inventories	2,990		2,792
Prepaid expenses and other current assets	2,849			3,107			Prepaid expenses and other current assets	2,842		3,252

Total current assets	103,901			42,864			Total current assets	68,515		82,184
Real estate and improvements - held for lease, net	19,115			20,026			Real estate and improvements - held for lease, net	17,660		18,674
Real estate development (includes $94,271 at December 31, 2017 and $89,381 at December 31, 2016, attributable to Centennial Founders, LLC, Note 17)	267,336			248,265
Real estate development (includes $108,600 at December 31, 2020 and $104,491 at December 31, 2019, attributable to Centennial Founders, LLC, Note 17)							Real estate development (includes $108,600 at December 31, 2020 and $104,491 at December 31, 2019, attributable to Centennial Founders, LLC, Note 17)	310,439		297,581
Property and equipment, net	45,332			46,034			Property and equipment, net	46,246		45,072
Investments in unconsolidated joint ventures	30,031			33,803			Investments in unconsolidated joint ventures	33,524		38,240
Net investment in water assets	47,130			43,764			Net investment in water assets	56,698		54,155
Deferred tax assets	1,562			2,282			Deferred tax assets	0		713
Other assets	3,792			2,663			Other assets	3,267		2,803
TOTAL ASSETS	$	518,199		$	439,701		TOTAL ASSETS	$	536,349	$	539,422
LIABILITIES AND EQUITY							LIABILITIES AND EQUITY
Current Liabilities:							Current Liabilities:
Trade accounts payable	$	3,545		$	2,415		Trade accounts payable	$	3,367	$	6,145
Accrued liabilities and other	1,810			3,188			Accrued liabilities and other	3,305		3,463

Deferred income	1,118			1,529			Deferred income	1,972		1,346
Revolving line of credit	—			7,700

Current maturities of long-term debt	4,004			3,853			Current maturities of long-term debt	4,295		4,182
Total current liabilities	10,477			18,685			Total current liabilities	12,939		15,136
Long-term debt, less current portion	65,816			69,853			Long-term debt, less current portion	52,587		57,476
Long-term deferred gains	3,405			3,662			Long-term deferred gains	5,550		5,731
Deferred tax liability							Deferred tax liability	925		0
Other liabilities	11,691			13,034			Other liabilities	19,017		15,455

Total liabilities	91,389			105,234			Total liabilities	91,018		93,798
Commitments and contingencies							Commitments and contingencies	0		0
Equity:							Equity:
Tejon Ranch Co. Stockholders’ Equity							Tejon Ranch Co. Stockholders’ Equity
Common stock, $0.50 par value per share:							Common stock, $0.50 par value per share:
Authorized shares - 30,000,000							Authorized shares - 30,000,000
Issued and outstanding shares - 25,894,773 at December 31, 2017 and 20,810,301 at December 31, 2016	12,947			10,405
Issued and outstanding shares - 26,276,830 at December 31, 2020 and 26,096,797 at December 31, 2019							Issued and outstanding shares - 26,276,830 at December 31, 2020 and 26,096,797 at December 31, 2019	13,137		13,048
Additional paid-in capital	320,167			229,762			Additional paid-in capital	342,059		338,745
Accumulated other comprehensive loss	(5,264		)	(6,239		)	Accumulated other comprehensive loss	(9,720)		(6,771)
Retained earnings	70,392			71,947			Retained earnings	84,487		85,227
Total Tejon Ranch Co. Stockholders’ Equity	398,242			305,875			Total Tejon Ranch Co. Stockholders’ Equity	429,963		430,249
Non-controlling interest	28,568			28,592			Non-controlling interest	15,368		15,375
Total equity	426,810			334,467			Total equity	445,331		445,624
TOTAL LIABILITIES AND EQUITY	$	518,199		$	439,701		TOTAL LIABILITIES AND EQUITY	$	536,349	$	539,422

See accompanying notes.

Tejon Ranch Co. and Subsidiaries

Consolidated Statements of Operations

($ in thousands, except per share amounts)


	Year Ended December 31

		2020		2019		2018
Revenues:
Real estate - commercial/industrial		$	9,536	$	16,792	$	8,970
Mineral resources		10,736		9,791		14,395
Farming		13,866		19,331		18,563
Ranch operations		3,692		3,609		3,691
Total revenues		37,830		49,523		45,619
Costs and expenses:
Real estate - commercial/industrial		7,122		12,961		6,246
Real estate - resort/residential		1,612		2,247		1,530
Mineral resources		6,414		5,818		6,223
Farming		15,103		15,251		16,028
Ranch operations		4,896		5,316		5,451
Corporate expenses		9,430		9,361		9,705
Total expenses		44,577		50,954		45,183
Operating (loss) income		(6,747)		(1,431)		436
Other income (loss):

Investment income		884		1,239		1,344
Gain on sale of real estate		1,331		0		0
Other income (loss)		110		(1,824)		(59)
Total other income (loss)		2,325		(585)		1,285
(Loss) income from operations before equity in earnings of unconsolidated joint ventures		(4,422)		(2,016)		1,721
Equity in earnings of unconsolidated joint ventures, net		4,504		16,575		3,834
Income before income taxes		82		14,559		5,555
Income tax expense		829		3,980		1,320
Net (loss) income		(747)		10,579		4,235
Net loss attributable to non-controlling interest		(7)		(1)		(20)
Net (loss) income attributable to common stockholders		$	(740)	$	10,580	$	4,255
Net (loss) income per share attributable to common stockholders, basic		$	(0.03)	$	0.41	$	0.16
Net (loss) income per share attributable to common stockholders, diluted		$	(0.03)	$	0.40	$	0.16

Year Ended December 31

2017
2016
2015
Revenues:

Real estate - commercial/industrial
$ 9,403

$ 9,438

$ 8,272
Mineral resources
5,983

14,153

15,116
Farming
16,434

18,648

23,836
Ranch operations
3,837

3,338

3,923
Total revenues 35,657
45,577
51,147
Costs and Expenses:

Real estate - commercial/industrial 6,529
7,100
6,694
Real estate - resort/residential 1,955
1,630
2,349
Mineral resources 2,964
7,796
7,396
Farming 16,201
18,673
18,984
Ranch operations 5,411
5,734
6,112
Corporate expenses 10,141
12,550
12,808
Total expenses 43,201
53,483
54,343
Operating loss (7,544 ) (7,906 ) (3,196 )
Other Income:

Gain on sale of real estate —
1,044
—
Investment income 462
457
528
Other income 153
158
381
Total other income 615
1,659
909
Loss from operations before equity in earnings of unconsolidated joint ventures (6,929 ) (6,247 ) (2,287 )
Equity in earnings of unconsolidated joint ventures, net 4,227
7,098
6,324
(Loss) income before income taxes (2,702 ) 851
4,037
Income tax (benefit) expense (1,123 ) 336
1,125
Net (loss) income (1,579 ) 515
2,912
Net loss attributable to non-controlling interest (24 ) (43 ) (38 )
Net (loss) income attributable to common stockholders $ (1,555 ) $ 558
$ 2,950
Net (loss) income per share attributable to common stockholders, basic $ (0.07 ) $ 0.03
$ 0.14
Net (loss) income per share attributable to common stockholders, diluted $ (0.07 ) $ 0.03
$ 0.14

See accompanying notes.

Tejon Ranch Co. and Subsidiaries

Consolidated Statements of Comprehensive (Loss) Income

($ in thousands)

Year Ended December 31
2017 2016 2015
Net (loss) income $ (1,579 ) $ 515
$ 2,912
Other comprehensive income/(loss):
Unrealized (loss) gain on available-for-sale securities (100 ) 62
(188 )
Benefit plan adjustments 404
(371 ) (1,301 )
Benefit plan reclassification for losses included in net income —
—
536
SERP liability adjustments 328
214
234
Unrealized interest rate swap gains/(losses) 970
1,040
678
Other comprehensive income (loss) before taxes 1,602
945
(41 )
Benefit (provision) for income taxes related to other comprehensive (loss) income items (627 ) (282 ) 38
Other comprehensive income (loss) 975
663
(3 )
Comprehensive (loss) income (604 ) 1,178
2,909
Comprehensive (loss) income attributable to non-controlling interests (24 ) (43 ) (38 )
Comprehensive (loss) income attributable to common stockholders $ (580 ) $ 1,221
$ 2,947


	Year Ended December 31
		2020		2019		2018
Net (loss) income		$	(747)	$	10,579	$	4,235
Other comprehensive (loss) income:
Unrealized (loss) gain on available-for-sale securities		(46)		440		(191)
Benefit plan adjustments		(215)		135		(189)

SERP liability adjustments		(622)		(424)		(43)

Unrealized interest rate swap (loss) gain		(3,213)		(2,809)		988
Other comprehensive (loss) income before taxes		(4,096)		(2,658)		565
Benefit (provision) for income taxes related to other comprehensive income items		1,147		744		(158)
Other comprehensive (loss) income		(2,949)		(1,914)		407
Comprehensive (loss) income		(3,696)		8,665		4,642
Comprehensive loss attributable to non-controlling interests		(7)		(1)		(20)
Comprehensive (loss) income attributable to common stockholders		$	(3,689)	$	8,666	$	4,662

See accompanying notes.

Tejon Ranch Co. and Subsidiaries

Consolidated Statements of Equity

($ in thousands, except share information)


																									Common Stock Shares Outstanding	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders' Equity		Noncontrolling Interest		Total Equity
	Common Stock Shares Outstanding		Common Stock			Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Total Stockholders' Equity			Noncontrolling Interest			Total Equity
Balance, December 31, 2014	20,636,478		$	10,318		$	212,763		$	(6,899	)	$	68,439		$	284,621		$	39,712		$	324,333
Net income	—		—			—			—			2,950			2,950			(38		)	2,912

Balance, December 31, 2017																								Balance, December 31, 2017	25,894,773	$	12,947	$	320,167	$	(5,264)	$	70,392	$	398,242	$	28,568	$	426,810
Net income (loss)																								Net income (loss)	—	—		—		—		4,255		4,255		(20)		4,235
Other comprehensive income	—		—			—			(3		)	—			(3		)	—			(3		)	Other comprehensive income	—	—		—		407		—		407		—		407
Restricted stock issuance	85,584		43			(43		)	—			—			—			—			—			Restricted stock issuance	124,597	63		(62)		—		—		1		—		1
Stock compensation	—		—			3,922			—			—			3,922			—			3,922			Stock compensation	—	—		4,480		—		—		4,480		—		4,480
Shares withheld for taxes and tax benefit of vested shares	(33,908	)	(17		)	(904		)	—			—			(921		)	—			(921		)	Shares withheld for taxes and tax benefit of vested shares	(47,290)	(24)		(1,071)		—		—		(1,095)		—		(1,095)
Warrants exercised	—		—			1,065			—			—			1,065			—			1,065
Balance, December 31, 2015	20,688,154		$	10,344		$	216,803		$	(6,902	)	$	71,389		$	291,634		$	39,674		$	331,308
Net income	—		—			—			—			558			558			(43		)	515
Rights offering, net																								Rights offering, net	—	—		(166)		—		—		(166)		—		(166)
Centennial redemption of withdrawing member interest																								Centennial redemption of withdrawing member interest	—	—		13,172		—		—		13,172		(13,172)		0
Balance, December 31, 2018																								Balance, December 31, 2018	25,972,080	$	12,986	$	336,520	$	(4,857)	$	74,647	$	419,296	$	15,376	$	434,672
Net income (loss)																								Net income (loss)	—	—		—		—		10,580		10,580		(1)		10,579
Other comprehensive loss	—		—			—			663			—			663			—			663			Other comprehensive loss	—	—		—		(1,914)				(1,914)		—		(1,914)
Restricted stock issuance	200,240		100			(100		)	—			—			—			—			—			Restricted stock issuance	221,267	110		(110)		—		—		0		—		0
Stock compensation	—		—			4,881			—			—			4,881			—			4,881			Stock compensation	—	—		3,958		—		—		3,958		—		3,958
Shares withheld for taxes and tax benefit of vested shares	(78,093	)	(39		)	(2,861		)	—			—			(2,900		)	—			(2,900		)	Shares withheld for taxes and tax benefit of vested shares	(96,550)	(48)		(1,623)		—		—		(1,671)		—		(1,671)
Centennial redemption of withdrawing member interest	—		—			11,039			—			—			11,039			(11,039		)	—
Balance, December 31, 2016	20,810,301		$	10,405		$	229,762		$	(6,239	)	$	71,947		$	305,875		$	28,592		$	334,467
Balance, December 31, 2019																								Balance, December 31, 2019	26,096,797	$	13,048	$	338,745	$	(6,771)	$	85,227	$	430,249	$	15,375	$	445,624
Net loss	—		—			—			—			(1,555		)	(1,555		)	(24		)	(1,579		)	Net loss	—	—		—		—		(740)		(740)		(7)		(747)
Other comprehensive income	—		—			—			975			—			975			—			975
Other comprehensive loss																								Other comprehensive loss	—	—		—		(2,949)				(2,949)		—		(2,949)
Restricted stock issuance	136,777		69			(70		)	—			—			(1		)	—			(1		)	Restricted stock issuance	338,074	169		(169)		—		—		0		—		0
Stock compensation	—		—			4,107			—			—			4,107			—			4,107			Stock compensation	—	—		5,629		—		—		5,629		—		5,629
Shares withheld for taxes and tax benefit for vested shares	(52,901	)	(27		)	(999		)	—			—			(1,026		)	—			(1,026		)
Rights offering, net	5,000,596		2,500			87,367			—			—			89,867			—			89,867
Balance, December 31, 2017	25,894,773		$	12,947		$	320,167		$	(5,264	)	$	70,392		$	398,242		$	28,568		$	426,810
Shares withheld for taxes and tax benefit of vested shares																								Shares withheld for taxes and tax benefit of vested shares	(158,041)	(80)		(2,146)		—		—		(2,226)		—		(2,226)
Balance, December 31, 2020																								Balance, December 31, 2020	26,276,830	$	13,137	$	342,059	$	(9,720)	$	84,487	$	429,963	$	15,368	$	445,331

See accompanying notes.

Tejon Ranch Co. and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands)


	Twelve Months Ended December 31,
	2020		2019		2018
Operating Activities
Net (loss) income	$	(747)	$	10,579	$	4,235
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	4,938		5,036		5,424
Amortization of premium (discount) on marketable securities	34		(94)		101
Equity in earnings of unconsolidated joint ventures, net	(4,504)		(16,575)		(3,834)
Non-cash retirement plan expense	78		307		335
(Gain) loss on sale of real estate/assets	(1,339)		0		94
Non-cash profits recognized from land contribution	0		(2,146)		0
Deferred income taxes	2,253		1,259		175
Stock compensation expense	4,494		3,198		3,248
Excess tax benefit of stock-based compensation	519		57		18
Non-cash write-off of leasing assets	110		1,604		0
Distribution of earnings from unconsolidated joint ventures	6,222		15,381		4,800
Changes in operating assets and liabilities:
Receivables, inventories, prepaids and other assets, net	5,427		154		(2,888)
Current liabilities, net	(2,004)		(2,715)		2,646
Net cash provided by operating activities	15,481		16,045		14,354
Investing Activities
Maturities and sales of marketable securities	41,843		53,418		35,219
Purchase of marketable securities	(5,610)		(28,219)		(28,392)
Real estate and equipment expenditures	(22,259)		(25,222)		(22,580)

Reimbursement proceeds from Communities Facilities District	4,223		4,180		3,588
Proceeds from sale of real estate/assets	2,000		0		0

Investment in unconsolidated joint ventures	(2,160)		(3,100)		(52)

Distribution of equity from unconsolidated joint ventures	5,309		3,457		2,815
Investments in long-term water assets	(3,568)		(3,686)		(3,844)

Net cash provided by/(used) in investing activities	19,778		828		(13,246)
Financing Activities
Borrowings on line of credit	0		5,000		0
Repayments of line of credit	0		(5,000)		0

Repayments of long-term debt	(4,819)		(4,004)		(4,046)
Net proceeds from rights offering	0		0		(166)

Taxes on vested stock grants	(2,226)		(1,671)		(1,095)
Net cash used in financing activities	(7,045)		(5,675)		(5,307)
Increase (decrease) in cash and cash equivalents	28,214		11,198		(4,199)
Cash and cash equivalents at beginning of year	27,106		15,908		20,107
Cash and cash equivalents at end of year	$	55,320	$	27,106	$	15,908

Twelve Months Ended December 31,
2017 2016 2015
Operating Activities
Net (loss) income $ (1,579 ) $ 515
$ 2,912
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization 4,551
4,549
5,090
Amortization of premium/discount of marketable securities 298
434
555
Equity in earnings of unconsolidated joint ventures, net (4,227 ) (7,098 ) (6,324 )
Non-cash retirement plan expense 469
1,046
997
Loss (gain) on sale of real estate/assets 45
(1,183 ) (95 )
Deferred income taxes 66
1,939
(120 )
Stock compensation expense 3,552
4,585
3,757
Excess tax benefit of stock-based compensation 107
—
—
Distribution of earnings from unconsolidated joint ventures 7,200
4,500
7,200
Changes in operating assets and liabilities:
Receivables, inventories, prepaids and other assets, net 1,660
(1,603 ) 2,733
Current liabilities, net (2,312 ) (2,099 ) 263
Net cash provided by operating activities 9,830
5,585
16,968
Investing Activities
Maturities and sales of marketable securities 8,126
11,750
24,157
Funds invested in marketable securities (52,716 ) (5,983 ) (15,574 )
Real estate and equipment expenditures (21,709 ) (26,380 ) (28,048 )
Reimbursement proceeds from Communities Facilities District —
6,155
4,971
Proceeds from sale of real estate/assets —
4,616
796
Investment in unconsolidated joint ventures (310 ) (2,000 ) (52 )
Distribution of equity from unconsolidated joint ventures 3,114
1,600
1,100
Investments in long-term water assets (4,717 ) —
—
Other (2 ) —
(11 )
Net cash used in investing activities (68,214 ) (10,242 ) (12,661 )
Financing Activities
Borrowings of line of credit 13,300
20,700
17,540
Repayments of line of credit (21,000 ) (13,000 ) (24,390 )
Repayments of long-term debt (3,908 ) (815 ) (244 )
Net proceeds from rights offering 89,867
—
—
Taxes on vested stock grants (1,026 ) (2,900 ) (921 )
Net cash provided by (used in) provided by financing activities 77,233
3,985
(8,015 )
Increase (decrease) in cash and cash equivalents 18,849
(672 ) (3,708 )
Cash and cash equivalents at beginning of year 1,258
1,930
5,638
Cash and cash equivalents at end of year $ 20,107
$ 1,258
$ 1,930
Supplemental cash flow information
Non cash capital contribution to unconsolidated joint venture $ 1,339
$ —
$ —
Accrued capital expenditures included in current liabilities $ 814
$ 652
$ 329
Capital expenditure financing arrangement $ —
$ 467
$ —
Taxes paid (net of refunds) $ (124 ) $ 1,135
$ 1,817


Non-cash investing activities
Accrued capital and water expenditures included in current liabilities	$	910	$	785		$	2,390

Contribution to unconsolidated joint venture1	$	0	$	8,658	1	$	0
Long term deferred profit on land contribution1	$	0	$	2,038	1	$	0

1 In April 2019, the Company contributed land with a fair value of $5.9 million to TRC-MRC 3, LLC, an unconsolidated joint venture formed to pursue the development, construction, leasing, and management of a 579,040 square foot industrial building on the Company's property at TRCC-East. The total cost of the land, inclusive of transaction costs was $2.8 million. The Company recognized $1.5 million in profit and deferred $1.5 million after applying the five-step revenue recognition model in accordance with Accounting Standards Codification (ASC) Topic 606 — Revenue From Contracts With Customers and ASC Topic 323, Investments — Equity Method and Joint Ventures. In December 2019, the Company contributed a newly constructed commercial multi-tenant building and underlying land with an aggregate fair value of $2.8 million to TA/Petro, an unconsolidated joint venture. The total cost of the building construction and land was $2.0 million. The Company recognized $0.3 million in profit and deferred $0.5 million after applying the five-step revenue recognition model in accordance with Accounting Standards Codification (ASC) Topic 606 — Revenue From Contracts With Customers and ASC Topic 323, Investments — Equity Method and Joint Ventures. Historically, cash outflows related to land development expenditures were accounted for within investing activities. For consistency, the Company will continue to classify cash outflows and cash inflows related to land development as investing activities.

See accompanying notes.

Tejon Ranch Co. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, ~~2017~~2020

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company

Tejon Ranch Co. (the Company ~~Tejon, we, us~~ and ~~our)~~Tejon) is a diversified real estate development and agribusiness company committed to responsibly using ~~our~~its land and resources to meet the housing, employment, and lifestyle needs of Californians. Current operations consist of land planning and entitlement, land development, commercial land sales and leasing, leasing of land for mineral royalties, water asset management and sales, grazing leases, ~~income portfolio management,~~ and farming.

These activities are performed through ~~our five~~5 reporting segments:

•Real Estate - Commercial/Industrial

•Real Estate - Resort/Residential

•Mineral Resources

•Farming

•Ranch Operations

~~Our~~Tejon's prime asset is approximately 270,000 acres of contiguous, largely undeveloped land that, at its most southerly border, is 60 miles north of downtown Los Angeles and, at its most northerly border, is 15 miles east of Bakersfield. ~~We create~~The Company creates value by securing entitlements for ~~our~~its land, facilitating infrastructure development, strategic land planning, monetization of land through development and sales, and conservation, in order to maximize the highest and best use for ~~our~~its land.

~~We are~~The Company is involved in ~~several~~7 joint ventures ~~which~~that own, develop, and operate real estate properties. The Company enters into joint ventures as a means to facilitate the development of portions of ~~our~~its land. ~~We are~~The Company is also actively engaged in land planning, land entitlement, and conservation projects.

Any references to the number of acres, number of buildings, square footage, number of leases, occupancy, and any amounts derived from these values in the notes to the consolidated financial statements are unaudited.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, and the accounts of all subsidiaries and investments in which a controlling interest is held by the Company. All intercompany transactions have been eliminated in consolidation. ~~We have~~The Company has evaluated subsequent events through the date of issuance of ~~our~~the consolidated financial statements.

Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. The carrying amount for cash equivalents approximates fair value.

Marketable Securities

The Company considers those investments not qualifying as cash equivalents, but which are readily marketable, to be marketable securities. The Company's investment portfolio is comprised of fixed income debt securities, which are classified as current assets on the consolidated balance sheets. The Company classifies all marketable securities as available-for-sale. These are stated at fair value with the unrealized gains (losses), net of tax, reported as a component of accumulated other comprehensive income (loss) in the consolidated statements of equity.

Investments in Unconsolidated Joint Ventures

For joint ventures that the Company does not control, but over which it exercises significant influence, the Company uses the equity method of accounting. The Company's judgment with regard to its level of influence or control of an entity involves consideration of various factors, including the form of its ownership interest; its representation in the entity's governance; its ability to participate in policy-making decisions; and the rights of other investors to participate in the decision-making process, to replace the Company as manager, and/or to liquidate the venture. These ventures are recorded at cost and adjusted for equity in earnings (losses) ~~and cash~~, contributions and distributions. Any difference between the carrying amount of these investments on the Company’s balance sheet and the underlying equity in net assets on the joint venture’s balance sheet is adjusted as the related underlying assets are depreciated, amortized, or sold. When the Company contributes land to a joint venture, it records the investment in the venture at fair value, regardless of whether the other investors in the venture contribute cash or property.

The Company generally allocates income and loss from an

unconsolidated joint venture based on the venture's distribution priorities, which may be different from its stated ownership percentage.

The Company evaluates the recoverability of its ~~investment~~investments in unconsolidated joint ventures in accordance with accounting standards for equity investments by first reviewing each investment for any indicators of impairment. If indicators are present, the Company estimates the fair value of the investment. If the carrying value of the investment is greater than the estimated fair value, management makes an assessment of whether the impairment is “temporary” or “other-than-temporary.” In making this assessment, management considers the following: (1) the length of time and the extent to which fair value has been less than cost, (2) the financial condition and near-term prospects of the entity, and (3) the Company’s intent and ability to retain its interest long enough for a recovery in market value. If management concludes that the impairment is "other than temporary," the Company reduces the investment to its estimated fair value.

Fair Values of Financial Instruments

The Company follows the Financial Accounting Standards Board's authoritative guidance for fair value measurements of certain financial instruments. The guidance defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Fair value is defined as the exchange (exit) price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This guidance establishes a three-level hierarchy for fair value measurements based upon the inputs to the valuation of an asset or liability. Observable inputs are those which can be easily seen by market participants, while unobservable inputs are generally developed internally, utilizing management’s estimates and assumptions:

•Level 1 – Valuation is based on quoted prices in active markets for identical assets and liabilities.

•Level 3 – Valuation is derived from model-based techniques in which at least one significant input is unobservable and based on ~~our~~the Company's own estimates about the assumptions that market participants would use to value the asset or liability.

When available, ~~we use~~the Company uses quoted market prices in active markets to determine fair value. ~~We consider~~The Company considers the principal market and nonperformance risk associated with ~~our~~ counterparties when determining the fair value measurement. Fair value measurements are used on a recurring basis for marketable securities, investments within the pension plan and hedging instruments, if any.

Interest Rate Swap Agreements

In October 2014, wethe Company entered into an interest rate swap agreement with Wells Fargo. In June, 2019, the Company amended the interest rate swap agreement to continue to hedge the Company's exposure to interest rate risk from the Term Note, and the subsequent Amended Term Note. See Note 8 (Line of Credit and Long-Term Debt) and Note 10 (Interest Rate Swap) of the Notes to Consolidated Financial Statements for further detail regarding this interest rate swap related to the Company's Credit Facility. ~~We believe~~The Company believes it is prudent at times to limit the variability of floating-rate interest payments and in the past have entered into interest rate swaps to manage those fluctuations.

~~We recognize~~

The Company recognizes interest rate swap agreements as either an asset or liability on the balance sheet at fair value. The accounting for changes in fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, a ~~Company~~company must designate the hedging instrument, based on the hedged exposure, as a fair value hedge, a cash flow hedge, or a hedge of a net investment in a foreign operation. ~~Our~~The interest rate swap agreement is considered a cash flow hedge because it was designed to match the terms of the Term Loan, and the subsequent Amended Term Loan, as a hedge of the exposure to variability in expected future cash flows. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the earnings effect of the hedged transactions in a cash flow hedge. This interest rate swap agreement will be evaluated based on whether it is deemed ~~“highly effective”~~highly effective in reducing ~~our~~ exposure to variable interest rates. WeThe Company formally ~~document~~documents all relationships between interest rate swap agreements and hedged items, including the method for evaluating effectiveness and the risk strategy. ~~We make~~The Company makes an assessment at the inception of each interest rate swap agreement and on a quarterly basis to determine whether these instruments are ~~“highly effective”~~highly effective in offsetting changes in cash flows associated with the hedged items. ~~The ineffective portion of each interest rate swap agreement is immediately recognized in earnings. While we intend to continue to meet the conditions for such hedge accounting, if~~If swaps ~~did not~~ qualify as ~~“highly~~highly effective,” the changes in the fair values of the derivatives used as hedges would be reflected in ~~earnings.~~

The effective portion of changes in the fair value of our interest rate swap agreements that are designated and that qualify as cash flow hedges is recognized in accumulated other comprehensive income. Amounts classified in accumulated other comprehensive income, or AOCI. Amounts classified in AOCI will be reclassified into earnings in the period during which the hedged transactions affect earnings. If swaps do not qualify as highly effective, the changes in fair values of derivatives used as hedges would be reflected in earnings.

The fair value of each interest rate swap agreement is determined using widely accepted valuation techniques including discounted cash flow analyses on the expected cash flows of each derivative. These analyses reflect the contractual terms of the derivatives, including the period to maturity, and use observable market-based inputs, including interest rate curves and implied volatilities (also referred to as “significant other observable inputs”). The fair ~~values~~value of ~~our~~ interest rate swap agreements are determined using the market standard methodology of netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The fair value calculation also includes an amount for risk of non-performance using “significant unobservable inputs” such as estimates of current credit spreads to evaluate the likelihood of default, which ~~we have~~the Company has determined to be insignificant to the overall fair value of ~~our~~its interest rate swap ~~agreements.~~agreement.

Variable Interest Entity

~~We evaluate~~The Company evaluates all of ~~our~~its interests in VIEs for consolidation. When ~~our~~the Company's interests are determined to be variable interests, ~~we assess~~the Company assesses whether ~~we are~~the Company is deemed to be the primary beneficiary of the VIE. The primary beneficiary of a VIE is required to consolidate the VIE. A primary beneficiary is defined as the party that has both (i) the power to direct the activities of the VIE that most significantly impact its economic performance, and (ii) the obligation to absorb losses and the right to receive benefits from the VIE which could potentially be ~~potentially~~ significant. ~~We consider our~~The Company considers its variable interests as well as any variable interests of ~~our~~ related parties in making this determination. Where both of these factors are present, ~~we are~~the Company is deemed to be the primary beneficiary and ~~we consolidate~~consolidates the VIE. Where either one of these factors is not present, ~~we are~~the Company is not the primary beneficiary and dodoes not consolidate the VIE.

To assess whether ~~we have~~the Company has the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, ~~we consider~~the Company considers all facts and circumstances, including ~~our~~its role in establishing the VIE and ~~our~~its ongoing rights and responsibilities. This assessment includes first, identifying the activities that most significantly impact the VIE’s economic performance; and second, identifying which party, if any, has power over those activities. In general, the parties that make the most significant decisions affecting the VIE or have the right to unilaterally remove those decision makers are deemed to have the power to direct the activities of a VIE.

Effective January 1, 2016, we implemented Accounting Standards Update (“ASU”) 2015-02, Consolidation (Topic 810) – Amendments to the Consolidation Analysis, which specifies that the right to remove the decision maker in a VIE must be exercisable without cause for the decision maker to not be deemed the party that has the power to direct the activities of a VIE. The application of the ASU to our pre-existing entities did not change our respective conclusions as to whether or not they should be consolidated.

To assess whether ~~we have~~the Company has the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE, ~~we consider~~the Company considers all ~~of our~~ economic interests, including debt and equity investments, servicing fees, and other arrangements deemed to be variable interests in the VIE. This assessment requires that wethe Company apply judgment in determining whether these interests, in the aggregate, are considered potentially significant to the VIE. Factors considered in assessing significance include: the design of the VIE, including its capitalization structure; subordination of interests; payment priority; relative share of interests held across various classes within the VIE’s capital structure; and the reasons why the interests are held by ~~us.~~the Company.

As of December 31, ~~2017~~2020 and ~~2016, we~~2019, the Company had ~~one VIE~~2 VIEs. One was consolidated in ~~our~~the financial statements ~~see~~while the other was not. See Note 17 (Investment in Unconsolidated and Consolidated Joint Ventures) to the Notes to Consolidated Financial Statements for further discussion.

Credit Risk

The Company grants credit in the course of operations to co-ops, wineries, nut marketing companies, and lessees of the Company’s facilities. The Company performs periodic credit evaluations of its customers’ financial condition and generally does not require collateral.

~~Our commercial~~Commercial revenues are derived primarily from lease rental payments and ~~reimbursement of~~ operating ~~expenses under our leases.~~expense reimbursements. If ~~our~~ client tenants fail to make rental payments under their ~~leases, our~~lease, the Company's financial condition, and cash flows could be adversely affected. ~~Please refer~~The Company records an allowance for doubtful accounts based on its judgment of a tenant’s creditworthiness, ability to ~~Rental Income for process~~pay and probability of ~~evaluating and monitoring credit quality of tenants.~~collection. Accounts are written off when they are deemed to be no longer collectible.

~~As of~~During both years ended December 31, ~~2017~~2020 and ~~2016,~~2019, the Pastoria Energy Facility, L.L.C., or PEF power plant lease generated approximately ~~11% and 8%~~12% of ~~our~~ total ~~revenues, respectively. We~~revenues. The Company had no other customers account for 5% or more of ~~our~~total revenues from ~~operations in 2017.~~

operations.

The Company maintains its cash and cash equivalents in federally insured financial institutions. The account balances at these institutions periodically exceed FDIC insurance coverage and, as a result, there is a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage. The Company believes that the risk is not significant.

Farm Inventories

Costs of bringing crops to harvest are inventoried when incurred. Such costs are expensed when the crops are sold. Expenses are computed and recognized on an average cost per pound or per ton basis, as appropriate. Costs incurred during the current year related to the next year’s crop are inventoried and carried in inventory until the matching crop is harvested and sold. Farm inventories held for sale are valued at the lower of cost (first-in, first-out method) or market.

Property and Equipment

Property and equipment are stated on the basis of cost, except for land acquired upon organization in 1936, which is stated on the basis carried by the Company’s predecessor. Depreciation is computed using the straight-line method over the estimated useful lives of the various assets. ~~Our~~The Company's property and equipment and their respective estimated useful lives are as follow:


($ in thousands)	Useful Life	December 31, 2020		December 31, 2019
Vineyards and orchards	20	$	56,612	$	52,853
Machinery, furniture fixtures and other equipment	3 - 10	19,882		17,688
Buildings and improvements	10 - 27.5	8,819		8,819
Land and land improvements	15	7,807		7,731
Development in process		4,817		6,908
		$	97,937	$	93,999
Less: accumulated depreciation		(51,691)		(48,927)
		$	46,246	$	45,072

($ in thousands) Useful Life December 31, 2017 December 31, 2016
Vineyards and orchards 20 $ 52,667
$ 49,210
Machinery, furniture fixtures and other equipment 3 - 10 21,320
19,807
Buildings and improvements 10 - 27.5 8,850
8,828
Land and land improvements 15 7,822
7,456
Development in process 6,600
8,908
97,259
94,209
Less: accumulated depreciation (51,927 ) (48,175 )
$ 45,332
$ 46,034

Long-Term Water Assets

Long-term purchased water contracts are in place with the Tulare Lake Basin Water Storage District and the Dudley-Ridge Water Storage District. These contracts provide the Company with the right to receive water over the term of the contracts that expire in 2035. The Company also purchased a contract that allows and requires it to purchase 6,693 acre-feet of water each year from the Nickel Family LLC. The initial term of this contract runs through 2044. The purchase price of these contracts is being amortized onunder the straight-line basis over their contractual ~~life.~~lives. Water contracts with the Wheeler Ridge Maricopa Water Storage District and the Tejon-Castac Water District are also in place, but were entered into with each district at inception and not purchased later from third parties, and therefore do not have a related financial value on the books of the Company. As a result, there is no amortization expense related to these contracts.

Vineyards and Orchards

Costs of planting and developing vineyards and orchards are capitalized until the crops become commercially productive. Interest costs and depreciation of irrigation systems and trellis installations during the development stage are also capitalized. Revenues from crops earned during the development stage are netted against development costs. Depreciation commences when the crops become commercially productive.

During the fourth quarter of 2019, the Company abandoned 313 acres of vineyards. As a result, the Company wrote off the $1,555,000 net book value related to these vineyards and other farming related assets which were previously included in the Property and equipment, net, line item within the Consolidated Balance Sheet. The $1,555,000 charge was recorded within the Other Income (Loss) line item within the Consolidated Statement of Operations.

At the time farm crops are harvested, contracted, and delivered to buyers and revenues can be estimated, revenues are recognized and any related inventoried costs are expensed, which traditionally occurs during the third and fourth quarters of each year. It is not unusual for portions of ~~our~~the Company's almond or pistachio crop to be sold in the year following the harvest. Orchard (almond and pistachio) revenues are based upon the contract settlement price or estimated selling price, whereas vineyard revenues are typically recognized at the contracted selling price. Estimated prices for orchard crops are based upon the quoted estimate of what the final market price will be by marketers and handlers of the orchard crops. These market price estimates are updated through the crop payment cycle as new information is received as to the final settlement price for the crop sold. These estimates are adjusted to actual upon receipt of final payment for the crop. This method of recognizing revenues on the sale of orchard crops is a standard practice within the agribusiness community. Adjustments for differences between ~~original~~ estimates and actual revenues received are recorded during the period in which such amounts become known. The net effect of these adjustments increased farming revenue by ~~$1,804,000~~$890,000 in ~~2017, $734,000~~2020, $3,746,000 in ~~2016,~~2019, and ~~$3,531,000~~$111,000 in ~~2015.~~2018. The adjustment for ~~2017~~2020 includes ~~$352,000~~a $890,000 increase for ~~almonds~~pistachio revenues and ~~$1,452,000~~no change for ~~pistachios.~~almonds. The adjustment for ~~2016~~2019 includes ~~$653,000~~a $3,807,000 increase for pistachio revenues and a $61,000 decrease for almonds ~~and $81,000 for pistachios.~~. The adjustment for ~~2015 includes $1,260,000 for almonds and $2,271,000 for~~2018 is entirely related to pistachios.

The Almond Board of California has the authority to require producers of almonds to withhold a portion of their annual production from the marketplace through a marketing order approved by the Secretary of Agriculture. At December 31, ~~2017, 2016,~~2020, 2019, and ~~2015,~~2018, no such withholding was mandated.

Common Stock Options and Grants

The Company accounts for stock incentive plans using the fair value method of accounting. The estimated fair value of the restricted stock grants and restricted stock units are expensed over the expected vesting period. For ~~performance based~~performance-based grants the Company makes estimates of the number of shares that will actually be granted based upon estimated ranges of success in meeting defined performance measures. Periodically, the Company updates its estimates and reflects any changes to the estimate in the consolidated statements of operations.

Long-Lived Assets

On a quarterly basis, ~~we review~~the Company reviews current activities and changes in the business conditions of all of ~~our~~its operating properties prior to and subsequent to the end of each quarter to determine the existence of any triggering events requiring an impairment analysis. If triggering events are identified, ~~we review~~the Company reviews an estimate of the future undiscounted cash flows for the properties, including, if necessary, a probability-weighted approach if multiple outcomes are under consideration.

Long-lived assets to be held and used, including ~~our~~ rental properties, CIP, real estate held for development and intangibles, are individually evaluated for impairment when conditions exist that may indicate that the carrying amount of a long-lived asset may not be recoverable. The carrying amount of a long-lived asset to be held and used is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Impairment indicators or triggering events for long-lived assets to be held and used, including ~~our~~ rental properties, CIP, real estate held for development, and intangibles, are assessed by project and include significant fluctuations in estimated net operating income, occupancy changes, significant near-term lease expirations, current and historical operating and/or cash flow losses, rental rates, and other market factors. ~~We assess~~The Company assesses the expected undiscounted cash flows based upon numerous factors, including, but not limited to, available market information, current and historical operating results, known trends, current market/economic conditions that may affect the property, and ~~our~~ assumptions about the use of the asset, including, if necessary, a probability-weighted approach if multiple outcomes are under consideration. Upon determination that an impairment has occurred, a write-down is recognized to reduce the carrying amount to its estimated fair value.

In addition, the Company accounts for long-lived assets to be disposed of at the lower of their carrying amounts or fair value less selling and disposal costs. At

As of December 31, ~~2017 and 2016,~~2020, management of the Company believes that none of its long-lived assets ~~are~~were impaired.

Revenue Recognition

The Company’s revenue is primarily derived from lease revenue from its rental portfolio, royalty revenue from mineral leases, sales of farm crops, sales of water, and land sales. On January 1, 2018, the Company implemented ASU 2014-09 “Revenue with Contracts from Customers (Topic 606)" (ASC 606). ASU 2014-09 supersedes all previous revenue recognition guidance, including industry-specific guidance. The Company recognizes revenue by following the five-step model under ASC 606 to achieve the core principle that an entity recognizes revenue to depict the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The five-step model requires that the Company (i) identifies the contract with the customer, (ii) identifies the performance obligations in the contract, (iii) determines the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocates the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation.

Sales of Real Estate

~~The Company recognizes revenue on sale~~Upon adoption of land when the sale is consummated, the buyer’s initial and continuing investment is adequate to demonstrate commitment to pay, any receivable obtained is not subject to future subordination, the usual risks and rewards of ownership are transferred, andASC 606, the Company ~~has no substantial continuing involvement~~is required to allocate the transaction price, on land sales with the property. For example, a land sale is considered consummated with a sufficient down payment of at least 20% to 25% of the sales price depending upon the type and timeframe for development of the property sold, and that any receivable from the sale cannot be subject to future subordination. If the Company has a commitmentmultiple performance obligations, to the ~~buyer~~performance obligations in proportion to their standalone selling prices (i.e., on a relative standalone selling price basis) and that commitment is a specific dollar amount, this commitment is accrued and the gain on sale that the Company recognizes is reduced. If the Company has a construction commitment to the buyer, management makes an estimate of this commitment, defers a portion of the profit from the sale, and recognizes the deferred profit as or when the commitment is fulfilled.not total costs.

Sales of Easements

From time to time the Company sells easements over its land, and the easements are either in the form of rights of access granted for such things as utility corridors or are in the form of conservation easements that generally require the Company to divest its rights to commercially develop a portion of its land, but do not result in a change in ownership of the land or restrict the Company from continuing other revenue generating activities on the land.

~~Since the conservation easements generally do not impose any significant continuing performance obligations on the~~ The Company ~~revenue from conservation~~recognizes easement sales ~~have been recognized when~~revenue by following the following four criteria are met: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; the seller’s price to the buyer is fixed or determinable; and collectability is reasonably assured, which generally occurs in the period the sale has closed and consideration has been received.

five-step model under ASC 606.

Allocation of Costs Related to Land Sales and Leases

When the Company sells land within one of its real estate developments and has not completed all infrastructure development related to the total project, the Company estimates, at the time of sale, future costs of the development to 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, the Company uses 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 change and costs of construction change.

Royalty Income

Royalty revenues are contractually defined as to the percentage of royalty and are tied to production and market prices. The Company’s royalty arrangements generally require payment on a monthly basis with the payment based on the previous month’s activity. The Company accrues monthly royalty revenues based upon estimates and adjusts to actual as the Company receives payments. The accounting of royalty income remains largely unchanged upon implementation of ASC 606.

Rental Income

Rental income from leases is recognized on a straight-line basis over the respective lease terms. ~~We classify~~The Company classifies amounts currently recognized as income, and amounts expected to be received in later years, as ~~an asset~~deferred rent in ~~deferred rent~~prepaid expenses and other current assets in the accompanying consolidated balance sheets. Amounts received currently, but recognized as income in future years, are classified in ~~accounts payable,~~ accrued ~~expenses,~~liabilities and ~~tenant security deposits~~other, and deferred income in the accompanying consolidated balance sheets. ~~We commence~~The Company commences recognition of rental income at the date the property is ready for its intended use, and the client tenant takes possession of or controls the physical use of the property.

During the term of each lease, ~~we monitor~~the Company monitors the credit quality of ~~our~~its tenants by (i) reviewing the credit rating of tenants that are rated by a nationally recognized credit rating agency, (ii) reviewing financial statements of the ~~client~~ tenants that are publicly available or that are required to be delivered to usthe Company pursuant to the applicable lease, (iii) monitoring news reports regarding ~~our~~its tenants and their respective businesses, and (iv) monitoring the timeliness of lease payments. ~~We have~~The Company has employees who are assigned the responsibility for assessing and monitoring the credit quality of ~~our~~its tenants and any material changes in credit quality.

Environmental Expenditures

Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations and which do not contribute to current or future revenue generation are expensed. Liabilities are recorded when environmental assessments and/or remedial efforts are probable, and the costs can be reasonably estimated. Generally, the timing of these accruals coincides with the completion of a feasibility study or the Company’s commitment to a formal plan of action. NoNaN liabilities for environmental costs have been recorded at December 31, ~~2017~~2020 and ~~2016.~~2019.

Use of Estimates

The preparation of the Company’s consolidated financial statements in accordance with ~~accounting principles generally accepted in the United States~~GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the financial statement dates and the reported amounts of revenue and expenses during the reporting period. Due to uncertainties inherent in the estimation process, it is reasonably possible that actual results could differ from these estimates.

Recent Accounting Pronouncements

~~Financial Instruments~~Lease Concessions Related to COVID-19 Pandemic

In ~~January 2016,~~April 2020, the Financial Accounting Standards Board, ~~(FASB)~~or FASB, issued a Staff Question-and-Answer, or Q&A, intending to reduce the operational challenges and complexity of accounting for leases at a time when many businesses have been ordered to close or have seen their revenue drop due to the effect of the COVID-19 pandemic. The FASB determined that it would be appropriate for entities to make a policy election regarding how to account for lease concessions resulting directly from COVID-19. Rather than analyzing each lease contract individually, entities can elect to account for lease concessions “as though the enforceable rights and obligations for those concessions existed, regardless of whether those enforceable rights and obligations for the concessions explicitly exist in the contract.” Accordingly, entities that choose to apply the relief provided by the FASB can either (1) apply the modification framework for these concessions in accordance with ASC Topic 840 or ASC Topic 842 as applicable or (2) account for the concessions as if they were made under the enforceable rights included in the original agreement and are thus outside of the modification framework. In making this election, an entity would not need to perform a lease-by-lease analysis to evaluate the enforceable rights and may instead simply treat the change as if the enforceable rights were included or excluded in the original agreement. The election not to apply lease modification accounting is only available when total cash flows resulting from the modified contract are “substantially the same or less” than the cash flows in the original contract.

The Company has elected to account for lease concessions outside of the modification framework based on the FASB Q&A. The COVID-19 pandemic has resulted in tenant requests for rent relief, with a majority of the requests occurring in the second quarter. As of December 31, 2020, the Company reached agreements with all of its commercial tenants on their respective rent deferral requests. For the twelve months ended December 31, 2020, the Company retained 91% of rent billings and agreed to defer 9% of rent billings, or $174,000. Based on the terms of the agreements reached with the Company's tenants, all deferred rent will be fully repaid by the end of 2021. The Company will account for the rent receivables as if no changes to the lease contract were made, and the rent receivable for the deferral period will stay on the Company's Consolidated Balance Sheet until the rent is collected over the passage of time.

Reference Rate Reform

In March 2020, the FASB issued Accounting ~~Standard~~Standards Update, ~~(ASU) 2016-01, "Financial Statements - Overall (Subtopic 825-10): Recognition~~or ASU No. 2020-04, "Facilitation of the Effects of Reference Rate Reform on Financial Reporting", for reference rate reform related activities that impact debt, leases, derivatives and ~~Measurement~~other contracts. The pronouncement provides optional expedients for a limited period of ~~Financial Assets and Financial Liabilities," which requires equity investments in unconsolidated entities (other than those~~time to ease the potential burden of accounting for reference rate reform. Specifically, the ASU permits modification of contracts within ASC Topic 470, Debt, to be accounted for ~~using~~by prospectively adjusting the ~~equity method~~effective interest rate when a contract is modified because of ~~accounting)~~reference rate reform. It also provides exceptions to ~~be measured at fair value with~~the guidance in ASC Topic 815 related to changes to critical terms of a hedging relationship: the change in ~~fair value recognized~~reference rate will not result in ~~net income. There will no longer be an available-for-sale classification for equity securities with readily determinable fair values.~~

~~The ASU became~~de-designation of a hedging relationship if certain criteria are met. This guidance is effective for us on January 1, 2018. The ASU requires the use of the modified retrospective transition method, under which cumulative unrealized gains and losses related to equity investments with readily determinable fair values will be reclassified from accumulated other comprehensive income to retained earnings on January 1, 2018 upon adoption of

~~this ASU. The guidance related to equity investments without readily determinable fair values will be applied prospectively to~~ all ~~investments that exist~~entities as of ~~the date of adoption. We~~March 12, 2020 through December 31, 2022. The Company expects to utilize this optional guidance but do not expect ~~the adoption of this new ASU~~it to have a material ~~impact~~effect on ~~our net income due to~~ the ~~Company's investment portfolio predominately being comprised of fixed income investments and not equity investments.~~

~~Lease Accounting~~

In February 2016, the FASB issued ASU No. 2016-02, "Leases." From the lessee's perspective, the new standard establishes a right-of-use, or ROU, model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement for a lessee. From the lessor's perspective, the new standard requires a lessor to classify leases as either sales-type, finance or operating. A lease will be treated as a sale if it transfers all of the risks and rewards, as well as control of the underlying asset, to the lessee. If risks and rewards are conveyed without the transfer of control, the lease is treated as a financing lease. If the lessor doesn’t convey risks and rewards or control, an operating lease results.

The ASU is effective for us no later than January 1, 2019, with early adoption permitted. The ASU requires us to identify lease and non-lease components of a lease agreement. This ASU will govern the recognition of revenue for lease components. Revenue related to non-lease components under our lease agreements will be subject to the new revenue recognition standard effective upon adoption of the new lease accounting standard. We expect to adopt the new lease accounting standard on January 1, 2019. The Company is currently in the process of evaluating the impact of the adoption of this ASU on the Company’s consolidated financial statements.

~~Revenue Recognition~~

In May 2014, the FASB issued ASU 2014-09 “Revenue with Contracts from Customers (Topic 606).” ASU 2014-09 supersedes the current revenue recognition guidance, including industry-specific guidance. The guidance introduces a five-step model to achieve its core principal of the entity recognizing revenue to depict the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitledNew Accounting Pronouncements Adopted in exchange for those goods or services. The five-step model requires that we (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) we satisfy the performance obligation.

In March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net).” ASU 2016-08 provides specific guidance to determine whether an entity is providing a specified good or service itself or is arranging for the good or service to be provided by another party.

The revenue recognition ASU became effective for us on January 1, 2018. Entities can use either a full retrospective or modified retrospective method to adopt this ASU. Under the full retrospective method, all periods presented will be restated upon adoption to conform to the new standard and a cumulative adjustment for effects on periods prior to 2016 will be recorded to retained earnings as of January 1, 2016. Under the modified retrospective approach, prior periods are not restated to conform to the new standard. Instead, a cumulative adjustment for effects of applying the new standard to periods prior to 2018 is recorded to retained earnings as of January 1, 2018. Additionally, incremental footnote disclosures are required to present the 2018 revenues under the prior standard. Under the modified retrospective method, an entity may also elect to apply the standard to either (i) all contracts as of January 1, 2018, or (ii) only to contracts that are not completed as of January 1, 2018. We have elected to adopt the revenue recognition ASU using the full retrospective method.

Based on our evaluation of all contracts within scope, under existing accounting standards, and under the new revenue recognition ASU, we expect no significant differences in the amounts recognized or the pattern of recognition. Management does, however, expects the adoption of Topic 606 to impact the accounting for land sales in situations where the Company has continued involvement or performance obligations that are essential to the land sale. Current guidance requires the Company to recognize revenue from land sales with continued involvement using a percentage completion method based on total costs of the performance obligations. Upon the adoption of Topic 606, any future land sales with multiple performance obligations, the standard generally requires the Company to allocate the transaction price to the performance obligations in proportion to their standalone selling prices (i.e., on a relative standalone selling price basis) not total costs.

During 2016, the Company sold a land parcel to a third party, under the terms of the purchase and sale agreement, the Company was obligated to complete specific infrastructure and landscaping adjacent to the land parcel, that were deemed essential to the

~~third party. When applying the guidance under Topic 606, the purchase price allocated to the multiple performance obligations yielded a different result than when applying the current guidance.~~

~~2016 Impact:~~

Under the current guidance the Company recognized $710,000 and $615,000 of revenues and gain from sale of land, respectively. Under the Topic 606, the Company expects to recognize $1,112,000 and $1,017,000 of revenues and gain from sale of land, respectively

~~2017 Impact:~~

Under the current guidance the Company recognized $475,000 and $411,000 of revenues and gain from sale of land, respectively. Under the Topic 606, the Company will recognize $73,000 and $9,000 of revenues and gain from sale of land, respectively.

~~No other differences were noted during our evaluation.~~

~~Employee Share-Based Payments~~

In March 2016, the FASB issued ASU No. 2016-09, "Compensation—Stock Compensation (Topic 718) — Improvements to Employee Share-Based Payment Accounting." The ASU is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2016. Stock-based compensation excess tax benefits or deficiencies are now reflected in the Consolidated Statements of Operations as a component of the provision for income taxes, whereas previously they were recognized within additional paid-in-capital. On the Consolidated Statements of Cash Flows, excess tax benefits or deficiencies associated with stock compensation should be classified as an operating activity. We applied both amendments prospectively within the Consolidated Statements of Operations and Consolidated Statements of Cash Flows recognizing excess tax deficiencies of $107,000. This change has no impact on total shareholders’ equity. The amendment also clarifies that cash paid by an employer when directly withholding shares for tax withholding purposes should be classified as a financing activity within the Consolidated Statements of Cash Flows. This approach is consistent with our existing policy and as such no changes were made to the Consolidated Statements of Cash Flows. Lastly, the ASU also allows for forfeitures to be recorded when they occur rather than estimated over the vesting period. However, we will continue to estimate forfeitures over the vesting period.

2020

Allowance for Credit Losses

In June 2016, the FASB issued an ASU No. 2016-13, "Financial ~~Instruments—~~Instruments — Credit Losses (Topic 326)," changing the impairment model for most financial instruments by requiring companies to recognize an allowance for expected losses, rather than incurred losses as required currently by the other-than-temporary impairment model. The ASU will apply to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans, available-for-sale and held-to-maturity debt securities, net investments in leases, and off-balance-sheet credit ~~exposures (e.g., loan commitments).~~exposures.

In November 2019, the FASB issued ASU No. 2019-10, changing effective dates for the new standards to give implementation relief to certain types of entities. The Company was required to adopt the new standards no later than January 1, 2023 according to ASU 2019-10, with early adoption allowed.

The Company adopted the new standards on January 1, 2020. The adoption did not have a material impact on the Company's consolidated financial statements. The Company's accounts receivable balance is primarily composed of crop receivables. Based on the short-term nature of these contracts, historical experience with current customers, periodic credit evaluations of the customers' financial conditions, the current economic environment and rent deferrals negotiated with tenants the Company believes its credit risk is minimal. With regards to marketable securities, the Company limits its investment to securities with investment grade ratings from Moody's or Standard and Poor's. As the Company does not have a current intent to sell securities and it is more likely than not that the Company will not be required to sell securities before recovery of their amortized cost basis, no allowance for credit losses was recorded.

Fair Value of Financial Instruments

In August 2018, the FASB issued ASU No. 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement." This ASU removes certain disclosure requirements related to the fair value hierarchy, such as the disclosure of amounts and reasons for transfers between Level 1 and Level 2, and adds new disclosure requirements, such as the disclosure of the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurement. The Company adopted the new standard on January 1, 2020, and the adoption did not have a material impact on its consolidated financial statements, as the Company does not have financial instruments classified as Level 3.

Retirement Benefits

In August 2018, the FASB issued ASU No. 2018-14, "Changes to the Disclosure Requirements for Defined Benefit Plans." This ASU removes certain disclosure requirements, including the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year and the amount and timing of plan assets expected to be returned to the employer. This ASU also requires additional disclosures for the weighted average interest crediting rates for cash balance plans and explanations for significant gains and losses related to changes in the benefit plan obligation. This ASU is effective for ~~reporting periods beginning~~fiscal years ending after December 15, ~~2019, with early adoption permitted, and will be applied as a cumulative adjustment to retained earnings as of the effective date.~~2020. The Company ~~is currently in~~adopted the ~~process of evaluating the impact of the adoption of this ASU on the Company’s consolidated financial statements.~~

~~Joint Venture Distributions~~

In August 2016, the FASB issued an ASU that provides guidance on the classification in the statement of cash flows of cash distributions received from equity method investments, including unconsolidated joint ventures. The ASU provides two approaches to determine the classification of cash distributions received from equity method investees: (i) the “cumulative earnings” approach, under which distributions up to the amount of cumulative equity in earnings recognized will be classified as cash inflows from operating activities, and those in excess of that amount will be classified as cash inflows from investing activities, and (ii) the “nature of the distribution” approach, under which distributions will be classified based on the nature of the underlying activity that generated cash distributions. An entity may elect either the “cumulative earnings” or the “nature of the distribution” approach. An entity that elects the “nature of the distribution” approach but lacks the information to apply it will apply the “cumulative earnings” approach as an accounting change on a retrospective basis. The ASU is effective for reporting periods beginning after December 15, 2017, with early adoption permitted, and will be applied retrospectively (exceptions apply). We adopted this ASUnew standard on January 1, ~~2018, using the “cumulative earnings” approach. We previously presented distributions from our equity method investees utilizing the “cumulative earnings” approach; therefore,~~2020, and the adoption ~~of this ASU will~~did not have noa material impact on ~~our~~its consolidated financial ~~statements. During the year ended December 31, 2017, distributions received from our equity method investees aggregated $10,314,000, consisting of approximately $7,200,000~~statements and related disclosures.

~~classified as a return on investment (cash flows from operating activities) and approximately $3,114,000 classified as a return of investment (cash flows from investing activities).~~

During the year ended December 31, 2016, we received distributions of $4,500,000 and $1,600,000 classified as operating and investing activities, respectively, on our consolidated statements of cash flows. Classifications were determined using the cumulative earnings approach.

2. EQUITY

Earnings Per Share (EPS)

Basic net (loss) income ~~(loss)~~ per share attributable to common stockholders is based upon the weighted-average number of shares of common stock outstanding during the year. Diluted net (loss) income ~~(loss)~~ per share attributable to common stockholders is based upon the weighted-average number of shares of common stock outstanding and the weighted-average number of shares outstanding assuming the issuance of common stock upon exercise of stock options, warrants to purchase common stock, and the vesting of restricted stock grants per ASC 260, “Earnings Per Share.”


	Twelve Months Ended December 31,
		2020	2019	2018
Weighted average number of shares outstanding:
Common stock		26,205,923	26,031,391	25,948,189
Common stock equivalents: stock options, grants		140,527	117,724	27,715
Diluted shares outstanding		26,346,450	26,149,115	25,975,904

Twelve Months Ended December 31,
2017 2016 2015
Weighted average number of shares outstanding:
Common stock 21,677,981
20,737,903
20,665,792
Common stock equivalents-stock options, grants 40,409
46,839
71,879
Diluted shares outstanding 21,718,390
20,784,742
20,737,671

~~Rights Offering~~

On October 4, 2017, the Company commenced a rights offering to common shareholders whereby proceeds will be used to provide additional working capital for general corporate purposes, including to fund general infrastructure costs and the development of buildings at TRCC, to continue forward with entitlement and permitting programs for the Centennial and Grapevine communities and costs related to the preparation of the development of MV. The rights offering concluded on October 27, 2017, with the Company raising $89,867,000, net of offering costs, from the sale of 5,000,000 shares at $18.00 per share. For additional detail please refer to Form 8-K filed on October 30, 2017.

3. MARKETABLE SECURITIES

ASC 320 “Investments – Debt and Equity Securities” requires that an enterprise classify all debt securities as either held-to-maturity, trading or available-for-sale. The Company has elected to classify its securities as available-for-sale and therefore is required to adjust securities to fair value at each reporting date. All costs and both realized and unrealized gains and losses on securities are determined on a specific identification basis. The following is a summary of available-for-sale securities at December 31:


($ in thousands)		2017				2016				($ in thousands)		2020				2019
Marketable Securities:	Fair Value Hierarchy	Cost		Estimated Fair Value		Cost		Estimated Fair Value		Marketable Securities:	Fair Value Hierarchy	Cost		Estimated Fair Value		Cost		Estimated Fair Value
Certificates of deposit										Certificates of deposit
with unrecognized losses for less than 12 months		$	6,238	$	6,222	$	1,868	$	1,863	with unrecognized losses for less than 12 months		$	0	$	0	$	251	$	250
with unrecognized losses for more than 12 months		102		100		—		—

with unrecognized gains		2,088		2,089		3,320		3,329		with unrecognized gains		0		0		1,799		1,806
Total Certificates of deposit	Level 1	8,428		8,411		5,188		5,192		Total Certificates of deposit	Level 1	0		0		2,050		2,056
U.S. Treasury and agency notes										U.S. Treasury and agency notes
with unrecognized losses for less than 12 months		29,741		29,669		947		946		with unrecognized losses for less than 12 months		0		0		6,485		6,479
with unrecognized losses for more than 12 months		137		135		—		—

with unrecognized gains		152		153		857		859		with unrecognized gains		801		803		14,413		14,434
Total U.S. Treasury and agency notes	Level 2	30,030		29,957		1,804		1,805		Total U.S. Treasury and agency notes	Level 2	801		803		20,898		20,913
Corporate notes										Corporate notes
with unrecognized losses for less than 12 months		18,230		18,159		11,658		11,592		with unrecognized losses for less than 12 months		708		707		1,004		1,002
with unrecognized losses for more than 12 months		2,804		2,788		1,053		1,042

with unrecognized gains		—		—		3,431		3,435		with unrecognized gains		1,257		1,261		13,082		13,106
Total Corporate notes	Level 2	21,034		20,947		16,142		16,069		Total Corporate notes	Level 2	1,965		1,968		14,086		14,108
Municipal notes										Municipal notes
with unrecognized losses for less than 12 months		10,298		10,288		2,556		2,526
with unrecognized losses for more than 12 months		999		987		271		269

with unrecognized gains		277		278		812		814		with unrecognized gains		0		0		1,999		2,007
Total Municipal notes	Level 2	11,574		11,553		3,639		3,609		Total Municipal notes	Level 2	0		0		1,999		2,007

		$	71,066	$	70,868	$	26,773	$	26,675			$	2,766	$	2,771	$	39,033	$	39,084

~~We evaluate our securities for other-than-temporary impairment based~~

The Company adopted ASU No. 2016-13, "Financial Instruments — Credit Losses (Topic 326)" on January 1, 2020 prospectively. Under ASC Topic 326-30, the specific facts and circumstances surrounding each security valued below its cost. Factors considered include the length of time the securities have been valued below cost, the financial condition of the issuer, industry reports related to the issuer, the severity of any decline, our intention not to sell the security, and our assessment as to whether itCompany is ~~more likely than not that we will be~~now required to ~~sell~~use an allowance approach when recognizing credit loss for available-for-sale debt securities, measured as the ~~security before a recovery of its~~difference between the security's amortized cost ~~basis. We then segregate~~basis and the ~~loss between the amounts representing a decrease in cash flows~~amount expected to be collected orover the security's lifetime. Under this approach, at each reporting date, the Company records impairment related to credit ~~loss, which is recognized~~losses through earnings ~~and the balance of the loss which is recognized through other comprehensive income.~~offset with an allowance for credit losses, or ACL. At December 31, ~~2017,~~2020 the Company has not recorded any credit losses.

At December 31, 2020, the fair market value of investment securities was ~~$198,000 below~~$5,000 above the cost basis of securities. The Company’s gross unrealized holding gains equal ~~$2,000~~$6,000 and gross unrealized holding losses equal ~~$200,000. The Company has determined that any unrealized losses in the portfolio are temporary as of December 31, 2017.~~

$1,000. As of December 31, ~~2017,~~2020, the adjustment to accumulated other comprehensive loss in consolidated equity for the temporary change in the value of securities reflects ~~a decline~~an increase in the market value of available-for-sale securities of ~~$100,000,~~$46,000, which includes estimated taxes of ~~$35,000.~~$13,000.

The Company elected to exclude applicable accrued interest from both the fair value and the amortized cost basis of the available-for-sale debt securities, and separately present the accrued interest receivable balance per ASC Topic 326-30-50-3A. The accrued interest receivables balance totaled $20,000 as of December 31, 2020, and was included within the Prepaid expenses and other current assets line item of the Consolidated Balance Sheets. The Company elected not to measure an allowance for credit losses on accrued interest receivable as an allowance on possible uncollectible accrued interest is not warranted.

U.S. Treasury and agency notes

The unrealized losses on the Company's investments in U.S. Treasury and agency notes at December 31, 2019 were caused by relative changes in interest rates since the time of purchase. The contractual cash flows for these securities are guaranteed by U.S. government agencies. The unrealized losses on these debt security holdings are a function of changes in investment spreads and interest rate movements and not changes in credit quality. As of December 31, 2019, the Company did not intend to sell these securities and it is not more-likely-than-not that the Company would be required to sell these securities before recovery of their cost basis. Therefore, these investments did not require an ACL as of December 31, 2019.

Corporate notes

The contractual terms of those investments do not permit the issuers to settle the securities at a price less than the amortized cost basis of the investments. The unrealized losses on corporate notes are a function of changes in investment spreads and interest rate movements and not changes in credit quality. The Company expects to recover the entire amortized cost basis of these securities. As of December 31, 2020 and December 31, 2019, the Company did not intend to sell these securities and it is not more-likely-than-not that the Company would be required to sell these securities before recovery of their cost basis. Therefore, these investments did not require an ACL as of December 31, 2020 and December 31, 2019.

The following tables summarize the maturities, at par, of marketable securities by year ($ in thousands):


December 31, 2020	2021		Total

U.S. Treasury and agency notes	$	801	$	801
Corporate notes	1,950		1,950

	$	2,751	$	2,751

December 31, 2017 2018 2019 2020 2021 Total
Certificates of deposit $ 4,306
$ 2,311
$ 1,799
$ —
$ 8,416
U.S. Treasury and agency notes 6,399
14,599
9,171
—
30,169
Corporate notes 7,954
6,430
6,450
—
20,834
Municipal notes 1,568
6,957
3,003
—
11,528
$ 20,227
$ 30,297
$ 20,423
$ —
$ 70,947


December 31, 2016	2017		2018		2019		2020		Total
December 31, 2019											December 31, 2019	2020		2021		Total
Certificates of deposit	$	531	$	4,306	$	324	$	—	$	5,161	Certificates of deposit	$	2,049	$	0	$	2,049
U.S. Treasury and agency notes	1,234		444		142		—		1,820		U.S. Treasury and agency notes	20,393		502		20,895
Corporate notes	4,316		7,133		4,232		—		15,681		Corporate notes	13,685		400		14,085
Municipal notes	840		1,688		1,075		—		3,603		Municipal notes	2,000		0		2,000
	$	6,921	$	13,571	$	5,773	$	—	$	26,265		$	38,127	$	902	$	39,029

The Company’s investments in corporate notes are with companies that have an investment grade rating from Standard & Poor’s.

4. INVENTORIES

Inventories ~~consist~~consisted of the following at December 31:


($ in thousands)	2017		2016		($ in thousands)	2020		2019
Farming inventories	$	2,012	$	2,709	Farming inventories	$	2,636	$	2,444
Other	457		375		Other	354		348
	$	2,469	$	3,084		$	2,990	$	2,792

Farming inventories consist of costs incurred during the current year related to ~~the~~ next year’s crop ~~as well as any~~along with unsold current ~~year’s unsold product~~year crop and farming chemicals.

5. REAL ESTATE

Real estate ~~consists~~consisted of the following atas of December 31:


($ in thousands)	2020		2019
Real estate development
Mountain Village	$	146,662	$	142,567
Centennial	108,600		104,491
Grapevine	36,815		34,813
Tejon Ranch Commerce Center	18,362		15,710
Real estate development	310,439		297,581

Real estate and improvements - held for lease, net
Tejon Ranch Commerce Center	20,595		21,435

Real estate and improvements - held for lease, net	20,595		21,435
Less accumulated depreciation	(2,935)		(2,761)
Real estate and improvements - held for lease, net	$	17,660	$	18,674

($ in thousands) 2017 2016
Real estate development
Mountain Village $ 132,034
$ 126,096
Centennial 94,271
89,381
Grapevine 28,139
23,917
Tejon Ranch Commerce Center 12,892
8,871
Real estate development 267,336
248,265

Real estate and improvements - held for lease, net
Tejon Ranch Commerce Center 21,123
21,643
Real estate and improvements - held for lease 21,123
21,643
Less accumulated depreciation (2,008 ) (1,617 )
Real estate and improvements - held for lease, net $ 19,115
$ 20,026

In January 2016, we completed construction of a multi-tenant commercial building located at TRCC-East. The multi-tenant building has a gross leasable area of 4,645 and is leased to Baja Fresh and Habit Burger.

~~In October 2016, we sold unimproved real property located at TRCC-East for $1,193,000 at a gain of $1,437,000.~~

~~In November 2016, we sold a building and land located in Rancho Santa Fe California for $4,700,000, recognizing a gain of $1,044,000.~~

6. LONG-TERM WATER ASSETS

Long-term water assets consist of water and water contracts held for future use or sale. The water is held at cost, which includes the price paid for the water and the cost to pump and deliver the water from the California aqueduct into the water bank. Water is currently held in a water bank on Company land in southern Kern ~~County. Company banked water costs also include costs related to the right to receive additional acre feet of water~~County and by TCWD in ~~the future from the Antelope Valley East~~ Kern Water ~~Agency, or AVEK.~~ Banks.

The Company has ~~also banked water within an AVEK owned water bank.~~

We have also been purchasing water for our future use or sale. In 2008 we purchased 8,393 acre-feet of transferable water and in 2009 we purchased an additional 6,393 acre-feet of transferable water, all of which is currently held on our behalf by AVEK or has been placed in the Company's water bank. We also have secured State Water Project, or SWP, ~~entitlement~~entitlements under long-term SWP water contracts within the Tulare Lake Basin Water Storage District and the Dudley-Ridge Water District, totaling 3,444 acre-feet of SWP entitlement annually, subject to SWP allocations. These contracts extend through 2035 and have been transferred to AVEK for ~~our~~the Company's use in the Antelope Valley. In 2013, the Company acquired ~~from DMB Pacific, or DMB,~~ a contract to purchase water that obligates the Company to purchase 6,693 ~~acre feet~~acre-feet of water each year from the Nickel Family, LLC, or Nickel, a California limited liability company that is located in Kern County.

The initial term of the water purchase agreement with Nickel runs ~~through~~to 2044 and includes a Company option to extend the contract for an additional 35 years. The purchase cost of water in ~~2017~~2020 was ~~$717~~$793 per acre-foot. ~~Purchase costs are~~The purchase cost is subject to annual cost increases based on the greater of the consumer price index ~~and~~or 3%~~, resulting in a 2018 purchase cost of $738 per acre-foot.~~.

The water ~~contracts~~ purchased above will ultimately be used in the development of the Company’s land for commercial/industrial real estate development, resort/residential real estate development, and farming. Interim uses may include the sale of portions of this water to third party users on an annual basis until this water is fully allocated to Company uses, as just described.

~~Annual amortization for these contracts is $1,351,000 per year.~~

~~In 2017, we sold 939 acre-feet of water totaling $1,254,000 with a~~Water revenues and cost of ~~$765,000, which cost is recorded in the mineral resources segment on the Consolidated Statements~~sales were as follows as of Operations. In 2016, we sold 7,285 acre feet of water totaling $9,601,000 with a cost of $5,925,000, which cost is recorded in the mineral resources segment on the Consolidated Statements of Operations. In 2015, we sold 7,922 acre feet of water totaling $10,165,000 with a cost of $5,483,000, which cost is recorded in the mineral resources segment on the Consolidated Statements of Operations.December 31:


($ in thousands)	2020		2019		2018

Acre-Feet Sold	5,022		4,482		9,442

Revenues	$	5,909	$	3,997	$	9,142
Cost of sales	3,663		3,194		3,864
Profit	$	2,246	$	803	$	5,278

Costs assigned to water assets held for future use were as follows ($ in thousands):


	December 31, 2020		December 31, 2019
Banked water and water for future delivery	$	28,136	$	25,265
Transferable water	4,102		3,054
Total water held for future use at cost	$	32,238	$	28,319

December 31, 2017 December 31, 2016
Banked water and water for future delivery $ 5,220
$ 4,779
Transferable water 13,351
9,075
Total water held for future use at cost $ 18,571
$ 13,854

Intangible Water Assets

The Company's carrying amounts of its purchased water contracts were as ~~follows:~~follows ($ in thousands):


	December 31, 2020				December 31, 2019
	Costs		Accumulated Depreciation		Costs		Accumulated Depreciation
Dudley-Ridge water rights	$	11,581	$	(4,825)	$	11,581	$	(4,342)
Nickel water rights	18,740		(4,605)		18,740		(3,962)
Tulare Lake Basin water rights	6,479		(2,910)		6,479		(2,660)
	$	36,800	$	(12,340)	$	36,800	$	(10,964)
Net cost of purchased water contracts	24,460				25,836
Total cost water held for future use	32,238				28,319
Net investments in water assets	$	56,698			$	54,155

December 31, 2017 December 31, 2016
Costs Accumulated Depreciation Costs Accumulated Depreciation
Dudley Ridge water rights $ 12,203
$ (3,377 ) $ 12,203
$ (2,895 )
Nickel water rights 18,740
(2,678 ) 18,740
(2,218 )
Tulare Lake Basin water rights 5,857
(2,186 ) 5,857
(1,777 )
$ 36,800
$ (8,241 ) $ 36,800
$ (6,890 )
Net cost of purchased water contracts 28,559
29,910

Total cost water held for future use 18,571
13,854

Net investments in water assets $ 47,130
$ 43,764

Water contracts with the Wheeler Ridge Maricopa Water Storage District, or WRMWSD, and the Tejon-Castac Water District, or TCWD, are also in place, but were entered into with each district at inception of the contract and not purchased later from third parties, and do not have a related financial value on the books of the Company. Therefore, there is no amortization expense related to these contracts. Total water resources, including both recurring and one-time ~~usage:~~usage are:


(in acre feet, unaudited)	December 31, 2020	December 31, 2019
Water held for future use
TCWD - Banked water owned by the Company	61,054	60,555
Company water bank	50,349	50,349
Transferable water	5,638	3,252
Total water held for future use	117,041	114,156
Purchased water contracts
Water Contracts (Dudley-Ridge, Nickel and Tulare)	10,137	10,137
WRMWSD - Contracts with Company	15,547	15,547
TCWD - Contracts with Company	5,749	5,749
Total purchased water contracts	31,433	31,433
Total water held for future use and purchased water contracts	148,474	145,589

(in acre feet, unaudited) December 31, 2017 December 31, 2016
Water held for future use
   AVEK water bank 13,033
13,033
   Company water bank 31,497
17,287
   AVEK water for future delivery —
2,362
   Transferable water * 6,169
9,062
Total water held for future use 50,699
41,744
Purchased water contracts
   Water Contracts (Dudley-Ridge, Nickel and Tulare) 10,137
10,137
   WRMWSD - Contracts with Company 15,547
15,547
   TCWD - Contracts with Company 5,749
5,749
   TCWD - Banked water contracted to Company 49,184
33,390
Total purchased water contracts 80,617
64,823
Total water held for future use and purchased water contracts 131,316
106,567

*of the 6,169 acre-feet of transferable water, 1,452 acre-feet will be returned by AVEK to the Company at a 1.5 to 1 factor giving the Company use of a total of 2,137 (1,452 X 1.5) acre-feet as of December 31, 2017.

~~On August 6, 2015,~~ Tejon Ranchcorp, or Ranchcorp, a wholly-owned subsidiary of Tejon Ranch Co., entered into a Water Supply Agreement with ~~Pastoria Energy Facility, L.L.C., or PEF.~~PEF in 2015. PEF is the current lessee under the power plant lease. Pursuant to the Water Supply Agreement, ~~on January 1, 2016, PEF may purchase from Ranchcorp up to 2,000 acre-feet of water and from January 1, 2017 through July 31, 2030,~~ PEF may purchase from Ranchcorp up to 3,500 acre-feet of water per year from January 1, 2017 through July 31, 2030, with an option to extend the term. PEF is under no obligation to purchase water from Ranchcorp in any year, but is required to pay Ranchcorp an annual option payment equal to 30% of the maximum annual payment. The price of the water under the Water Supply Agreement ~~is $1,025~~for 2020 was $1,154 per ~~acre foot~~acre-foot of annual water, subject to 3% annual increases ~~commencing January 1, 2017.~~over the life of the contract. The Water Supply Agreement contains other customary terms and conditions, including representations and warranties, which are typical for agreements of this type. The Company's commitments to sell water can be met through current water assets.

7. ACCRUED LIABILITIES AND OTHER

Accrued liabilities and other ~~consists~~consisted of the ~~following:~~following as of December 31:


($ in thousands)	2020		2019
Accrued vacation	$	736	$	799
Accrued paid personal leave	399		419
Accrued bonus	1,658		1,700
Other	512		545
	$	3,305	$	3,463

($ in thousands) December 31, 2017 December 31, 2016
Accrued vacation $ 824
$ 901
Accrued paid personal leave 494
590
Accrued bonus 126
1,346
Other 366
351
$ 1,810
$ 3,188

8. ~~LINE-OF-CREDIT~~LINE OF CREDIT AND LONG-TERM DEBT

Debt ~~consists~~consisted of the ~~following:~~

($ in thousands) December 31, 2017 December 31, 2016
Revolving line-of-credit $ —
$ 7,700
Notes payable 69,741
73,400
Other borrowings 218
467
Total short-term and long-term debt 69,959
81,567
Less line-of-credit and current maturities of long-term debt (4,004 ) (11,553 )
Less deferred loan costs (139 ) (161 )
Long-term debt, less current portion $ 65,816
$ 69,853

On October 13, 2014, the Company as borrower entered into an Amended and Restated Credit Agreement, a Term Note and a Revolving Line of Credit Note, with Wells Fargo, or collectively the Credit Facility. The Credit Facility adds a $70,000,000 term loan, or Term Loan to the existing $30,000,000 revolving line of credit, or RLC. Funds from the Term Loan were used to finance the Company's purchase of DMB TMV LLC’s interest in TMV LLC as disclosed in the Current Report on Form 8-K filed on July 16, 2014. The Term Loan had a $66,046,000 balancefollowing as of December 31, 2017. Any future borrowings under the RLC will be used for ongoing working capital requirements and other general corporate purposes. To maintain availability of funds under the RLC, undrawn amounts under the RLC will accrue a commitment fee of 10 basis points per annum. The Company's ability to borrow additional funds in the future under the RLC is subject to compliance with certain financial covenants and making certain representations and warranties.31:

The RLC had no outstanding balance at December 31, 2017 and an outstanding balance of $7,700,000 as of December 31, 2016. At the Company’s option, the interest rate on this line of credit can float at 1.50% over a selected LIBOR rate or can be fixed at 1.50% above LIBOR for a fixed rate term. During the term of this credit facility (which matures in September 2019), we can borrow at any time and partially or wholly repay any outstanding borrowings and then re-borrow, as necessary.


($ in thousands)	2020		2019

Notes payable	$	57,078	$	61,897


Less: line-of-credit and current maturities of long-term debt	(4,295)		(4,182)
Less: deferred loan costs	(196)		(239)
Long-term debt, less current portion	$	52,587	$	57,476

The interest rate per annum applicable to the Term Loan is LIBOR (as defined in the Term Note) plus a margin of 170 basis points. The interest rate for the term of the note has been fixed through the use of an interest rate swap at a rate of 4.11%. The Term Loan requires interest only payments for the first two years of the term and thereafter requires monthly amortization payments pursuant to a schedule set forth in the Term Note, with the final outstanding principal amount due October 5, 2024. The Company may make voluntary prepayments on the Term Loan at any time without penalty (excluding any applicable LIBOR or interest rate swap breakage costs). Each optional prepayment will be applied to reduce the most remote principal payment then unpaid. The Credit Facility is secured by the Company's farmland and farm assets, which include equipment, crops and crop receivables and the PEF power plant lease and lease site, and related accounts and other rights to payment and inventory.

The Credit Facility requires compliance with three financial covenants: (a) total liabilities divided by tangible net worth not greater than 0.75 to 1.0 at each quarter end; (b) a debt service coverage ratio not less than 1.25 to 1.00 as of each quarter end on a rolling four quarter basis; and (c) maintain liquid assets equal to or greater than $20,000,000. At December 31, 2017 and 2016, we were in compliance with all financial covenants.

The Credit Facility also contains customary negative covenants that limit the ability of the Company to, among other things, make capital expenditures, incur indebtedness and issue guaranties, consummate certain assets sales, acquisitions or mergers, make investments, pay dividends or repurchase stock, or incur liens on any assets.

The 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; and a change in control without consent of the bank (which consent will not be unreasonably withheld). The Credit Facility contains other customary terms and conditions, including representations and warranties, which are typical for credit facilities of this type.

The foregoing descriptions of the Credit Facility documents are qualified in their entirety by reference to each such material contract. Copies of the Credit Facility documents are filed as Exhibits 10.31 through 10.33 in the Current Report on Form 8-K filed October 17, 2014. The balance of the long-term debt instruments listed above approximates the fair value of the instrument.

During the third quarter of 2013, we entered into a promissory note agreement with CMFG Life Insurance Company, to pay a principal amount of $4,750,000 with principal and interest due monthly starting on October 1, 2013. The interest rate on this

promissory note is 4.25% per annum, with monthly principal and interest payments of $102,700 ending on September 1, 2028. The proceeds from this promissory note were used to eliminate debt that had been previously used to provide long-term financing for a building being leased to Starbucks and provide additional working capital for future investment. The current balance on the note is $3,695,000. The balance of this long-term debt instrument listed above approximates the fair value of the instrument.

The following table summarizes ~~our~~debt maturities, outstanding indebtedness, and respective principal maturities as of December 31,


($ in thousands)	2018		2019		2020		2021		2022		Thereafter		Total		($ in thousands)	Stated Rate	Effective Rate	Maturity	2021		2022		2023		2024		2025		Thereafter		Total
Term loan	$	3,563	$	3,715	$	3,881	$	4,051	$	4,221	$	46,615	$	66,046
Term Loan1															Term Loan1	L+1.70%	4.16%	6/5/2029	$	4,051	$	4,221	$	4,429	$	4,624	$	4,825	$	32,737	$	54,887
$35 million RLOC															$35 million RLOC	See below2	See below2	10/5/2024	0		0		0		0		0		0		0
Promissory note	277		289		302		315		328		2,184		3,695		Promissory note	4.25%	4.25%	9/1/2028	244		254		265		277		289		862		2,191
Other borrowings	163		55		—		—		—		—		218
Total long-term debt	$	4,003	$	4,059	$	4,183	$	4,366	$	4,549	$	48,799	$	69,959	Total long-term debt				$	4,295	$	4,475	$	4,694	$	4,901	$	5,114	$	33,599	$	57,078

1The interest on the Term Loan is fixed by an interest rate swap agreement. Please see Footnote 10 for further discussion.															1The interest on the Term Loan is fixed by an interest rate swap agreement. Please see Footnote 10 for further discussion.

2At the Company’s option, the interest rate on this line of credit can float at 1.50% over a selected LIBOR rate or can be fixed at 1.50% above LIBOR for a fixed rate term.															2At the Company’s option, the interest rate on this line of credit can float at 1.50% over a selected LIBOR rate or can be fixed at 1.50% above LIBOR for a fixed rate term.

9. OTHER LIABILITIES

Other liabilities consist of the ~~following:~~following as of December 31:


($ in thousands)	December 31, 2017		December 31, 2016		($ in thousands)	2020		2019
Pension liability (See Note 15)	$	2,280	$	2,931	Pension liability (See Note 15)	$	1,602	$	1,790
Interest rate swap liability (See Note 10)	894		1,865		Interest rate swap liability (See Note 10)	5,929		2,716
Supplemental executive retirement plan liability (See Note 15)	7,759		8,015		Supplemental executive retirement plan liability (See Note 15)	8,419		8,011
Other	758		223
Other1					Other1	3,067		2,938
	$	11,691	$	13,034		$	19,017	$	15,455
1 For two of joint ventures with Majestic Realty Co., excess distributions were made and are classified as a liability. See further disclosure in Note 17 (Investment In Unconsolidated and Consolidated Joint Ventures).					1 For two of joint ventures with Majestic Realty Co., excess distributions were made and are classified as a liability. See further disclosure in Note 17 (Investment In Unconsolidated and Consolidated Joint Ventures).

For the captions presented in the table above, please refer to the respective Notes to Consolidated Financial Statements for further detail.

10. INTEREST RATE SWAP ~~LIABILITY~~

~~During~~In October 2014, the Company entered into an interest rate swap agreement to hedge cash flows tied to changes in the underlying floating interest rate tied to LIBOR for the Term Loan as discussed in Note 8 (Line of Credit and Long-Term Debt) of the Notes to Consolidated Financial Statements. ~~The ineffective portion of~~On June 21, 2019, the ~~change in fair value of our~~Company amended the interest rate swap agreement to continue to hedge a portion of its exposure to interest rate risk from the Term Note, and, subsequently, the Amended Term Note. The original hedging relationship was de-designated, and the amended interest rate swap was re-designated simultaneously. The amended interest rate swap qualified as an effective cash flow hedge at the initial assessment based upon a regression analysis and is ~~required to be recognized directly in earnings.~~ recorded at fair value.

During the ~~year~~quarter ended December 31, ~~2017, our~~2020, the interest rate swap agreement was ~~100% effective; because of this, no hedge ineffectiveness was recognized in earnings.~~deemed highly effective. Changes in fair value, including accrued interest and adjustments for non-performance risk, ~~on the effective portion of our interest rate swap agreements that are designated and~~ that qualify as cash flow hedges are classified in ~~accumulated other comprehensive loss.~~AOCI. Amounts classified in ~~accumulated other comprehensive loss~~AOCI are subsequently reclassified into earnings in the period during which the hedged transactions affect earnings.

As of December 31, ~~2017~~,2020, the fair ~~values~~value of ~~our~~the interest rate swap agreement ~~aggregating a liability balance were classified in other liabilities based upon~~was less than its ~~respective fair value. We~~cost basis and as such is recorded within Other Liabilities on the Consolidated Balance Sheets. The Company had the following outstanding interest rate swap agreement designated as an interest rate cash flow ~~hedges of interest rate risk~~hedge as of~~December 31, 2017~~ ($ in thousands):

December 31, 2020

Effective Date

Maturity Date

Fair Value Hierarchy

Weighted Average Interest Pay Rate

Fair Value

Notional Amount

July 5, 2019

June 5, 2029

Level 2

4.16%

$(5,929)

$54,887

December 31, 2019

Effective Date

Maturity Date

Fair Value Hierarchy

Weighted Average Interest Pay Rate

Fair Value

Notional Amount

July 5, 2019

June 5, 2029

Level 2

4.16%

$(2,716)

$58,768

Effective Date Maturity Date Fair Value Hierarchy Weighted Average Interest Pay Rate Fair Value as of 12/31/2017 Notional Amount as of 12/31/2017
October 15, 2014 October 5, 2024 Level 2 4.11% $(894) $66,046

11. STOCK COMPENSATION - RESTRICTED STOCK AND PERFORMANCE SHARE GRANTS

The Company’s stock incentive plans provide for the making of awards to employees based upon a service condition or through the achievement of performance-related objectives. The Company has issued ~~three~~3 types of stock grant awards under these plans: restricted stock with service condition vesting; performance share grants that only vest upon the achievement of specified performance conditions, such as corporate cash flow goals or share price, or Performance Condition Grants; and performance share grants that include threshold, target, and maximum achievement levels based on the achievement of specific performance ~~milestones,~~measures, or Performance Milestone Grants. ~~The Company has also granted performance share grants that contain both performance-based and~~Performance Condition Grants with market-based ~~conditions. Compensation cost for these awards is recognized~~conditions are based ~~on either the achievement of the performance-based conditions, if they are considered probable, or if they are not considered probable,~~ on the achievement of ~~the~~a target share price. The share price used to calculate vesting for market-based ~~condition.~~awards is determined using a Monte Carlo simulation. Failure to ~~satisfy~~achieve the ~~threshold performance conditions~~target share price will result in the forfeiture of shares. Forfeiture of share awards with service conditions or performance-based restrictions ~~results~~will result in a reversal of

previously recognized share-based compensation expense. Forfeiture of share awards with market-based restrictions does not result in a reversal of previously recognized share-based compensation expense.

The following is a summary of the Company's performance share grants with performance conditions ~~for~~as of the year ended December 31, ~~2017:~~

2020:



Performance Share Grants with Performance Conditions
~~Below threshold performance~~						—
Threshold performance						~~169,178~~62,416
Target performance						~~387,886~~575,596
Maximum performance						~~589,415~~992,745

The following is a summary of the Company’s stock grant activity, both time and performance unit grants, assuming target achievement for outstanding performance grants for the following twelve-month periods ended:


	December 31, 2020	December 31, 2019	December 31, 2018
Stock Grants Outstanding Beginning of the Year at Target Achievement	409,373	538,599	536,860
New Stock Grants/Additional shares due to achievement in excess of target	797,364	160,471	97,529
Vested Grants	(307,250)	(188,032)	(93,948)
Expired/Forfeited Grants	(59,180)	(101,665)	(1,842)
Stock Grants Outstanding at Target Achievement	840,307	409,373	538,599

December 31, 2017 December 31, 2016 December 31, 2015
Stock Grants Outstanding Beginning of the Year at Target Achievement 386,171
272,353
237,045
New Stock Grants/Additional shares due to achievement in excess of target 295,243
287,091
114,221
Vested Grants (99,769 ) (172,749 ) (52,436 )
Expired/Forfeited Grants (44,785 ) (524 ) (26,477 )
Stock Grants Outstanding at Target Achievement 536,860
386,171
272,353
The following is a summary of the assumptions used to determine the price for the Company's market-based Performance Condition Grants for the year ended December 31, 2020:


($ in thousands except for share prices)
Grant date	December 12, 2019	March 11, 2020
Vesting end	December 31, 2022	December 31, 2022
Share price at target achievement	$18.80	$16.36

Expected volatility	17.28%	18.21%
Risk-free interest rate	1.69%	0.58%

Simulated Monte Carlo share price	$11.95	$5.87
Shares granted	6,327	81,716
Total fair value of award	$76	$480

The unamortized cost associated with ~~nonvested~~unvested stock grants and the weighted-average period over which it is expected to be recognized as of December 31, ~~2017~~2020 was ~~$5,514,000~~$7,567,000 and 2422 months respectively. The fair value of restricted stock with time-based vesting features is based upon the Company’s share price on the date of grant and is expensed over the service period. Fair value of performance grants that cliff vest based on the achievement of performance conditions is based on the share price of the Company’s stock on the day of grant once the Company determines that it is probable that the award will vest. This fair value is expensed over the service period applicable to these grants. For performance grants that contain a range of shares from zero to maximum ~~we determine,~~the Company determines, based on historic and projected results, the probability of (1) achieving the performance objective, and (2) the level of achievement. Based on this information, ~~we determine~~the Company determines the fair value of the award and measure the expense over the service period related to these grants. Because the ultimate vesting of all performance grants is tied to the achievement of a performance condition, ~~we estimate~~the Company estimates whether the performance condition will be met and over what period of time. Ultimately, ~~we adjust~~the Company adjusts compensation cost according to the actual outcome of the performance condition. Under the Non-Employee Director Stock Incentive Plan, or NDSI Plan, each non-employee director, ~~receives~~during the years presented, received his or her annual compensation in stock.

The performance share grant approved by the Board in March 2014, included the modification of existing performance milestone grants totaling 133,890 restricted stock units and the issuance of new performance share grants totaling 89,837 restricted stock units. The restricted stock units of the modified existing performance milestone grants have been accounted for as probable-to-probable modification since the Company has determined that achieving the existing performance milestones was probable. The unamortized total cost relating to these probable-to-probable modified performance share grants is being recognized ratably over the new requisite service period. The impact of modifying the existing performance stock grants is an annual expense of $1,109,000 over the service period. The values for the 2014 performance grants, including the new milestone grants, are fixed at threshold, target and maximum performance values, meaning that the number of shares at vesting will vary depending on the stock price at that time. The total value for these grants at maximum performance is $5,702,000. During the second quarter of 2015, the 2014 performance milestone grants were modified to fix the number of shares to be received rather than have the number of shares to be issued at vesting float with the price of the stock, which converted the awards from liability awards to equity awards. As such, we reclassified $1,065,000 from other liabilities to equity. This resulted in a probable-to-probable modification and had no impact on earnings. In 2016, these milestone performance grants were met at levels above target and at target achievement levels.

The following table summarizes stock compensation costs for the Company's 1998 Stock Incentive Plan, or the Employee 1998 Plan, and NDSI Plan for the following periods:


Employee 1998 Plan ($ in thousands):	December 31, 2020		December 31, 2019		December 31, 2018
Expensed	$	4,060	$	2,667	$	2,564
Capitalized	1,135		760		1,232
	5,195		3,427		3,796
NDSI Plan	434		531		684
	$	5,629	$	3,958	$	4,480

Employee 1998 Plan ($ in thousands): December 31, 2017 December 31, 2016 December 31, 2015
Expensed $ 2,889
$ 3,847
$ 2,989
Capitalized 555
296
165
3,444
4,143
3,154
NDSI Plan 663
738
768
$ 4,107
$ 4,881
$ 3,922

12. INCOME TAXES

The Company accounts for income taxes using ASC 740, “Income Taxes” which is an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized differently in the financial statements and the tax returns. The provision for income taxes consists of the following at December 31:


($ in thousands)	2020		2019		2018
Total (benefit) provision:	$	829	$	3,980	$	1,320
Federal:
Current	(852)		1,798		862
Deferred	1,464		866		64
	612		2,664		926
State:
Current	(21)		812		353
Deferred	238		504		41
	217		1,316		394
	$	829	$	3,980	$	1,320

($ in thousands) 2017 2016 2015
Total (benefit) provision: $ (1,123 ) $ 336
$ 1,125
Federal:
Current (1,266 ) (758 ) 1,521
Deferred 380
1,021
(682 )
(886 ) 263
839
State:
Current (120 ) (145 ) 585
Deferred (117 ) 218
(299 )
(237 ) 73
286
$ (1,123 ) $ 336
$ 1,125

~~The provision for income taxes for fiscal year 2017~~In March 2020, the Coronavirus Aid, Relief, and Economic Security Act was enacted, which includes a ~~$54,000 estimated~~five year net operating loss carryback provision which will enable the Company to benefit from certain losses. This provision applies to net operating losses occurring between December 31, 2017 and January 1, 2021 and temporarily nullifies provisions within the Tax Cuts Jobs Act of 2017 that disallows net operating loss carrybacks. Under these guidelines, the Company expects to receive a Federal tax refund of $1,021,000 once 2020 tax losses are carried back.

During 2018, the Company completed its analysis of the impacts of the U.S. Tax Reform and no additional expense was warranted. Other provisions of the U.S. Tax Reform did not have a material effect on the effective tax rate for 2018.

In 2020, income tax provision expense primarily consisted of permanent differences related to Section 162(m) limitations and discrete tax expense associated with stock compensation. The Section 162(m) compensation deduction limitations occurred as a result of changes in tax law arising from the ~~revaluation~~2017 Tax Cuts Jobs Act, which did not impact the Company until this year. The discrete item was triggered when stock grants were issued to participants at a price less than the original grant price, causing a deferred tax shortfall. The shortfall recognized during the quarter represents the reversal of ~~federal net~~excess deferred tax assets ~~from 34% to 21% due to the impact~~recognized in prior periods. The recognition of the ~~enactment of U.S. Tax Reform. The final~~shortfall is not anticipated to have an impact ~~of U.S. Tax Reform may differ from these estimates, due to, among other things, changes in interpretations, analysis and assumptions made by management, additional guidance that may be issued by~~on the U.S. Department of the Treasury and the Internal Revenue Service, and any updates or changes to estimates we have utilized to calculate the transition impact. Therefore, our accounting for the elements of U.S. Tax Reform is incomplete. However, we were able to make reasonable estimates of the effects of U.S. Tax Reform on a provisional basis.

Company's current income tax payable. A reconciliation of the provision for income taxes, with the amount computed by applying the statutory Federal income tax rate of ~~34% to income before provision for income taxes~~21% in 2020, 2019 and 2018 is as follows for the years ended December 31:


($ in thousands)	2020			2019			2018
Income tax at statutory rate	$	17		$	3,058		$	1,171
State income taxes, net of Federal benefit	217			948			317
Excess stock compensation expense	365			(57)			(20)
Non-deductible compensation	357			0			0
Oil and mineral depletion	(101)			(131)			(134)
Refunds	(78)			0			0
Permanent differences	16			26			19
Other	36			136			(33)
Provision (benefit) for income taxes	$	829		$	3,980		$	1,320
Effective tax rate	1,011.0		%	27.3		%	23.8		%

($ in thousands) 2017 2016 2015
Income tax at statutory rate $ (910 ) $ 304
$ 1,360
State income taxes, net of Federal benefit (161 ) 42
213
Oil and mineral depletion (180 ) (161 ) (213 )
Permanent differences 25
82
(92 )
Excess stock compensation expense 107
—
—
Tax Reform adjustment 54
—
—
Other (58 ) 69
(143 )
(Benefit) provision for income taxes $ (1,123 ) $ 336
$ 1,125
Effective tax rate 42.0 % 37.6 % 28.1 %

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities ~~are~~were as follows at December 31:


($ in thousands)	2017		2016		($ in thousands)	2020		2019
Deferred income tax assets:					Deferred income tax assets:
Accrued expenses	$	393	$	561	Accrued expenses	$	322	$	349
Deferred revenues	209		654		Deferred revenues	557		370
Capitalization of costs	2,138		3,224		Capitalization of costs	1,661		1,843
Pension adjustment	2,996		4,690		Pension adjustment	2,921		2,883
Stock grant expense	2,130		2,309		Stock grant expense	2,211		2,500
State deferred taxes	—		37		State deferred taxes	0		116
Book deferred gains	941		1,912		Book deferred gains	1,034		1,176
Joint venture allocations	1,025		932		Joint venture allocations	587		533
Provision for additional capitalized costs	699		1,003		Provision for additional capitalized costs	699		699
Interest rate swap	267		799		Interest rate swap	1,769		810
Other	423		41		Other	209		39
Total deferred income tax assets	$	11,221	$	16,162	Total deferred income tax assets	$	11,970	$	11,318
Deferred income tax liabilities:					Deferred income tax liabilities:
Deferred gains	$	32	$	51	Deferred gains	$	490	$	490
Depreciation	3,563		5,279		Depreciation	3,533		2,892
Cost of sales allocations	872		1,252		Cost of sales allocations	872		872
Joint venture allocations	3,972		5,389		Joint venture allocations	6,592		5,070
Straight line rent	631		926		Straight line rent	548		590
Prepaid expenses	132		323		Prepaid expenses	340		333
State deferred taxes	322		470		State deferred taxes	383		208

Other	135		190		Other	137		150
Total deferred income tax liabilities	$	9,659	$	13,880	Total deferred income tax liabilities	$	12,895	$	10,605
Net deferred income tax asset	$	1,562	$	2,282
Net deferred income tax (liability) asset					Net deferred income tax (liability) asset	$	(925)	$	713
Allowance for deferred tax assets	—		—		Allowance for deferred tax assets	—		0
Net deferred taxes	$	1,562	$	2,282	Net deferred taxes	$	(925)	$	713

Due to the nature of ~~our~~the Company's deferred tax assets, the Company believes they will be used through operations in future years and a valuation allowance is not necessary.

The Company ~~made total federal and state income~~did not make any tax payments ~~of $0~~ in ~~2017~~2020 and ~~$1,750,000 during 2016.~~$4,645,000 in 2019. The Company received tax refunds of ~~$124,000~~$1,314,000 and ~~$615,000~~$1,345,000 in ~~2017~~2020 and ~~2016,~~2019, respectively.

The Company evaluates its tax positions for all income tax items based on their technical merits to determine whether each position satisfies the “more likely than not to be sustained upon examination” test. The tax benefits are then measured as the largest amount of benefit, determined on a cumulative basis, that is “more likely than not” to be realized upon ultimate settlement. As a result of this evaluation, the Company determined there were no uncertain tax positions that required recognition and measurement for the years ended December 31, ~~2017~~2020 and ~~2016~~2019 within the scope of ASC 740, "Income Taxes." Tax years from ~~2014~~2017 to 2019 and 2016 ~~and 2013~~ to ~~2016~~2019 remain available for examination by the Federal and California State taxing authorities, respectively.

13. LEASES

The Company is a lessor of certain property pursuant to various ~~commercial~~ lease agreements having terms ranging up to ~~60 years~~.30 years. The Company generates rental income from ~~commercial rents.~~right to use assets. The following is a summary of income from commercial rents included in commercial/industrial real estate ~~revenue~~revenues as of December 31:


($ in thousands)	2020		2019		2018
Base rent	$	6,471	$	6,554	$	6,444
Percentage rent	$	949	$	1,024	$	621

2017 2016 2015
Base rent $ 5,711,000
$ 5,613,000
$ 5,208,000
Percentage rent $ 677,000
$ 495,000
$ 652,000

Future minimum rental income on commercial, communication and right-of-way on non-cancelable leases as of December 31, ~~2017:~~2020 ($ in thousands):


2021		2022		2023		2024		2025		Thereafter
$	6,461	$	5,637	$	5,279	$	5,144	$	4,946	$	16,664

2018 2019 2020 2021 2022 Thereafter
$ 5,715
$ 5,635
$ 5,555
$ 5,309
$ 5,113
$ 21,679

14. COMMITMENTS AND CONTINGENCIES

The Company's land is subject to water contracts of which ~~$8,884,000~~$10,194,000 is expected to be paid in ~~2018.~~2021. These estimated water contract payments consist of SWP, contracts with Wheeler Ridge Maricopa Water Storage District, ~~Tejon-Castac Water District, or~~ TCWD, Tulare Lake Basin Water Storage District, Dudley-Ridge Water Storage District and the Nickel water contract. The SWP contracts run through 2035 and the Nickel water contract runs through 2044, with an option to extend an additional 35 years. As discussed in Note 56 (Long-Term Water Assets), wethe Company purchased the assignment of a contract to purchase water in late 2013. The assigned water contract is with Nickel ~~Family, LLC,~~ and obligates usthe Company to purchase 6,693 acre-feet of water annually through the term of the contract. The Company's contractual obligation for future water payments was $276,146,000 as of December 31, 2020 .

The Company is obligated to make payments of approximately $800,000 ~~per year through~~during 2021 to the Tejon Ranch Conservancy as prescribed in the Conservation Agreement wethat was entered into with five major environmental organizations in 2008. ~~Our~~These advances to the Tejon Ranch Conservancy are dependent on the occurrence of certain events and their timing, and are therefore subject to change in amount and period. These amounts ~~are recorded~~paid will be capitalized in real estate development for the Centennial, Grapevine and Mountain Village, or MV, projects.

The Company exited a consulting contract during the second quarter of 2014 related to the Grapevine Development and is obligated to pay an earned incentive fee at the time of successful receipt of litigated project entitlements and at a value measurement date ~~five-years~~five years after litigated 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.

The Tejon Ranch Public Facilities Financing Authority, or TRPFFA, is a joint powers authority formed by Kern County and TCWD to finance public infrastructure within the Company’s Kern County developments. For the development of ~~the Tejon Ranch Commerce Center, or~~ TRCC, TRPFFA has created ~~two~~2 Community Facilities Districts, or ~~CFDs,~~CFDs: the West CFD and the East CFD. The West CFD has placed liens on 420 acres of the Company’s land to secure payment of special taxes related to $28,620,000 of bond debt sold by TRPFFA for TRCC-West. The East CFD has placed liens on 1,931 acres of the Company’s land to secure payments of special taxes related to ~~$55,000,000~~$75,965,000 of bond debt sold by TRPFFA for TRCC-East. At TRCC-West, the West CFD has no0 additional bond debt approved for issuance. At TRCC-East, the East CFD has approximately ~~$65,000,000~~$44,035,000 of additional bond debt authorized by TRPFFA that can be sold in the future.

In connection with the sale of bonds, there is a standby letter of credit for ~~$4,921,000~~$4,468,000 related to the issuance of East CFD bonds. The standby letter of credit is in place to provide additional credit enhancement and cover approximately two years' worth of interest on the outstanding bonds. This letter of credit will not be drawn upon unless the Company, as the largest landowner in the CFD, fails to make its property tax payments. The Company believes that the letter of credit will never be drawn upon. The letter of credit is for two years and will be renewed in two-year intervals as necessary. The annual cost related to the letter of credit is approximately ~~$83,000.~~$68,000.

The Company is obligated, as a landowner in each CFD, to pay its share of the special taxes assessed each year. The secured lands include both the TRCC-West and TRCC-East developments. Proceeds from the sale of West CFD bonds went to reimburse the Company for public infrastructure costs related to the TRCC-West development. At December 31, ~~2017~~2020 there were no0 additional improvement funds remaining from both of the West CFD bonds and ~~there are $7,768,000 in improvement funds within the~~ East CFD bonds for reimbursement of public infrastructure costs during ~~2017 and~~ future years. During ~~2017,~~2020, the Company paid approximately ~~$2,578,000~~$2,550,000 in special taxes. As development continues to occur at TRCC, new owners of land and new lease tenants, through triple net leases, will bear an increasing portion of the assessed special tax. This amount could change in the future based on the amount of bonds outstanding and the amount of taxes paid by others. The assessment of each individual property sold or leased is not determinable at this time because it is based on the current tax rate and the assessed value of the property at the time of sale or on its assessed value at the time it is leased to a third-party. Accordingly, the Company is not required to recognize an obligation at December 31, ~~2017.~~2020.

100

Tehachapi Uplands Multiple Species Habitat Conservation Plan Approval

In July 2014, the Company received a copy of a Notice of Intent to Sue, ~~or Notice,~~ dated July 17, 2014 indicating that the Center for Biological Diversity, or CBD, the Wishtoyo Foundation and Dee Dominguez ~~intend~~(collectively the TUMSHCP Plaintiffs) intended to initiate a lawsuit against the U.S. Fish and Wildlife Service, or USFWS, ~~under the federal Endangered Species Act~~ challenging USFWS's approval of ~~Ranchcorp's~~the Company's Tehachapi Uplands Multiple Species Habitat Conservation Plan, or TUMSHCP, and USFWS's issuance of an Incidental Take Permit, or ITP, ~~to Ranchcorp~~ for the take of federally listed species. The ~~foregoing~~TUMSHCP approval and ITP issuance by the USFWS occurred in 2013. These approvals authorize, among other things, the removal of California condor habitat associated with ~~Ranchcorp's~~the Company's potential future development of MV. ~~No lawsuit~~

On April 25, 2019, the TUMSHCP Plaintiffs filed suit against the USFWS in the U.S. District Court for the Central District of California in Los Angeles (Case No. 2:19-CV-3322) (the TUMSHCP Suit). The Company was not initially named as a party in the TUMSHCP Suit and brought a motion to intervene, which the court granted. The TUMSHCP Suit sought to invalidate the TUMSHCP as it pertains to the protection of the California condor (an endangered species), as well as the ITP.

The primary allegations in the TUMSHCP Suit are that California condors or their habitat are “Traditional Cultural Properties” within the meaning of the National Historic Preservation Act (NHPA), that the USFWS failed to take into account the impact of the TUMSHCP and ITP on these “Traditional Cultural Properties” and failed to adequately consult with affected Native American tribes or their representatives with respect to these “Traditional Cultural Properties.”

Management considers the allegations in the TUMSHCP Suit to be beyond the scope of the law and regulations referenced in the TUMSHCP Suit, and believes that the issues raised by the TUMSHCP Plaintiffs were adequately addressed by USFWS during the consultation process with Native American tribes. The Company has ~~been filed at~~supported USFWS's efforts to vigorously defend this ~~time. It~~matter during the course of this litigation.

In a December 18, 2019 ruling, the court ordered that the parties proceed to bring motions for summary judgment on the question of whether the USFWS correctly determined that the California condor is not ~~possible~~a “Traditional Cultural Property” under the NHPA. In response to ~~predict whether any lawsuit will actually~~this order, both the TUMSCHP Plaintiffs and the USFWS and the Company filed cross-motions for summary judgment.

On December 4, 2020 the court issued an order denying, in its entirety, the TUMSHCP Plaintiffs’ motions for summary judgment and granted, in their entirety, USFWS and the Company’s motions for summary judgment. On December 18, 2020, the Company brought a motion to recover attorneys’ fees and costs, as the prevailing party, against the TUMSCHP Plaintiffs. On February 2, 2021, the court denied the fee motion. Following the court’s ruling on the fee motion, on February 2, 2021, Plaintiff’s notified the court of its intent to appeal the court’s ruling on its claims. The Ninth Circuit Court of Appeal has issued a preliminary briefing schedule that requires opening and responsory briefs to be filed ~~or whether~~in April and May 2021. The appeal will be heard by the ~~Company or Ranchcorp~~court following briefing, and the court will ~~incur any damages from such a lawsuit.~~rule following the hearing.

National Cement

The Company leases land to National Cement Company of California Inc., or National, for the purpose of manufacturing Portland cement from limestone deposits on the leased acreage. The California Regional Water Quality Control Board, or RWQCB, for the Lahontan Region issued orders in the late 1990s with respect to environmental conditions on the property currently leased to National.

The Company's former tenant Lafarge Corporation, or Lafarge, and current tenant National, continue to remediate these environmental conditions consistent with the RWQCB orders.

The Company is not aware of any failure by Lafarge or National to comply with directives of the RWQCB. Under current and prior leases, National and Lafarge are obligated to indemnify the Company for costs and liabilities arising out of their use of the leased premises. The remediation of environmental conditions is included within the scope of the National or Lafarge indemnity obligations. If the Company were required to remediate the environmental conditions at its own cost, it is unlikely that the amount of any such expenditure by the Company would be material and there is no reasonable likelihood of continuing risk from this matter.

101

Antelope Valley Groundwater Cases

On November 29, 2004, a conglomerate of public water suppliers filed a cross-complaint in the Los Angeles Superior Court against landowners and others with interest in the groundwater basin within the Antelope Valley (including the Company) seeking a judicial determination of the rights to groundwater within the Antelope Valley basin, including the groundwater underlying the Company’s land near the Centennial project. Four phases of a multi-phase trial have been completed. Upon completion of the third phase, the court ruled that the groundwater basin ~~is currently~~was in overdraft and established a current total sustainable yield. The fourth phase of trial occurred in the first half of 2013 and resulted in confirmation of each party’s groundwater pumping for 2011 and 2012. The fifth phase of the trial commenced in February 2014 and concerned 1) whether the United States has a federal reserved water right to basin groundwater, and 2) the rights to return flows from imported water. The court heard evidence on the federal reserved right but continued the trial on the return flow issues while most of the parties to the adjudication discussed a settlement, including rights to return flows. In February 2015, more than 140 parties representing more than 99% of the current water use within the adjudication boundary agreed to a settlement. On March 4, 2015, the settling parties, including Tejon, submitted a Stipulation for Entry of Judgment and Physical Solution to the court for approval. On December 23, 2015, the court entered ~~Judgment~~judgment approving the Stipulation for Entry of Judgment and Physical ~~Solution.~~Solution, or the Judgment. The Company’s water supply plan for the Centennial project anticipated reliance on, among other sources, a certain quantity of groundwater underlying the Company’s lands in the Antelope Valley. The Company’s allocation in the Judgment is consistent with that amount. Prior to the Judgment becoming final, on February 19 and 22, 2016, several parties, including the Willis Class, ~~and~~ Phelan Pinon Hills Community Services District (Phelan), and Charles Tapia (Tapia) filed notices of appeal from the ~~Judgment.~~Judgment (collectively, the Phelan Appeal). The Appeal has been transferred from the Fourth Appellate District of California to the Fifth Appellate District. Appellate briefing is complete.

On November 9, 2020, the court heard oral argument on the Phelan appeal. On December 9, 2020, the Fifth District Court of Appeal affirmed the Judgment as to the Phelan Appeal. The decision became final in January.

The Willis Class appeal is scheduled for oral argument in February 2021, and decision will be made within 90 days thereafter. Oral argument on the Tapia appeal is scheduled for March 10, 2021. Following oral argument, the court will likely ~~occur during 2018.~~take the matters under submission and issue one or more opinions within 90 days thereafter. Notwithstanding the appeals, the parties, with assistance from the ~~Court~~court, have ~~begun establishment of~~established the Watermaster Board, hired the Watermaster Engineer and ~~administration of~~Watermaster Legal Counsel, and begun administering the ~~Physical Solution,~~physical solution consistent with the Judgment.

Summary and Status of Kern Water Bank Lawsuits

On June 3, 2010, the Central Delta and South Delta Water Agencies and several environmental groups, including CBD, collectively, the ~~Center for Biological Diversity (collectively, “Central Delta”),~~Central Delta Petitioners, filed a complaint in the Sacramento County Superior Court, or the Central Delta Action, against the California Department of Water Resources, or DWR, Kern County Water Agency, or KCWA, and a number of “real parties in interest,” including the Company and TCWD. The lawsuit challenges certain amendments to the SWP contracts that were originally approved in 1995, known as the ~~“Monterey~~Monterey Amendments.” The Central Delta Petitioners ~~in this action~~ sought to invalidate the DWR's approval of the Monterey Amendments and also the 2010 environmental ~~documentation~~impact report, or 2010 EIR, regarding the Monterey Amendments prepared pursuant to the California Environmental Quality Act, or CEQA, pertaining to the Kern Water ~~Bank.~~

~~The original Environmental Impact Report,~~Bank, or ~~EIR, for~~KWB. Pursuant to the Monterey Amendments, ~~was determined to be insufficient~~DWR transferred approximately 20,000 acres in ~~an earlier lawsuit. The current lawsuit principally (i) challenges the adequacy of the remedial EIR that~~Kern County owned by DWR, ~~prepared as a result of the original lawsuit and (ii) challenges the validity of the Monterey Amendments on various grounds, including the transfer of the Kern Water Bank,~~ or KWB ~~lands, from DWR~~property, to the ~~Kern County Water Agency and in turn to the Kern Water Bank Authority,~~KCWA.

A separate but parallel lawsuit, or ~~KWBA, whose members are various Kern and Kings County interests, including TCWD, which TCWD has a 2% interest in the KWBA. A parallel lawsuit~~Central Delta II, was also filed by the Central Delta Petitioners in Kern County Superior Court on July 2, 2010, against ~~Kern County Water Agency,~~KCWA, also naming the Company and TCWD as real parties in ~~interest, which~~interest. Central Delta II challenged the validity of the transfer of the KWB property from the KCWA to the Kern Water Bank Authority, or KWBA. The petitioners in this case alleged that (i) the transfer of the KWB property by KCWA to the KWBA was an unconstitutional gift of public funds, and (ii) the consideration for the transfer of the KWB property to the KWBA was unconscionable and illusory. This case has been stayed pending the outcome of the ~~other action against DWR. The Company is named on the ground that it “controls” TCWD. This lawsuit has since been moved to the Sacramento County Superior Court. Another~~Central Delta Action.

In addition, another lawsuit was filed in Kern County Superior Court on June 3, 2010, by two districts adjacent to the KWB, namely Rosedale Rio Bravo and Buena Vista Water Storage Districts or(collectively, the Rosedale Petitioners), asserting that the ~~remedial~~2010 EIR did not adequately evaluate potential impacts arising from operations of the KWB, or Rosedale Action, but this lawsuit did not name the ~~Company,~~Company: it only named TCWD. TCWD has a contract right for water stored in the KWB and rights to recharge and withdraw water. This lawsuit ~~has since been~~was later moved to the Sacramento County Superior Court.

In ~~an initial favorable ruling~~the Central Delta Action and Rosedale Action, the trial courts concluded that the 2010 EIR for the Monterey Amendments was insufficient with regard to the EIR's evaluation of the potential impacts of the operation of the KWB, particularly on ~~January 25, 2013,~~groundwater and water quality, and ruled that DWR was required to prepare a remedial EIR (which is further described below). In the Central Delta Action, the trial court ~~determined~~also concluded that the challenges to ~~the validity~~DWR’s 1995 approval of the Monterey Amendments ~~including the transfer of the KWB lands, were not timely and~~ were barred by ~~the~~ statutes of ~~limitation,~~limitations and laches. The Central Delta Petitioners appealed the ~~doctrine of laches,~~Sacramento County Superior Court Judgment, and bycertain real parties filed a cross-appeal. No party appealed the annual validating statute. The substantive hearing on the challenges to the EIR was held on January 31, 2014. On March 5, 2014 the court issued a decision, rejecting all of Central Delta’s California Environmental Quality Act, or CEQA, claims, exceptKern County Superior Court Judgment in the Rosedale ~~claim, joined by Central Delta, that the EIR did not adequately evaluate future impacts from operation of the KWB, in particular potential impacts on groundwater and water quality.~~Action.

102

On November 24, 2014, the ~~court~~Sacramento County Superior Court in the Central Delta Action issued a writ of mandate, ~~(the “2014 Writ”)~~or 2014 Writ, that ~~requires~~required DWR to prepare a revised EIR (described herein as the 2016 EIR because it was certified in 2016) regarding the Monterey Amendments evaluating the potential operational impacts of the KWB. The 2014 Writ, authorizes the continued operation of the KWB pending completion of the revised EIR subject to certain conditions including those described in an interim operating plan negotiated between the KWBA and Rosedale. The 2014 Writ, as revised by the court, ~~requires~~required DWR to certify the ~~revised~~2016 EIR and file the ~~return~~response to the 2014 Writ by September 28, 2016. On September 20, 2016, the Director of DWR (a) certified the ~~revised~~2016 EIR prepared by DWR ~~or the Revised EIR,~~ as in compliance with CEQA, (b) adopted findings, a statement of overriding considerations, and a mitigation, monitoring and reporting program as required by CEQA, (c) made a new finding pertaining to carrying out the Monterey Amendments through continued use and operation of the KWB by the KWBA, and (d) caused a notice of determination to be filed with the Office of Planning and Resources of the State of California on September 22, 2016. On September 28, 2016, DWR filed with the Sacramento County Superior Court its return to the 2014 ~~Writ.~~

~~On November 24, 2014, the court entered a judgment~~Writ in the Central Delta case (1) dismissing the challenges to the validity of the Monterey Amendments and the transfer of the KWB lands in their entirety and (2) granting in part, and denying, in part, the CEQA petition for writ of mandate. Central Delta has appealed the judgment and the KWBA and certain other parties have filed a cross-appeal with regard to certain defenses to the CEQA cause of action. The appeals are pending in the California Court of Appeal.Action.

On December 3, 2014, the court entered judgment in the Rosedale case (i) in favor of Rosedale in the CEQA cause of action, and (ii) dismissing the declaratory relief cause of action. No appeal of the Rosedale judgment has been filed. Rosedale has stipulated to the discharge of the 2014 Writ.

On October 21, 2016, the Central Delta ~~petitioners~~Petitioners and a new party, the Center for Food Safety (“(CFS) (collectively, the CFS ~~Petitioners”)~~Petitioners), filed a new lawsuit in Sacramento County Superior Court, (the ~~"CFS Petition")~~CFS Action), against DWR and naming a number of real parties in interest, including KWBA and TCWD (but not including the Company). The ~~new lawsuit~~CFS Action challenges DWR’s (i) certification of the ~~Revised~~2016 EIR, (ii) compliance with the 2014 Writ and CEQA, and (iii) finding concerning the continued use and operation of the KWB by KWBA. In response to a motion filed by the CFS Petitioners, on April 7, 2017 the Superior Court denied the CFS Petitioners’ motion to stay the Superior Court proceedings on the return to the 2014 Writ and CFS petition pending appeal. The Superior Court subsequently modified the 2014 Writ to authorize the KWBA to construct an additional 190 acres of recharge ponds within the KWB pending the court's consideration of DWR's return to the 2014 Writ and the petition in ~~CFS vs DWR. On August 18, 2017 the Superior Court held a hearing on the return to the 2014 Writ and on the CFS Petition.~~ On October 2, 2017, the Sacramento County Superior Court issued a ruling that the court shall deny the CFS ~~Petition~~petition and shall discharge the 2014 Writ. The CFS ~~has~~Petitioners appealed the Sacramento County Superior Court judgment denying the CFS ~~Petition. DWR has moved~~petition. The Third Appellate District of the Court of Appeal granted DWR’s motion to consolidate the CFS Action appeal for hearing with the pending appeals in the Central Delta ~~case.~~

Action. Briefing on all of the appeals and cross-appeals is now complete. At this time, the Company anticipates having a ruling from the Court of Appeal on these consolidated appeals of the CFS Action and the Central Delta Action sometime in 2021, but there is a possibility that the court’s hearing and disposition of the pending appeals could be delayed by the closure of the courts in response to the COVID-19 pandemic. To the extent there may be an adverse outcome of the claims still pending as described above, the monetary value cannot be estimated at this ~~time.~~time

Grapevine

On December 6, 2016, the Kern County Board of Supervisors unanimously granted entitlement approval for the Grapevine ~~project (described below).~~project. On January 5, 2017, the ~~Center for Biological Diversity, or~~ CBD and ~~the Center for Food Safety, or~~ CFS, filed an action in Kern County Superior Court pursuant to CEQA against Kern County and the Kern County Board of Supervisors,

( or collectively, the ~~“County”)~~County, concerning the County’s granting of the 2016 approvals for the Grapevine project, including certification of the final EIR and related findings; approval of associated general plan amendments; adoption of associated zoning maps; adoption of Specific Plan Amendment No. 155, Map No. 500; adoption of Special Plan No. 1, Map No. 202; exclusion from Agricultural Preserve No. 19; and adoption of a development agreement, among other associated approvals.(the 2017 Action). The Company ~~and its wholly-owned subsidiary, Tejon Ranchcorp, are~~was named as a real ~~parties~~party in interest in ~~this action.~~

the 2017 Action. The ~~action alleges~~2017 Action alleged that the County failed to properly follow the procedures and requirements of CEQA, including failure to identify, analyze and mitigate impacts to air quality, greenhouse gas emissions, biological resources, traffic, water supply and hydrology, growth inducing impacts, failure to adequately consider project alternatives and to provide support for the County’s findings and statement of overriding considerations in adopting the EIR and failure to adequately describe the environmental setting and project description. ~~On December 6, 2017, the County served a responsive pleading answering petioners' allegations and denying that relief should be granted.~~ Petitioners ~~seek~~sought to invalidate the ~~County's~~County’s approval of the project and the environmental approvals and require the Company and the County to revise the environmental documentation.

On July 27, 2018, the court held a hearing on the petitioners’ claims in the 2017 Action. At that hearing, the court rejected all of petitioners’ claims raised in the litigation, except petitioners’ claims that (i) the project description was inadequate and (ii) such inadequacy resulted in aspects of certain environmental impacts being improperly analyzed. As to the claims described in “(i)” and “(ii)” in the foregoing sentence, the court determined that the EIR was inadequate. In that regard, the court determined the Grapevine project description contained in the EIR allowed development to occur in the time and manner determined by the real parties in interest and, as a consequence, such development flexibility could result in the project’s internal capture rate, or ICR, of the percent of vehicle trips remaining within the project actually being lower than the projected ICR levels used in the EIR and that lower ICR levels warranted supplemental traffic, air quality, greenhouse gas emissions, noise, public health and growth inducing impact analyses.

On December 11, 2018, the court in the 2017 Action ruled that portions of the EIR required corrections and supplemental environmental analysis and ordered that the County rescind the Grapevine project approvals until such supplemental environmental analysis was completed. The court issued a final judgment consistent with its ruling on February 15, 2019 and, on March 12, 2019, the County rescinded the Grapevine project approvals.

Following the County’s rescission of the Grapevine project approvals, the Company filed new applications to re-entitle the Grapevine project (the re-entitlement). The re-entitlement application involved processing project approvals that were substantively similar to the Grapevine project that was unanimously approved by the Kern County Board of Supervisors in December 2016. As part of the re-entitlement, supplemental environmental analysis was prepared to address the court’s ruling in the 2017 Action. Following a public comment and review period, the Kern County Planning Commission held a hearing on November 14, 2019 and unanimously recommended to the Kern County Board of Supervisors that it approve the re-entitlement of the Grapevine project. On December 10, 2019, the Kern County Board of Supervisors held a hearing and after considering the supplemental environmental analysis and material presented at the hearing unanimously voted to approve the re-entitlement

103

of the Grapevine project. On January 9, 2020, the County filed a Supplemental and Final Return to Preemptory Writ of Mandate to inform the court of the re-entitlement in a manner that the County and the Company believes is compliant with the court’s February 15, 2019 final judgment in the 2017 Action. Concurrently, the County and the Company filed a Motion for Order Discharging Writ of Mandate, which requests that the court determine that the re-entitlement complies with the court’s February 15, 2019 final judgment in the 2017 Action (the Motion for Order to Discharge 2017 Writ of Mandate). A hearing was held on February 14, 2020 for this motion and is further summarized below.

On January 10, 2020, CBD filed a new and separate action in Kern County Superior Court pursuant to CEQA against the County, concerning the County’s approval of the December 2019 re-entitlement, including certification of the final EIR (the 2020 Action). The Company is named as real party in interest in the 2020 Action. The 2020 Action alleges that the County failed to properly follow the procedures and requirements of CEQA with respect to the re-entitlement of the Grapevine project, including failure to identify, analyze and mitigate impacts to air quality, greenhouse gas emissions, biological resources, public health, and traffic, and failed to provide support for the County’s findings and statement of overriding considerations in adopting the EIR. CBD seeks to invalidate the County’s approval of the re-entitlement, the environmental approvals for the re-entitlement and require the Company and the County to revise the environmental documentation. The Company intends to vigorously defend the re-entitlement of the Grapevine project against claims made in the 2020 Action. On January 22, 2020, the Company and County filed a demurrer and motion to strike the claims in the 2020 Action on the basis that the claims brought by CBD must be resolved by the court in the 2017 action, pursuant to the final judgment issued in the 2017 Action. The Company and County’s motion described in the previous sentence also included an alternative request that the court consolidate CBD’s claims in the 2020 Action with its disposition of any remaining matters relating to the 2017 Action. A ~~case management conference~~hearing on these motions filed in the 2020 Action and on the Motion for Order Discharging Writ of Mandate (described above and relating to the 2017 Action) was held on ~~December 15, 2017, at which time~~February 14, 2020. At the hearing, the court ~~ordered~~granted the Company and County’s request to consolidate the 2020 Action with its adjudication of the Company and County’s compliance with the writ of mandate issued by the Court in the 2017 Action. The court denied, without prejudice, the Company’s and County’s motion to discharge the writ in the 2017 Action and their demurrer and motion to strike the claims in the 2020 Action, but the court further ruled that the Company and County could re-assert these arguments at a later date once additional evidence was before the court.

On January 22, 2021 the court conducted a hearing on the 2020 Action and the Motion for Order to Discharge 2017 Writ of Mandate. At the January 22nd hearing, the court ruled in favor of the Company and the County on all issues: (1) granting the County’s Motion for Order to Discharge the 2017 Writ of Mandate and (2) rejecting each and every claim made by CDB in the 2020 Action. The court has directed the County and Company to prepare a final judgment reflecting its ruling in favor of the Company. Following the entry of a final judgment, any party may appeal the court’s decision.

Centennial

On April 30, 2019, the Los Angeles County Board of Supervisors granted final entitlement approval for the Centennial project. On May 15, 2019, Climate Resolve filed an action in Los Angeles Superior Court (the Climate Resolve Action) pursuant to CEQA and the California Planning and Zoning Law against the County of Los Angeles and the Los Angeles County Board of Supervisors (collectively, LA County) concerning LA County’s granting of approvals for the Centennial project, including certification of the final environmental impact report and related findings (Centennial EIR); approval of associated general plan amendments; adoption of associated zoning; adoption of the Centennial Specific Plan; approval of a subdivision map for financing purposes; and adoption of a development agreement, among other approvals (collectively, the Centennial Approvals). Separately, on May 28, 2019, CBD and the California Native Plant Society (CNPS) filed an action in Los Angeles County Superior Court (the CBD/CNPS Action) against LA County; like the Climate Resolve Action, the CBD/CNPS Action also challenges the Centennial Approvals. The Company, its wholly owned subsidiary Tejon Ranchcorp, and Centennial Founders, LLC are named as real parties-in-interest in both the Climate Resolve Action and the CBD/CNPS Action.

The Climate Resolve Action and the CBD/CNPS Action collectively allege that LA County failed to properly follow the procedures and requirements of CEQA and the California Planning and Zoning Law. The Climate Resolve Action and the CBD/CNPS Action have been deemed “related” and have been consolidated for adjudication before the judge presiding over the Climate Resolve Action. The Climate Resolve Action and CBD/CNPS Action seek to invalidate the Centennial Approvals and require LA County to revise the environmental documentation related to the Centennial project. The court held three consolidated hearings for the CBD/CNPS Action and Climate Resolve Action on September 30, 2020, November 13, 2020 and January 8, 2021, but has not yet issued a ruling or judgment.

Conservancy Litigation

On December 2, 2020, conservation groups filed an action against the Company in Kern County Superior Court, alleging that, beginning October 1, 2020, the Company breached its obligation under the Tejon Ranch Conservation and Land Use Agreement (“RWA”) by failing to make advance payments for Q4 2020 to the Tejon Ranch Conservancy (“Conservancy”) – a non-profit organization created under the RWA to oversee conservation of the protected lands at Tejon Ranch.

104

As permitted by the RWA, the Company deposited the advance payments to the Conservancy into a third-party escrow pending a determination of the Company’s rights under the RWA.

At December 31, 2020 the Company believes it has performed all its obligations under the RWA and has withheld the escrowed payments based on the self-dealing, conflicts of interest and violations of the terms of the RWA performed by the non-Company members of the board of directors of the Conservancy and representatives of signatories to the RWA. The Company will vigorously defend the action and does not believe that the resolution of this ~~matter be set for July 27, 2018.~~proceeding will result in a liability to the Company beyond the costs of suit and the Company’s escrow deposits which are included in the Company’s annual budgets.

Proceedings Incidental to Business

From time to time, ~~we are~~the Company is involved in other proceedings incidental to ~~our~~its business, including actions relating to employee claims, real estate disputes, contractor disputes and grievance hearings before labor regulatory agencies.

The outcome of these other proceedings is not predictable. However, based on current circumstances, ~~we do~~the Company does not believe that the ultimate resolution of these other proceedings ~~after considering available defenses and any insurance coverage or indemnification rights,~~ will have a material adverse effect on ~~our~~the Company's financial position, results of operations or cash flows either individually or in the aggregate.

15. RETIREMENT PLANS

The Company sponsors a defined benefit retirement plan, or Benefit Plan, that covers eligible employees hired prior to February 1, 2007. The benefits are based on years of service and the employee’s five-year final average salary. The accounting for the defined benefit plan requires the use of assumptions and estimates in order to calculate periodic benefit cost and the value of the plan's assets and benefit obligation. These assumptions include discount rates, investment returns, and ~~project~~projected salary increases, amongst others. The discount rates used in valuing the plan's benefits obligations were determined with reference to high quality corporate and government bonds that are appropriately matched to the duration of the plan's obligation.

Contributions are intended to provide for benefits attributable to service both to date and expected to be provided in the future. The Company funds the plan in accordance with the Employee Retirement Income Security Act of 1974, or ERISA. The Company in April 2017, froze the Benefit Plan as it relates to future benefit accruals for participants. The benefit accrual freeze resulted in an adjustment to the Benefit Plan, improving our other comprehensive loss position by $404,000.

The following table sets forth changes in the plan's net benefit obligation and accumulated benefit information as of December 31:


($ in thousands)	2020		2019
Change in benefit obligation - Pension
Benefit obligation at beginning of year	$	10,710	$	9,406

Interest cost	338		389
Actuarial (gain)/assumption changes	1,248		1,161
Benefits paid	(259)		(246)

Benefit obligation and accumulated benefit obligation at end of year	$	12,037	$	10,710

Change in Plan Assets
Fair value of plan assets at beginning of year	$	8,920	$	7,258
Actual return on plan assets	1,609		1,744
Employer contribution	165		165
Benefits/expenses paid	(259)		(247)

Fair value of plan assets at end of year	$	10,435	$	8,920
Funded status - liability	$	(1,602)	$	(1,790)

Amounts recorded in equity
Net actuarial loss	$	3,242	$	3,027

Total amount recorded	$	3,242	$	3,027
Amount recorded, net taxes	$	2,335	$	2,180

105

($ in thousands) 2017 2016
Change in benefit obligation - Pension
Benefit obligation at beginning of year $ 9,905
$ 8,970
Service cost 15
223
Interest cost 386
406
Actuarial gain/assumption changes 1,505
378
Benefits paid (124 ) (50 )
Settlements paid (1,588 ) (22 )
Benefit obligation at end of year $ 10,099
$ 9,905
Accumulated benefit obligation at end of year $ 10,099
$ 8,475
Change in Plan Assets
Fair value of plan assets at beginning of year $ 6,974
$ 6,707
Actual return on plan assets 804
339
Employer contribution 165
—
Benefits/expenses paid (124 ) (50 )
Settlements paid —
(22 )
Fair value of plan assets at end of year $ 7,819
$ 6,974
Funded status - liability $ (2,280 ) $ (2,931 )

Amounts recorded in equity
Net actuarial loss $ 2,973
$ 3,465
Prior service cost —
(61 )
Total amount recorded $ 2,973
$ 3,404
Amount recorded, net taxes $ 1,784
$ 2,042

Other changes in plan assets and benefit obligations recognized in other comprehensive income include the following as of December 31:


($ in thousands)	2020		2019
Net loss (gain)	$	282	$	(60)
Recognition of net actuarial loss	(67)		(75)

Total changes	$	215	$	(135)
Changes, net of taxes	$	155	$	(97)

($ in thousands) 2017 2016
Net loss (gain) $ (355 ) $ 556
Recognition of net actuarial loss (137 ) (213 )
Recognized prior service cost 61
29
Total changes $ (431 ) $ 372
Changes, net of taxes $ (259 ) $ 188

The Company expects to recognize the following amounts as a component of net periodic pension costs during the next fiscal year:

Amortization net actuarial gain $ 64
Amortization prior service cost $ —


Expected return on plan assets	$	752
Interest cost	(291)
Amortization of net gain/(loss)	(73)
Net periodic pension benefit/(cost)	$	388

At December 31, ~~2017~~2020 and ~~2016,~~2019, the Company had a long-term pension liability. The Company has always valued its plan assets as of December 31 each year so there were no additional transition impacts upon implementation of a year-end measurement date for plan assets as required by ASC 715 "Compensation - Retirement Benefits." For ~~2018,~~2021, the Company is estimating that contributions to the pension plan will be approximately $165,000.

Based on actuarial estimates, it is expected that annual benefit payments from the pension trust will be as follows:


2018		2019		2020		2021		2022		Thereafter
2021												2021	2022		2023		2024		2025		Thereafter
$	200	$	268	$	278	$	291	$	294	$	2,327	299	$	304	$	362	$	372	$	471	$	2,570

Plan assets consist of equity, debt and short-term money market investment funds. The ~~plan’s~~Benefit Plan’s current investment policy ~~targets 65% equities, 25% debt~~changed during the third quarter of 2018. The new policy is an investment strategy in which the primary focus is to minimize the volatility of the funding ratio. This objective will result in a prescribed asset mix between "return seeking" assets (e.g. stocks) and ~~10% money market funds. Equity and debt~~a bond portfolio (e.g., long duration bonds) according to a pre-determined customized investment ~~percentages are allowed~~strategy based on the Plan's Funded Status as the primary input. This path will be used as a reference point as to ~~fluctuate plus or minus 20% around~~ the ~~respective targets to take advantage~~mix of ~~market conditions. As an example, equities can fluctuate from 78% to 52% of plan assets.~~assets, which by design will de-emphasize the return seeking portion as funded status improves. At December 31, ~~2017,~~2020, the investment mix was approximately ~~57%~~65% equity, ~~37%~~34% debt, and 6%1% money market funds. At December 31, ~~2016,~~2019, the investment mix was approximately ~~60%~~66% equity, ~~29%~~33% debt and ~~11%~~1% money market funds. Equity investments consist of a combination of individual equity securities plus value funds, growth funds, large cap funds and international stock funds. Debt investments consist of U.S. Treasury securities and investment grade corporate debt. The weighted-average discount rate used in determining the periodic pension cost is ~~3.65%~~2.45% in ~~2017~~2020 and ~~4.30%~~3.20% in ~~2016.~~2019. The expected long-term rate of return on plan assets is ~~7.5%~~7.3% in ~~2017~~2020 and ~~2016.~~7.3% in 2019. The long-term rate of return on plan assets is based on the historical returns within the plan and expectations for future returns. See the following table for fair value hierarchy by investment type at December 31:


($ in thousands)	Fair Value Hierarchy	2017		2016		($ in thousands)	Fair Value Hierarchy	2020		2019
Pension Plan Assets:						Pension Plan Assets:
Cash and Cash Equivalents	Level 1	$	455	$	776	Cash and Cash Equivalents	Level 1	$	70	$	48
Collective Funds	Level 2	3,942		3,423		Collective Funds	Level 2	10,365		8,872
Treasury/Corporate Notes	Level 2	1,583		1,181
Corporate Equities	Level 1	1,839		1,594

Fair value of plan assets		$	7,819	$	6,974	Fair value of plan assets		$	10,435	$	8,920

Total pension and retirement expense was as follows for each of the years ended December 31:


($ in thousands)	2020		2019		2018
Cost components:
Service cost	$	0	$	0	$	0
Interest cost	(338)		(389)		(365)
Expected return on plan assets	643		522		585
Net amortization and deferral	(68)		(75)		(64)
Settlement recognition	0		0		0
Total net periodic pension earnings/(cost)	$	237	$	58	$	156

106

($ in thousands) 2017 2016 2015
Cost components:
Service cost $ (15 ) $ (223 ) $ (265 )
Interest cost (386 ) (406 ) (466 )
Expected return on plan assets 531
517
615
Net amortization and deferral (122 ) (184 ) (284 )
Settlement recognition 47
—
(536 )
Total net periodic pension cost $ 55
$ (296 ) $ (936 )

The Company has a Supplemental Executive Retirement Plan, or SERP, to restore to executives designated by the Compensation Committee of the Board of Directors the full benefits under the pension plan that would otherwise be restricted by certain limitations now imposed under the Internal Revenue Code. The SERP is currently unfunded. The Company in April 2017, froze the SERP plan as it relates to the accrual of additional benefits resulting in a SERP liability adjustment, improving our other comprehensive loss position by $328,000.

The following SERP benefit information is as of December 31:


($ in thousands)	2020		2019
Change in benefit obligation - SERP
Benefit obligation at beginning of year	$	8,011	$	7,750

Interest cost	229		303
Actuarial gain/assumption changes	708		486
Benefits paid	(529)		(528)
Curtailments	0		0

Benefit obligation and accumulated benefit obligation at end of year	$	8,419	$	8,011
Funded status - liability	$	(8,419)	$	(8,011)

($ in thousands) 2017 2016
Change in benefit obligation - SERP
Benefit obligation at beginning of year $ 8,015
$ 7,999
Service cost —
—
Interest cost 287
323
Actuarial gain/assumption changes 466
129
Benefits paid (444 ) (436 )
Curtailments (565 ) —
Benefit obligation at end of year $ 7,759
$ 8,015
Accumulated benefit obligation at end of year $ 7,759
$ 7,482
Funded status - liability $ (7,759 ) $ (8,015 )


($ in thousands)	2020		2019
Amounts recorded in stockholders’ equity
Net actuarial loss (gain)	$	3,024	$	2,402

Total amount recorded	$	3,024	$	2,402
Amount recorded, net taxes	$	2,178	$	1,730

($ in thousands) 2017 2016
Amounts recorded in stockholders’ equity
Net actuarial loss (gain) $ 1,935
$ 2,248
Prior service cost —
—
Total amount recorded $ 1,935
$ 2,248
Amount recorded, net taxes $ 1,161
$ 1,349

Other changes in benefit obligations recognized in other comprehensive income for ~~2017~~2020 and ~~2016 include~~2019 included the following components:


($ in thousands)	2017			2016			($ in thousands)	2020		2019
Net (gain) loss	$	(101	)	$	129		Net (gain) loss	$	708	$	486
Recognition of net actuarial gain or (loss)	(212		)	(343		)	Recognition of net actuarial gain or (loss)	(86)		(62)

Total changes	$	(313	)	$	(214	)	Total changes	$	622	$	424
Changes, net of taxes	$	188		$	638		Changes, net of taxes	$	448	$	305

The Company expects to recognize the following amounts as a component of net periodic pension costs during the next fiscal year ($ in thousands):

~~Amortization net actuarial gain or (loss) $ 63~~


Interest cost	$	(163)
Amortization of net (gain)/loss	(125)
Net periodic pension earnings/(cost)	$	(288)

Based on actuarial estimates, it is expected that annual SERP benefit payments will be as follows ($ in thousands):


2018		2019		2020		2021		2022		Thereafter
2021												2021	2022		2023		2024		2025		Thereafter
$	526	$	492	$	487	$	481	$	475	$	2,497	527	$	522	$	516	$	483	$	557	$	2,628

The weighted-average discount rate and rate of increase in future compensation levels used in determining the actuarial present value of projected benefits obligation was ~~3.40%~~2.00% and 0.0% for ~~2017, 3.90%~~2020, 2.95% and ~~3.5%~~0.0% for ~~2016,~~2019, and ~~4.15%~~4.05% and ~~3.5%~~0.00% for ~~2015.~~2018. Total pension and retirement expense was as follows for each of the years ended December 31:


($ in thousands)	2020		2019		2018
Cost components:

Interest cost	$	(229)	$	(303)	$	(268)
Net amortization and other	(86)		(62)		(223)
Total net periodic pension earnings/(cost)	$	(315)	$	(365)	$	(491)

107

($ in thousands) 2017 2016 2015
Cost components:
Service cost $ —
$ —
$ —
Interest cost 287
323
278
Net amortization and deferral 211
343
337
Total net periodic pension cost $ 498
$ 666
$ 615

16. REPORTING SEGMENTS AND RELATED INFORMATION

WeThe Company currently ~~operate in five~~operates 5 reporting segments: commercial/industrial real estate development, resort/residential real estate development, mineral resources, farming, and ranch operations. For further details of the revenue components within each reporting segment, see Results of Operations by Segment in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations".

Information pertaining to operating results of the Company's reporting segments are as ~~follows:~~

($ in thousands) December 31, 2017 December 31, 2016 December 31, 2015
Revenues
Real estate—commercial/industrial (1) $ 9,403
$ 9,438
$ 8,272
Mineral resources 5,983
14,153
15,116
Farming (2) 16,434
18,648
23,836
Ranch operations (1) 3,837
3,338
3,923
Segment revenues 35,657
45,577
51,147
Equity in unconsolidated joint ventures, net 4,227
7,098
6,324
Gain on sale of real estate —
1,044
—
Investment income 462
457
528
Other income 153
158
381
Total revenues and other income 40,499
54,334
58,380
Segment Profits (Losses)
Real estate—commercial/industrial (1) 2,874
2,338
1,578
Real estate—resort/residential (2) (1,955 ) (1,630 ) (2,349 )
Mineral resources 3,019
6,357
7,720
Farming 233
(25 ) 4,852
Ranch operations (1) (1,574 ) (2,396 ) (2,189 )
Segment profits (2) 2,597
4,644
9,612
Equity in unconsolidated joint ventures, net 4,227
7,098
6,324
Gain on sale of real estate —
1,044
—
Investment income 462
457
528
Other income 153
158
381
Corporate expenses (10,141 ) (12,550 ) (12,808 )
Income from operations before income taxes $ (2,702 ) $ 851
$ 4,037

(1) During the fourth quarter of 2015, the Company reclassified revenues and expenses previously classified as commercial/industrial into a new segment called Ranch Operations. Ranch operations is comprised of grazing leases, game management and other ancillary services supporting the ranch.
(2) Segment profits are revenues less operating expenses, excluding investment income and expense, corporate expenses, equity in earnings of unconsolidated joint ventures, and income taxes.

~~The revenue components~~follows for each of ~~the commercial/industrial real estate segment for~~ the years ended December ~~31 are as follows:~~

31:

($ in thousands) 2017 2016 2015
Pastoria Energy Facility Lease $ 3,854
$ 3,612
$ 3,694
TRCC Leasing 1,748
1,647
1,421
TRCC management fees and reimbursements 1,083
955
786
Commercial leases 652
917
851
Communication leases 808
806
784
Landscaping and other 783
791
736
Land Sale¹
475
710
—
Total commercial revenues $ 9,403
$ 9,438
$ 8,272
Equity in earnings of unconsolidated joint ventures 4,227
7,098
6,324
Commercial revenues & equity in earnings of unconsolidated joint ventures $ 13,630
$ 16,536
$ 14,596

(1) Revenue from land sale relates to a purchase and sale agreement entered into with a third party in 2016. Due to a performance obligation, the Company recognized a portion of the sale in 2016, with the remainder being recognized in 2017.


($ in thousands)	2020		2019		2018
Revenues
Real estate—commercial/industrial	$	9,536	$	16,792	$	8,970
Mineral resources	10,736		9,791		14,395
Farming	13,866		19,331		18,563
Ranch operations	3,692		3,609		3,691
Segment revenues	37,830		49,523		45,619
Equity in unconsolidated joint ventures, net	4,504		16,575		3,834
Gain on sale of real estate	1,331		—		—
Investment income	884		1,239		1,344
Total revenues and other income	44,549		67,337		50,738
Segment Profits (Losses)
Real estate—commercial/industrial	2,414		3,831		2,724
Real estate—resort/residential	(1,612)		(2,247)		(1,530)
Mineral resources	4,322		3,973		8,172
Farming	(1,237)		4,080		2,535
Ranch operations	(1,204)		(1,707)		(1,760)
Segment profits (1)	2,683		7,930		10,141
Equity in unconsolidated joint ventures, net	4,504		16,575		3,834
Gain on sale of real estate	1,331		—		—
Investment income	884		1,239		1,344
Other income	110		(1,824)		(59)
Corporate expenses	(9,430)		(9,361)		(9,705)
Income from operations before income taxes	$	82	$	14,559	$	5,555


(1) Segment profits are revenues less operating expenses, excluding investment income and expense, corporate expenses, equity in earnings of unconsolidated joint ventures, and income taxes.

Real estate - Commercial/Industrial

Commercial ~~lease~~ revenue consists of land and building leases to tenants at ~~our~~the Company's commercial retail and industrial developments, base and percentage rents from ~~our~~the PEF power plant lease, communication tower rents, land sales, and payments from easement leases. ~~On November 2016, we~~In 2020, the Company sold building and land, previously belonging to this segment, that was ~~part~~previously operated by a fast food tenant to its joint venture, Petro Travel Plaza LLC. The Company received a cash distribution of ~~our commercial~~$2,000,000 from the joint venture, and realized a Gain on Sale of Real Estate of $1,331,000.

108

The following table summarizes revenues, expenses and operating income from this segment ~~located in Rancho Santa Fe California~~ for ~~$4,700,000, recognizing a gain~~each of ~~$1,044,000, which is not included within~~ the years ended December ~~31, 2016 results above.~~31:


($ in thousands)	2020		2019		2018







Commercial revenues	$	9,536	$	16,792	$	8,970
Equity in earnings of unconsolidated joint ventures	4,504		16,575		3,834
Commercial revenues and equity in earnings of unconsolidated joint ventures	$	14,040	$	33,367	$	12,804
Commercial expenses	7,122		12,961		6,246
Operating results from commercial and unconsolidated joint ventures	$	6,918	$	20,406	$	6,558

The resort/residential real estate development segment is actively involved in the land entitlement and development process internally and through joint venture entities. The segment produced losses of ~~$1,955,000, $1,630,000,~~$1,612,000, $2,247,000, and ~~$2,349,000~~$1,530,000 during the years ended December 31, ~~2017, 2016,~~2020, 2019, and ~~2015,~~2018, respectively.

The mineral resources segment receives oil and mineral royalties from the exploration and development companies that extract or mine the natural resources from ~~our~~the Company's land ~~and receives~~along with revenue from water sales. The following table summarizes ~~these activities~~revenues, expenses and operating results from this segment for each of the years ended December 31:

($ in thousands) 2017 2016 2015
Oil and gas $ 1,659
$ 1,549
$ 2,661
Rock aggregate 1,072
1,164
870
Cement 1,614
1,299
1,263
Exploration leases 102
176
157
Water sales 1,254
9,601
10,165
Reimbursable 282
364
—
Total mineral resources revenues $ 5,983
$ 14,153
$ 15,116


($ in thousands)	2020		2019		2018






Mineral resources revenues	$	10,736	$	9,791	$	14,395
Mineral resources expenses	$	6,414	$	5,818	$	6,223
Operating results from mineral resources	$	4,322	$	3,973	$	8,172

The farming segment produces revenues from the sale of wine grapes, almonds, pistachios and hay. The ~~revenue components of the farming~~following table summarizes revenues, expenses and operating results from this segment ~~were as follows~~ for each of the ~~year~~years ended December 31:

($ in thousands) 2017 2016 2015
Almonds $ 6,327
$ 7,373
$ 12,238
Pistachios 4,523
6,199
6,425
Wine grapes 4,131
3,744
4,338
Hay 456
520
749
Total crop proceeds 15,437
17,836
23,750
Other farming revenues 997
812
86
Total farming revenues $ 16,434
$ 18,648
$ 23,836


($ in thousands)	2020		2019		2018






Farming revenues	$	13,866	$	19,331	$	18,563
Farming expenses	$	15,103	$	15,251	$	16,028
Operating results from farming	$	(1,237)	$	4,080	$	2,535

Ranch operations consists of game management revenues and ancillary land uses such as grazing leases and filming. ~~Within game management we operate our High Desert Hunt Club, a premier upland bird hunting club.~~ The ~~High Desert Hunt Club offers over 6,400 acres~~following table summarizes revenues, expenses and ~~35 hunting fields,~~operating results from this segment for each field providing different terrain and challenges. The hunting season runs from mid-October through March. We sell individual hunting packages as well as memberships. Ranch operations also includes Hunt at Tejon, which offers a wide variety of ~~guided big game hunts including trophy Rocky Mountain elk, deer, turkey and wild pig. We offer guided hunts and memberships for both~~ the ~~Spring and Fall hunting seasons.~~years ended December 31:


($ in thousands)	2020		2019		2018




Ranch operations revenues	$	3,692	$	3,609	$	3,691
Ranch operations expenses	$	4,896	$	5,316	$	5,451
Operating results from ranch operations	$	(1,204)	$	(1,707)	$	(1,760)

109

($ in thousands) 2017 2016 2015
Game management $ 1,291
$ 1,296
$ 1,658
Grazing 1,677
1,187
1,484
High Desert Hunt Club 351
334
351
Filming and other 518
521
430
Total ranch operations revenues $ 3,837
$ 3,338
$ 3,923

Information pertaining to assets of the Company’s reporting segments is as follows for each of the years ended December 31:


($ in thousands)	Identifiable Assets		Depreciation and Amortization		Capital Expenditures
2020
Real estate - commercial/industrial	$	73,317	$	486	$	7,128
Real estate - resort/residential	297,052		39		9,764
Mineral resources	57,797		1,384		25
Farming	38,090		1,989		5,145
Ranch operations	2,442		482		91
Corporate	67,651		558		106
Total	$	536,349	$	4,938	$	22,259
2019
Real estate - commercial/industrial	$	76,814	$	517	$	8,690
Real estate - resort/residential	286,801		51		12,811
Mineral resources	55,049		1,371		37
Farming	41,258		1,909		3,362
Ranch operations	2,624		526		213
Corporate	76,876		662		109
Total	$	539,422	$	5,036	$	25,222
2018
Real estate - commercial/industrial	$	65,929	$	651	$	5,225
Real estate - resort/residential	273,620		58		13,459
Mineral resources	54,144		1,372		171
Farming	40,835		1,897		3,166
Ranch operations	2,973		536		102
Corporate	91,547		910		457
Total	$	529,048	$	5,424	$	22,580

($ in thousands)
Identifiable
Assets
Depreciation and Amortization
Capital
Expenditures
2017
Real estate - commercial/industrial $ 63,065
$ 615
$ 4,638
Real estate - resort/residential 258,697
63
14,230
Mineral resources 48,305
1,363
356
Farming 36,317
996
2,129
Ranch operations 3,625
601
220
Corporate 108,190
913
136
Total $ 518,199
$ 4,551
$ 21,709
2016
Real estate - commercial/industrial $ 65,290
$ 585
$ 5,196
Real estate - resort/residential 243,963
77
16,013
Mineral resources 45,066
1,357
2,161
Farming 36,895
1,150
2,006
Ranch operations 3,893
607
523
Corporate 44,594
773
481
Total $ 439,701
$ 4,549
$ 26,380
2015
Real estate - commercial/industrial $ 67,550
$ 552
$ 7,023
Real estate - resort/residential 228,064
71
16,404
Mineral resources 46,025
1,501
1,199
Farming 32,542
929
2,583
Ranch operations 4,313
377
299
Corporate 53,425
1,660
540
Total $ 431,919
$ 5,090
$ 28,048

~~Segment profits (losses) are total revenues less operating expenses, excluding interest income, corporate expenses, equity in earnings of unconsolidated joint ventures, and interest expense.~~ Identifiable assets by segment include both assets directly identified with those operations and an allocable share of jointly used assets. Corporate assets consist primarily of cash and cash equivalents, marketable securities, deferred income taxes, and land and buildings. Land is valued at cost for acquisitions since 1936. Land acquired in 1936, upon organization of the Company, is stated on the basis carried by the Company’s predecessor.

17. INVESTMENT IN UNCONSOLIDATED AND CONSOLIDATED JOINT VENTURES

The Company maintains investments in joint ventures. The Company accounts for its investments in unconsolidated joint ventures using the equity method of accounting unless the venture is a variable interest entity, or VIE, and meets the requirements for consolidation. The Company’s investment in its unconsolidated joint ventures at December 31, ~~2017~~2020 was ~~$30,031,000.~~$33,524,000. The equity in the income of the unconsolidated joint ventures was ~~$4,227,000~~$4,504,000 for the twelve months ended December 31, ~~2017.~~2020. The unconsolidated joint ventures have not been consolidated as of December 31, ~~2017,~~2020, because the

Company does not control the investments. The Company’s current joint ventures are as follows:

•Petro Travel Plaza Holdings LLC – TA/Petro is an unconsolidated joint venture with TravelCenters of America ~~LLC~~Inc. for the development and management of travel plazas and convenience stores. The Company has 50% voting rights and shares 60% of profit and losses in this joint venture. It houses multiple commercial eating establishments as well as diesel and gasoline operations in TRCC. The Company does not control the investment due to ~~its~~it having only 50% voting rights, and because ~~our~~the partner in the joint venture is the managing partner and performs all of the day-to-day operations and has significant decision-making authority regarding key business components such as fuel inventory and pricing at the facility. At December 31, ~~2017,~~2020, the Company had an equity investment balance of ~~$17,422,000~~$23,358,000 in this joint venture.

◦On April 17, 2020, the Company sold the land and a building formerly leased to a tenant operating a fast food restaurant, to Petro. The Company received cash proceeds of $2,000,000 from Petro, and realized a gain of $1,331,000 under ASC 610-20, "Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets."

110

◦In December 2019, the Company completed the shell and core of a new 4,900 square foot multi-tenant building at TRCC-East, with a fair value of $2,805,000, and contributed the building and land to TA/Petro. The contribution met the criteria of a sale under ASC Topic 606, "Revenue from Contracts with Customers." As such, the Company recognized profit of $334,000 and deferred $501,000 of profit in accordance with ASC Topic 323, "Investment - Equity Method and Joint Ventures" on the date the assets were contributed.

•Majestic Realty Co. – Majestic Realty Co., or Majestic, is a privately-held developer and owner of master planned business parks in the United States. The Company partnered with Majestic to form ~~two~~3 50/50 joint ventures to acquire, develop, manage, and operate industrial real estate at TRCC. The partners have equal voting rights and equally share in the profit and loss of the joint venture. The Company and Majestic guarantee the performance of all outstanding debt. At December 31, ~~2017,~~2020, the Company's investment in these joint ventures was ~~$0,~~$1,753,000, which includes ~~our~~an outside basis.

◦

In August 2016, we partnered with Majestic to form TRC-MRC 2, LLC to acquire, lease, and maintain a fully occupied warehouse at TRCC-West. The partnership acquired the 651,909 square foot building for $24,773,000 and was largely financed through a $21,080,000 promissory note guaranteed by both partners. The note matures in September 2020 and currently has an outstanding principal balance of $21,080,000. Since inception, we have received excess distributions resulting in a deficit balance of $496,000. In accordance with the applicable accounting guidance, these excess distributions are reclassified to the liabilities section of our consolidated balance sheet. We will continue to record our equity in the net income as a debit to the investment account, and if it becomes positive, it will again be shown as an asset on our consolidated balance sheet. If it becomes obvious that any excess distribution may not be returned (upon joint venture liquidation or otherwise), we will recognize any balance classified as a liability as income immediately.

◦

In September 2016, TRC-MRC 1, LLC was formed to develop and operate an approximately 480,480 square foot industrial building at TRCC-East. The joint venture completed construction of the building during the third quarter of 2017. Since inception of the joint venture, we received distributions of $1,952,000 representing excess distributions resulting in a deficit balance of $3,000. In accordance with the applicable accounting guidance, these excess distributions are reclassified to the liabilities section of our consolidated balance sheet. We will continue to record our equity in the net income as a debit to the investment account, and if it becomes positive, it will again be shown as an asset on our consolidated balance sheet. If it becomes obvious that any excess distribution may not be returned (upon joint venture liquidation or otherwise), we will recognize any balance classified as a liability as income immediately. The joint venture currently has borrowings under a $25,000,000 construction loan of which $19,433,000 has been drawn.

◦In November 2018, TRC-MRC 3, LLC was formed to pursue the development, construction, leasing, and management of a 579,040 square foot industrial building on the Company's property at TRCC-East. TRC-MRC 3, LLC qualified as a VIE from inception, but the Company is not the primary beneficiary therefore does not consolidate TRC-MRC 3, LLC in its financial statements. The construction of the building was completed in the fourth quarter of 2019, and the Company has leased 100% of the rentable space to two tenants. In March 2019, the joint venture entered into a promissory note with a financial institution to finance the construction of the building. The note matures on May 1, 2030 and had an outstanding principal balance of $35,785,000 as of December 31, 2020. On April 1, 2019, the Company contributed land with a fair value of $5,854,000 to TRC-MRC 3, LLC in accordance with the limited liability agreement. The land contribution met the criteria of a land sale under ASC Topic 606, "Revenue from Contracts with Customers." As such, the Company recognized profit of $1,537,000 and deferred $1,537,000 of profit in accordance with ASC Topic 323, "Investment - Equity Method and Joint Ventures" on the date the land was contributed. The Company's investment in this joint venture was $1,753,000 as of December 31, 2020.

◦In August 2016, the Company partnered with Majestic to form TRC-MRC 2, LLC to acquire, lease, and maintain a fully occupied warehouse at TRCC-West. The partnership acquired the 651,909 square foot building for $24,773,000 and was largely financed through a promissory note guaranteed by both partners. The promissory note was refinanced on June 1, 2018 with a $25,240,000 promissory note. The note matures on July 1, 2028, and currently has an outstanding principal balance of $23,869,000. Since inception, the Company has received excess distributions resulting in a deficit balance of $1,867,000. In accordance with the applicable accounting guidance, these excess distributions are reclassified to the liabilities section of the consolidated balance sheet. The Company will continue to record its equity in the net income as a debit to the investment account, and if it becomes positive, it will again be shown as an asset on the consolidated balance sheet. If it becomes obvious that any excess distribution may not be returned (upon joint venture liquidation or otherwise), the Company will recognize any balance classified as a liability as income.

◦In September 2016, TRC-MRC 1, LLC was formed to develop and operate an approximately 480,480 square foot industrial building at TRCC-East. The joint venture completed construction of the building during the third quarter of 2017. Since inception of the joint venture, the Company has received excess distributions resulting in a deficit balance of $1,194,000. In accordance with the applicable accounting guidance, these excess distributions are reclassified to the liabilities section of the consolidated balance sheet. The Company will continue to record its equity in the net income as a debit to the investment account, and if it becomes positive, it will again be shown as an asset on the consolidated balance sheet. If it becomes obvious that any excess distribution may not be returned (upon joint venture liquidation or otherwise), the Company will recognize any balance classified as a liability as income. The joint venture refinanced its construction loan in December 2018 with a mortgage loan. The original principal balance of the mortgage loan was $25,030,000, of which $23,985,000 was outstanding at December 31, 2020.

•Rockefeller Joint Ventures – The Company has ~~three~~2 joint ventures with Rockefeller Group Development Corporation or ~~Rockefeller.~~Rockefeller as of December 31, 2020. At December 31, ~~2017,~~2020, the Company’s combined equity investment balance in these ~~three~~ joint ventures was ~~$12,609,000.~~

◦

Two joint ventures are for the development of buildings on approximately 91 acres and are part of an agreement for the potential development of up to 500 acres of land in TRCC that are tied to Foreign Trade Zone designation. The Company owns a 50% interest in each of the joint ventures. Currently the Five West Parcel LLC joint venture owns and leases a 606,000 square foot building to Dollar General which has now been extended to April 2022, and includes an option to extend for an additional three years. For operating revenue, please see the following table. The Five West Parcel joint venture currently has an outstanding term loan with a balance of $9,711,000 that matures on May 5, 2022. The Company and Rockefeller guarantee the performance of the debt. The second of these joint ventures, 18-19 West LLC, was formed in August 2009 through the contribution of 61.5 acres of land by the Company, which is being held for future development. Both of these joint ventures are being accounted for under the equity method due to both members having significant participating rights in the management of the ventures.

$8,413,000.

◦The first joint venture, 18-19 West LLC, was formed in August 2009 through the contribution of 61.5 acres of land by the Company, which is being held for future development. This joint venture is part of an agreement for the potential development of up to 500 acres of land in TRCC that are tied to Foreign Trade Zone designation. The Company owns a 50% interest in this joint ventures, and the joint ventures is being accounted for under the equity method due to both members having significant participating rights in the management of the ventures.

◦

The third joint venture is the TRCC/Rock Outlet Center LLC joint venture that was formed during the second quarter of 2013 to develop, own, and manage a net leasable 326,000 square foot outlet center on land at TRCC-East. The cost of the outlet center was approximately $87,000,000 and was funded through a construction loan for up to 60% of the costs and the remaining 40% was through equity contributions from the two members. The Company controls 50% of the voting interests of TRCC/Rock Outlet Center LLC, thus it does not control by voting interest alone. The Company is the named managing member, as such we considered the presumption that a managing member controls the limited liability company. The managing member's responsibilities relate to the routine day-to-day activities of TRCC/Rock Outlet Center LLC. However, all operating decisions during development and operations, including the setting and monitoring of the budget, leasing, marketing, financing and selection of the contractor for any of the project's construction, are jointly made by both members of the joint venture. Therefore, the Company concluded that both members have significant participating rights that are sufficient to overcome the presumption of the Company controlling the joint venture through it being named the managing member. Therefore, the investment in TRCC/Rock Outlet Center LLC is being accounted for under the equity method. The TRCC/Rock Outlet Center LLC joint venture is separate from the aforementioned agreement to potentially develop up to 500 acres of land in TRCC. During the fourth quarter of 2013, the TRCC/Rock Outlet Center LLC joint venture entered into a construction line of credit agreement with a financial institution for $52,000,000 that, as of December 31, 2017, had an outstanding balance of $48,769,000. The Company and Rockefeller guarantee the performance of the debt.

111

▪The Company's 18-19 West LLC joint venture has a purchase option in place with the third-party who purchased the Five West building and land (noted below) to purchase lots 18 and 19 at a price of $13.8 million through the option period ending May 21, 2021. If the option is extended to November 21, 2021, the price increases to $15.2 million. The land option expires in the fourth quarter of 2021.

◦The Company was a member of the Five West Parcel LLC joint venture, which owned and leased a 606,000 square foot building, the joint venture's primary asset, to Dollar General. The building was sold to a third party in November 2019 for a purchase price of $29,088,000, realizing a gain of $17,537,000. The outstanding term loan of the joint venture was paid off upon the sale. This joint venture was dissolved during the fourth quarter of 2020.

◦The second joint venture is the TRCC/Rock Outlet Center LLC joint venture that was formed during the second quarter of 2013 to develop, own, and manage a net leasable 326,000 square foot outlet center on land at TRCC-East. The cost of the outlet center was approximately $87,000,000 and was funded through a construction loan for up to 60% of the costs and the remaining 40% was through equity contributions from the 2 members. The Company controls 50% of the voting interests of TRCC/Rock Outlet Center LLC; thus, it does not control by voting interest alone. The Company is the named managing member. The managing member's responsibilities relate to the routine day-to-day activities of TRCC/Rock Outlet Center LLC. However, all operating decisions during the development period and ongoing operations, including the setting and monitoring of the budget, leasing, marketing, financing and selection of the contractor for any construction, are jointly made by both members of the joint venture. Therefore, the Company concluded that both members have significant participating rights that are sufficient to overcome the presumption of the Company controlling the joint venture through it being named the managing member. Therefore, the investment in TRCC/Rock Outlet Center LLC is being accounted for under the equity method. The TRCC/Rock Outlet Center LLC joint venture has a term note with a financial institution that matures on September 5, 2021. As of December 31, 2020, the outstanding balance of the term note was $34,845,000. The Company and Rockefeller guarantee the performance of the debt.

•Centennial Founders, LLC – Centennial Founders, LLC, or CFL, is a joint venture that was initially formed with TRI Pointe Homes, Lewis Investment Company and CalAtlantic ~~that was organized~~ to pursue the entitlement and development of land that the Company owns in Los Angeles County. Based on the Second Amended and Restated Limited Company Agreement of ~~Centennial Founders, LLC~~CFL and the change in control and funding that resulted from the amended agreement, ~~Centennial Founders, LLC~~CFL qualified as a VIE, beginning in the third quarter of 2009, and the Company was determined to be the primary beneficiary. As a result, ~~Centennial Founders, LLC~~CFL has been consolidated into ~~our~~the financial statements beginning in that quarter. ~~Our~~The remaining partners have retained a noncontrolling interest in the joint venture. On November 30, 2016, CFL and Lewis entered a Redemption and Withdrawal Agreement, ~~(the Agreement),~~ whereby Lewis irrevocably and unconditionally withdrew as a member of CFL, and CFL redeemed Lewis' entire interest for no consideration. As a result, ~~our~~the noncontrolling interest balance was reduced by $11,039,000. On December 31, 2018, CFL and CalAtlantic entered a Redemption and Withdrawal Agreement, whereby CalAtlantic irrevocably and unconditionally withdrew as a member of CFL, and CFL redeemed CalAtlantic's entire interest for no consideration. As a result, the noncontrolling interest balance was reduced by $13,172,000. At December 31, ~~2017,~~2020, the Company owned ~~89.28%~~92.85% of ~~Centennial Founders, LLC.~~CFL.

The Company’s investment balance in its unconsolidated joint ventures differs from its respective capital accounts in the respective joint ventures. The differential represents the difference between the cost basis of assets contributed by the Company and the agreed upon contribution value of the assets contributed.

112

Condensed balance sheet information and statement of operations of the Company’s unconsolidated joint ventures are as follows:

Balance Sheet Information as of December 31:


																					Joint Venture												TRC
	Joint Venture															TRC					Assets				Borrowings				Equity				Investment In
	Assets				Borrowings						Equity					Investment In					2020		2019		2020		2019		2020		2019		2020		2019
	2017		2016		2017			2016			2017			2016		2017		2016
Petro Travel Plaza Holdings, LLC	$	67,435	$	68,652	$	(15,279	)	$	(15,275	)	$	49,705		$	51,287	$	17,422	$	18,372
Petro Travel Plaza Holdings LLC																				Petro Travel Plaza Holdings LLC	$	77,516	$	77,835	$	(15,291)	$	(15,287)	$	59,597	$	60,061	$	23,358	$	23,636
Five West Parcel, LLC	15,738		16,614		(9,711		)	(10,251		)	5,972			6,043		2,802		2,837		Five West Parcel, LLC	0		694		0		0		0		648		0		140
18-19 West, LLC	4,704		4,623		—			—			4,704			4,621		1,782		1,741		18-19 West, LLC	4,733		4,849		0		0		4,483		4,600		1,672		1,730
TRCC/Rock Outlet Center, LLC	81,610		86,056		(48,769		)	(50,712		)	32,177			34,523		8,025		9,198		TRCC/Rock Outlet Center, LLC	65,475		69,459		(34,845)		(38,909)		29,608		29,688		6,741		6,781
TRC-MRC 1, LLC	25,380		199		(19,433		)	—			4,541			199		—		224		TRC-MRC 1, LLC	26,502		28,673		(23,985)		(24,542)		2,059		3,623		0		0
TRC-MRC 2, LLC	20,336		23,965		(21,080		)	(21,080		)	(992		)	2,592		—		1,431		TRC-MRC 2, LLC	20,191		20,026		(23,869)		(24,455)		(7,741)		(7,094)		0		0
TRC-MRC 3, LLC																				TRC-MRC 3, LLC	38,502		37,292		(35,785)		(28,061)		(2,001)		6,052		1,753		5,953
Total	$	215,203	$	200,109	$	(114,272	)	$	(97,318	)	$	96,107		$	99,265	$	30,031	$	33,803	Total	$	232,919	$	238,828	$	(133,775)	$	(131,254)	$	86,005	$	97,578	$	33,524	$	38,240

Centennial Founders, LLC	$	89,721	$	86,099	$	—		$	—		$	88,862		$	85,281	Consolidated				Centennial Founders, LLC	$	98,898	$	96,415	$	0	$	0	$	98,565	$	96,143	Consolidated

Condensed Statement of Operations Information as of December 31:


																										Joint Venture												TRC
	Joint Venture															TRC										Revenues						Earnings(Loss)						Equity in Earnings (Loss)
	Revenues						Earnings(Loss)									Equity in Earnings (Loss)										2020		2019		2018		2020		2019		2018		2020		2019		2018
	2017		2016		2015		2017			2016			2015			2017			2016			2015
Petro Travel Plaza Holdings, LLC	$	119,463	$	114,331	$	115,313	$	10,418		$	12,077		$	10,629		$	6,251		$	7,246		$	6,377
Petro Travel Plaza Holdings LLC																									Petro Travel Plaza Holdings LLC	$	86,331	$	117,708	$	119,083	$	9,536	$	14,684	$	9,672	$	5,722	$	8,810	$	5,803
Five West Parcel, LLC	2,824		2,887		3,408		905			1,029			1,084			452			$	515		$	542		Five West Parcel, LLC	0		2,648		2,731		(6)		18,239		778		(2)		9,119		389
18-19 West, LLC	11		10		20		(97		)	(129		)	(108		)	(48		)	$	(65	)	$	(54	)	18-19 West, LLC	6		15		13		(136)		(107)		(102)		(68)		(53)		(51)
TRCC/Rock Outlet Center, LLC¹	9,615		9,542		8,988		(2,347		)	(367		)	(1,082		)	(1,173		)	$	(184	)	$	(541	)	TRCC/Rock Outlet Center, LLC1	5,495		6,278		6,418		(4,180)		(3,843)		(4,645)		(2,090)		(1,921)		(2,323)
TRC-MRC 1, LLC	—		—		—		(3		)	—			—			(2		)	$	—		$	—		TRC-MRC 1, LLC	3,123		3,067		1,323		129		91		(498)		64		46		(249)
TRC-MRC 2, LLC²	3,655		1,178		—		(2,505		)	(828		)	—			(1,253		)	(414		)	—			TRC-MRC 2, LLC2	4,087		4,023		3,981		1,357		1,151		529		678		575		265
TRC-MRC 3, LLC																									TRC-MRC 3, LLC	$	4,032	$	0	$	0	$	399	$	(2)	$	0	$	200	$	(1)	$	0
	$	135,568	$	127,948	$	127,729	$	6,371		$	11,782		$	10,523		$	4,227		$	7,098		$	6,324			$	103,074	$	133,739	$	133,549	$	7,099	$	30,213	$	5,734	$	4,504	$	16,575	$	3,834

Centennial Founders, LLC	$	456	$	520	$	749	$	(144	)	$	(246	)	$	(140	)	Consolidated									Centennial Founders, LLC	$	419	$	469	$	297	$	(103)	$	(20)	$	(249)	Consolidated

(1) Revenues for TRCC/Rock Outlet Center are presented net of non-cash tenant allowance amortization of $1.8 million, $1.9 million, and $2.1 million as of December 31, 2017, 2016, and 2015, respectively.
(2)Earnings for TRC-MRC 2, LLC include non-cash amortization of purchase accounting adjustments related to in-place leases of $4.0 million and $1.2 million as of December 31, 2017 and 2016, respectively, that will be amortized over the remaining lease period.
(1) Revenues for TRCC/Rock Outlet Center are presented net of non-cash tenant allowance amortization of $1.3 million, $1.7 million, and $1.7 million for the years ended December 31, 2020, 2019 and 2018, respectively.																									(1) Revenues for TRCC/Rock Outlet Center are presented net of non-cash tenant allowance amortization of $1.3 million, $1.7 million, and $1.7 million for the years ended December 31, 2020, 2019 and 2018, respectively.
(2) Earnings for TRC-MRC2, LLC include non-cash amortization of purchase accounting adjustments related to in-place leases of $0.0 million, $0.2 million and $0.8 million for the years ended December 31, 2020, 2019 and 2018, respectively.																									(2) Earnings for TRC-MRC2, LLC include non-cash amortization of purchase accounting adjustments related to in-place leases of $0.0 million, $0.2 million and $0.8 million for the years ended December 31, 2020, 2019 and 2018, respectively.

18. RELATED PARTY TRANSACTIONS

TCWD is a not-for-profit governmental entity, organized on December 28, 1965, pursuant to Division 13 of the Water Code, State of California. TCWD is a landowner voting district, which requires an elector, or voter, to be an owner of land located within the district. TCWD was organized to provide the water needs for future municipal and industrial development. The Company is the largest landowner and taxpayer within TCWD. The Company has a water service contract with TCWD that entitles usit to receive all of TCWD’s State Water Project entitlement and all of TCWD’s banked water. TCWD is also entitled to make assessments of all taxpayers within the district, to the extent funds are required to cover expenses and to charge water users within the district for the use of water. From time to time, ~~we transact~~the Company transacts with TCWD in the ordinary course of business. ~~We believe that~~

113

The Company has water contracts with WRMWSD for SWP water deliveries to its agricultural and municipal/industrial operations in the San Joaquin Valley. The terms ~~negotiated~~of these contracts extend to 2035. Under the contracts, the Company is entitled to annual water for ~~all transactions are no less favorable than those that could be negotiated in arm’s length transactions.~~5,496 acres of land, or 5,749 acre-feet of water subject to SWP allocations. In December 2019, the Company's Executive Vice President and Chief Operating Officer became one of nine directors at WRMWSD. As of December 31, 2020 and December 31, 2019, the Company paid $5,181,000 and $3,299,000 for these water contracts and related costs, respectively.

19. UNAUDITED QUARTERLY OPERATING RESULTS

The following is a tabulation of unaudited quarterly operating results for the years indicated:


($ in thousands, except per share)	Total Revenue¹		Segment Profit (Loss)			Net (Loss) Income			Net (Loss) Income attributable to Common Stockholders			Net (Loss) Income Per Share			Net (Loss) Income, Per Share attributable to Common Stockholders²			($ in thousands, except per share)	Total Revenue1		Segment Profit (Loss)		Net Income (Loss)		Net Income (Loss) attributable to Common Stockholders		Net Income (Loss) Per Share		Net Income (Loss), Per Share attributable to Common Stockholders2
2017
2020																		2020
First Quarter	$	5,985	$	(811	)	$	(1,913	)	$	(1,902	)	$	(0.09	)	$	(0.09	)	First Quarter	$	10,541	$	770	$	(684)	$	(682)	$	(0.03)	$	(0.03)
Second Quarter	6,311		715			(1		)	26			—			—			Second Quarter	4,926		(289)		(326)		(333)		(0.01)		(0.01)
Third Quarter	12,051		720			(26		)	(22		)	—			—			Third Quarter	13,968		1,294		384		398		0.02		0.02
Fourth Quarter	11,925		1,973			361			343			0.01			0.01			Fourth Quarter	9,279		908		(121)		(123)		0		0
	$	36,272	$	2,597		$	(1,579	)	$	(1,555	)								$	38,714	$	2,683	$	(747)	$	(740)
2016
2019																		2019
First Quarter	$	13,122	$	3,186		$	1,195		$	1,209		$	0.06		$	0.06		First Quarter	$	11,011	$	1,442	$	124	$	119	$	0	$	0
Second Quarter	7,006		56			(728		)	(688		)	(0.04		)	(0.03		)	Second Quarter	9,275		895		709		707		0.03		0.03
Third Quarter	13,223		1,187			317			324			0.02			0.02			Third Quarter	9,951		(708)		37		47		0		0
Fourth Quarter	12,841		215			(269		)	(287		)	(0.01		)	(0.01		)	Fourth Quarter	20,525		6,301		9,709		9,707		0.37		0.37
	$	46,192	$	4,644		$	515		$	558									$	50,762	$	7,930	$	10,579	$	10,580

(1) Includes investment ~~income and other~~ income.

(2) Net income (loss) per share on a diluted basis. Quarterly rounding of per share amounts can result in a variance from the reported annual amount.

The fourth quarter 2019 amount includes gain realized by Five West Parcel LLC joint venture on building sale (see Note 17).

~~105~~

114




	Page
Management’s Report on Internal Control Over Financial Reporting		6771
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting		6872
Report of Independent Registered Public Accounting Firm		6973
Consolidated Balance Sheets - Years Ended December 31, ~~2017~~20 20 and ~~2016~~201 9		7076
Consolidated Statements of Operations - Years Ended December 31, ~~2017, 2016,~~20 20 , 201 9 , and ~~2015~~201 8		7177
Consolidated Statements of Comprehensive (Loss) Income - Years Ended December 31, ~~2017, 2016~~20 20 , 201 9 and ~~2015~~2018		7278
Consolidated Statements of Equity - Years Ended December 31, ~~2017, 2016~~20 20 , 201 9 and ~~2015~~201 8		7379
Consolidated Statements of Cash Flows - Years Ended December 31, ~~2017, 2016~~20 20 , 201 9 and ~~2015~~2018		7480
Notes to Consolidated Financial Statements		7582



	2017				2016
Quarter	High		Low		High		Low
First	$	26.04	$	20.58	$	21.58	$	16.85
Second	$	24.18	$	19.90	$	24.90	$	19.50
Third	$	21.94	$	19.67	$	26.99	$	22.00
Fourth	$	22.81	$	18.59	$	27.99	$	21.13



	December 31, 2016					December 31, 2015					Change
($ in thousands)	Revenue		Quantity Sold²	Average Price		Revenue		Quantity Sold²	Average Price		Revenue			Quantity Sold		Average Price
ALMONDS (lbs.)
Current year crop	$	5,282	2,106	$	2.51	$	7,377	2,210	$	3.34	$	(2,095	)	(104	)	$	(0.83	)
Prior year crops	1,363		454	3.00		3,601		916	$	3.93	(2,238		)	(462	)	(0.93		)
Prior crop price adjustment	653					1,260					(607		)
Signing bonus	75					—					75
Subtotal Almonds¹	$	7,373	2,560	$	2.60	$	12,238	3,126	$	3.51	$	(4,865	)	(566	)	$	(0.91	)
PISTACHIOS (lbs.)
Current year crop	$	5,844	2,883	$	2.03	$	183	64	$	2.86	$	5,661		2,819		$	(0.83	)
Prior year crops	274		47	5.83		1,271		214	5.94		(997		)	(167	)	(0.11		)
Prior crop price adjustment	81					2,271					(2,190		)
Insurance	—					2,700					(2,700		)
Subtotal Pistachios¹	$	6,199	2,930	$	2.09	$	6,425	278	$	5.23	$	(226	)	2,652		$	(3.14	)
WINE GRAPES (tons)
Current year crop	$	3,725	14	$	266.07	$	4,338	16	$	271.13	$	(613	)	(2	)	$	(5.06	)
Insurance	19					—					19
Subtotal Wine Grapes	$	3,744	14	$	266.07	$	4,338	16	$	271.13	$	(594	)	(2	)	$	(5.06	)
Other
Hay	$	520				$	749				$	(229	)
Other farming revenues	812					86					726
Total farming revenues	$	18,648				$	23,836				$	(5,188	)

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.



Amortization net actuarial gain	$	64
Amortization prior service cost	$	—