TEJON RANCH CO

Previous wording

This Quarterly Report on Form 10-Q contains forward-looking statements, including without limitation statements regarding strategic alliances, the almond, pistachio, olives and grape industries, the future plantings of permanent crops, future yields, prices and water availability for the Company's crops and real estate operations, future prices, production and demand for oil and other minerals, future development of the Company's property, future revenue and income of its jointly-owned travel plaza and other joint venture operations, the adequacy of future cash flows to fund our operations, future revenue and income residential leasing, the adequacy 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 and accounts receivable, our outstanding indebtedness, ongoing negotiations and other future events and conditions. In some cases, these statements are identifiable through use of words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “target,” “can,” “could,” “may,” “will,” “should,” “would,” “likely,” and similar expressions such as “in the process” and “well-positioned.” 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 performance, 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, weather, market, geopolitical 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 several reasons, including those described above and in the section entitled “Risk Factors” in our most recent Annual Report on Form 10-K.

Current wording

This Quarterly Report on Form 10-Q contains forward-looking statements, including without limitation statements regarding strategic alliances, the almond, pistachio, olives and grape industries, the future plantings of permanent crops, future yields, prices and water availability for the Company's crops and real estate operations, future prices, production and demand for oil and other minerals, future development of the Company's property, future revenue and income of its jointly-owned travel plaza and other joint venture operations, the adequacy of future cash flows to fund our operations, future revenue and income residential leasing, the adequacy 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 and accounts receivable, our outstanding indebtedness, ongoing negotiations and other future events and conditions. In some cases, these statements are identifiable through use of words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “target,” “can,” “could,” “may,” “will,” “should,” “would,” “likely,” and similar expressions such as “in the process” “designed to,” “well positioned,” 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 performance, 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, weather, market, geopolitical 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, and the timing and outcome of regulatory or litigation processes. No assurance can be given that the actual future results will not differ materially from the forward-looking statements that we make for several reasons, including those described above and in Part I, Item 1A“Risk Factors” of our most recent Annual Report on Form 10-K.

Previous wording

We currently operate in five reporting segments: commercial/industrial real estate development; resort/residential real estate development; mineral resources; farming; and ranch operations.

Current wording

We currently operate in six reporting segments: commercial/industrial real estate development; multifamily; resort/residential real estate development; mineral resources; farming; and ranch operations.

Previous wording

At the heart of the commercial/industrial real estate development segment is TRCC, a 20 million square foot mixed-use development on Interstate 5 just north of the Los Angeles basin. TRCC continues to serve as a model for long-term value creation, having generated more than $110 million in cumulative cash flow from commercial and industrial development since 2000. With the launch of Terra Vista at Tejon, TRCC is now evolving into a vibrant residential and employment hub, enhancing the interconnectivity of our mixed-use master planned community strategy. Over eight million square feet of industrial, commercial and retail space has already been developed or is under development, including distribution centers for IKEA, Caterpillar, Nestlé, Famous Footwear, L'Oreal, Camping World, Sunrise Brands, Dollar General and RectorSeal. TRCC sits on both sides of Interstate 5, giving distributors immediate access to the West Coast’s principal north-south goods movement corridor.

Current wording

At the heart of the commercial/industrial real estate development segment is TRCC, a 20 million square foot mixed-use development on Interstate 5 just north of the Los Angeles basin. With the completion of Terra Vista at Tejon construction, TRCC is now evolving into a vibrant residential and employment hub, enhancing the interconnectivity of our mixed-use master planned community strategy. Over eight million square feet of industrial, commercial and retail space has already been developed or is under development, including distribution centers for IKEA, Caterpillar, Nestlé, Famous Footwear, L'Oreal, Camping World, Sunrise Brands, Dollar General and RectorSeal. TRCC sits on both sides of Interstate 5, giving distributors immediate access to the West Coast’s principal north-south goods movement corridor.

Previous wording

•Five joint ventures with Majestic Realty Co., or Majestic, to develop, manage, and operate five industrial buildings comprising of 2.8 million square feet of industrial space all within TRCC and all fully leased.

Current wording

•Five joint ventures with Majestic Realty Co., or Majestic, to develop, manage, and operate five industrial buildings comprised of 2.8 million square feet of industrial space all within TRCC and all fully leased.

Previous wording

•The Centennial development is a 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 approximately 19,333 homes and 10.1 million square feet of commercial development, including nearly 3,500 affordable units. See Note 11 (Commitments and Contingencies) of the Notes to Unaudited Consolidated Financial Statements for additional information related to current litigation;

Current wording

•The Centennial development is a 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 approximately 19,333 homes and 10.1 million square feet of commercial development, including nearly 3,500 affordable units. See Note 11 (Commitments and Contingencies) of the Notes to Unaudited Consolidated Financial Statements for additional information related to current progress on re-entitlement;

Previous wording

The farming segment produces revenues from the sale of wine grapes, almonds, and pistachios. As part of our crop segmentation strategy within the farming division, we have initiated the planting of an olive orchard to diversify our commodity portfolio and better position the Company for shifts in market conditions.

Current wording

Our farming segment produces revenues from the sale of wine grapes, almonds, and pistachios. As part of our crop segmentation strategy within the farming division, we have initiated the planting of an olive orchard to diversify our commodity portfolio and better position the Company for shifts in market conditions.

Previous wording

Summary of Third Quarter and YTD 2025 Performance

Current wording

Summary of First Quarter and YTD 2026 Performance

Previous wording

During the nine months ended September 30, 2025, our critical accounting policies have not changed since the filing of our Annual Report on Form 10-K for the year ended December 31, 2024. Please refer to that filing for a description of our critical accounting policies. Please also refer to Note 1 (Basis of Presentation) in the Notes to Unaudited Consolidated Financial Statements in this report for a discussion regarding newly adopted accounting principles.

Current wording

During the three months ended March 31, 2026, our critical accounting policies have not changed since the filing of our Annual Report on Form 10-K for the year ended December 31, 2025. Please refer to that filing for a description of our critical accounting policies. Please also refer to Note 1 (Basis of Presentation) in the Notes to Unaudited Consolidated Financial Statements in this report for a discussion regarding newly adopted accounting principles.

Previous wording

The logistics operators currently located at TRCC have proven effective in serving customers throughout California and the broader western United States, and their success is prominently featured in our marketing efforts. We plan to continue focusing our marketing strategy for TRCC on the site's strategic labor and logistics advantages, the pro-business environment of Kern County, and the demonstrated success of existing tenants and property owners within the development. Our location 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 many 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 are also demonstrating success with e-commerce fulfillment.

Current wording

The logistics operators currently located at TRCC have demonstrated the site’s ability to serve customers throughout California and the broader western United States, and their presence continues to be highlighted in our marketing efforts. We intend to continue emphasizing in our marketing strategy TRCC’s strategic labor and logistics advantages, Kern County’s business-friendly incentive framework, and the operating success of existing tenants and property owners within the development. Our location aligns with a logistics model increasingly used by many companies, which favors large, centralized distribution facilities strategically located to optimize the balance of inbound and outbound efficiencies, rather than numerous smaller, decentralized distribution centers. The presence and performance of major logistics operators at TRCC support this model. In addition, TRCC’s location provides access to nearly 90% of California consumers within a single-day truck turn and to markets of more than 40 million people for next-day delivery service, which we believe supports e-commerce fulfillment operations.

Previous wording

We believe the FTZ and AKIP, along with our ability to provide fully entitled, shovel-ready land parcels to support buildings of any size, including buildings one million square feet or larger, provide us with a marketing advantage. Our marketing efforts target the Inland Empire region of Southern California, the Santa Clarita Valley of northern Los Angeles County, the northern part of the San Fernando Valley (due to the limited availability of new product and high real estate costs in these locations), and the San Joaquin Valley of California. We continue to analyze the market and evaluate expansions of industrial buildings for lease either on our own or in partnerships, as we have done with the buildings developed within our joint ventures.

Current wording

We believe the FTZ and AKIP, and our ability to offer fully entitled, shovel-ready land parcels capable of supporting buildings of any size, including buildings of one million square feet or more, provides us with a meaningful marketing advantage. Our marketing efforts are directed primarily toward the Inland Empire region of Southern California, the Santa Clarita Valley of northern Los Angeles County, the northern San Fernando Valley, where the availability of new industrial product is limited and real estate costs remain relatively high, and the San Joaquin Valley of California. We continue to analyze market conditions and evaluate opportunities to expand our portfolio of industrial buildings for lease, either independently or through partnerships, as we have done with buildings developed through our joint ventures.

Previous wording

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, the potential disadvantage of our distance from the ports is being mitigated.

Current wording

A potential disadvantage to our development strategy is TRCC’s greater distance from the Ports of Los Angeles and Long Beach as compared to warehouse and distribution facilities in the Inland Empire, a major industrial market east of Los Angeles that continues to expand farther east into areas including Perris, Moreno Valley and Beaumont. However, as Inland Empire development continues to move eastward, the relative disadvantage of TRCC’s distance from the ports may lessen. At the same time, TRCC’s location continues to offer access to major transportation corridors and broad regional consumer markets.

Previous wording

During the quarter ended September 30, 2025, vacancy rates in the Inland Empire climbed by 70 basis points to 7.5% as net absorption remains in the negative at approximately 22,000 square feet. Average monthly asking rents continued to decline to $1.05. The San Fernando Valley and Ventura County industrial markets continued to experience tight conditions as demand remained positive. Vacancy rose 130 basis points to 3.5% in San Fernando Valley and rose 60 basis points to 3.1% in Ventura County. Average asking rent edged up in the third quarter in the San Fernando Valley, increasing $0.01 to $1.48, while Ventura posted an increase to $1.32.

Current wording

During the quarter ended March 31, 2026, vacancy rates in the Inland Empire increased by 50 basis points to 8.1% while net absorption remained negative at approximately 2.8 million square feet. Average monthly asking rents continued to decline, reaching approximately $1.00 per square foot.

Previous wording

See below for the vacancy rates and average asking rent of Inland Empire, San Fernando Valley and Ventura County.

Current wording

See below for the vacancy rates and average asking rent of Inland Empire, North Los Angeles County (San Fernando Valley and Ventura County), Greater Los Angeles, and Southern Central Valley.

Previous wording

Industrial users seeking larger spaces are continuing to go further north into neighboring Kern County, and particularly, TRCC, which has attracted increased attention as market conditions continue to tighten. Additionally, TRCC is in a position to capture tenant awareness due to our ability to provide a competitive alternative for users in the Inland Empire and the Santa Clarita Valley.

Current wording

Industrial users seeking larger spaces are going further north into neighboring Kern County, and particularly TRCC, which has attracted increased attention as market conditions continue to tighten. Additionally, TRCC is in a position to capture tenant awareness due to our ability to provide a competitive alternative for users in the Inland Empire and the Santa Clarita Valley, however, there can be no assurance that these advantages will offset market vacancy increases, rent softening, regulatory constraints, tenant consolidation trends or competitive development activity.

Previous wording

We expect our commercial/industrial real estate development segment to continue to experience costs, net of amounts capitalized, primarily related to professional service fees, marketing costs, planning costs, and staffing costs, as we continue to pursue development opportunities. From a macroeconomic perspective, the tightening of capital markets may cause a near-term slowdown in new commercial real estate developments.

Current wording

We expect our commercial/industrial real estate development segment to continue to experience costs, net of amounts capitalized, primarily related to professional service fees, marketing costs, planning costs, and staffing costs, as we continue to pursue development opportunities. From a macroeconomic perspective, capital market conditions remain relatively restrictive, and higher interest rates and more limited construction financing availability may contribute to a near-term slowdown in new commercial real estate development activity.

Previous wording

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 to increase 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 land sales 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. Industrial land prices have increased at TRCC since 2000 from $0.57 per square foot to $9.00 per square foot which is a 1,479% increase, demonstrating the consistent increase in demand and maturation of TRCC. Industrial rents have increased 249% over the past eight-year period starting at $0.25 per square foot in 2017.

Current wording

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 to increase over several years, as we develop our landholdings. We will also continue to evaluate land resources to determine the highest and best uses for our landholdings. Future land sales 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.

Previous wording

Resort/residential real estate development segment expenses were $318,000 for the three months ended September 30, 2025, a decrease of $10,000 from $328,000 for the three months ended September 30, 2024 with no significant fluctuations across expenses categories.

Current wording

Resort/residential real estate development segment expenses were $356,000 for the three months ended March 31, 2026, a decrease of $30,000 from $386,000 for the three months ended March 31, 2025 with no significant fluctuations across expense categories.

Previous wording

Our long-term business strategy to develop the master-planned communities of MV, Centennial, and Grapevine remains unchanged. We believe that the long-term macroeconomic fundamentals, particularly California’s large population base and continued household formation as well as the demographic migration to the suburban and exurban periphery of Los Angeles and Kern Counties, will support sustained housing demand in our region. Additionally, California’s well-documented housing shortage reinforces the need for thoughtfully planned residential development, and we believe our communities are well-positioned to help address this shortfall. Accordingly, the majority of expenditures and capital investments within our resort/residential real estate segment are expected to remain focused on these three communities.

Current wording

While near-term market conditions, including elevated interest rates and affordability pressures, may impact the pace of housing activity, California’s well-documented housing shortage reinforces the need for thoughtfully planned communities. We believe our developments are well-positioned to help address this structural imbalance. Accordingly, the majority of expenditures and capital investments within our resort/residential real estate segment are expected to remain focused on these three communities.

Previous wording

As anticipated regulatory changes related to groundwater management in California emerge, such as potential limits on groundwater pumping, we believe our water assets will become increasingly important and valuable. These assets include our water banking operations, groundwater recharge programs, and access to water supply contracts, such as those we have acquired in prior periods. We expect these resources will continue to play a critical role in supporting our development projects and may also present opportunities for water sales to third parties.

Current wording

As groundwater regulation in California continues to evolve, particularly under the Sustainable Groundwater Management Act (“SGMA”), we believe our water assets will become increasingly strategic and valuable. These assets include our water banking operations, groundwater recharge capabilities, and access to long-term water supply contracts, including SWP entitlements acquired in prior periods. We expect these resources to play a critical role in supporting our current and future development activities and to provide potential opportunities for incremental revenue through water sales to third parties.

Previous wording

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. In addition to surface water supplies, the Company has access to adjudicated groundwater rights, including an annual allocation of 1,634 acre-feet in the Antelope Valley Basin. Portions of our property also have available groundwater, which the Company believes are sufficient to support its commercial development plans along the Interstate 5 corridor and its ongoing agricultural operations.

Current wording

SWP water contracts require annual payments for both fixed and variable costs associated with the SWP and the applicable water districts, regardless of water delivery. In addition to surface water supplies, the Company holds adjudicated groundwater rights, including an annual allocation of 1,634 acre-feet in the Antelope Valley Basin. The Company also has access to groundwater underlying portions of its landholdings, which it believes are sufficient to support planned commercial development along the Interstate 5 corridor, as well as ongoing agricultural operations.

Previous wording

Prices for oil and natural gas fluctuate in response to relatively minor changes in supply and demand, market uncertainty and a variety of additional factors that are beyond our control, such as: changes in domestic and global supply and demand, domestic and global inventory levels, political and regulatory conditions in California, and international disputes. Production has seen an overall decline in California as a result of regulatory conditions.

Current wording

Prices for oil and natural gas are subject to volatility due to changes in supply and demand, market uncertainty and factors beyond the Company's control, including domestic and global inventory levels, geopolitical developments, and evolving regulatory conditions in California and international disputes. Oil and gas production in California has generally declined in recent years, in part due to increased regulatory constraints.

Previous wording

Our almond, pistachio, and wine grape crop sales are subject to significant seasonality, with the majority of sales typically occurring during the third and fourth quarters of the year. Almonds and pistachios are generally sold at prevailing market prices, while wine grapes are sold under contracted pricing arrangements with wineries. In 2025, the Company's crop segmentation in its farming division will include the planting of an olive orchard, diversifying the Company's commodity products and best positioning the Company for market changes.

Current wording

Almond, pistachio, and wine grape sales are subject to significant seasonality, with the majority of revenues typically generated during the third and fourth quarters of the year. Almonds and pistachios are generally sold at prevailing market prices, while wine grapes are sold under contracted pricing arrangements with wineries.

Previous wording

Labor costs, both internal and through labor contractors, continue to increase and the Company expects this trend to continue over the near future. The Company utilizes external labor contractors, as necessary, for large projects, such as pruning and harvesting, as a way to manage our labor needs. From a broader inflationary standpoint, the Company continues to expect an increase in production costs, most notably chemicals such as herbicides and pesticides, and fuel costs.

Current wording

The Company continues to monitor and assess the impact of broader macroeconomic and geopolitical conditions on its production costs. Labor costs, both internal and through labor contractors, continue to increase and the Company expects this trend to continue over the near future. The Company utilizes external labor contractors, as necessary, for large projects, such as pruning and harvesting, as a way to manage our labor needs. The ongoing conflict in the Middle East has contributed to significant volatility in global fertilizer markets. The Company expects fertilizer costs, along with other key production inputs such as chemicals, fuel, and labor, to remain elevated in the near term. While the Company actively works to manage its input cost exposure through operational planning and procurement strategies, there can be no assurance that these measures will be sufficient to fully offset the impact of continued price increases, which could adversely affect the Company's operating results and financial condition.

Previous wording

•Ranch operations revenues totaled $3,725,000 for the first nine months of 2025, an increase of $207,000, or 6%, compared to $3,518,000 for the same period in 2024. The increase was primarily attributable to an increase in game management and other revenue of $242,000, primarily attributedto higher guided hunt revenues and increased revenue recognized from the High Desert Hunt Club.

Current wording

•Ranch operations revenues totaled $1,617,000 for the three months ended March 31, 2026, representing an increase of $313,000, or 24%, compared to $1,304,000 for the same period in 2025. The increase was primarily driven by a $217,000 increase in game management revenues, largely attributable to higher guided hunt revenue and an increase in membership revenue.

Previous wording

•Ranch operations expenses were $1,176,000 for the three months ended September 30, 2025, a decrease of $47,000, or 4%, from $1,223,000 for the same period in 2024. The decrease was primarily attributable to lower selling, general and administrative expenses of $57,000 mostly related to lower overhead costs across various categories.

Current wording

•Ranch operations expenses were $1,213,000 for the three months ended March 31, 2026, a decrease of $60,000, or 5%, from $1,273,000 for the same period in 2025. The decrease was primarily attributable to lower operating expenses of $34,000 and lower selling, general and administrative expenses of $19,000 mostly related to lower overhead costs across various categories.

Previous wording

Total other income was $168,000 for the three months ended September 30, 2025, a decrease of $291,000 from $459,000 for the same period in 2024, primarily due to lower investment income as a result of a decrease in marketable securities balance.

Current wording

Total other income was $50,000 for the three months ended March 31, 2026, a decrease of $220,000 from $270,000 for the same period in 2025, primarily due to lower investment income as a result of lower average invested balance.

Previous wording

•Equity in earnings was $2,555,000 for the three months ended September 30, 2025, a decrease of $774,000, from $3,329,000 during the same period in 2024. The decrease was primarily attributable to a decrease in equity in earnings recorded for the TA/Petro joint venture of approximately $852,000 driven by a 5.5% decline in fuel gross margin, a 8.8% decline in nonfuel gross margin, an 8% increase in labor expenses and a 5.9% increase in operating expense compared to the same period in 2024. Equity in loss from TRCC/Rock Outlet Center LLC joint venture decreased by $174,000 compared to the prior period, primarily due to the recognition of a property tax refund of $200,000 in the three months ended September 30, 2025. Equity in earnings for all other joint ventures with Majestic Realty Co. remained relatively consistent.

Current wording

•Equity in earnings was $1,290,000 for the three months ended March 31, 2026, an increase of $132,000, from $1,158,000 during the same period in 2025. The increase was primarily attributable to improved results at TRCC/Rock Outlet Center LLC joint venture of $184,000, due to a one-time tenant turnover writedown in March 2025. The increase was partially offset by a decrease in equity in earnings recorded for the TA/Petro joint venture of approximately $117,000 driven by a 26.7% decline in year-to-date fuel gross margin compared to the same period in 2025.

Previous wording

For the nine months ended September 30, 2025, we had an income tax benefit of $1,809,000 compared to $286,000 for the nine months ended September 30, 2024. The effective tax rates approximated 55% and 14% for the nine months ended September 30, 2025 and 2024, respectively. As of September 30, 2025, the Company had income taxes receivable of $3,458,000. We classify interest and penalties incurred on tax payments as income tax expenses. Our effective tax rates differ from statutory rates primarily because of permanent differences related to Internal Revenue Code Section 162(m). The Internal Revenue Code Section 162(m) compensation deduction limitations occurred due to changes in tax law arising from the 2017 Tax Cuts and Jobs Act.

Current wording

For the three months ended March 31, 2026, we had an income tax expense of $59,000 compared to $1,272,000 for the three months ended March 31, 2025. The effective tax rates were 28% and 46% for the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026, the Company had income taxes receivable of $1,416,000. We classify interest and penalties incurred on tax payments as income tax expenses. Our effective tax rates differ from statutory rates primarily because of permanent differences related to Internal Revenue Code Section 162(m), state taxes and mineral depletion. The Internal Revenue Code Section 162(m) compensation deduction limitations occurred due to changes in tax law arising from the 2017 Tax Cuts and Jobs Act.

Previous wording

Our financial position allows us to pursue our strategies of continued development of TRCC, funding of operating activities, land entitlement, development, and conservation. Accordingly, we have established well-defined priorities for our available cash, including investing in core operating segments to achieve profitable future growth. We have historically funded our operations with cash flows from operating activities, investment proceeds, and short-term borrowings from our bank credit facilities. In the past, we have also issued common stock and used the proceeds for capital investment activities.

Current wording

Our financial position allows us to pursue our strategies of continued development of TRCC, funding of operating activities, land entitlement, development, and conservation. Accordingly, we have established well-defined priorities for our available cash, including investing in core operating segments to achieve profitable future growth. Our primary sources of liquidity include cash generated from operations, investment proceeds, distributions from our unconsolidated joint venture investments and short-term borrowings from our bank credit facilities. In the past, we have also issued common stock and used the proceeds for capital investment activities. Our liquidity may fluctuate throughout the year due to seasonal production cycles within our farming segment, weather conditions, and market demand for our agricultural and real estate products. To meet working capital requirements and fund agricultural inputs and development activities, we utilize our revolving credit facilities as needed.

Previous wording

Our cash, cash equivalents and marketable securities totaled approximately $21,044,000 as of September 30, 2025, a decrease of $32,664,000 from $53,708,000 as of December 31, 2024, due primarily to funding of construction on the Terra Vista at Tejon multi-family apartment community.

Current wording

Our cash, cash equivalents and marketable securities totaled approximately $19,383,000 as of March 31, 2026, a decrease of $5,511,000 from $24,894,000 as of December 31, 2025.

Previous wording

The following table shows our cash flow activities for the nine months ended September 30,

Current wording

The following table shows our cash flow activities for the three months ended March 31,

Previous wording

During the first nine months of 2025, our operations used $4,106,000, largely attributable to cash used to settle our current liabilities balance including liability related to stock compensation awards of $1,831,000.

Current wording

During the first three months of 2025, our operations used $1,345,000, largely attributable to cash used to settle our current liabilities balance including liability classified stock compensation awards of $1,831,000.

Previous wording

During the first nine months of 2025, investing activities used $56,100,000. The increase in investing activities is primarily related to the construction of Terra Vista at Tejon for the first phase of this multi-family project.

Current wording

During the first three months of 2026, investing activities used $8,865,000. The decrease in cash used for investing activities is primarily related to the completed construction of Terra Vista at Tejon project.

Previous wording

We made capital expenditures, inclusive of capitalized interest and payroll (exclusive of stock compensation), of $49,393,000 for real estate development, reflected as follows: At TRCC, we spent $25,291,000 of construction cost on Terra Visa at Tejon and $6,014,000 on infrastructure improvements at TRCC-East. We also spent $2,194,000 and $1,652,000 on permitting efforts for MV and Grapevine, respectively, and $2,554,000 on litigation defense for Centennial. Within our farming segment, we spent $3,752,000, which included cultural costs for orchards currently classified as under development and replacement of machinery and equipment. Additionally, we used $8,926,000 to acquire water assets. We had marketable securities of $29,508,000 that matured, and we reinvested $32,387,000. Lastly, we received proceeds of $773,000 from joint venture distributions.

Current wording

During the first three months of 2025, investing activities used $32,650,000. We made capital expenditures, inclusive of capitalized interest and payroll (exclusive of stock compensation), of $17,544,000 for real estate development. At TRCC, we spent $11,586,000 of construction cost on Terra Vista at Tejon and $1,957,000 on infrastructure improvements at TRCC-East. We also spent $543,000 and $346,000 on permitting efforts for MV and Grapevine, respectively, and $775,000 on re-entitlement costs for Centennial. Within our farming segment, we spent $2,030,000, which included cultural costs for orchards currently classified as under development and replacement of machinery and equipment. Additionally, we used $9,018,000 to acquire water assets. We had marketable securities of $15,280,000 that matured, and we reinvested $21,410,000. Lastly, we received proceeds of $142,000 from joint venture distributions.

Previous wording

Our estimated capital investment, inclusive of capitalized interest and payroll, for the remainder of 2025 is primarily related to our real estate projects. These estimated investments include approximately $4,366,000 of construction costs for the Terra Vista at Tejon multi-family project phase 1 development and $4,649,000 of infrastructure development at TRCC-East to support the continued commercial retail and industrial development, water treatment system improvements, and expansion of the wastewater treatment plant for future anticipated absorption. We also expect to invest up to $2,191,000 for land planning, litigation/appeals, federal and state agency permitting activities, and development activities at MV, Centennial, and Grapevine during the remainder of 2025.

Current wording

Our estimated capital investment, inclusive of capitalized interest and payroll, for the remainder of 2026 is primarily related to our real estate projects. These estimated investments include $12,362,000 of infrastructure development at TRCC-East to support the continued commercial retail and industrial development, water treatment system improvements, and expansion of the wastewater treatment plant for future anticipated absorption, a substantial portion of which is expected to be reimbursed through the CFD bond proceeds. We also expect to invest up to $10,626,000 for land planning, re-entitlement, federal and state agency permitting activities, and development activities at MV, Centennial, and Grapevine during the remainder of 2026.

Previous wording

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 expenditures for the asset have been made and interest cost has been incurred. Capitalized interest for the nine months ended September 30, 2025 and 2024, was $3,529,000 and $3,175,000, respectively, and is classified within real estate development. We also capitalized payroll costs related to development, pre-construction, and construction projects, which aggregated $1,666,000 and $2,179,000 for the nine months ended September 30, 2025 and 2024, respectively. Expenditures for repairs and maintenance are expensed as incurred.

Current wording

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 expenditures for the asset have been made and interest cost has been incurred. Capitalized interest for the three months ended March 31, 2026 and 2025, was $504,000 and $594,000, respectively, and is classified within real estate development. We also capitalized payroll costs related to development, pre-construction, and construction projects, which aggregated $394,000 and $700,000 for the three months ended March 31, 2026 and 2025, respectively. Expenditures for repairs and maintenance are expensed as incurred.

Previous wording

During the first nine months of 2024, financing activities provided $11,794,000, which was attributable to borrowings on the line of credit of $12,000,000 to fund construction projects and other ongoing development such as Terra Vista and TRCC infrastructure, partially offset by the tax payments on vested share grants of $206,000.

Current wording

During the first three months of 2026, financing activities provided $695,000, which was primarily attributable to borrowings on the line of credit of $1,500,000 to fund the cash needs of various segments as well as our ongoing development projects. This was partially offset by the tax payments on vested share grants of $805,000.

Previous wording

During the first nine months of 2025, financing activities provided $24,510,000, which was attributable to borrowings on the line of credit of $25,000,000 to fund construction projects and other ongoing development such as Terra Vista and TRCC infrastructure, partially offset by the tax payments on vested share grants of $490,000.

Current wording

During the first three months of 2025, financing activities provided $7,010,000, which was attributable to borrowings on the line of credit of $7,500,000 to fund construction projects and other ongoing development such as Terra Vista and TRCC infrastructure, partially offset by the tax payments on vested share grants of $490,000.

Previous wording

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 litigation, permitting and engineering design for our master planned communities and prepare to move into the development stage, we may need to secure additional funding in the long-term through either the issuance of equity and/or by securing other forms of financing such as joint venture equity and debt financing.

Current wording

Cash flows and earnings may fluctuate from period to period due to the commodity-driven nature of our farming and mineral operations and the timing of sales and leasing activity within our development projects. Some farming crops, notably pistachios, bear in alternate years which results in reduced revenues for those years. Development timelines, market conditions, and the time required to negotiate transactions can cause variability in reported results across periods. Often, the timing aspect of land development can lead to particular years or periods having more or less earnings than comparable periods. Based on current projections and available liquidity, management expects to maintain sufficient cash resources to fund internal operations over the next 12 months. As we move forward with the re-entitlement, permitting and engineering design for our master planned communities and prepare to move into the development stage, we may need to secure additional funding in the long-term through either the issuance of equity and/or by securing other forms of financing such as joint ventures equity and debt financing.

Previous wording

At September 30, 2025, total capitalization at book value was $580,532,000, consisting of $91,942,000 of debt and $488,590,000 of equity, resulting in a debt-to-total-capitalization ratio of approximately 15.8%.

Current wording

At March 31, 2026, total capitalization at book value was $585,306,000, consisting of $95,442,000 of debt and $489,864,000 of equity, resulting in a debt-to-total-capitalization ratio of approximately 16.3%, representing an increase compared to the debt-to-total-capitalization ratio of 13.2% at March 31, 2025.