NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Only references to the number of farms/properties, acreage, and primary crop use are unaudited.
NOTE 1. BUSINESS AND ORGANIZATION
Business
Gladstone Land Corporation (the “Company”) is an agricultural real estate investment trust (“REIT”) that was re-incorporated in Maryland on March 24, 2011, having been originally incorporated in California on June 14, 1997. We are primarily in the business of owning and leasing farmland. Subject to certain restrictions and limitations, and pursuant to contractual agreements, our business is managed by Gladstone Management Corporation (the “Adviser”), a Delaware corporation, and administrative services are provided to us by Gladstone Administration, LLC (the “Administrator”), a Delaware limited liability company. Our Adviser and Administrator are both affiliates of ours (see Note 6, “Related-Party Transactions,” for additional discussion regarding our Adviser and Administrator).
Organization
We conduct substantially all of our operations through a subsidiary, Gladstone Land Limited Partnership (the “Operating Partnership”), a Delaware limited partnership. As we currently control the sole general partner of the Operating Partnership and own, directly or indirectly, a majority of the common units of limited partnership interest in the Operating Partnership (“OP Units”), the financial position and results of operations of the Operating Partnership are consolidated within our financial statements. As of December 31, 2020 and 2019, the Company owned 100.0% and approximately 98.6%, respectively, of the outstanding OP Units (see Note 8, “Equity,” for additional discussion regarding OP Units).
Gladstone Land Partners, LLC (“Land Partners”), a Delaware limited liability company and a subsidiary of ours, was organized to engage in any lawful act or activity for which a limited liability company may be organized in Delaware. Land Partners is the general partner of the Operating Partnership and has the power to make and perform all contracts and to engage in all activities necessary in carrying out the purposes of the Company, as well as all other powers available to it as a limited liability company. As we currently own all of the membership interests of Land Partners, the financial position and results of operations of Land Partners are consolidated within our financial statements.
Gladstone Land Advisers, Inc. (“Land Advisers”), a Delaware corporation and a subsidiary of ours, was created to collect any non-qualifying income related to our real estate portfolio and to perform certain small-scale farming business operations. We have elected for Land Advisers to be taxed as a taxable REIT subsidiary (“TRS”) of ours. Since we currently own 100% of the voting securities of Land Advisers, its financial position and results of operations are consolidated within our financial statements.
All further references herein to “we,” “us,” “our,” and the “Company” refer, collectively, to Gladstone Land Corporation and its consolidated subsidiaries, except where indicated otherwise.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in accordance with U.S. generally-accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, including the impact of extraordinary events, such as the novel coronavirus (“COVID-19”) pandemic, the results of which form the basis for making certain judgments. Actual results may materially differ from these estimates.
Real Estate and Lease Intangibles
Our investments in real estate consist of farmland, improvements made to the farmland (consisting primarily of irrigation and drainage systems and buildings), and permanent plantings acquired in connection with certain land purchases (consisting primarily of almond and pistachio trees, blueberry bushes, and wine vineyards). We record investments in real estate at cost and generally capitalize improvements and replacements when they extend the useful life or improve the efficiency of the asset.
We expense costs of routine repairs and maintenance as such costs are incurred. We generally compute depreciation using the straight-line method over the shorter of the estimated useful life or 39 years for buildings and improvements, the shorter of the estimated useful life or 40 years for permanent plantings, 5 to 10 years for equipment and fixtures, and the shorter of the useful life or the remaining lease term for tenant improvements.
Certain of our acquisitions involve sale-leaseback transactions with newly-originated leases, and other of our acquisitions involve the acquisition of farmland that was already being operated as rental property, in which case we will typically assume the lease in place at the time of acquisition. Most of our acquisitions, including those with a prior leasing history, are generally treated as asset acquisitions under Accounting Standards Codification (“ASC”) 360, “Property Plant and Equipment.”
Regardless of whether an acquisition is considered an asset acquisition under ASC 360 or a business combination under ASC 805, “Business Combinations,” both ASC 360 and ASC 805 require that the purchase price of real estate be allocated to (i) the tangible assets acquired and liabilities assumed (typically consisting of land, buildings, improvements, permanent plantings, and long-term debt) and, if applicable, (ii) any identifiable intangible assets and liabilities (typically consisting of in-place lease values, lease origination costs, the values of above- and below-market leases, and tenant relationships), based in each case on their fair values. In addition, for acquisitions accounted for as asset acquisitions under ASC 360, all acquisition-related costs (other than legal costs incurred directly related to either originating new leases we execute upon acquisition or reviewing in-place leases we assumed upon acquisition) are capitalized and included as part of the fair value allocation of the identifiable tangible and intangible assets acquired or liabilities assumed. ASC 805 required that all costs related to the acquisition be expensed as incurred, rather than capitalized into the cost of the acquisition.
Management’s estimates of fair value are made using methods similar to those used by independent appraisers, such as a sales comparison approach, a cost approach, and either an income capitalization approach or discounted cash flow analysis. Factors considered by management in its analysis include an estimate of carrying costs during hypothetical, expected lease-up periods, taking into consideration current market conditions and costs to execute similar leases. We also consider information obtained about each property as a result of our pre-acquisition due diligence, marketing, and leasing activities in estimating the fair value of the tangible and intangible assets acquired and liabilities assumed. In estimating carrying costs, management also includes lost reimbursement of real estate taxes, insurance, and certain other operating expenses, as well as estimates of lost rental income at market rates during the hypothetical, expected lease-up periods, which typically range from 1 to 24 months, depending on specific local market conditions. Management also estimates costs to execute similar leases, including leasing commissions, legal fees, and other related expenses, to the extent that such costs are not already incurred in connection with a new lease origination as part of the transaction. While management believes these estimates to be reasonable based on the information available at the time of acquisition, the purchase price allocation may be adjusted if management obtains more information regarding the valuations of the assets acquired or liabilities assumed.
We allocate the purchase price to the fair value of the tangible assets and liabilities of an acquired property by valuing the property as if it were vacant. The “as-if-vacant” value is allocated to land, buildings, improvements, and permanent plantings, based on management’s determination of the relative fair values of such assets and liabilities as of the date of acquisition.
We record above- and below-market lease values for acquired properties based on the present value (using a discount rate that reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place lease agreements, and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining, non-cancelable term of the lease. When determining the non-cancelable term of the lease, we evaluate whether fixed-rate or below-market renewal options, if any, should be included. The fair value of capitalized above-market lease values, included as part of Other assets in the accompanying Consolidated Balance Sheets, is amortized as a reduction of rental income on a straight-line basis over the remaining, non-cancelable terms of the respective leases. The fair value of capitalized below-market lease values, included as part of Other liabilities in the accompanying Consolidated Balance Sheets, is amortized as an increase to rental income on a straight-line basis over the remaining, non-cancelable terms of the respective leases, including that of any fixed-price or below-market renewal options.
The value of the remaining intangible assets acquired, which consists of in-place lease values, lease origination costs, and tenant relationship values, are determined based on management’s evaluation of the specific characteristics of each tenant’s lease and our overall relationship with that respective tenant. Characteristics to be considered by management in allocating these values include the nature and extent of our existing business relationships with the tenant, prospects for developing additional business with the tenant, the tenant’s credit quality, and our expectations of lease renewals (including those existing under the terms of the current lease agreement), among other factors.
The value of in-place leases and certain lease origination costs (if any) are amortized to amortization expense on a straight-line basis over the remaining, non-cancelable terms of the respective leases. The value of tenant relationship intangibles, which is the benefit to us resulting from the likelihood of an existing tenant renewing its lease at the existing property or entering into a lease at a different property we own, is amortized to amortization expense over the remaining lease term and any anticipated renewal periods in the respective leases.
Should a tenant terminate its lease, the unamortized portion of the above intangible assets or liabilities would be charged to the appropriate income or expense account.
Total consideration for acquisitions may include a combination of cash and equity securities, such as OP Units. When OP Units are issued in connection with acquisitions, we determine the fair value of the OP Units issued based on the number of units issued multiplied by the closing price of the Company’s common stock on the date of acquisition. Unless otherwise noted, all properties acquired during 2020 and 2019 were accounted for as asset acquisitions under ASC 360.
Impairment of Real Estate Assets
We account for the impairment of our tangible and identifiable intangible real estate assets in accordance with ASC 360, which requires us to periodically review the carrying value of each property to determine whether indicators of impairment exist. Such indicators may include, but are not limited to, declines in a property’s operating performance, deteriorating market conditions, vacancy rates, and environmental or legal concerns. If circumstances support the possibility of impairment, we prepare a projection of the total undiscounted future cash flows of the specific property (without interest charges), including proceeds from disposition, and compare them to the net book value of the property to determine whether the carrying value of the property is recoverable. In performing the analysis, we consider such factors as the tenants’ payment history and financial condition, the likelihood of lease renewal, agricultural and business conditions in the regions in which our farms are located, and whether there are indications that the fair value of the real estate has decreased. If the carrying amount is more than the aggregate undiscounted future cash flows, we would recognize an impairment loss to the extent the carrying value exceeds the estimated fair value of the property.
We evaluate our entire property portfolio each quarter for any impairment indicators and perform an impairment analysis on those select properties that have an indication of impairment. As of December 31, 2020 and 2019, we concluded that none of our properties were impaired. There have been no impairments recognized on our real estate assets since our inception.
Tenant Improvements
From time to time, our tenants may pay for improvements on certain of our properties with the ownership of the improvements remaining with us, in which case we will record the cost of such improvements as an asset (tenant improvements, included within Investments in real estate, net), along with a corresponding liability (deferred rent liability, included within Other liabilities, net) on our Consolidated Balance Sheets. When we are determined to be the owner of the tenant improvements, such improvements will be depreciated, and the related deferred rent liability will be amortized as an addition to rental income, each over the shorter of the useful life of the respective improvement or the remaining term of the existing lease in place. If the tenant is determined to be the owner of the tenant improvements, any tenant improvements funded by us are treated as a lease incentive and amortized as a reduction of rental income over the remaining term of the existing lease in place.
In determining whether the tenant or the Company is the owner of such improvements, several factors will be considered, including, but not limited to: (i) whether the tenant or landlord retains legal title to the improvements upon expiration of the lease; (ii) whether the lease stipulates how such improvements should be treated; (iii) the uniqueness of the improvements (i.e., whether the improvements were made to meet the specific needs or for the benefit of the tenant leasing the property, or if the improvements generally increased the value or extended the useful life of the asset improved upon); (iv) the expected useful life of the improvements relative to the remaining length of the lease; (v) whether the tenant improvements are expected to have significant residual value at the end of the lease term; and (vi) whether the tenant or the Company constructs or directs construction of the improvements. The determination of who owns the improvements can be subject to significant judgment.
Cash and Cash Equivalents
We consider cash equivalents to be all short-term, highly-liquid investments that are both readily convertible to cash and have a maturity of three months or less at the time of purchase, except that any such investments purchased with funds held in escrow or similar accounts are classified as restricted cash. Items classified as cash equivalents include money-market deposit accounts. Our cash and cash equivalents as of December 31, 2020 and 2019 were held in the custody of one financial institution, and our balance at times may exceed federally-insurable limits. We did not have any restricted cash or restricted cash equivalents as of December 31, 2020 or 2019.
Debt Issuance Costs
Debt issuance costs consist of costs incurred to obtain debt financing, including legal fees, origination fees, and administrative fees. Costs associated with our long-term borrowings are deferred and amortized over the terms of the respective financings using the straight-line method, which approximates the effective interest method. In the case of our lines of credit, the straight-line method is used due to the revolving nature of the financing instrument. Upon early extinguishment of any borrowings, the
unamortized portion of the related deferred financing costs will be immediately charged to expense. In addition, in accordance with ASC 470, “Debt,” when a financing arrangement is amended so that the only material change is an increase in the borrowing capacity, the unamortized deferred financing costs from the prior arrangement is amortized over the term of the new arrangement. During the years ended December 31, 2020 and 2019, we recorded approximately $756,000 and $630,000, respectively, of total amortization expense related to debt issuance costs.
Deferred Offering Costs
We account for offering costs in accordance with SEC Staff Accounting Bulletin Topic 5.A., which states that incremental offering costs directly attributable to a proposed or actual offering of securities may be deferred and charged against the gross proceeds of such offering. Accordingly, costs incurred related to our ongoing equity offerings are included in Other assets, net on the accompanying Consolidated Balance Sheets and are ratably applied to the cost of equity as the related securities are issued. If an equity offering is subsequently terminated, the remaining, unallocated portion of the related deferred offering costs are charged to expense in the period such offering is aborted and recorded as General and administrative expenses on the accompanying Consolidated Statements of Operations and Comprehensive Income. During the year ended December 31, 2020, we incurred approximately $113,000 of costs for an offering that was subsequently aborted and charged such costs to General and administrative expenses on the accompanying Consolidated Statements of Operations and Comprehensive Income.
Other Assets and Other Liabilities
Other assets, net generally consists primarily of net deferred rent assets, rents receivable, deferred offering costs, prepaid expenses, deferred financing costs associated with our lines of credit, operating lease right-of-use assets, deposits on potential real estate acquisitions, and other miscellaneous receivables. As of December 31, 2020 and 2019, the balance in Other assets, net also consists of approximately $1.4 million and $1.6 million, respectively, for the net depreciated cost of five industrial generators used to provide power for newly-drilled wells on certain of our farms until such wells were connected to a permanent power source, as well as a net ownership interest in an LLC valued at approximately $1.2 million and $587,000, respectively, which interest was acquired in connection with certain property acquisitions during the years ended December 31, 2020 and 2019 (see “—Investments in Unconsolidated Entities” below and also Note 3, “Real Estate and Lease Intangibles—Acquisitions” for further discussion on the LLC ownership interests acquired).
Other liabilities, net generally consists primarily of rents received in advance, net deferred rent liabilities, and operating lease liabilities. As of December 31, 2020 and 2019, the balance in Other liabilities, net also consists of a net liability of approximately $1.5 million and $390,000, respectively, related to changes in fair values of various interest rate swap agreements we are party to.
Investments in Unconsolidated Entities
We determine if an entity is a variable interest entity (“VIE”) in accordance with ASC Topic 810, “Consolidation.” For an entity in which we have acquired an interest, the entity will be considered a VIE if either of the following characteristics are met: (i) the entity lacks sufficient equity to finance its activities without additional subordinated financial support, or (ii) equity holders, as a group, lack the characteristics of a controlling financial interest. We evaluate all significant investments in real estate-related assets to determine if they are VIEs, utilizing judgment and estimates that are inherently subjective.
If an entity is determined to be a VIE, we then determine whether to consolidate the entity as the primary beneficiary. The primary beneficiary has both (i) the power to direct the activities that most significantly impact the VIE’s economic performance, and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the entity.
As of each of December 31, 2020 and 2019, we concluded that we had one investment in a VIE, and because we are not the primary beneficiary, we did not consolidate the entity. However, as our investment in the VIE is deemed to constitute “significant influence,” we have accounted for this investment in a VIE under the equity method of accounting in accordance with ASC 323, “Investments—Equity Method and Joint Ventures.” We have recorded our investment at cost and will adjust the carrying amount of the investment to recognize our share of any earnings or losses of the investee. Our investment in the unconsolidated entity is included within Other assets, net on the accompanying Condensed Balance Sheet, and our share of any earnings or losses of the unconsolidated entity will be reflected on the Consolidated Statements of Operations and Comprehensive Income. During the years ended December 31, 2020 and 2019, we recorded a net loss of approximately $4,000 and net income of $0, respectively, which represented our share of earnings or losses recognized by the unconsolidated entity during our respective periods of ownership.
Non-controlling Interests
Non-controlling limited interests in our Operating Partnership (“OP Units”) are those OP Units not owned by us. We evaluate whether OP Units held by non-controlling OP Unitholders are subject to redemption features outside of our control. OP Units held by non-controlling OP Unitholders are redeemable at the option of the holder for cash or, at our election, shares of our common stock and thus are reported in the equity section of the Consolidated Balance Sheets but separate from stockholders’ equity. The amount reported for such non-controlling interests on the Consolidated Statements of Operations and Comprehensive Income represent the portion of income (loss) from the Operating Partnership not attributable to us. At the end of each reporting period, we determine the amount of equity (at book value) that is allocable to non-controlling interests based upon the respective ownership interests. To reflect such non-controlling interests’ equity interest in the Company, an adjustment is made to non-controlling interests, with a corresponding adjustment to paid-in capital, as reflected on the Consolidated Statements of Equity.
Lease Revenue
Lease revenue includes rents that each tenant pays in accordance with the terms of its respective lease, reported evenly over the non-cancelable term of the lease. Most of our leases contain rental increases at specified intervals, which we recognize on a straight-line basis. In the event that the collectability of rental payments with respect to any given tenant is in doubt, the revenue recognition pattern for that particular lease would convert from a straight-line basis to a cash basis. We are not currently recognizing any lease revenues on a cash basis. Certain other leases provide for additional rental payments that are based on a percentage of the gross crop revenues earned on the farm, which we refer to as participation rents. Such contingent revenue is generally recognized when all contingencies have been resolved and when actual results become known or estimable, enabling us to estimate and/or measure our share of such gross revenues. As a result, depending on the circumstances of each lease, certain participation rents may be recognized by us in the year the crop was harvested, while other participation rents may be recognized in the year following the harvest.
Deferred rent receivable, included in Other assets on the accompanying Consolidated Balance Sheets, includes the cumulative difference between rental revenue as recorded on a straight-line basis and cash rents received from the tenants in accordance with the lease terms. In addition, we determine, in our judgment, to what extent the deferred rent receivable applicable to each specific tenant is collectible. We perform a quarterly review of the net deferred rent receivable balance as it relates to straight-line rents and take into consideration the tenant’s payment history, the financial condition of the tenant, business conditions of the industry in which the tenant operates, and economic and agricultural conditions in the geographic area in which the property is located. In the event that the collectability of deferred rent with respect to any given tenant is in doubt, we record a direct write-off of the specific rent receivable, with a corresponding adjustment to lease revenue.
Tenant recovery revenue includes payments received from tenants as reimbursements for certain operating expenses, such as property taxes and insurance premiums. These expenses and their subsequent reimbursements are recognized under property operating expenses as incurred and tenant recovery revenue as earned, respectively, and are recorded in the same periods. We do not record any tenant recovery revenue or property operating expenses associated with costs paid directly by our tenants for net-leased properties.
Other Income
We record non-operating and unusual or infrequent income as Other income on our Consolidated Statements of Operations and Comprehensive Income. Other income recorded for each of the years ended December 31, 2020 and 2019 was primarily from interest patronage received on certain of our long-term borrowings (see Note 4, “Borrowings,” for additional information on interest patronage recorded during each of the years ended December 31, 2020 and 2019). In addition, during the year ended December 31, 2020, we recognized a commission rebate of $200,000 that was received in connection with a property acquired during the year. During the year ended December 31, 2019, we recognized $170,000 of income related to a sale agreement for one of our farms that was terminated. Payments received from the potential buyer of the farm were initially deferred and were then recognized as income upon termination of the agreement.
Involuntary Conversions and Property and Casualty Loss
We account for involuntary conversions, for example, when a nonmonetary asset, such as property or equipment, is involuntarily converted to a monetary asset, such as insurance proceeds, in accordance with ASC 606, “Revenue Recognition – Gains and Losses,” which requires us to recognize a gain or a loss equal to the difference between the carrying amount of the nonmonetary asset and the amount of monetary assets received. Further, in accordance with ASC 450, “Contingencies,” if recovery of the loss is considered to be probable, we will recognize a receivable for the amount expected to be covered by insurance proceeds, not to exceed the related loss recognized, unless such amounts have been realized.
(Loss) Gain on Dispositions of Real Estate Assets
We recognize net (losses) or gains on dispositions of real estate assets either upon the abandonment of an asset before the end of its useful life or upon the closing of a transaction (be it an outright sale of a property or the sale of a perpetual, right-of-way easement on all or a portion of a property) with the purchaser. When a real estate asset is abandoned prior to the end of its useful life, a loss is recorded in an amount equal to the net book value of the related real estate asset at the time of abandonment. In the case of a sale of a property, a (loss) gain is recorded to the extent that the total consideration received for a property is (less) more than the property’s net carrying value (plus any closing costs incurred) at the time of the sale. Gains are recognized using the full accrual method (i.e., when the collectability of the sales price is reasonably assured, we are not obligated to perform additional activities that may be considered significant, the initial investment from the buyer is sufficient, and other profit recognition criteria have been satisfied). Gains on sales of real estate assets may be deferred in whole or in part until the requirements for gain recognition have been met.
Income Taxes
We have operated and intend to continue to operate in a manner that will allow us to qualify as a REIT under the Sections 856-860 of the Internal Revenue Code of 1986, as amended (the “Code”). Beginning with our tax year ended December 31, 2013, we elected to be taxed as a REIT for federal income tax purposes, and Land Advisers has been treated as a wholly-owned TRS that is subject to federal and state income taxes.
As a REIT, we generally are not subject to federal corporate income taxes on amounts that we distribute to our stockholders (except income from any foreclosure property), provided that, on an annual basis, we distribute at least 90% of our REIT taxable income (excluding net capital gains) to our stockholders and meet certain other conditions. To the extent that we satisfy the annual distribution requirement but distribute less than 100% of our taxable income (including net capital gains), we will be subject to corporate income tax on our undistributed taxable income. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax on our taxable income at regular corporate rates (including any alternative minimum tax) and may not be able to qualify as a REIT for the four immediately-subsequent taxable years. Even as a REIT, we may be subject to certain state and local income and property taxes and to federal income and excise taxes on undistributed taxable income. In general, however, as long as we qualify as a REIT, no provision for federal income taxes will be necessary, except for taxes on undistributed REIT taxable income and taxes on the income generated by a TRS (such as Land Advisers), if any.
For the tax years ended December 31, 2020 and 2019, we did not have any undistributed REIT taxable income, nor was there any taxable income or loss from Land Advisers.
Should we have any taxable income or loss in the future, we will account for any income taxes in accordance with the provisions of ASC 740, “Income Taxes,” using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized based on differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax basis (including for operating loss, capital loss, and tax credit carryforwards) and are calculated using the enacted tax rates and laws expected to be in effect when such amounts are realized or settled. In addition, we will establish valuation allowances for tax benefits when we believe it is more-likely-than-not (defined as a likelihood of more than 50%) that such assets will not be realized.
We perform an annual review for any uncertain tax positions and, if necessary, will record future tax consequences of uncertain tax positions in the financial statements. An uncertain tax position is defined as a position taken or expected to be taken in a tax return that is not based on clear and unambiguous tax law and which is reflected in measuring current or deferred income tax assets and liabilities for interim or annual periods. As of December 31, 2020 and 2019, we had no provisions for uncertain tax positions. The prior three tax years remain open for an audit by the Internal Revenue Service.
Comprehensive Income
We record the effective portion of changes in the fair value of the interest rate swap agreements that qualify as cash flow hedges to accumulated other comprehensive income. For the years ended December 31, 2020 and 2019, we reconciled net income attributable to the Company to comprehensive income attributable to the Company on the accompanying Consolidated Statements of Operations and Comprehensive Income. Prior to the year ended December 31, 2019, comprehensive income equaled net income; therefore, a separate statement of comprehensive income was not included in the accompanying consolidated financial statements.
Segment Reporting
We manage our operations on an aggregated, single-segment basis for purposes of assessing performance and making operating decisions and, accordingly, have only one reporting and operating segment.
Recently-Issued Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-13, “Financial Instruments–Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 requires more timely recognition of credit losses on loans and other financial instruments that are not accounted for at fair market value through net income. The standard also requires that financial assets measured at amortized cost be presented at the net amount anticipated to be collected via an allowance for credit losses that is deducted from the amortized cost basis. Pursuant to ASU 2016-13, we will be required to measure all expected credit losses based upon historical experience, current conditions, and reasonable (and supportable) forecasts that affect the collectability of the financial asset. We adopted ASU 2016-13 on January 1, 2020, and it has not had a material impact on our consolidated financial statements.
In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848)” (“ASU 2020-04”). The main provisions of this update provide optional expedients and exceptions for contracts, hedging relationships, and other transactions that reference the London Inter-bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. ASU 2020-04 is effective for all entities as of March 12, 2020. We adopted ASU 2020-04 on January 1, 2020, and it has not resulted in a material impact to our consolidated financial statements, as ASU 2020-04 allows for prospective application of any changes in the effective interest rate for LIBOR-based debt and also provides for practical expedients that will allow us to continue to treat our derivative instruments designed as cash flow hedges consistent to how they are accounted for now.
In April 2020, the FASB issued a staff question-and-answer document, “Topic 842 and Topic 840: Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic” (the “COVID-19 Q&A”), to address certain frequently-asked questions pertaining to lease concessions arising from the effects of the COVID-19 pandemic. Existing lease guidance requires entities to determine if a lease concession was a result of a new arrangement reached with the tenant (which would be addressed under the lease modification accounting framework) or if a lease concession was under the enforceable rights and obligations within the existing lease agreement (which would not fall under the lease modification accounting framework). The COVID-19 Q&A clarifies that entities may elect to not evaluate whether lease-related relief granted in light of the effects of COVID-19 is a lease modification, provided that the concession does not result in a substantial increase in rights of the lessor or obligations of the lessee. This election is available for concessions that result in the total payments required by the modified contract being substantially the same as or less than the total payments required by the original contract. In July 2020, we granted rent deferrals to two tenants who owed aggregate rents of approximately $343,000, which was originally scheduled to be paid on July 1, 2020. The agreements with these tenants provided for extensions of up to 123 days, extending the new due dates for these rental payments to be on or before November 1, 2020. These rental payments were collected in full during the year ended December 31, 2020. We have elected to not evaluate these lease amendments under the lease modification accounting framework.
NOTE 3. REAL ESTATE AND INTANGIBLE ASSETS
All of our properties are wholly-owned on a fee-simple basis, except where noted. The following table provides certain summary information about the 137 farms we owned as of December 31, 2020 (dollars in thousands, except for footnotes):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Location
|
|
No. of Farms
|
|
Total
Acres
|
|
Farm Acres
|
|
Net Cost Basis(1)
|
|
Encumbrances(2)
|
|
California(3)
|
|
55
|
|
25,197
|
|
23,531
|
|
$
|
621,549
|
|
|
$
|
378,419
|
|
|
Florida
|
|
23
|
|
20,770
|
|
16,256
|
|
209,732
|
|
|
130,068
|
|
|
Arizona(4)
|
|
6
|
|
6,280
|
|
5,228
|
|
58,837
|
|
|
19,843
|
|
|
Colorado
|
|
12
|
|
32,773
|
|
25,577
|
|
48,353
|
|
|
30,549
|
|
|
Washington
|
|
3
|
|
1,384
|
|
1,001
|
|
39,467
|
|
|
25,475
|
|
|
Nebraska
|
|
9
|
|
7,782
|
|
7,050
|
|
30,672
|
|
|
19,296
|
|
|
Michigan
|
|
15
|
|
962
|
|
682
|
|
11,950
|
|
|
7,079
|
|
|
Texas
|
|
1
|
|
3,667
|
|
2,219
|
|
8,328
|
|
|
5,117
|
|
|
Maryland
|
|
4
|
|
759
|
|
693
|
|
6,308
|
|
|
3,728
|
|
|
Oregon
|
|
3
|
|
418
|
|
363
|
|
6,127
|
|
|
3,898
|
|
|
South Carolina
|
|
3
|
|
597
|
|
447
|
|
3,812
|
|
|
2,259
|
|
|
North Carolina
|
|
2
|
|
310
|
|
295
|
|
2,245
|
|
|
1,206
|
|
|
Delaware
|
|
1
|
|
180
|
|
140
|
|
1,274
|
|
|
753
|
|
|
Totals
|
|
137
|
|
101,079
|
|
83,482
|
|
$
|
1,048,654
|
|
|
$
|
627,690
|
|
(1)Consists of the initial acquisition price (including the costs allocated to both tangible and intangible assets acquired and liabilities assumed), plus subsequent improvements and other capitalized costs associated with the properties, and adjusted for accumulated depreciation and amortization. Specifically, includes Investments in real estate, net (excluding improvements paid for by the tenant) and Lease intangibles, net; plus net above-market
lease values, lease incentives, and net investments in special-purpose LLCs included in Other assets, net; and less net below-market lease values and other deferred revenue included in Other liabilities, net; each as shown on the accompanying Consolidated Balance Sheets.
(2)Excludes approximately $3.6 million of debt issuance costs related to notes and bonds payable, included in Notes and bonds payable, net on the accompanying Consolidated Balance Sheets.
(3)Includes ownership in a special-purpose LLC that owns a pipeline conveying water to certain of our properties. As of December 31, 2020, this investment had a net carrying value of approximately $1.2 million and is included within Other assets, net on the accompanying Consolidated Balance Sheets.
(4)Includes two farms in which we own a leasehold interest via ground leases with the State of Arizona that expire in February 2022 and February 2025, respectively. In total, these two farms consist of 1,368 total acres and 1,221 farm acres and had an aggregate net cost basis of approximately $1.6 million as of December 31, 2020 (included in Lease intangibles, net on the accompanying Consolidated Balance Sheets).
Real Estate
The following table sets forth the components of our investments in tangible real estate assets as of December 31, 2020 and 2019 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
|
December 31, 2019
|
|
Real estate:
|
|
|
|
|
|
Land and land improvements
|
|
$
|
713,333
|
|
|
$
|
583,247
|
|
|
Permanent Plantings
|
|
202,420
|
|
|
107,941
|
|
|
Irrigation and drainage systems
|
|
141,408
|
|
|
108,222
|
|
|
Farm-related facilities
|
|
28,146
|
|
|
20,665
|
|
|
Other site improvements
|
|
10,132
|
|
|
7,180
|
|
|
Real estate, at gross cost
|
|
1,095,439
|
|
|
827,255
|
|
|
Accumulated depreciation
|
|
(49,236)
|
|
|
(35,174)
|
|
|
Real estate, net
|
|
$
|
1,046,203
|
|
|
$
|
792,081
|
|
Real estate depreciation expense on these tangible assets was approximately $14.9 million and $11.2 million for the years ended December 31, 2020 and 2019, respectively.
Included in the figures above are amounts related to improvements made on certain of our properties paid for by our tenants but owned by us, or tenant improvements. As of December 31, 2020 and 2019, we recorded tenant improvements, net of accumulated depreciation, of approximately $2.0 million and $2.2 million, respectively. We recorded both depreciation expense and additional lease revenue related to these tenant improvements of approximately $304,000 and $292,000 during the years ended December 31, 2020 and 2019, respectively.
Intangible Assets and Liabilities
The following table summarizes the carrying value of certain lease intangible assets and the related accumulated amortization as of December 31, 2020 and 2019 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
|
December 31, 2019
|
|
Lease intangibles:
|
|
|
|
|
|
Leasehold interest – land
|
|
$
|
3,498
|
|
|
$
|
3,498
|
|
|
In-place leases
|
|
1,968
|
|
|
2,293
|
|
|
Leasing costs
|
|
1,640
|
|
|
2,066
|
|
|
Tenant relationships
|
|
127
|
|
|
414
|
|
|
Lease intangibles, at gross cost
|
|
7,233
|
|
|
8,271
|
|
|
Accumulated amortization
|
|
(3,501)
|
|
|
(3,444)
|
|
|
Lease intangibles, net
|
|
$
|
3,732
|
|
|
$
|
4,827
|
|
Total amortization expense related to these lease intangible assets, including amounts charged to amortization expense due to lease terminations, was approximately $1.7 million and $1.6 million for the years ended December 31, 2020 and 2019, respectively.
The following table summarizes the carrying values of certain lease intangible assets or liabilities included in Other assets, net or Other liabilities, net, respectively, on the accompanying Consolidated Balance Sheets and the related accumulated amortization or accretion, respectively, as of December 31, 2020 and 2019 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
|
December 31, 2019
|
|
Intangible Asset or Liability
|
|
Deferred
Rent Asset
(Liability)
|
|
Accumulated
(Amortization)
Accretion
|
|
Deferred
Rent Asset
(Liability)
|
|
Accumulated
(Amortization)
Accretion
|
|
Above-market lease values and lease incentives(1)
|
|
$
|
308
|
|
|
$
|
(154)
|
|
|
$
|
111
|
|
|
$
|
(41)
|
|
|
Below-market lease values and other deferred revenues(2)
|
|
(908)
|
|
|
336
|
|
|
(886)
|
|
|
257
|
|
|
|
|
$
|
(600)
|
|
|
$
|
182
|
|
|
$
|
(775)
|
|
|
$
|
216
|
|
(1)Net above-market lease values and lease incentives are included as part of Other assets, net on the accompanying Consolidated Balance Sheets, and the related amortization is recorded as a reduction of Lease revenue on the accompanying Consolidated Statements of Operations and Comprehensive Income.
(2)Net below-market lease values and other deferred revenue are included as a part of Other liabilities, net on the accompanying Consolidated Balance Sheets, and the related accretion is recorded as an increase to Lease revenue on the accompanying Consolidated Statements of Operations and Comprehensive Income.
Total amortization related to above-market lease values and lease incentives was approximately $203,000 and $128,000 for the years ended December 31, 2020 and 2019, respectively. Total accretion related to below-market lease values and other deferred revenues was approximately $113,000 and $172,000 for the years ended December 31, 2020 and 2019, respectively.
The estimated aggregate amortization expense to be recorded related to in-place lease values, leasing costs, and tenant relationships and the estimated net impact on lease revenue from the amortization of above-market lease values and lease incentives or accretion of above-market lease values and other deferred revenues for each of the five succeeding fiscal years and thereafter is as follows (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period
|
|
Estimated
Amortization
Expense
|
|
Estimated Net
Increase (Decrease)
to Lease Revenue
|
|
For the fiscal years ending December 31:
|
2021
|
|
$
|
664
|
|
|
$
|
(26)
|
|
|
|
2022
|
|
623
|
|
|
43
|
|
|
|
2023
|
|
589
|
|
|
35
|
|
|
|
2024
|
|
523
|
|
|
25
|
|
|
|
2025
|
|
438
|
|
|
25
|
|
|
|
Thereafter
|
|
895
|
|
|
316
|
|
|
|
|
|
$
|
3,732
|
|
|
$
|
418
|
|
Acquisitions
2020 Acquisitions
During the year ended December 31, 2020, we acquired 26 new farms, which are summarized in the table below (dollars in thousands, except for footnotes).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property Name
|
|
Property
Location
|
|
Acquisition
Date
|
|
Total
Acreage
|
|
No. of
Farms
|
|
Primary
Crop(s)
|
|
Lease
Term
|
|
Renewal
Options
|
|
Total
Purchase
Price
|
|
Acquisition
Costs(1)
|
|
Annualized
Straight-line
Rent(2)
|
|
|
|
County Road 18
|
|
Phillips, CO
|
|
1/15/2020
|
|
1,325
|
|
2
|
|
Sugar beets, edible beans, potatoes, & corn
|
|
6.0 years
|
|
None
|
|
$
|
7,500
|
|
|
$
|
39
|
|
|
$
|
416
|
|
|
|
|
Lamar Valley
|
|
Chase, NE
|
|
5/7/2020
|
|
678
|
|
1
|
|
Potatoes, edible beans, & corn
|
|
6.7 years
|
|
2 (5 years)
|
|
3,500
|
|
|
42
|
|
|
204
|
|
|
|
|
Driver Road(3)
|
|
Kern, CA
|
|
6/5/2020
|
|
590
|
|
1
|
|
Pecans
|
|
4.7 years
|
|
2 (10 years)
|
|
14,169
|
|
|
52
|
|
|
784
|
|
|
|
|
Mt. Hermon
|
|
Wicomico & Caroline, MD, and Sussex, DE
|
|
8/31/2020
|
|
939
|
|
5
|
|
Sod & vegetables
|
|
10.0 years
|
|
2 (5 years)
|
|
7,347
|
|
|
226
|
|
|
432
|
|
|
|
|
Firestone Avenue(4)(5)(6)
|
|
Fresno, CA
|
|
9/3/2020
|
|
2,534
|
|
3
|
|
Pistachios and misc. organic & conventional vegetables
|
|
1.2 years
|
|
2 (5 years)
|
|
31,833
|
|
|
131
|
|
|
1,734
|
|
|
|
|
West Lost Hills(4)(7)(8)
|
|
Fresno, CA
|
|
10/1/2020
|
|
801
|
|
1
|
|
Pistachios
|
|
1.1 years
|
|
4 (3 years)
|
|
31,827
|
|
|
77
|
|
|
1,752
|
|
|
|
|
Tractor Road
|
|
Bamberg & Orangeburg, SC
|
|
10/23/2020
|
|
597
|
|
3
|
|
Sod
|
|
9.5 years
|
|
None
|
|
3,765
|
|
|
72
|
|
|
244
|
|
|
|
|
American Ave
|
|
Fresno, CA
|
|
12/11/2020
|
|
236
|
|
1
|
|
Current: Table grapes; Future: Almonds
|
|
19.9 years
|
|
1 (5 years)
|
|
3,600
|
|
|
50
|
|
|
241
|
|
|
|
|
Round Mountain
|
|
Ventura, CA
|
|
12/15/2020
|
|
368
|
|
3
|
|
Misc. vegetables
|
|
1.6 years
|
|
None
|
|
20,750
|
|
|
64
|
|
|
949
|
|
|
|
|
West Sierra
|
|
Tulare, CA
|
|
12/17/2020
|
|
4,642
|
|
1
|
|
Almonds, pomegranates (conventional & organic), pistachios, and oats
|
|
9.9 years
|
|
1 (10 years)
|
|
61,500
|
|
|
107
|
|
|
3,886
|
|
|
|
|
Eight Mile Road(9)
|
|
San Joaquin, CA
|
|
12/24/2020
|
|
1,036
|
|
2
|
|
Conventional & organic blueberries
|
|
10.0 years
|
|
3 (5 years)
|
|
34,300
|
|
|
81
|
|
|
2,030
|
|
|
|
|
Rock Road(9)
|
|
Whatcom, WA
|
|
12/24/2020
|
|
638
|
|
2
|
|
Blueberries
|
|
10.0 years
|
|
3 (5 years)
|
|
31,700
|
|
|
74
|
|
|
1,885
|
|
|
|
|
Fountain Springs(4)
|
|
Tulare, CA
|
|
12/31/2020
|
|
160
|
|
1
|
|
Citrus (mandarins & lemons)
|
|
7.8 years
|
|
2 (5 years)
|
|
4,200
|
|
|
50
|
|
|
252
|
|
|
|
|
|
|
|
|
|
|
14,544
|
|
26
|
|
|
|
|
|
|
|
$
|
255,991
|
|
|
$
|
1,065
|
|
|
$
|
14,809
|
|
|
|
(1)Includes approximately $75,000 of aggregate external legal fees associated with negotiating and originating the leases associated with these acquisitions, which costs were expensed in the period incurred.
(2)Unaudited; based on the minimum cash rental payments guaranteed under the respective leases, as required under GAAP, and excludes contingent rental payments, such as participation rents.
(3)The lease provides for an initial term of 14.7 years and includes six tenant termination options throughout the initial term. The lease term stated above represents the term through the first available termination option, and the annualized straight-line rent amount represents the rent guaranteed through the noncancellable term of the lease.
(4)Lease provides for an annual participation rent component based on the gross crop revenues earned on the farm. The rent figure above represents only the minimum cash guaranteed under the lease.
(5)Lease provides for an initial term of 8.2 years but also includes an annual tenant termination option should the tenant become physically unable to continue farming operations on the property, effective as of the end of the then-current lease year (as defined within the lease). The lease term stated above represents the term through the first available termination option, and the annualized straight-line rent amount represents the rent guaranteed through the noncancellable term of the lease.
(6)In connection with the acquisition of this property, we also acquired an ownership interest in a related LLC, the sole purpose of which is to own and maintain a pipeline conveying water to this and other neighboring properties. Our acquired ownership, which equated to a 12.5% interest in the LLC, was valued at approximately $280,000 at the time of acquisition and is included within Other assets, net on the accompanying Consolidated Balance Sheets. See “Investments in Unconsolidated Entities” below for further information on our aggregate ownership interest in this LLC.
(7)Lease provides for an initial term of 3.1 years but also includes an annual tenant termination option should the tenant become physically unable to continue farming operations on the property, effective as of the end of the then-current lease year (as defined within the lease). The lease term stated above represents the term through the first available termination option, and the annualized straight-line rent amount represents the rent guaranteed through the noncancellable term of the lease.
(8)In connection with the acquisition of this property, we also acquired an ownership interest in a related LLC, the sole purpose of which is to own and maintain a pipeline conveying water to this and other neighboring properties. Our acquired ownership, which equated to a 12.5% interest in the LLC, was valued at approximately $294,000 at the time of acquisition and is included within Other assets, net on the accompanying Consolidated Balance Sheets. See “Investments in Unconsolidated Entities” below for further information on our aggregate ownership interest in this LLC.
(9)These two properties were acquired as part of a single transaction. In addition, in connection with the acquisition of these properties, we committed to provide up to $3.0 million as additional compensation for a cold storage facility subject to a ground lease, contingent upon the approval by local municipal entity. We are currently unable to estimate when or if this approval will be obtained.
During the year ended December 31, 2020, in the aggregate, we recognized operating revenues of approximately $2.5 million and net income of approximately $984,000 related to the above acquisitions.
2019 Acquisitions
During the year ended December 31, 2019, we acquired 26 new farms, which are summarized in the table below (dollars in thousands, except for footnotes).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
Name
|
|
Property
Location
|
|
Acquisition
Date
|
|
Total
Acreage
|
|
No. of
Farms
|
|
Primary
Crop(s) / Use
|
|
Lease
Term
|
|
Renewal
Options
|
|
Total
Purchase
Price
|
|
Acquisition
Costs(1)
|
|
Annualized
Straight-line
Rent(2)
|
|
|
|
Somerset Road
|
|
Lincoln, NE
|
|
1/22/2019
|
|
695
|
|
1
|
|
Popcorn & edible beans
|
|
4.9 years
|
|
1 (5 years)
|
|
$
|
2,400
|
|
|
$
|
33
|
|
|
$
|
126
|
|
|
|
|
Greenhills Boulevard(3)
|
|
Madera, CA
|
|
4/9/2019
|
|
928
|
|
1
|
|
Pistachios
|
|
10.6 years
|
|
2 (5 years)
|
|
28,550
|
|
|
141
|
|
|
1,721
|
|
|
|
|
Van Buren Trail
|
|
Van Buren, MI
|
|
5/29/2019
|
|
159
|
|
2
|
|
Blueberries & cranberries
|
|
10.6 years
|
|
2 (5 years)
|
|
2,682
|
|
|
26
|
|
|
206
|
|
|
|
|
Blue Star Highway
|
|
Allegran & Van Buren, MI
|
|
6/4/2019
|
|
357
|
|
8
|
|
Blueberries
|
|
10.6 years
|
|
2 (5 years)
|
|
5,100
|
|
|
30
|
|
|
390
|
|
|
|
|
Yolo County Line Road
|
|
Yolo, CA
|
|
6/13/2019
|
|
542
|
|
1
|
|
Olives for olive oil
|
|
14.6 years
|
|
1 (5 years)
|
|
9,190
|
|
|
68
|
|
|
624
|
|
|
|
|
San Juan Grade Road(4)
|
|
Monterey, CA
|
|
7/11/2019
|
|
324
|
|
1
|
|
Strawberries & vegetables
|
|
0.3 years
|
|
None
|
|
9,000
|
|
|
68
|
|
|
632
|
|
|
|
|
West Citrus Boulevard(5)
|
|
Martin, FL
|
|
7/22/2019
|
|
3,586
|
|
1
|
|
Water retention
|
|
8.4 years
|
|
2 (10 years)
|
|
57,790
|
|
|
516
|
|
|
3,696
|
|
|
|
|
Sutter Avenue
(Phase I)(3)(6)
|
|
Fresno, CA
|
|
8/16/2019
|
|
1,011
|
|
1
|
|
Pistachios
|
|
8.2 years
|
|
2 (5 years)
|
|
33,000
|
|
|
146
|
|
|
2,106
|
|
|
|
|
Las Posas Road(7)
|
|
Ventura, CA
|
|
8/28/2019
|
|
413
|
|
3
|
|
Sod & vegetables
|
|
3.3 years
|
|
1 (2 years)
|
|
21,320
|
|
|
111
|
|
|
1,283
|
|
|
|
|
Withers Road(8)
|
|
Napa, CA
|
|
8/29/2019
|
|
366
|
|
1
|
|
Wine grapes
|
|
10.3 years
|
|
2 (10 years)
|
|
32,000
|
|
|
84
|
|
|
2,256
|
|
|
|
|
Highway 17(9)
|
|
Hayes, NE
|
|
10/7/2019
|
|
2,561
|
|
3
|
|
Corn, soybeans, & edible beans
|
|
0.2 years
|
|
None
|
|
9,690
|
|
|
44
|
|
|
489
|
|
|
|
|
Indian Highway(10)
|
|
Hayes & Hitchcock, NE
|
|
10/7/2019
|
|
1,289
|
|
2
|
|
Corn, soybeans, & edible beans
|
|
0.3 years
|
|
None
|
|
5,000
|
|
|
36
|
|
|
788
|
|
|
|
|
Sutter Avenue
(Phase II)(3)(6)
|
|
Fresno, CA
|
|
11/1/2019
|
|
1,099
|
|
1
|
|
Pistachios
|
|
8.0 years
|
|
2 (5 years)
|
|
37,000
|
|
|
73
|
|
|
2,365
|
|
|
|
|
|
|
|
|
|
|
13,330
|
|
26
|
|
|
|
|
|
|
|
$
|
252,722
|
|
|
$
|
1,376
|
|
|
$
|
16,682
|
|
|
|
(1)Includes approximately $76,000 of aggregate external legal fees associated with negotiating and originating the leases associated with these acquisitions, which were expensed in the period incurred.
(2)Unaudited; based on the minimum cash rental payments guaranteed under the respective leases, as required under GAAP, and excludes contingent rental payments, such as participation rents.
(3)Leases provide for an annual participation rent component based on the gross crop revenues earned on the respective farms. The rent figures above represent only the minimum cash guaranteed under the respective leases.
(4)In connection with the acquisition of this property, we executed a six-year, follow-on lease with a new tenant that will commence upon the expiration of the four-month lease executed on the date of acquisition. The follow-on lease includes one, four-year extension option and provides for minimum annualized straight-line rents of approximately $606,000. In connection with the follow-on lease, we committed to provide up to $100,000 for certain irrigation improvements on the property.
(5)As partial consideration for the acquisition of this property, we issued 288,303 OP Units, constituting an aggregate fair value of approximately $3.3 million as of the acquisition date.
(6)In connection with the acquisition of this property (which occurred in two phases), we also acquired an ownership in a related LLC, the sole purpose of which is to own and maintain a pipeline conveying water to this and other neighboring properties. On August 16, 2019, we acquired an 11.75% ownership interest in the LLC that was valued at approximately $280,000 at the time of acquisition, and on November 1, 2019, we acquired an additional 13.25% interest in the LLC that was valued at approximately $307,000 at the time of acquisition. Our acquired ownership in the LLC is included within Other assets, net on the accompanying Consolidated Balance Sheets. See “Investments in Unconsolidated Entities” below for further information on our aggregate ownership interest in this LLC.
(7)In connection with this acquisition, we executed two separate lease agreements with two different, unrelated third-party tenants. The lease term of 3.3 years represents the weighted-average term of the two leases. In addition, pursuant to one of these lease agreements, we committed to provide up to $1.0 million for certain irrigation improvements on the property.
(8)In connection with the acquisition of this property, we committed to provide up to approximately $4.0 million as additional compensation, contingent upon the County of Napa approving the planting of additional vineyards on up to 47 acres of the property. Subject to such approval, we also committed to contribute up to 40,000 per approved acre for the development of such vineyards. As provided for in the lease, we will earn additional rent on all of the aforementioned costs, if any, incurred by us. See below, under “Significant Existing Real Estate Activity—Property Add-on,” for additional information on the subsequent approval of additional vineyard plantings.
(9)In connection with the acquisition of this property, we executed a 10-year, follow-on lease with a new, unrelated third-party tenant that will commence upon the expiration of the three-month lease executed on the date of acquisition. The follow-on lease provides for minimum annualized straight-line rents of approximately $630,000, plus a participation rent component based on the gross revenues earned on the farm. The farm is expected to be converted to organic farmland by the second half of 2021. In addition, the incoming tenant intends to construct a building on a portion of the property to act as its headquarters, and pursuant to the follow-on lease, we are obligated to purchase the building from the tenant at a price approximately equal to the total construction cost. Construction of this building has not yet begun, and we are unable to estimate the total cost of the building at this time. As stipulated in the follow-on lease, we will earn additional rent on the total construction cost of the building as disbursements are made by us
(10)In connection with this acquisition, we executed a four-month leaseback agreement with the seller that provides for a fixed rental payment of $250,000. In addition, we also executed a 10-year, follow-on lease with a new, unrelated third-party tenant that will commence upon the expiration of the four-month leaseback agreement. The follow-on lease provides for minimum annualized straight-line rents of approximately $372,000, plus a participation rent component based on the gross revenues earned on the farm. In addition, the farm is expected to be converted to organic farmland by the second half of 2021.
During the year ended December 31, 2019, in the aggregate, we recognized operating revenues of approximately $6.8 million and net income of approximately $2.4 million related to the above acquisitions.
Purchase Price Allocations
The allocation of the aggregate purchase price for the farms acquired during each of the years ended December 31, 2020 and 2019 is as follows (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets (Liabilities) Acquired
|
|
2020 Acquisitions
|
|
2019 Acquisitions
|
|
Land and Land Improvements
|
|
$
|
124,870
|
|
|
$
|
164,681
|
|
|
Permanent plantings
|
|
93,751
|
|
|
58,240
|
|
|
Irrigation & Drainage Systems
|
|
26,837
|
|
|
26,184
|
|
|
Farm-related Facilities
|
|
6,620
|
|
|
2,080
|
|
|
Other Site Improvements
|
|
2,699
|
|
|
358
|
|
|
In-Place Leases
|
|
395
|
|
|
560
|
|
|
Leasing Costs
|
|
250
|
|
|
117
|
|
|
Above-market Lease Values(1)
|
|
54
|
|
|
—
|
|
|
Below-market Lease Values(2)
|
|
(58)
|
|
|
(85)
|
|
|
Investment in LLC(1)
|
|
573
|
|
|
587
|
|
|
Total Purchase Price
|
|
$
|
255,991
|
|
|
252,722
|
|
(1)Included within Other assets, net on the accompanying Consolidated Balance Sheets.
(2)Included within Other liabilities, net on the accompanying Consolidated Balance Sheets.
Acquired Intangibles and Liabilities
The following table shows the weighted-average amortization periods (in years) for the intangible assets acquired and liabilities assumed in connection with new real estate acquired during the years ended December 31, 2020 and 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average
Amortization Period (in Years)
|
|
Intangible Assets and Liabilities
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
In-place lease values
|
|
4.6
|
|
1.9
|
|
Leasing costs
|
|
8.3
|
|
3.0
|
|
Above-market lease values and lease incentives
|
|
10.0
|
|
0.0
|
|
Below-market lease values and other deferred revenue
|
|
1.3
|
|
2.5
|
|
All intangible assets and liabilities
|
|
5.9
|
|
2.1
|
Significant Existing Real Estate Activity
Property Add-on
In connection with the acquisition of Withers Road, we committed to provide up to approximately $4.0 million as additional compensation, contingent upon the County of Napa approving the planting of additional vineyards on up to 47 acres of the property by February 25, 2020 (the “Permit Deadline”). In addition, if approval was obtained, we also committed to contribute up to $40,000 per approved acre for the development of such vineyards. While approval of the additional plantings was not received from the County of Napa by the Permit Deadline, in March 2020, we executed an agreement with the tenant on Withers Road to extend the Permit Deadline until August 24, 2020.
In April 2020, we received notification from the County of Napa informing us that it had approved of additional vineyard plantings on 38.7 acres of the property. As such, in May 2020, we paid additional compensation related to this acquisition of approximately $3.2 million. As a result, and pursuant to a lease amendment, we will earn additional straight-line rental income of approximately $335,000 per year throughout the remaining term of the lease, which expires on December 31, 2029. We will also earn additional rent on any of the aforementioned development costs as they are incurred by us.
Investments in Unconsolidated Entities
In connection with the acquisition of certain farmland located in Fresno County, California, we also acquired an ownership in a related LLC, the sole purpose of which is to own and maintain a pipeline conveying water to our and other neighboring properties. As of December 31, 2020, our aggregate ownership interest in the LLC was 50.0%. As our investment in the LLC is deemed to constitute “significant influence,” we have accounted for this investment under the equity method.
During the year ended December 31, 2020, we recorded a loss of approximately $4,000 (included on our Condensed Consolidated Statements of Operations and Comprehensive Income as Income from investments in unconsolidated entities), which represented our pro-rata share of the loss recognized by the LLC. Prior to fiscal year 2020, we had not recorded any material income or loss related to our ownership interest in the LLC. Our combined ownership interest in the LLC, which had an aggregate carrying value of approximately $1.2 million and $587,000 as of December 31, 2020 and 2019, respectively, is included within Other assets, net on the accompanying Condensed Consolidated Balance Sheets.
Future Minimum Lease Payments
We account for all of our leasing arrangements in which we are the lessor as operating leases. The majority of our leases are subject to fixed rental increases, and a small subset of our lease portfolio includes lease payments based on an index, such as the consumer price index (“CPI”). In addition, several of our leases contain participation rent components based on the gross revenues earned on the respective farms. Most of our leases also include tenant renewal options; however, these renewal options are generally based on then-current market rental rates and are therefore typically excluded from the determination of the minimum lease term. Our leases do not generally include tenant termination options.
The following tables summarize the future lease payments to be received under noncancellable leases as of December 31, 2020 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period
|
|
Tenant
Lease Revenue
|
|
For the fiscal years ending December 31,
|
2021
|
|
$
|
59,079
|
|
|
|
2022
|
|
54,697
|
|
|
|
2023
|
|
53,332
|
|
|
|
2024
|
|
47,880
|
|
|
|
2025
|
|
44,144
|
|
|
|
Thereafter
|
|
149,930
|
|
|
|
|
|
$
|
409,062
|
|
Portfolio Concentrations
Credit Risk
As of December 31, 2020, our farms were leased to 81 different, unrelated third-party tenants, with certain tenants leasing more than one farm. No individual tenant represented greater than 10.0% of the total lease revenue recorded during the year ended December 31, 2020.
Geographic Risk
Farms located in California and Florida accounted for approximately $31.5 million (55.3%) and $13.3 million (23.4%), respectively, of the total lease revenue recorded during the year ended December 31, 2020. Though we seek to continue to further diversify geographically, as may be desirable or feasible, should an unexpected natural disaster (such as an earthquake, wildfire, or flood) occur or climactic change impact the regions where our properties are located, there could be a material adverse effect on our financial performance and ability to continue operations. None of our farms in California or Florida have been materially impacted by the recent wildfires or hurricanes that occurred in those respective regions. No other single state accounted for more than 10.0% of the total rental revenue recorded during the year ended December 31, 2020.
NOTE 4. BORROWINGS
We generally borrow at a rate of 60% of the value of the underlying agricultural real estate, and, except as noted below, the amounts borrowed are not generally guaranteed by the Company. Our borrowings as of December 31, 2020 and 2019 are summarized below (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying Value as of
|
|
As of December 31, 2020
|
|
|
December 31, 2020
|
|
December 31, 2019
|
|
Stated Interest
Rates(1)
(Range; Wtd Avg)
|
|
Maturity Dates
(Range; Wtd Avg)
|
|
Notes and bonds payable:
|
|
|
|
|
|
|
|
|
Fixed-rate notes payable
|
$
|
492,182
|
|
|
$
|
394,569
|
|
|
2.45%–5.70%; 3.78%
|
|
2/14/2022–11/1/2045; December 2031
|
|
Variable-rate notes payable(2)
|
45,525
|
|
|
—
|
|
|
2.14%–3.00%; 2.18%
|
|
12/1/2022–11/1/2045; July 2030
|
|
Fixed-rate bonds payable
|
89,883
|
|
|
90,380
|
|
|
2.13%–4.57%; 3.50%
|
|
8/17/2021–10/31/2028; June 2024
|
|
Total notes and bonds payable
|
627,590
|
|
|
484,949
|
|
|
|
|
|
|
Debt issuance costs – notes and bonds payable
|
(3,629)
|
|
|
(3,120)
|
|
|
N/A
|
|
N/A
|
|
Notes and bonds payable, net
|
$
|
623,961
|
|
|
$
|
481,829
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable-rate revolving lines of credit
|
$
|
100
|
|
|
$
|
100
|
|
|
2.50%
|
|
4/5/2024
|
|
|
|
|
|
|
|
|
|
|
Total borrowings, net
|
$
|
624,061
|
|
|
$
|
481,929
|
|
|
|
|
|
(1)Where applicable, stated interest rates are before interest patronage (as described below).
(2)Notes were fixed subsequent to December 31, 2020; see Note 11, “Subsequent Events.”
As of December 31, 2020, the above borrowings were collateralized by certain of our farms with an aggregate net book value of approximately $1.04 billion. The weighted-average interest rate charged on the above borrowings (excluding the impact of debt issuance costs and before any interest patronage, or refunded interest) was 3.95% for each of the years ended December 31, 2020 and 2019. In addition, 2019 interest patronage from our Farm Credit Notes Payable (as defined below), which we received and recorded during the three months ended March 31, 2020, resulted in a 20.4% reduction (approximately 98 basis points) to the stated interest rates on such borrowings. See below under “—Farm Credit Notes Payables—Interest Patronage” for further discussion on interest patronage.
Our loan agreements generally contain various affirmative and negative covenants, including with respect to liens, indebtedness, mergers, and asset sales, and customary events of default. These agreements may also require that we satisfy certain financial covenants at the end of each calendar quarter or year. Some of these financial covenants include, but are not limited to, staying below a maximum leverage ratio and maintaining a minimum net worth value, rental-revenue-to-debt ratio, current ratio, and fixed charge coverage ratio. As of December 31, 2020, we were in compliance with all covenants applicable to the above borrowings.
MetLife Borrowings
MetLife Facility
As of December 31, 2019, our facility with Metropolitan Life Insurance Company (“MetLife”) consisted of a total of $200.0 million of term notes (the “Prior MetLife Term Notes”) and $75.0 million of revolving equity lines of credit (the “MetLife Lines of Credit,” and together with the Prior MetLife Term Notes, the “Prior MetLife Facility”). The draw period for the Prior MetLife Term Notes expired on December 31, 2019, with approximately $21.5 million being left undrawn, and MetLife had no obligation to disburse the remaining funds under those notes.
On February 20, 2020, we entered into an agreement with MetLife to remove the MetLife Lines of Credit from the Prior MetLife Facility and create a new credit facility consisting of a new $75.0 million long-term note payable (the “New MetLife Term Note”) and the MetLife Lines of Credit (collectively, the “New MetLife Facility”).
The following table summarizes the pertinent terms of the New MetLife Facility as of December 31, 2020 (dollars in thousands, except for footnotes):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
|
|
Aggregate
Commitment
|
|
Maturity
Dates
|
|
Principal
Outstanding
|
|
Interest Rate Terms
|
|
Undrawn
Commitment
|
|
|
New MetLife Term Note
|
|
$
|
75,000
|
|
(1)
|
1/5/2030
|
|
$
|
36,900
|
|
|
2.75%
|
(2)
|
$
|
38,100
|
|
(3)
|
|
MetLife Lines of Credit
|
|
75,000
|
|
|
4/5/2024
|
|
100
|
|
|
3-month LIBOR + 2.00%
|
(4)
|
74,900
|
|
(3)
|
|
Total principal outstanding
|
|
|
|
$
|
37,000
|
|
|
|
|
|
|
(1)If the aggregate commitment under the New MetLife Term Note is not fully utilized by December 31, 2022, MetLife has the option to be relieved of its obligation to disburse the additional funds under the New MetLife Term Note.
(2)Interest rates on future disbursements under the New MetLife Term Note will be based on prevailing market rates at the time of such disbursements. In addition, through December 31, 2022, the New MetLife Term Note is also subject to an unused fee ranging from 0.10% to 0.20% on undrawn amounts (based on the balance drawn under the New MetLife Term Note).
(3)Based on the properties that were pledged as collateral under the MetLife Facility, as of December 31, 2020, the maximum additional amount we could draw under the facility was approximately $24.2 million.
(4)The interest rate on the MetLife Lines of Credit is subject to a minimum annualized rate of 2.50%, plus an unused fee ranging from 0.10% to 0.20% on undrawn amounts (based on the balance drawn under each line of credit).
Under the MetLife Facility, we are generally allowed to borrow up to 60% of the aggregate of the lower of cost or the appraised value of the pool of agricultural real estate pledged as collateral. Amounts owed to MetLife under the agreement are guaranteed by us and each subsidiary of ours that owns a property pledged as collateral pursuant to the loan documents.
Farm Credit Notes Payable
From time to time since September 2014 through December 31, 2020, we, through certain subsidiaries of our Operating Partnership, have entered into various loan agreements (collectively, the “Farm Credit Notes Payable”) with 11 different Farm Credit associations (collectively, “Farm Credit”). During the year ended December 31, 2020, we entered into the following loan agreements with Farm Credit (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuer
|
|
Date of
Issuance
|
|
Amount
|
|
Maturity
Date
|
|
Principal
Amortization
|
|
Stated Interest Rate(1)
|
|
Interest Rate Terms
|
|
Premier Farm Credit, FLCA
|
|
5/14/2020
|
|
$
|
4,500
|
|
|
1/1/2045
|
|
24.6 years
|
|
4.00%
|
|
Fixed through December 31, 2029 (variable thereafter)
|
|
Farm Credit West, FLCA
|
|
6/24/2020
|
|
600
|
|
|
5/1/2044
|
|
24.2 years
|
|
3.00%
|
|
Fixed through July 31, 2026 (variable thereafter)
|
|
Farm Credit West, FLCA
|
|
6/24/2020
|
|
600
|
|
|
5/1/2044
|
|
24.2 years
|
|
3.00%
|
|
Fixed through August 31, 2026 (variable thereafter)
|
|
Farm Credit West, FLCA
|
|
6/25/2020
|
|
8,500
|
|
|
11/1/2045
|
|
25.0 years
|
|
3.75%
|
|
Fixed through June 30, 2030 (variable thereafter)
|
|
Farm Credit of the Virginias, ACA
|
|
8/31/2020
|
|
4,481
|
|
|
9/1/2030
|
|
25.0 years
|
|
3.99%
|
|
Fixed throughout term
|
|
Farm Credit West, FLCA(2)
|
|
12/10/2020
|
|
2,160
|
|
|
11/1/2045
|
|
24.5 years
|
|
3.70%
|
|
Fixed through January 31, 2031 (variable thereafter)
|
(1)Stated rate is before interest patronage, as described below.
(2)Loan was fixed subsequent to December 31, 2020; see Note 11, “Subsequent Events—Financing Activity—Borrowing Activity—Fixed Rate Conversions.”
Certain amounts owed under the Farm Credit Notes Payable, limited to 12 months of principal and interest due under certain of the loans, are guaranteed by us pursuant to the respective loan documents.
Interest Patronage
Interest patronage, or refunded interest, on our borrowings from Farm Credit is generally recorded upon receipt and is included within Other income on our Consolidated Statements of Operations and Comprehensive Income. Receipt of interest patronage typically occurs in the first half of the calendar year following the calendar year in which the respective interest payments are made. During the three months ended March 31, 2020, we recorded interest patronage of approximately $1.3 million related to interest accrued on loans from Farm Credit during the year ended December 31, 2019, which resulted in a 20.4% reduction (approximately 98 basis points) to the stated interest rates on such borrowings. During the three months ended September 30, 2020, we also received approximately $306,000 of additional interest patronage related to our Farm Credit Notes Payable, as certain Farm Credit associations prepaid a portion of the 2020 interest patronage (which relates to interest accrued during 2020 but is typically received in 2021).
Farmer Mac Facility
On December 5, 2014, we, through certain subsidiaries of our Operating Partnership, entered into a bond purchase agreement (the “Bond Purchase Agreement”) with Federal Agricultural Mortgage Corporation (“Farmer Mac”) and Farmer Mac Mortgage Securities Corporation (the “Bond Purchaser”), for a secured note purchase facility. As subsequently amended, the Bond Purchase Agreement provided for bond issuances up to an aggregate amount of $125.0 million (the “Prior Farmer Mac Facility”) through December 11, 2018, after which date the Bond Purchaser had the option to continue buying new bonds issued under the Farmer Mac Facility.
On December 10, 2020, we entered into an amended and restated bond purchase agreement (the “Amended and Restated Bond Purchase Agreement”) with Farmer Mac and the Bond Purchaser, increasing the secured note purchase facility to provide for bond issuances up to an aggregate principal amount of $225.0 million (the “New Farmer Mac Facility”). In addition, the Amended and Restated Bond Purchase Agreement extended the date up to which we can issue new bonds to May 31, 2023 and
final maturity date for bonds issued under the Farmer Mac Facility to December 31, 2030. The Amended and Restated Bond Purchase Agreement also included certain adjustments to the Fixed Charge Coverage Ratio definition and the Fixed Charge Ratio Covenant. All other terms of the Bond Purchase Agreement remained the same.
During the year ended December 31, 2020, we amended and restated three bonds totaling approximately $22.0 million that were previously issued under the Prior Farmer Mac Facility and were originally scheduled to mature on December 11, 2019, and January 6, 2020, respectively. The pertinent terms of the three amended and restated bonds are summarized in the table below (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date of Issuance
|
|
Amount
|
|
Maturity Dates
|
|
Principal Amortization
|
|
Stated Interest Rate
|
|
Interest Rate Terms
|
|
1/10/2020
|
|
$
|
8,100
|
|
|
1/12/2024
|
|
None
(interest only)
|
|
2.66%
|
|
Fixed throughout term
|
|
12/11/2020
|
|
3,180
|
|
|
7/31/2023
|
|
None
(interest only)
|
|
2.13%
|
|
Fixed throughout term
|
|
12/11/2020
|
|
10,673
|
|
|
10/31/2028
|
|
None
(interest only)
|
|
3.25%
|
|
Fixed throughout term
|
No prepayment penalties were incurred in connection with these amendments, and all other material items of the amended and restated bonds remained unchanged.
Pursuant to the Bond Purchase Agreement, bonds issued by us to the Bond Purchaser will be secured by a security interest in loans originated by us (pursuant to a pledge and security agreement), which, in turn, will be collateralized by first liens on agricultural real estate owned by subsidiaries of ours. The bonds issued generally have a maximum aggregate, effective loan-to-value ratio of 60% of the underlying agricultural real estate, after giving effect to certain overcollateralization obligations.
Other Borrowings
During the year ended December 31, 2020, we entered into loan agreements with various other lenders, the terms of which are summarized in the following table (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lender
|
|
Date of Issuance
|
|
Amount
|
|
Maturity Date
|
|
Principal Amortization
|
|
Stated Interest Rate
|
|
Interest Rate Terms
|
|
Conterra Agricultural Capital, LLC
|
|
6/8/2020
|
|
$
|
2,100
|
|
|
7/1/2027
|
|
30.0 years
|
|
3.40%
|
|
Fixed throughout term
|
|
PGIM Real Estate Finance, LLC
|
|
10/1/2020
|
|
19,042
|
|
|
7/1/2028
|
|
25.0 years
|
|
2.47%
|
|
Fixed throughout term
|
|
PGIM Real Estate Finance, LLC
|
|
10/1/2020
|
|
19,096
|
|
|
7/1/2028
|
|
25.0 years
|
|
2.45%
|
|
Fixed throughout term
|
|
AgAmerica Lending, LLC
|
|
10/23/2020
|
|
2,259
|
|
|
1/1/2028
|
|
30.0 years
|
|
3.50%
|
|
Fixed throughout term
|
|
PGIM Real Estate Finance, LLC
|
|
12/15/2020
|
|
12,450
|
|
|
7/1/2028
|
|
None
(interest only)
|
|
2.98%
|
|
Fixed throughout term
|
|
Rabo AgriFinance, LLC(1)
|
|
12/24/2020
|
|
37,170
|
|
|
12/1/2030
|
|
25.0 years
|
|
2.14%
|
|
1-month LIBOR + 2.00%(1)
|
|
Rabo AgriFinance, LLC(1)
|
|
12/24/2020
|
|
6,195
|
|
|
12/1/2022
|
|
None
(interest only)
|
|
2.14%
|
|
1-month LIBOR + 2.00%(1)
|
(1) Subsequent to December 31, 2020, we entered into fixed interest rate swap agreements for each of these loans. See Note 11, “Subsequent Events—Financing Activity—Borrowing Activity—Fixed Rate Conversions,” for additional information on these swap agreements.
Debt Service – Aggregate Maturities
Scheduled principal payments of our aggregate notes and bonds payable as of December 31, 2020, for the succeeding years are as follows (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Years Ending December 31,
|
|
Scheduled
Principal Payments
|
|
2021
|
|
$
|
19,848
|
|
|
2022
|
|
51,053
|
|
|
2023
|
|
43,755
|
|
|
2024
|
|
39,873
|
|
|
2025
|
|
36,881
|
|
|
Thereafter
|
|
436,180
|
|
|
|
|
$
|
627,590
|
|
Fair Value
ASC 820 provides a definition of fair value that focuses on the exchange (exit) price of an asset or liability in the principal, or most advantageous, market and prioritizes the use of market-based inputs to the valuation. ASC 820-10, “Fair Value Measurements and Disclosures,” establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:
•Level 1 — inputs that are based upon quoted prices (unadjusted) for identical assets or liabilities in active markets;
•Level 2 — inputs are based upon quoted prices for similar assets or liabilities in active or inactive markets or model-based valuation techniques, for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
•Level 3 — inputs are generally unobservable and significant to the fair value measurement. These unobservable inputs are generally supported by little or no market activity and are based upon management’s estimates of assumptions that market participants would use in pricing the asset or liability.
As of December 31, 2020, the aggregate fair value of our notes and bonds payable was approximately $628.3 million, as compared to an aggregate carrying value (excluding unamortized related debt issuance costs) of approximately $627.6 million. The fair value of our long-term, fixed-rate notes and bonds payable is valued using Level 3 inputs under the hierarchy established by ASC 820-10 and is determined by a discounted cash flow analysis, using discount rates based on management’s estimates of market interest rates on long-term debt with comparable terms. Further, due to the revolving nature and variable interest rates applicable to the MetLife Lines of Credit, their aggregate fair value as of December 31, 2020, is deemed to approximate their aggregate carrying value of $100,000.
Interest Rate Swap Agreements
In order to hedge our exposure to variable interest rates, we have entered into various interest rate swap agreements in connection with certain of our mortgage financings. In accordance with these swap agreements, we will pay our counterparty a fixed interest rate on a quarterly basis and receive payments from our counterparty equivalent to the respective stipulated floating rates. We have adopted the fair value measurement provision for these financial instruments, and the aggregate fair value of our interest rate swap agreements is recorded in Other assets, net or Other liabilities, net, as appropriate, on our accompanying Consolidated Balance Sheets. Generally, in the absence of observable market data, we will estimate the fair values of our interest rate swaps using estimates of certain data points, including estimated remaining life, counterparty credit risk, current market yield, and interest rate spreads of similar securities as of the measurement date. As of December 31, 2020, our interest rate swaps were valued using Level 2 inputs.
In addition, we have designated our interest rate swaps as cash flow hedges, and we record changes in the fair values of the interest rate swap agreements to accumulated other comprehensive income on the Consolidated Balance Sheets. We record changes in fair value on a quarterly basis, using current market valuations at quarter end. The following table summarizes our interest rate swaps as of December 31, 2020 and 2019 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period
|
|
Aggregate Notional Amount
|
|
Aggregate Fair Value Asset
|
|
Aggregate Fair Value Liability
|
|
As of December 31, 2020
|
|
$
|
14,077
|
|
|
$
|
—
|
|
|
$
|
1,500
|
|
|
As of December 31, 2019
|
|
14,298
|
|
|
—
|
|
|
390
|
|
The following table presents the amount of loss recognized in comprehensive income within our consolidated financial statements for the years ended December 31, 2020 and 2019 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31, 2020
|
|
For the Year Ended December 31, 2019
|
|
Derivative in cash flow hedging relationship:
|
|
|
|
|
Interest rate swaps
|
$
|
(1,110)
|
|
|
$
|
(390)
|
|
|
Total
|
$
|
(1,110)
|
|
|
$
|
(390)
|
|
The following table summarizes certain information regarding our derivative instruments as of December 31, 2020 and 2019 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Liability Fair Value
|
|
Derivative Type
|
|
Balance Sheet Location
|
|
December 31, 2020
|
|
December 31, 2019
|
|
Derivatives Designated as Hedging Instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
Other liabilities, net
|
|
$
|
1,500
|
|
|
$
|
390
|
|
|
Total
|
|
|
|
$
|
1,500
|
|
|
$
|
390
|
|
NOTE 5. MANDATORILY-REDEEMABLE PREFERRED STOCK
In August 2016, we completed a public offering of 6.375% Series A Cumulative Term Preferred Stock, par value $0.001 per share (the “Series A Term Preferred Stock”), at a public offering price of $25.00 per share. As a result of this offering (including the underwriters’ exercise of their option to purchase additional shares to cover over-allotments), we issued a total of 1,150,000 shares of the Series A Term Preferred Stock for gross proceeds of approximately $28.8 million and net proceeds, after deducting underwriting discounts and offering expenses borne by us, of approximately $27.6 million.
Generally, we were not permitted to redeem shares of the Series A Term Preferred Stock prior to September 30, 2018, except in limited circumstances to preserve our qualification as a REIT. Since September 30, 2018, we were permitted to redeem the shares at a redemption price of $25.00 per share, plus any accumulated and unpaid dividends up to, but excluding, the date of redemption. The shares of the Series A Term Preferred Stock had a mandatory redemption date of September 30, 2021, and were not convertible into our common stock or any other securities. As of December 31, 2020, no shares of Series A Term Preferred Stock were redeemed.
We incurred approximately $1.2 million in total offering costs related to this issuance, which have been recorded net of the Series A Term Preferred Stock as presented on the accompanying Consolidated Balance Sheets and are being amortized over the mandatory redemption period as a component of interest expense on the accompanying Consolidated Statements of Operations and Comprehensive Income. The Series A Term Preferred Stock is recorded as a liability on our accompanying Consolidated Balance Sheets in accordance with ASC 480, “Distinguishing Liabilities from Equity,” which states that mandatorily-redeemable financial instruments should be classified as liabilities. In addition, the related dividend payments are treated similarly to interest expense on the accompanying Consolidated Statements of Operations and Comprehensive Income.
Due to the short-term maturity of our Series A Term Preferred Stock, its carrying value (exclusive of unamortized offering costs) of approximately $28.8 million was deemed to approximate its fair value as of December 31, 2020. Subsequent to December 31, 2020, we issued a new series of mandatorily-redeemable preferred stock and redeemed all of our outstanding shares of Series A Term Preferred Stock (see Note 11, “Subsequent Events,” for more information on both events). For information on the dividends declared by our Board of Directors and paid by us on the Series A Term Preferred Stock during the years ended December 31, 2020 and 2019, see Note 8, “Equity—Distributions.”
NOTE 6. RELATED-PARTY TRANSACTIONS
Our Adviser and Administrator
We are externally managed pursuant to contractual arrangements with our Adviser and our Administrator, which collectively employ all of our personnel and pay their salaries, benefits, and general expenses directly. Both our Adviser and Administrator are affiliates of ours, as their parent company is owned and controlled by David Gladstone, our chairman, chief executive officer, and president. In addition, two of our executive officers, Mr. Gladstone and Terry Brubaker (our vice chairman and chief operating officer), serve as directors and executive officers of each of our Adviser and Administrator, and Michael LiCalsi, our general counsel and secretary (who also serves as our Administrator’s president, general counsel, and secretary) is also executive vice president of administration of our Adviser.
We have entered into an investment advisory agreement with our Adviser and an administration agreement with our Administrator (the “Administration Agreement”). The advisory agreement with our Adviser that was in effect through March 31, 2017, and the Administration Agreement each became effective February 1, 2013. The advisory agreement with our Adviser that was in effect through June 30, 2019 (the “Prior Advisory Agreement”), was amended and restated on July 9, 2019 (as amended, the “2019 Advisory Agreement”), and again amended and restated on January 14, 2020 (as amended, the “2020 Advisory Agreement,” and, together with the Prior Advisory Agreement and the 2019 Advisory Agreement, the “Advisory Agreements”). The Administration Agreement and each of the Advisory Agreements were approved unanimously by our board of directors, including our independent directors.
Our Board of Directors reviews and considers renewing the agreement with our Adviser each July. During its July 2020 meeting, our board of Directors reviewed and renewed each of the 2020 Advisory Agreement and the Administration Agreement for an additional year, through August 31, 2021.
A summary of the compensation terms for each of the Advisory Agreements is below.
Advisory Agreements
Pursuant to each of the Prior Advisory Agreement (which was in effect from April 1, 2017, through June 30, 2019), the 2019 Advisory Agreement (which was in effect from July 1, 2019, through December 31, 2019), and the 2020 Advisory Agreement (which has been in effect since January 1, 2020), our Adviser is compensated in the form of a base management fee and, each as applicable, an incentive fee, a capital gains fee, and a termination fee. Our Adviser does not charge acquisition or disposition fees when we acquire or dispose of properties, as is common in other externally-managed REITs. The 2019 Advisory Agreement modified the calculation of the base management and incentive fees to exclude preferred equity from such calculations, while the capital gains and termination fees remained unchanged. The 2020 Advisory Agreement revised and replaced the previous calculation of the base management fee, which was previously based on equity, with a calculation based on gross real estate assets, while all other fees remained unchanged. Each of the base management, incentive, capital gains, and termination fees is described below.
Base Management Fee
Pursuant to the Prior Advisory Agreement, a base management fee was paid quarterly and was calculated as 2.0% per annum (0.50% per quarter) of the calendar quarter’s total adjusted equity, which was defined as total equity plus total mezzanine equity, if any (each as reported on our balance sheet), adjusted to exclude unrealized gains and losses and certain other one-time events and non-cash items (“Total Adjusted Equity”).
Pursuant to the 2019 Advisory Agreement, a base management fee was paid quarterly and was calculated as 2.0% per annum (0.50% per quarter) of the prior calendar quarter’s total adjusted common equity, which was defined as common stockholders’ equity plus non-controlling common interests in the Operating Partnership, if any (each as reported on our balance sheet), adjusted to exclude unrealized gains and losses and certain other one-time events and non-cash items (“Total Adjusted Common Equity”).
Under the 2020 Advisory Agreement, a base management fee is paid quarterly and is calculated at an annual rate of 2.00% (0.500% per quarter) of the prior calendar quarter’s “Gross Tangible Real Estate,” defined as the gross cost of tangible real estate owned by us (including land and land improvements, irrigation and drainage systems, permanent plantings, farm-related facilities, and other tangible site improvements), prior to any accumulated depreciation, and as shown on our balance sheet or the notes thereto for the applicable quarter.
During the year ended December 31, 2019, our Adviser granted us certain non-contractual, unconditional, and irrevocable waivers, which were applied as credits against the base management fee for the period, as detailed in the table below under “—Related-Party Fees.” We did not have any such waivers for the year ended December 31, 2020.
Incentive Fee
Pursuant to the Prior Advisory Agreement, an incentive fee was calculated and payable quarterly in arrears if the Pre-Incentive Fee FFO for a particular quarter exceeded a hurdle rate of 1.75% (7.0% annualized) of the prior calendar quarter’s Total Adjusted Equity.
Under the 2019 Advisory Agreement and the 2020 Advisory Agreement, an incentive fee was calculated and payable quarterly in arrears if the Pre-Incentive Fee FFO for a particular quarter exceeded a hurdle rate of 1.75% (7.0% annualized) of the prior calendar quarter’s Total Adjusted Common Equity.
For purposes of this calculation, Pre-Incentive Fee FFO was defined in each of the Advisory Agreements as FFO (also as defined in each of the Advisory Agreements) accrued by the Company during the current calendar quarter (prior to any incentive fee calculation for the current calendar quarter), less any dividends paid on preferred stock securities that were not treated as a liability for GAAP purposes. Our Adviser would receive: (i) no Incentive Fee in any calendar quarter in which the Pre-Incentive Fee FFO did not exceed the hurdle rate; (ii) 100% of the Pre-Incentive Fee FFO with respect to that portion of such Pre-Incentive Fee FFO, if any, that exceeded the hurdle rate but was less than 2.1875% in any calendar quarter (8.75% annualized); and (iii) 20% of the amount of the Pre-Incentive Fee FFO, if any, that exceeded 2.1875% in any calendar quarter (8.75% annualized).
Capital Gains Fee
Pursuant to each of the Advisory Agreements, a capital gains-based incentive fee will be calculated and payable in arrears at the end of each fiscal year (or upon termination of the agreement with our Adviser). The capital gains fee shall equal: (i) 15% of the cumulative aggregate realized capital gains minus the cumulative aggregate realized capital losses, minus (ii) any aggregate capital gains fees paid in prior periods. For purposes of this calculation, realized capital gains and losses will be calculated as (x) the sales price of the property, minus (y) any costs to sell the property and the then-current gross value of the property
(which includes the property’s original acquisition price plus any subsequent, non-reimbursed capital improvements). At the end of each fiscal year, if this figure is negative, no capital gains fee shall be paid.
Termination Fee
Pursuant to each of the Advisory Agreements, in the event of our termination of the agreement with our Adviser for any reason (with 120 days’ prior written notice and the vote of at least two-thirds of our independent directors), a termination fee would be payable to the Adviser equal to three times the sum of the average annual base management fee and incentive fee earned by the Adviser during the 24-month period prior to such termination.
Administration Agreement
Pursuant to the Administration Agreement, we pay for our allocable portion of the Administrator’s expenses incurred while performing its obligations to us, including, but not limited to, rent and the salaries and benefits expenses of our Administrator’s employees, including our chief financial officer, treasurer, chief compliance officer, general counsel and secretary (who also serves as our Administrator’s president, general counsel, and secretary), and their respective staffs.
As approved by our Board of Directors, effective July 1, 2014, our allocable portion of the Administrator’s expenses is generally derived by multiplying our Administrator’s total expenses by the approximate percentage of time the Administrator’s employees perform services for us in relation to their time spent performing services for all companies serviced by our Administrator under similar contractual agreements.
Gladstone Securities
On April 11, 2017, we entered into an agreement with Gladstone Securities for it to act as our non-exclusive agent to assist us with arranging financing for our properties (the “Financing Arrangement Agreement”). Gladstone Securities is a privately-held broker-dealer and a member of the Financial Industry Regulatory Authority and the Securities Investor Protection Corporation. Gladstone Securities is an affiliate of ours, as its parent company is owned and controlled by Mr. Gladstone, who also serves on the board of managers of Gladstone Securities. In addition, Michael LiCalsi, our General Counsel and Secretary, serves in several capacities for Gladstone Securities, serving as Chief Legal Officer, Secretary, and a member of its board of managers since 2010 and a managing principal since 2011.
Financing Arrangement Agreement
We pay Gladstone Securities a financing fee in connection with the services it provides to us for securing financing on our properties. Depending on the size of the financing obtained, the maximum amount of the financing fee, which will be payable upon closing of the respective financing, will range from 0.5% to 1.0% of the amount of financing obtained. The amount of the financing fee may be reduced or eliminated as determined by us and Gladstone Securities after taking into consideration various factors, including, but not limited to, the involvement of any unrelated third-party brokers and general market conditions.
During the years ended December 31, 2020 and 2019, we paid total financing fees to Gladstone Securities of approximately $262,000 and $235,000, respectively. Through December 31, 2020, the total amount of financing fees paid to Gladstone Securities represented approximately 0.14% of the total financings secured since the Financing Arrangement Agreement has been in place.
Series B Dealer-Manager Agreement
On January 10, 2018, we entered into a dealer-manager agreement, which was amended and restated on May 31, 2018 (the “Series B Dealer-Manager Agreement”), with Gladstone Securities, whereby Gladstone Securities serves as our exclusive dealer-manager in connection with the offering of our Series B Preferred Stock (as defined in Note 8, “Equity—Series B Preferred Stock”). Pursuant to the Series B Dealer-Manager Agreement, Gladstone Securities provides certain sales, promotional, and marketing services to us in connection with the offering of the Series B Preferred Stock, and we generally will pay Gladstone Securities: (i) selling commissions of up to 7.0% of the gross proceeds from sales of Series B Preferred Stock in the offering (the “Series B Selling Commissions”), and (ii) a dealer-manager fee of 3.0% of the gross proceeds from sales of Series B Preferred Stock in the offering (the “Series B Dealer-Manager Fee”). Gladstone Securities was permitted, in its sole discretion, to remit all or a portion of the Series B Selling Commissions and also to reallow all or a portion of the Series B Dealer-Manager Fees to participating broker-dealers and wholesalers in support of the offering. The terms of the Dealer-Manager Agreement were approved by our board of directors, including all of its independent directors.
During the years ended December 31, 2020 and 2019, we paid total Series B Selling Commissions and Series B Dealer-Manager Fees to Gladstone Securities of approximately $2.5 million and $7.6 million, respectively, in connection with sales of the Series B Preferred Stock. The majority of these amounts were then remitted by Gladstone Securities to unrelated third parties involved in the offering, including participating broker-dealers and wholesalers. Series B Selling Commissions and
Series B Dealer-Manager Fees paid to Gladstone Securities were netted against the gross proceeds received from sales of the Series B Preferred Stock and are included within Additional paid-in capital on the accompanying Consolidated Balance Sheets. The offering of our Series B Preferred Stock was completed on March 5, 2020.
Series C Dealer-Manager Agreement
On February 20, 2020, we entered into a dealer-manager agreement (the “Series C Dealer-Manager Agreement”), with Gladstone Securities, whereby Gladstone Securities will serve as our exclusive dealer-manager in connection with the offering of our Series C Preferred Stock (as defined in Note 8, “Equity—Equity Issuances—Series C Preferred Stock”). Pursuant to the Series C Dealer-Manager Agreement, Gladstone Securities provides certain sales, promotional, and marketing services to us in connection with the offering of the Series C Preferred Stock, and we pay Gladstone Securities (i) selling commissions of up to 6.0% of the gross proceeds from sales of Series C Preferred Stock (the “Series C Selling Commissions”) in the Primary Series C Offering (as defined in Note 8, “Equity—Equity Issuances—Series C Preferred Stock”), and (ii) a dealer-manager fee of 3.0% of the gross proceeds from sales of Series C Preferred Stock in the Primary Series C Offering (the “Series C Dealer-Manager Fee”). No Series C Selling Commissions or Series C Dealer-Manager Fee shall be paid with respect to shares of the Series C Preferred Stock sold pursuant to our dividend reinvestment plan (the “DRIP”) for the Series C Preferred Stock. Gladstone Securities may, in its sole discretion, reallow a portion of the Series C Dealer-Manager Fee to participating broker-dealers in support of the Primary Series C Offering. The terms of the Series C Dealer-Manager Agreement were approved by our board of directors, including all of our independent directors.
During the year ended December 31, 2020, we paid total Series C Selling Commissions and Series C Dealer-Manager Fees to Gladstone Securities of approximately $2.2 million in connection with sales of the Series C Preferred Stock. The majority of these amounts were then remitted by Gladstone Securities to unrelated third parties involved in the offering, including participating broker-dealers and wholesalers. Series C Selling Commissions and Series C Dealer-Manager Fees paid to Gladstone Securities are netted against the gross proceeds received from sales of the Series C Preferred Stock and are included within Additional paid-in capital on the accompanying Condensed Consolidated Balance Sheets.
Related Party Fees
The following table summarizes related-party fees paid or accrued for and reflected in our accompanying consolidated financial statements (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
|
2020
|
|
2019
|
|
|
Base management fee(1)(2)
|
$
|
4,289
|
|
|
$
|
3,623
|
|
|
|
Incentive fee(1)(2)
|
3,038
|
|
|
847
|
|
|
|
Capital gains fee(1)(2)
|
—
|
|
|
—
|
|
|
|
Credits from non-contractual, unconditional, and irrevocable waiver granted by Adviser’s board of directors(2)
|
—
|
|
|
(1,543)
|
|
|
|
Total fees to our Adviser, net
|
$
|
7,327
|
|
|
$
|
2,927
|
|
|
|
|
|
|
|
|
|
Administration fee(1)(2)
|
$
|
1,448
|
|
|
$
|
1,207
|
|
|
|
|
|
|
|
|
|
Selling Commissions and Dealer-Manager Fees(1)(3)
|
$
|
4,711
|
|
|
$
|
7,645
|
|
|
|
Financing fees(1)(4)
|
262
|
|
|
235
|
|
|
|
Total fees to Gladstone Securities
|
$
|
4,973
|
|
|
$
|
7,880
|
|
|
(1)Pursuant to the agreements with the respective related-party entities, as discussed above.
(2)Reflected as a line item on our accompanying Consolidated Statements of Operations and Comprehensive Income.
(3)Included within Additional paid-in capital on the accompanying Consolidated Balance Sheets.
(4)Included within Notes and bonds payable, net on the Consolidated Balance Sheets and amortized into Interest expense on the Consolidated Statements of Operations and Comprehensive Income.
Related-Party Fees Due
Amounts due to related parties on our accompanying Consolidated Balance Sheets as of December 31, 2020 and 2019 were as follows (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
|
December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base management fee
|
$
|
1,130
|
|
|
$
|
881
|
|
|
|
Incentive fee
|
883
|
|
|
847
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other, net(1)
|
18
|
|
|
25
|
|
|
|
Total due to Adviser
|
2,031
|
|
|
1,753
|
|
|
|
Administration fee
|
363
|
|
|
341
|
|
|
|
Cumulative accrued but unpaid portions of prior Administration Fees(2)
|
75
|
|
|
75
|
|
|
|
Total due to Administrator
|
438
|
|
|
416
|
|
|
|
|
|
|
|
|
|
Total due to Gladstone Securities(3)
|
15
|
|
|
—
|
|
|
|
Total due to related parties(4)
|
$
|
2,484
|
|
|
$
|
2,169
|
|
|
(1)Other fees due to or from our Adviser primarily relate to miscellaneous general and administrative expenses either paid by our Adviser on our behalf or by us on our Adviser’s behalf.
(2)Represents the cumulative accrued but unpaid portion of prior Administration fees that are scheduled to be paid during the three months ending September 30 of each year, which is the quarter following our Administrator’s fiscal year end.
(3)Represents miscellaneous costs related to the Series C Offering paid by Gladstone Securities on our behalf.
(4)Reflected as a line item on our accompanying Consolidated Balance Sheets.
NOTE 7. COMMITMENTS AND CONTINGENCIES
Operating Obligations
In connection with the execution of certain lease agreements, we have committed to provide capital improvements on certain of our farms, which are summarized in the table below (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Farm
Location
|
|
Farm
Gross
Acreage
|
|
Total
Commitment
|
|
Obligated
Completion
Date(1)
|
|
Amount Expended
or Accrued as of
December 31, 2020
|
|
Hillsborough, FL
|
|
55
|
|
$
|
2,250
|
|
(2)
|
Q2 2021
|
|
$
|
780
|
|
|
Tulare, CA
|
|
160
|
|
700
|
|
(2)
|
Q2 2021
|
|
—
|
|
|
Wicomico & Caroline, MD, and Sussex, DE
|
|
833
|
|
115
|
|
|
Q3 2021
|
|
36
|
|
|
Van Buren, MI
|
|
89
|
|
150
|
|
|
Q4 2021
|
|
126
|
|
|
Napa, CA
|
|
270
|
|
1,548
|
|
(2)
|
Q3 2023
|
|
—
|
|
|
Santa Barbara, CA
|
|
271
|
|
4,000
|
|
(2)
|
Q3 2024
|
|
2,410
|
|
|
Columbia, OR
|
|
157
|
|
1,800
|
|
(2)
|
Q3 2024
|
|
1,146
|
|
|
Collier & Hendry, FL
|
|
3,612
|
|
2,000
|
|
(2)
|
Q2 2025
|
|
—
|
|
|
Monterey, CA
|
|
304
|
|
1,248
|
|
|
Q4 2025
|
|
1,188
|
|
(1)Our obligation to provide capital to fund these improvements does not extend beyond these respective dates.
(2)Pursuant to contractual agreements, we will earn additional rent on the cost of these capital improvements as the funds are disbursed by us.
Ground Lease Obligations
In connection with two farms acquired on June 1, 2017, through a leasehold interest, we assumed two ground lease arrangements under which we are the lessee (with the State of Arizona as the lessor). These two operating ground leases expire in February 2022 and February 2025, and neither lease contains any extension, renewal, or termination options. Upon our adoption of ASU 2016-02, “Leases (Topic 842): An Amendment of the FASB Accounting Standards Codification,” on January 1, 2019, we recognized an operating lease right-of-use asset of approximately $218,000 and an operating lease liability of approximately $213,000 as a result of these ground leases. These values were determined by discounting the respective future minimum lease payments using a discount rate equivalent to treasury rates with similar terms plus a spread ranging from 2.47% to 2.53%.
As of December 31, 2020 and 2019, we recorded the following as a result of these operating ground leases (dollars in thousands, except for footnotes):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
|
December 31, 2019
|
|
Operating lease right-of-use assets(1)
|
$
|
136
|
|
|
$
|
178
|
|
|
Operating lease liabilities(2)
|
$
|
130
|
|
|
$
|
172
|
|
|
|
|
|
|
|
Weighted-average remaining lease term (years)
|
3.8
|
|
4.6
|
|
Weighted-average discount rate
|
4.20
|
%
|
|
4.20
|
%
|
(1)Operating lease right-of-use assets are shown net of accrued lease payments of approximately $6,000 as of each December 31, 2020 and 2019 and are included within Other assets, net on the accompanying Consolidated Balance Sheets.
(2)Included within Other liabilities, net on the accompanying Consolidated Balance Sheets.
As a result of these ground leases, we recorded lease expense (included within Property operating expenses on the accompanying Consolidated Statement of Operations and Comprehensive Income) of approximately $59,000 and $50,000 during the years ended December 31, 2020 and 2019, respectively. Future lease payments due under the remaining non-cancelable terms of these leases as of December 31, 2020 and 2019, are as follows (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Future Lease Payments(1)
|
|
Period
|
|
December 31, 2020
|
|
December 31, 2019
|
|
2020
|
|
$
|
—
|
|
|
$
|
47
|
|
|
2021
|
|
47
|
|
|
47
|
|
|
2022
|
|
30
|
|
|
30
|
|
|
2023
|
|
30
|
|
|
30
|
|
|
2024
|
|
31
|
|
|
31
|
|
|
Thereafter
|
|
—
|
|
|
—
|
|
|
Total undiscounted lease payments
|
|
138
|
|
|
185
|
|
|
Less: imputed interest
|
|
(8)
|
|
|
(13)
|
|
|
Present value of lease payments
|
|
$
|
130
|
|
|
$
|
172
|
|
(1)Annual lease payments are set at the beginning of each year to then-current market rates (as determined by the State of Arizona). The amounts shown above represent estimated amounts based on the lease rates currently in place.
Litigation
In the ordinary course of business, we may be involved in legal proceedings from time to time. We are not currently subject to any material known or threatened litigation.
NOTE 8. EQUITY
Amendment to Articles of Incorporation
On February 20, 2020, we filed with the Maryland Department of Assessments and Taxation an Articles Supplementary (i) setting forth the rights, preferences, and terms of the Series C Preferred Stock and (ii) reclassifying and designating 26,000,000 shares of our authorized and unissued shares of common stock as shares of Series C Preferred Stock. The reclassification decreased the number of shares classified as common stock from approximately 91.5 million shares immediately prior to the reclassification to 65.5 million shares immediately after the reclassification.
Subsequent to December 31, 2020, we further amended our articles of incorporation in connection with the issuance of the Series D Preferred Stock (as defined in Note 11, “Subsequent Events—Financing Activity—Borrowing Activity”). See Note 11, “Subsequent Events—Financing Activity—Equity Activity,” for additional information on this amendment to our articles of incorporation.
Amendment to Operating Partnership Agreement
In connection with the authorization of the Series C Preferred Stock, the Operating Partnership adopted the Fourth Amendment to its First Amended and Restated Agreement of Limited Partnership (collectively, the “Amendment”), establishing the rights, privileges, and preferences of 6.00% Series C Cumulative Redeemable Preferred Units, a newly-designated class of limited partnership interests (the “Series C Preferred OP Units”). The Amendment provides for the Operating Partnership’s establishment and issuance of an equal number of Series C Preferred OP Units as are issued shares of Series C Preferred Stock
by the Company in connection with the Series C Offering upon the Company’s contributions to the Operating Partnership of the net proceeds of the Series C Offering. Generally, the Series C Preferred OP Units provided for under the Amendment have preferences, distribution rights and other provisions substantially equivalent to those of the Series C Preferred Stock.
Subsequent to December 31, 2020, we further amended our Operating Partnership agreement in connection with the issuance of the Series D Preferred Stock (as defined in Note 11, “Subsequent Events—Financing Activity—Borrowing Activity”). See Note 11, “Subsequent Events—Financing Activity—Equity Activity,” for additional information on this amendment to our Operating Partnership agreement.
Non-Controlling Interests in Operating Partnership
We consolidate our Operating Partnership, which is a majority-owned partnership. As of December 31, 2020 and 2019, we owned 100.0% and approximately 98.6%, respectively, of the outstanding OP Units. As of December 31, 2020 and 2019, there were 0 and 288,303 OP Units held by non-controlling OP Unitholders, respectively.
On or after 12 months after becoming a holder of OP Units, each non-controlling OP Unitholder has the right, subject to the terms and conditions set forth in the partnership agreement of the Operating Partnership, to require the Operating Partnership to redeem all or a portion of such units in exchange for cash or, at the Company’s option, shares of our common stock on a one-for-one basis. The cash redemption per OP Unit would be based on the market price of our common stock at the time of redemption. A limited partner will not be entitled to exercise redemption rights if the delivery of common stock to the redeeming limited partner would breach restrictions on the ownership of common stock imposed under our charter and other limitations thereof.
We did not issue any new OP Units during the year ended December 31, 2020. Information related to OP Units issued during the year December 31, 2019, is provided in the table below (dollars in thousands, except per-unit amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of OP Units Issued
|
|
Weighted-average Issuance Price
|
|
Aggregate Value(1)
|
|
288,303
|
|
$11.41
|
|
$
|
3,290
|
|
(1)Based on the closing stock price of the Company’s common stock on the date of issuance.
Information related to OP Units tendered for redemption during the years ended December 31, 2020 and 2019 is provided in the table below (dollars in thousands, except per-unit amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period
|
|
OP Units Tendered
for Redemption
|
|
Shares of Common
Stock Issued
|
|
|
|
|
|
|
For the year ended December 31, 2020
|
|
288,303
|
|
288,303
|
|
|
|
|
|
|
For the year ended December 31, 2019
|
|
570,879
|
|
570,879
|
|
|
|
|
|
Regardless of the rights described above, the Operating Partnership will not have an obligation to issue cash to a unitholder upon a redemption request if the Company elects to redeem the OP Units for shares of its common stock. When a non-controlling OP Unitholder redeems OP Units and the Company elects to satisfy that redemption through the issuance of common stock, non-controlling interest in the Operating Partnership is reduced, and stockholders’ equity is increased.
The Operating Partnership is required to make distributions on each OP Unit in the same amount as those paid on each share of the Company’s common stock, with the distributions on the OP Units held by the Company being utilized to make distributions to the Company’s common stockholders.
Registration Statement
On March 30, 2017, we filed a universal registration statement on Form S-3 (File No. 333-217042) with the SEC (the “2017 Registration Statement”) to replace our previous registration statement. The 2017 Registration Statement, which was declared effective by the SEC on April 12, 2017, permitted us to issue up to an aggregate of $300.0 million in securities, consisting of common stock, preferred stock, warrants, debt securities, depository shares, subscription rights, and units, including through separate, concurrent offerings of two or more of such securities. Under the 2017 Registration Statement, we issued a total of 9,495,834 shares of common stock (excluding 1,215,565 shares of common stock issued in exchange for certain OP Units that were tendered for redemption) for gross proceeds of approximately $117.4 million and 6,000,000 shares of Series B Preferred Stock for gross proceeds of approximately $147.5 million.
On March 6, 2020, we filed a universal registration statement on Form S-3 (File No. 333-236943) with the SEC (the “2020 Registration Statement”) to replace the 2017 Registration Statement. The 2020 Registration Statement, which was declared effective by the SEC on April 1, 2020, permits us to issue up to an aggregate of $1.0 billion in securities, consisting of common
stock, preferred stock, warrants, debt securities, depository shares, subscription rights, and units, including through separate, concurrent offerings of two or more of such securities. Through December 31, 2020, we had issued a total of 4,584,258 shares of common stock (excluding 288,303 shares of common stock issued in exchange for certain OP Units that were tendered for redemption) for gross proceeds of approximately $67.8 million and approximately 1,088,573 shares of Series C Preferred Stock (excluding redemptions) for gross proceeds of approximately $27.0 million under the 2020 Registration Statement.
In conjunction with the filing of the 2020 Registration Statement, we wrote off approximately $29,000 of unallocated costs associated with the initial filing of the 2017 Registration Statement. These costs were written off to professional fees, which is included within General and administrative expenses on our accompanying Condensed Consolidated Statements of Operations and Comprehensive Income, during the year ended December 31, 2020.
Equity Issuances
Series B Preferred Stock
On May 31, 2018, we filed a prospectus supplement with the SEC for a continuous public offering of up to 6,000,000 shares (the “Series B Offering”) of our 6.00% Series B Cumulative Redeemable Preferred Stock (the “Series B Preferred Stock”) at an offering price of $25.00 per share for gross proceeds of up to $150.0 million. The Series B Preferred Stock was offered on a continuous, “reasonable best efforts” basis by Gladstone Securities, the dealer-manager for the Series B Offering. See Note 6, “Related-Party Transactions—Gladstone Securities—Series B Dealer-Manager Agreement,” for a discussion of the fees and commissions paid to Gladstone Securities in connection with the Series B Offering.
The following table provides information on sales of the Series B Preferred Stock that occurred during the years ended December 31, 2020 and 2019 (dollars in thousands, except per-share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period
|
|
Number of
Shares Sold
|
|
Weighted-average
Offering Price
per Share
|
|
Gross Proceeds
|
|
Net Proceeds(1)
|
|
Year Ended December 31, 2020
|
|
1,229,531
|
|
$
|
24.52
|
|
|
$
|
30,148
|
|
|
$
|
27,664
|
|
|
Year Ended December 31, 2019
|
|
3,626,076
|
|
24.61
|
|
|
89,232
|
|
|
81,587
|
|
(1)Net of Series B Selling Commissions and Series B Dealer-Manager Fees borne by us.
The following table provides information on redemptions of the Series B Preferred Stock that occurred during the years ended December 31, 2020 and 2019 (dollars in thousands, except per-share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period
|
|
Number of
Shares Redeemed
|
|
Weighted-average
Redemption Price
per Share
|
|
Cash Redemption Paid
|
|
Year Ended December 31, 2020
|
|
29,335
|
|
$
|
23.22
|
|
|
$
|
681
|
|
|
Year Ended December 31, 2019
|
|
14,600
|
|
23.30
|
|
|
340
|
|
The Series B Offering was completed on March 9, 2020 (the “Series B Termination Date”), with the full 6,000,000 allotted shares being sold, and, exclusive of redemptions, resulted in total gross proceeds of approximately $147.5 million and net proceeds, after deducting Series B Selling Commissions, Series B Dealer-Manager Fees, and offering expenses payable by us, of approximately $133.4 million. Excluding Series B Selling Commissions and Series B Dealer-Manager Fees, we incurred approximately $1.6 million of total costs related to the Series B Offering, which were initially recorded as deferred offering costs (included within Other assets, net on the accompanying Consolidated Balance Sheets) and were applied against the gross proceeds received from the offering through additional paid-in capital as shares of the Series B Preferred Stock were sold.
During the year ended December 31, 2020, we listed the Series B Preferred Stock on Nasdaq under the ticker symbol “LANDO.” Trading of the Series B Preferred Stock on Nasdaq commenced on October 19, 2020.
Series C Preferred Stock
On February 20, 2020, we filed a prospectus supplement with the SEC for a continuous public offering of up to 400,000 shares of our newly-designated 6.00% Series C Cumulative Redeemable Preferred Stock, par value $0.001 per share (the “Series C Preferred Stock”), on a “reasonable best efforts” basis through Gladstone Securities at an offering price of $25.00 per share, and up to 120,000 shares of our Series C Preferred Stock pursuant to the DRIP at a price of $22.75 per share. No shares of the Series C Preferred Stock were sold pursuant to the prospectus supplement dated February 20, 2020.
On April 3, 2020, we filed a new prospectus supplement with the SEC for a continuous offering of up to 26,000,000 shares of the Series C Preferred Stock, which superseded and replaced the prospectus supplement dated February 20, 2020, for a continuous public offering (the “Series C Offering”) of up to 26,000,000 shares of the Series C Preferred Stock. The Series C Offering permits us to sell up to 20,000,000 shares (the “Primary Series C Offering”) of our Series C Preferred Stock on a “reasonable best efforts” basis through Gladstone Securities at an offering price of $25.00 per share and up to 6,000,000 shares of our Series C Preferred Stock pursuant to the DRIP at a price of $22.75 per share. See Note 6, “Related-Party Transactions—Gladstone Securities—Series C Dealer-Manager Agreement,” for a discussion of the commissions and fees to be paid to Gladstone Securities in connection with the Series C Offering.
The following table provides information on sales of the Series C Preferred Stock that occurred during the year ended December 31, 2020 (dollars in thousands, except per-share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period
|
|
Number of
Shares Sold(1)
|
|
Weighted Average
Offering Price
Per Share
|
|
Gross Proceeds
|
|
Net Proceeds(2)
|
|
Year Ended December 31, 2020
|
|
1,088,315
|
|
$
|
24.80
|
|
|
$
|
26,987
|
|
|
$
|
24,759
|
|
|
|
|
|
|
|
|
|
|
|
(1)Excludes shares issued pursuant to the DRIP. During the year ended December 31, 2020, we issued approximately 258 shares of the Series C Preferred Stock pursuant to the DRIP.
(2)Net of Series C Selling Commissions and Series C Dealer-Manager Fees.
The following table provides information on redemptions of the Series C Preferred Stock that occurred during the year ended December 31, 2020 and (dollars in thousands, except per-share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period
|
|
Number of
Shares Redeemed
|
|
Weighted-average
Redemption Price
per Share
|
|
Cash Redemption Paid
|
|
Year Ended December 31, 2020
|
|
138
|
|
$
|
22.50
|
|
|
$
|
3
|
|
|
|
|
|
|
|
|
|
As of December 31, 2020, excluding Series C Selling Commissions and Series C Dealer-Manager Fees, we have incurred approximately $282,000 of costs related to the Series C Offering, which are initially recorded as deferred offering costs (included within Other assets, net on the accompanying Condensed Consolidated Balance Sheets) and are applied against gross proceeds received from the offering through additional paid-in capital as shares of the Series C Preferred Stock are sold. See Note 11, “Subsequent Events—Equity Activity—Series C Preferred Stock,” for sales of Series C Preferred Stock completed subsequent to December 31, 2020.
The Series C Offering will terminate on the date (the “Series C Termination Date”) that is the earlier of either June 1, 2025 (unless terminated earlier or extended by our Board of Directors), or the date on which all 20,000,000 shares in the Primary Series C Offering are sold. There is currently no public market for shares of the Series C Preferred Stock; however, we intend to apply to list the Series C Preferred Stock on Nasdaq or another national securities exchange within one calendar year after the Series C Termination Date, though there can be no assurance that a listing will be achieved in such timeframe, or at all.
Common Stock
Follow-on Offerings
We completed an overnight public offering of our common stock during each of the years ended December 31, 2020 and 2019, which are summarized in the following table (dollars in thousands, except per-share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period
|
|
Number of
Shares Sold(1)
|
|
Weighted-average
Offering Price
Per Share
|
|
Gross Proceeds(1)
|
|
Net Proceeds(1)(2)
|
|
Year Ended December 31, 2020
|
|
1,897,500
|
|
$
|
14.40
|
|
|
$
|
27,324
|
|
|
$
|
26,094
|
|
|
Year Ended December 31, 2019
|
|
2,277,297
|
|
11.73
|
|
|
26,713
|
|
|
25,401
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)Includes the underwriters’ exercise of the over-allotment option in connection with each offering.
(2)Net of underwriting commissions and discounts.
At-the-Market Program
On August 7, 2015, we entered into equity distribution agreements (commonly referred to as “at-the-market agreements”), as amended from time to time, with Cantor Fitzgerald & Co., Ladenburg Thalmann & Co., Inc., and Virtu Americas, LLC (each a “Sales Agent”), under which we were permitted to issue and sell, from time to time and through the Sales Agents, shares of our common stock having an aggregate offering price of up to $30.0 million (the “Prior ATM Program”). On May 12, 2020, we terminated the Prior ATM Program and entered into new equity distribution agreements with Virtu Americas, LLC, and
Ladenburg Thalmann & Co., Inc., under which we may issue and sell, from time to time and through the current Sales Agents, shares of our common stock having an aggregate offering price of up to $100.0 million (the “Current ATM Program,” and collectively with the Prior ATM Program, the “ATM Programs”).
The following table provides information on shares of common stock sold by the Sales Agents under the ATM Programs during the years ended December 31, 2020 and 2019 (dollars in thousands, except per-share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period
|
|
Number of
Shares Sold
|
|
Weighted-average
Offering Price
Per Share
|
|
Gross Proceeds
|
|
Net Proceeds(1)
|
|
Year Ended December 31, 2020
|
|
3,096,558
|
|
$
|
14.82
|
|
|
$
|
45,883
|
|
|
$
|
45,424
|
|
|
Year Ended December 31, 2019
|
|
197,142
|
|
12.24
|
|
|
2,413
|
|
|
2,377
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)Net of underwriting commissions and discounts.
Distributions
The per-share distributions to preferred and common stockholders declared by our Board of Directors and paid by us (except as noted) during the years ended December 31, 2020 and 2019 are reflected in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
Issuance
|
|
2020
|
|
2019
|
|
Series A Term Preferred Stock(1)
|
|
$
|
1.59375
|
|
|
$
|
1.59375
|
|
|
Series B Preferred Stock(2)
|
|
1.500
|
|
|
1.500
|
|
|
Series C Preferred Stock(2)
|
|
1.1250
|
|
|
—
|
|
|
Common Stock(3)
|
|
0.53715
|
|
|
0.53430
|
|
(1)Treated similar to interest expense on the accompanying Consolidated Statements of Operations and Comprehensive Income.
(2)Of the aggregate dividends declared on the Series B Preferred Stock and Series C Preferred Stock by our Board of Directors on October 31, 2020, and October 8, 2019, approximately $881,000 and $594,000, respectively, was paid (as scheduled) by us on January 5, 2021, and January 3, 2020, respectively.
(3)The same amounts were paid as distributions on each OP Unit held by non-controlling OP Unitholders.
For federal income tax characterization purposes, distributions paid to stockholders may be characterized as ordinary income, capital gains, return of capital, or a combination thereof. The characterization of distributions on our preferred and common stock during each of the years ended December 31, 2020 and 2019 is reflected in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary
Income
|
|
Return of
Capital
|
|
Long-term
Capital Gain
|
|
For the Year Ended December 31, 2020:
|
|
|
|
|
|
|
Series A Term Preferred Stock
|
70.743160
|
%
|
|
29.256840
|
%
|
|
—
|
%
|
|
Series B Preferred Stock
|
70.743160
|
%
|
|
29.256840
|
%
|
|
—
|
%
|
|
Series C Preferred Stock
|
70.743160
|
%
|
|
29.256840
|
%
|
|
—
|
%
|
|
Common Stock
|
—
|
%
|
|
100.000000
|
%
|
|
—
|
%
|
|
For the Year Ended December 31, 2019:
|
|
|
|
|
|
|
Series A Term Preferred Stock
|
100.000000
|
%
|
|
—
|
%
|
|
—
|
%
|
|
Series B Preferred Stock
|
100.000000
|
%
|
|
—
|
%
|
|
—
|
%
|
|
|
|
|
|
|
|
|
Common Stock
|
2.668400
|
%
|
|
97.331600
|
%
|
|
—
|
%
|
NOTE 9. LEASE REVENUES
The following table sets forth the components of our lease revenue for the years ended December 31, 2020 and 2019 (dollars in thousands, except for footnotes):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
2020
|
|
2019
|
|
Fixed lease payments(1)
|
$
|
51,377
|
|
|
$
|
38,168
|
|
|
Variable lease payments(2)
|
5,654
|
|
|
2,524
|
|
|
Lease revenue, net(3)
|
$
|
57,031
|
|
|
$
|
40,692
|
|
(1)Fixed lease payments include contractual rents under lease agreements with tenants recognized on a straight-line basis over the respective lease terms and includes the amortization of above-market lease values and lease incentives and the accretion of below-market lease values and other deferred revenue.
(2)Variable lease payments include participation rents, which are generally based on a percentage of the gross crop revenues earned on the farm, and reimbursements of certain property operating expenses by tenants. Participation rents are generally recognized when all contingencies have been resolved and when actual results become known or estimable, enabling us to estimate and/or measure our share of such gross revenues. During the years ended December 31, 2020 and 2019, we recorded participation rents of approximately $2.4 million and $2.3 million respectively, and reimbursements of certain property operating expenses by tenants of approximately $457,000 and $198,000, respectively. In addition, during the year ended December 31, 2020, we received a lease termination payment of approximately $3.0 million.
(3)Reflected as a line item on our accompanying Consolidated Statements of Operations and Comprehensive Income.
NOTE 10. EARNINGS PER SHARE OF COMMON STOCK
The following table sets forth the computation of basic and diluted earnings per common share for the years ended December 31, 2020 and 2019, computed using the weighted-average number of shares outstanding during the respective periods. Net earnings figures are presented net of non-controlling interests in the earnings per share calculations. The non-controlling limited partners’ outstanding OP Units (which may be redeemed for shares of common stock) have been excluded from the diluted per-share calculation, as there would be no effect on the amounts since the non-controlling OP Unitholders’ share of earnings would also be added back to net income or loss.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
|
|
|
(Dollars in thousands, except per-share amounts)
|
|
Net loss attributable to common stockholders
|
|
$
|
(4,396)
|
|
|
$
|
(2,499)
|
|
|
Weighted average shares of common stock outstanding – basic and diluted
|
|
22,258,121
|
|
|
19,602,533
|
|
|
Loss per common share – basic and diluted
|
|
$
|
(0.20)
|
|
|
$
|
(0.13)
|
|
The weighted-average number of OP Units held by non-controlling OP Unitholders was 131,745 and 235,613 for the years ended December 31, 2020 and 2019, respectively.
NOTE 11. SUBSEQUENT EVENTS
Financing Activity
Borrowing Activity
New Borrowings
Subsequent to the year ended December 31, 2020, we entered into the following loan agreements with the terms of which are summarized in the following table (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lender
|
|
Date of
Issuance
|
|
Amount
|
|
Maturity Date
|
|
Principal Amortization
|
|
Stated Interest Rate
|
|
Interest Rate Terms
|
|
Farm Credit West, FLCA
|
|
1/28/2021
|
|
$
|
2,073
|
|
|
11/1/2045
|
|
24.8 years
|
|
3.23%
|
|
Fixed through December 31, 2027 (variable thereafter)
|
|
Farmer Mac
|
|
2/4/2021
|
|
2,460
|
|
|
10/31/2028
|
|
25.0 years
|
|
3.13%
|
|
Fixed throughout term
|
Fixed Rate Conversions
Certain loans we secured during the year ended December 31, 2020, were initially issued at variable rates. Subsequent to December 31, 2020, we fixed the interest rates on these loans, as summarized in the following table (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lender
|
|
Date of Fixed
Agreement
|
|
Loan
Amount
|
|
Original Variable Interest Rate Terms
|
|
New Fixed Interest Rate Terms
|
|
Farm Credit West, FLCA
|
|
1/8/2021
|
|
$
|
2,160
|
|
|
3.00%, subject to change monthly
|
|
3.70%, fixed through 1/31/2031; variable thereafter
|
|
Rabo AgriFinance, LLC(1)
|
|
1/15/2021
|
|
37,170
|
|
|
1-month LIBOR + 2.00%
|
|
3.21%; fixed throughout term
|
|
Rabo AgriFinance, LLC(1)
|
|
1/15/2021
|
|
6,195
|
|
|
1-month LIBOR + 2.00%
|
|
2.46%; fixed throughout term
|
(1)Interest rates were fixed via our entry into interest rate swap agreements.
Series D Term Preferred Stock
In January 2021, we completed a public offering of 5.00% Series D Cumulative Term Preferred Stock, par value $0.001 per share (the “Series D Term Preferred Stock”), at a public offering price of $25.00 per share. As a result of this offering (including the underwriters’ exercise of their option to purchase additional shares to cover over-allotments), we issued a total of 2,415,000 shares of the Series D Term Preferred Stock for gross proceeds of approximately $60.4 million and net proceeds, after deducting selling concessions and underwriting fees, of approximately $58.5 million. The Series D Term Preferred Stock is traded under the ticker symbol “LANDM” on Nasdaq.
The shares of the Series D Term Preferred Stock have a mandatory redemption date of January 31, 2026, and are not convertible into our common stock or any other securities. Generally, we are not permitted to redeem shares of the Series D Term Preferred Stock prior to January 31, 2023, except in limited circumstances to preserve our status as a REIT. On or after January 31, 2023, we may redeem the shares at a redemption price of $25.00 per share, plus any accumulated and unpaid dividends up to, but excluding, the date of redemption.
Dividends on the Series D Term Preferred Stock will be cumulative from, but excluding, the date of original issue and payable monthly in arrears, beginning on February 28, 2021, at an annual rate of 5.00% of the liquidation preference, or $25.00 per share.
Redemption of Series A Term Preferred Stock
On February 12, 2021, we redeemed all of our outstanding shares of Series A Term Preferred Stock at a cash redemption price of $25.00 per share plus all accrued and unpaid dividends up to, but excluding, the redemption date. In total, we paid approximately $28.8 million for the redemption of the Series A Term Preferred Stock using proceeds from the offering of our Series D Term Preferred Stock. Our Series A Term Preferred Stock was delisted from Nasdaq on the date we redeemed all outstanding shares. In connection with this early redemption, during the three months ending March 31, 2021, we anticipate writing off approximately $127,000 of unamortized issuance costs related to the issuance of the Series A Term Preferred Stock.
Equity Activity
Amendment to Articles of Incorporation
On January 13, 2021, we filed with the State Department of Assessments and Taxation of Maryland the Articles Supplementary (i) setting forth the rights, preferences and terms of the Series D Term Preferred Stock and (ii) reclassifying and designating 3,600,000 shares of our authorized and unissued shares of common stock as shares of Series D Term Preferred Stock.
Amendment to Operating Partnership Agreement
On January 13, 2021, the Operating Partnership adopted the Fifth Amendment to its First Amended and Restated Agreement of Limited Partnership, including Exhibit SD thereto (collectively, the “Amendment”), as amended from time to time, establishing the rights, privileges, and preferences of 5.00% Series D Cumulative Term Preferred Units, a newly-designated class of limited partnership interests (the “Series D Preferred Units”). The Amendment provides for the Operating Partnership’s establishment and issuance of an equal number of Series D Preferred Units as are issued shares of Series D Term Preferred Stock by the Company in connection with the offering of Series D Term Preferred Stock upon the Company’s contribution to the Operating Partnership of the net proceeds of the offering of Series D Term Preferred Stock. Generally, the Series D Term Preferred Units provided for under the Amendment have preferences, distribution rights, and other provisions substantially equivalent to those of the Series D Preferred Stock.
Equity Issuances
The following table provides information on certain equity sales that have occurred subsequent to December 31, 2020 (dollars in thousands, except per-share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Type of Issuance
|
|
Number of
Shares Sold
|
|
Weighted-average
Offering Price
Per Share
|
|
Gross Proceeds
|
|
Net Proceeds(1)
|
|
Series C Preferred Stock(2)
|
|
313,646
|
|
$
|
24.88
|
|
|
$
|
7,802
|
|
|
$
|
7,135
|
|
|
Common Stock – ATM Program
|
|
524,148
|
|
14.47
|
|
|
7,582
|
|
|
7,507
|
|
(1)Net of Series C Selling Commissions and Series C Dealer-Manager Fees or underwriting commissions and discounts (in each case, as applicable).
(2)Excludes approximately 367 shares issued pursuant to the DRIP.
Distributions
On January 12, 2021, our Board of Directors declared the following monthly cash distributions to holders of our preferred and common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
|
|
Record Date
|
|
Payment Date
|
|
Distribution per Share
|
|
Series A Term Preferred Stock:
|
|
January 22, 2021
|
|
January 29, 2021
|
|
$
|
0.1328125
|
|
|
Total Series A Term Preferred Stock Distributions:
|
|
$
|
0.1328125
|
|
|
|
|
|
|
|
|
|
|
Series B Preferred Stock:
|
|
January 27, 2021
|
|
February 5, 2021
|
|
$
|
0.125
|
|
|
|
|
February 24, 2021
|
|
March 5, 2021
|
|
0.125
|
|
|
|
|
March 24, 2021
|
|
April 5, 2021
|
|
0.125
|
|
|
Total Series B Preferred Stock Distributions:
|
|
$
|
0.375
|
|
|
|
|
|
|
|
|
|
|
Series C Preferred Stock:
|
|
January 27, 2021
|
|
February 5, 2021
|
|
$
|
0.125
|
|
|
|
|
February 24, 2021
|
|
March 5, 2021
|
|
0.125
|
|
|
|
|
March 24, 2021
|
|
April 5, 2021
|
|
0.125
|
|
|
Total Series C Preferred Stock Distributions:
|
|
$
|
0.375
|
|
|
|
|
|
|
|
|
|
|
Series D Term Preferred Stock(1):
|
|
February 17, 2021
|
|
February 28, 2021
|
(2)
|
$
|
0.142361
|
|
|
|
|
March 25, 2021
|
|
April 5, 2021
|
|
0.104167
|
|
|
Total Series D Term Preferred Stock Distributions:
|
|
$
|
0.246528
|
|
|
|
|
|
|
|
|
|
|
Common Stock(3):
|
|
January 22, 2021
|
|
January 29, 2021
|
|
$
|
0.04495
|
|
|
|
|
February 17, 2021
|
|
February 26, 2021
|
|
0.04495
|
|
|
|
|
March 18, 2021
|
|
March 31, 2021
|
|
0.04495
|
|
|
Total Common Stock Distributions:
|
|
$
|
0.13485
|
|
(1)Dividends on the Series D Term Preferred Stock were declared on January 25, 2021.
(2)To be paid on the following business day.
(3)The same amounts paid to common stockholders will be paid as distributions on each OP Unit held by non-controlling OP Unitholders as of the above record dates.
GLADSTONE LAND CORPORATION
SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 2020
(In Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial Cost
|
|
Subsequent Capitalized Additions
|
|
Total Cost
|
|
|
|
Location and Description of Property
|
|
Date Acquired
|
|
Encumbrances
|
|
Land and Land Improvements
|
|
Buildings & Improvements
|
|
Permanent Plantings
|
|
Land Improvements
|
|
Buildings & Improvements
|
|
Permanent Plantings
|
|
Land and Land Improvements
|
|
Buildings & Improvements
|
|
Permanent Plantings
|
|
Total(1)
|
|
Accumulated Depreciation(2)
|
Santa Cruz County, California:
Land & Improvements
|
|
6/16/1997
|
|
$
|
7,929
|
|
|
$
|
4,350
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
579
|
|
|
$
|
—
|
|
|
$
|
4,350
|
|
|
$
|
579
|
|
|
$
|
—
|
|
|
$
|
4,929
|
|
|
$
|
(341)
|
|
Ventura County, California:
Land, Buildings & Improvements
|
|
9/15/1998
|
|
30,899
|
|
|
9,895
|
|
|
5,256
|
|
|
—
|
|
|
—
|
|
|
293
|
|
|
—
|
|
|
9,895
|
|
|
5,549
|
|
|
—
|
|
|
15,444
|
|
|
(4,306)
|
|
Santa Cruz County, California:
Land & Improvements
|
|
1/3/2011
|
|
6,914
|
|
|
8,328
|
|
|
—
|
|
|
—
|
|
|
443
|
|
|
527
|
|
|
—
|
|
|
8,771
|
|
|
527
|
|
|
—
|
|
|
9,298
|
|
|
(171)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hillsborough County, Florida:
Land, Buildings & Improvements
|
|
9/12/2012
|
|
2,575
|
|
|
2,199
|
|
|
1,657
|
|
|
—
|
|
|
14
|
|
|
1,328
|
|
|
—
|
|
|
2,213
|
|
|
2,985
|
|
|
—
|
|
|
5,198
|
|
|
(1,219)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Monterey County, California:
Land, Buildings & Improvements
|
|
10/21/2013
|
|
4,956
|
|
|
7,187
|
|
|
164
|
|
|
—
|
|
|
180
|
|
|
3,118
|
|
|
—
|
|
|
7,367
|
|
|
3,282
|
|
|
—
|
|
|
10,649
|
|
|
(727)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cochise County, Arizona:
Land, Buildings & Improvements
|
|
12/27/2013
|
|
2,940
|
|
|
6,168
|
|
|
572
|
|
|
—
|
|
|
8
|
|
|
4,548
|
|
|
—
|
|
|
6,176
|
|
|
5,120
|
|
|
—
|
|
|
11,296
|
|
|
(1,118)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Santa Cruz County, California:
Land, Building & Improvements
|
|
6/13/2014
|
|
3,012
|
|
|
5,576
|
|
|
207
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
—
|
|
|
5,576
|
|
|
219
|
|
|
—
|
|
|
5,795
|
|
|
(208)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ventura County, California:
Land, Buildings & Improvements
|
|
7/23/2014
|
|
2,241
|
|
|
6,219
|
|
|
505
|
|
|
—
|
|
|
—
|
|
|
85
|
|
|
—
|
|
|
6,219
|
|
|
590
|
|
|
—
|
|
|
6,809
|
|
|
(229)
|
|
Kern County, California:
Land & Improvements
|
|
7/25/2014
|
|
2,925
|
|
|
5,841
|
|
|
67
|
|
|
—
|
|
|
—
|
|
|
993
|
|
|
—
|
|
|
5,841
|
|
|
1,060
|
|
|
—
|
|
|
6,901
|
|
|
(382)
|
|
Manatee County, Florida:
Land, Buildings & Improvements
|
|
9/29/2014
|
|
9,001
|
|
|
8,466
|
|
|
5,426
|
|
|
—
|
|
|
—
|
|
|
667
|
|
|
—
|
|
|
8,466
|
|
|
6,093
|
|
|
—
|
|
|
14,559
|
|
|
(3,296)
|
|
Ventura County, California:
Land, Buildings & Improvements
|
|
10/29/2014
|
|
15,741
|
|
|
23,673
|
|
|
350
|
|
|
—
|
|
|
—
|
|
|
2,166
|
|
|
—
|
|
|
23,673
|
|
|
2,516
|
|
|
—
|
|
|
26,189
|
|
|
(569)
|
|
Ventura County, California:
Land & Improvements
|
|
11/4/2014
|
|
3,180
|
|
|
5,860
|
|
|
92
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
5,860
|
|
|
94
|
|
|
—
|
|
|
5,954
|
|
|
(58)
|
|
Monterey County, California:
Land, Buildings & Improvements
|
|
1/5/2015
|
|
10,673
|
|
|
15,852
|
|
|
582
|
|
|
—
|
|
|
(156)
|
|
|
1,426
|
|
|
—
|
|
|
15,696
|
|
|
2,008
|
|
|
—
|
|
|
17,704
|
|
|
(765)
|
|
Manatee County, Florida:
Land, Buildings & Improvements
|
|
3/10/2015
|
|
3,750
|
|
|
2,403
|
|
|
1,871
|
|
|
—
|
|
|
—
|
|
|
84
|
|
|
—
|
|
|
2,403
|
|
|
1,955
|
|
|
—
|
|
|
4,358
|
|
|
(1,024)
|
|
Hendry County, Florida:
Land, Buildings & Improvements
|
|
6/25/2015
|
|
10,356
|
|
|
14,411
|
|
|
789
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,411
|
|
|
789
|
|
|
—
|
|
|
15,200
|
|
|
(626)
|
|
Rock County, Nebraska:
Land, Buildings & Improvements
|
|
8/20/2015
|
|
3,516
|
|
|
4,862
|
|
|
613
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,862
|
|
|
613
|
|
|
—
|
|
|
5,475
|
|
|
(421)
|
|
Holt County, Nebraska:
Land, Buildings & Improvements
|
|
8/20/2015
|
|
3,534
|
|
|
4,690
|
|
|
786
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,690
|
|
|
786
|
|
|
—
|
|
|
5,476
|
|
|
(346)
|
|
Kern County, California:
Land & Improvements
|
|
9/3/2015
|
|
16,324
|
|
|
18,893
|
|
|
497
|
|
|
—
|
|
|
688
|
|
|
5,959
|
|
|
1,418
|
|
|
19,581
|
|
|
6,456
|
|
|
1,418
|
|
|
27,455
|
|
|
(1,986)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cochise County, Arizona:
Land, Buildings & Improvements
|
|
12/23/2015
|
|
3,210
|
|
|
4,234
|
|
|
1,502
|
|
|
—
|
|
|
5
|
|
|
3,298
|
|
|
—
|
|
|
4,239
|
|
|
4,799
|
|
|
—
|
|
|
9,038
|
|
|
(791)
|
|
Saguache County, Colorado:
Land, Buildings & Improvements
|
|
3/3/2016
|
|
15,313
|
|
|
16,756
|
|
|
8,348
|
|
|
—
|
|
|
—
|
|
|
1,486
|
|
|
—
|
|
|
16,756
|
|
|
9,834
|
|
|
—
|
|
|
26,590
|
|
|
(4,540)
|
|
Fresno County, California:
Land, Improvements & Permanent plantings
|
|
4/5/2016
|
|
8,117
|
|
|
3,623
|
|
|
1,228
|
|
|
11,455
|
|
|
—
|
|
|
196
|
|
|
—
|
|
|
3,623
|
|
|
1,424
|
|
|
11,455
|
|
|
16,501
|
|
|
(2,401)
|
|
Saint Lucie County, Florida:
Land, Buildings & Improvements
|
|
7/1/2016
|
|
2,743
|
|
|
4,165
|
|
|
971
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,165
|
|
|
971
|
|
|
—
|
|
|
5,136
|
|
|
(437)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Baca County, Colorado:
Land & Buildings
|
|
9/1/2016
|
|
3,498
|
|
|
6,167
|
|
|
214
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,167
|
|
|
214
|
|
|
—
|
|
|
6,381
|
|
|
(62)
|
|
Merced County, Colorado:
Land & Improvements
|
|
9/14/2016
|
|
7,696
|
|
|
12,845
|
|
|
504
|
|
|
—
|
|
|
—
|
|
|
190
|
|
|
—
|
|
|
12,845
|
|
|
694
|
|
|
—
|
|
|
13,539
|
|
|
(106)
|
|
Stanislaus County, Colorado:
Land & Improvements
|
|
9/14/2016
|
|
8,337
|
|
|
14,114
|
|
|
45
|
|
|
—
|
|
|
—
|
|
|
463
|
|
|
—
|
|
|
14,114
|
|
|
508
|
|
|
—
|
|
|
14,622
|
|
|
(82)
|
|
Fresno County, California:
Land, Improvements & Permanent plantings
|
|
10/13/2016
|
|
3,501
|
|
|
2,937
|
|
|
139
|
|
|
3,452
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,937
|
|
|
139
|
|
|
3,452
|
|
|
6,528
|
|
|
(769)
|
|
Baca County, Colorado:
Land & Improvements
|
|
12/28/2016
|
|
6,763
|
|
|
11,430
|
|
|
278
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,430
|
|
|
278
|
|
|
—
|
|
|
11,708
|
|
|
(222)
|
|
Martin County, Florida:
Land & Improvements
|
|
1/12/2017
|
|
32,400
|
|
|
52,443
|
|
|
1,627
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
52,443
|
|
|
1,627
|
|
|
—
|
|
|
54,070
|
|
|
(260)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yuma County, Arizona
Land & Improvements
|
|
6/1/2017
|
|
13,694
|
|
|
12,390
|
|
|
12,191
|
|
|
—
|
|
|
151
|
|
|
18,207
|
|
|
—
|
|
|
12,541
|
|
|
30,398
|
|
|
—
|
|
|
42,939
|
|
|
(4,145)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fresno County, California:
Land, Improvements & Permanent plantings
|
|
7/17/2017
|
|
7,110
|
|
|
5,048
|
|
|
777
|
|
|
7,818
|
|
|
2
|
|
|
1,364
|
|
|
—
|
|
|
5,050
|
|
|
2,141
|
|
|
7,818
|
|
|
15,009
|
|
|
(1,548)
|
|
Santa Barbara County, California:
Land, Improvements & Permanent plantings
|
|
8/9/2017
|
|
3,225
|
|
|
4,559
|
|
|
577
|
|
|
397
|
|
|
(50)
|
|
|
148
|
|
|
1,494
|
|
|
4,509
|
|
|
724
|
|
|
1,891
|
|
|
7,124
|
|
|
(403)
|
|
Okeechobee County, Florida:
Land & Improvements
|
|
8/9/2017
|
|
5,230
|
|
|
9,111
|
|
|
953
|
|
|
—
|
|
|
985
|
|
|
1,094
|
|
|
—
|
|
|
10,096
|
|
|
2,047
|
|
|
—
|
|
|
12,143
|
|
|
(377)
|
|
Walla Walla County, Washington:
Land, Improvements & Permanent plantings
|
|
9/8/2017
|
|
4,860
|
|
|
5,286
|
|
|
401
|
|
|
3,739
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,286
|
|
|
401
|
|
|
3,739
|
|
|
9,426
|
|
|
(1,724)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fresno County, California:
Land, Improvements & Permanent plantings
|
|
12/15/2017
|
|
3,207
|
|
|
2,016
|
|
|
324
|
|
|
3,626
|
|
|
(1)
|
|
|
—
|
|
|
(3)
|
|
|
2,015
|
|
|
324
|
|
|
3,623
|
|
|
5,962
|
|
|
(1,092)
|
|
Kern County, California:
Land & Improvements
|
|
1/31/2018
|
|
1,358
|
|
|
2,733
|
|
|
249
|
|
|
—
|
|
|
(4)
|
|
|
1,526
|
|
|
—
|
|
|
2,729
|
|
|
1,775
|
|
|
—
|
|
|
4,504
|
|
|
(128)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Collier & Hendry, Florida Land & Improvements
|
|
7/12/2018
|
|
21,504
|
|
|
36,223
|
|
|
344
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
36,224
|
|
|
344
|
|
|
—
|
|
|
36,568
|
|
|
(121)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kings County, California:
Land, Improvements & Permanent plantings
|
|
9/13/2018
|
|
4,025
|
|
|
3,264
|
|
|
284
|
|
|
3,349
|
|
|
5
|
|
|
—
|
|
|
5
|
|
|
3,269
|
|
|
284
|
|
|
3,354
|
|
|
6,907
|
|
|
(237)
|
|
Madera, California:
Land, Improvements & Permanent plantings
|
|
11/1/2018
|
|
13,385
|
|
|
12,305
|
|
|
1,718
|
|
|
9,015
|
|
|
13
|
|
|
2
|
|
|
9
|
|
|
12,318
|
|
|
1,720
|
|
|
9,024
|
|
|
23,062
|
|
|
(725)
|
|
Hartley County, Texas:
Land & Improvements
|
|
11/20/2018
|
|
5,117
|
|
|
7,320
|
|
|
1,054
|
|
|
—
|
|
|
3
|
|
|
96
|
|
|
—
|
|
|
7,323
|
|
|
1,150
|
|
|
—
|
|
|
8,473
|
|
|
(145)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Madera County, California:
Land & Improvements
|
|
4/9/2019
|
|
17,130
|
|
|
8,074
|
|
|
2,696
|
|
|
17,916
|
|
|
—
|
|
|
525
|
|
|
—
|
|
|
8,074
|
|
|
3,221
|
|
|
17,916
|
|
|
29,212
|
|
|
(1,613)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allegran and Van Buren County, Michigan:
Land & Improvements
|
|
6/4/2019
|
|
2,996
|
|
|
1,634
|
|
|
800
|
|
|
2,694
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,634
|
|
|
800
|
|
|
2,694
|
|
|
5,128
|
|
|
(291)
|
|
Yolo County, California:
Land & Improvements
|
|
6/13/2019
|
|
5,073
|
|
|
5,939
|
|
|
665
|
|
|
2,648
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,939
|
|
|
665
|
|
|
2,648
|
|
|
9,252
|
|
|
(215)
|
|
Monterey County, California:
Land & Improvements
|
|
7/11/2019
|
|
5,860
|
|
|
8,629
|
|
|
254
|
|
|
—
|
|
|
1,192
|
|
|
1,698
|
|
|
—
|
|
|
9,821
|
|
|
1,952
|
|
|
—
|
|
|
11,773
|
|
|
(69)
|
|
Martin County, Florida:
Land & Improvements
|
|
7/22/2019
|
|
36,733
|
|
|
51,691
|
|
|
6,595
|
|
|
—
|
|
|
4
|
|
|
1
|
|
|
—
|
|
|
51,695
|
|
|
6,596
|
|
|
—
|
|
|
58,291
|
|
|
(734)
|
|
Fresno County, California:
Land & Improvements
|
|
8/16/2019
|
|
40,811
|
|
|
24,772
|
|
|
13,410
|
|
|
31,420
|
|
|
4
|
|
|
8
|
|
|
10
|
|
|
24,776
|
|
|
13,418
|
|
|
31,430
|
|
|
69,624
|
|
|
(2,295)
|
|
Ventura County, California:
Land & Improvements
|
|
8/28/2019
|
|
13,059
|
|
|
20,602
|
|
|
397
|
|
|
—
|
|
|
172
|
|
|
1,163
|
|
|
—
|
|
|
20,774
|
|
|
1,560
|
|
|
—
|
|
|
22,334
|
|
|
(152)
|
|
Napa County, California:
Land & Improvements
|
|
8/29/2019
|
|
18,262
|
|
|
27,509
|
|
|
1,646
|
|
|
2,923
|
|
|
3,235
|
|
|
—
|
|
|
—
|
|
|
30,744
|
|
|
1,646
|
|
|
2,923
|
|
|
35,313
|
|
|
(510)
|
|
Hayes County, Nebraska:
Land & Improvements
|
|
10/7/2019
|
|
3,045
|
|
|
4,750
|
|
|
264
|
|
|
—
|
|
|
16
|
|
|
1
|
|
|
—
|
|
|
4,766
|
|
|
265
|
|
|
—
|
|
|
5,031
|
|
|
(55)
|
|
Hayes & Hitchcock County, Nebraska:
Land & Improvements
|
|
10/7/2019
|
|
5,739
|
|
|
9,275
|
|
|
431
|
|
|
—
|
|
|
20
|
|
|
1
|
|
|
—
|
|
|
9,295
|
|
|
432
|
|
|
—
|
|
|
9,727
|
|
|
(100)
|
|
Phillips County, Colorado:
Land & Improvements
|
|
1/15/2020
|
|
4,500
|
|
|
6,875
|
|
|
660
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,875
|
|
|
660
|
|
|
—
|
|
|
7,535
|
|
|
(63)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kern County, California:
Land, Improvements & Permanent plantings
|
|
6/24/2020
|
|
8,500
|
|
|
12,521
|
|
|
1,325
|
|
|
370
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,521
|
|
|
1,325
|
|
|
370
|
|
|
14,216
|
|
|
—
|
|
Wicomico & Caroline County, Maryland, and Sussex County, Delaware:
Land & Improvements
|
|
8/31/2020
|
|
4,481
|
|
|
6,703
|
|
|
626
|
|
|
—
|
|
|
—
|
|
|
36
|
|
|
—
|
|
|
6,703
|
|
|
662
|
|
|
—
|
|
|
7,365
|
|
|
(21)
|
|
Fresno County, California:
Land & Improvements
|
|
9/3/2020
|
|
18,764
|
|
|
15,071
|
|
|
4,680
|
|
|
11,921
|
|
|
—
|
|
|
28
|
|
|
—
|
|
|
15,071
|
|
|
4,708
|
|
|
11,921
|
|
|
31,700
|
|
|
(278)
|
|
Fresno County, California:
Land, Improvements & Permanent plantings
|
|
10/1/2020
|
|
18,817
|
|
|
7,128
|
|
|
9,206
|
|
|
15,242
|
|
|
33
|
|
|
—
|
|
|
—
|
|
|
7,161
|
|
|
9,206
|
|
|
15,242
|
|
|
31,609
|
|
|
(283)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ventura County, California:
Land & Improvements
|
|
12/15/2020
|
|
12,450
|
|
|
19,215
|
|
|
1,264
|
|
|
—
|
|
|
50
|
|
|
—
|
|
|
—
|
|
|
19,265
|
|
|
1,264
|
|
|
—
|
|
|
20,529
|
|
|
(5)
|
|
Tulare County, California:
Land, Improvements & Permanent plantings
|
|
12/17/2020
|
|
22,319
|
|
|
26,952
|
|
|
6,420
|
|
|
28,152
|
|
|
77
|
|
|
—
|
|
|
—
|
|
|
27,029
|
|
|
6,420
|
|
|
28,152
|
|
|
61,601
|
|
|
(110)
|
|
San Joaquin County, California:
Land, Improvements, & Permanent plantings
|
|
12/24/2020
|
|
20,615
|
|
|
8,219
|
|
|
7,228
|
|
|
16,281
|
|
|
41
|
|
|
—
|
|
|
—
|
|
|
8,260
|
|
|
7,228
|
|
|
16,281
|
|
|
31,769
|
|
|
(59)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Whatcom County, Washington:
Land, Improvements, & Permanent plantings
|
|
12/24/2020
|
|
22,750
|
|
|
12,265
|
|
|
2,142
|
|
|
19,924
|
|
|
38
|
|
|
—
|
|
|
—
|
|
|
12,303
|
|
|
2,142
|
|
|
19,924
|
|
|
34,369
|
|
|
(89)
|
|
Tulare County, California:
Land, Improvements & Permanent plantings
|
|
12/31/2020
|
|
—
|
|
|
1,082
|
|
|
1,154
|
|
|
1,977
|
|
|
31
|
|
|
—
|
|
|
—
|
|
|
1,113
|
|
|
1,154
|
|
|
1,977
|
|
|
4,244
|
|
|
—
|
|
|
Miscellaneous Investments
|
|
Various
|
|
26,257
|
|
|
35,112
|
|
|
8,687
|
|
|
4,194
|
|
|
58
|
|
|
2,657
|
|
|
974
|
|
|
35,169
|
|
|
11,345
|
|
|
5,168
|
|
|
51,683
|
|
|
(4,187)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
627,690
|
|
|
$
|
706,070
|
|
|
$
|
123,712
|
|
|
$
|
198,513
|
|
|
$
|
7,263
|
|
|
$
|
55,975
|
|
|
$
|
3,907
|
|
|
$
|
713,332
|
|
|
$
|
179,686
|
|
|
$
|
202,420
|
|
|
$
|
1,095,439
|
|
|
$
|
(49,236)
|
|
(1)The aggregate cost for land, buildings, improvements and long-lived horticulture plantings for federal income tax purposes is approximately $1.1 billion.
(2)The Company computes depreciation using the straight-line method over the shorter of the estimated useful life or 39 years for buildings and improvements, the shorter of the estimated useful life or 40 years for permanent plantings, 5 to 10 years for equipment and fixtures and the shorter of the useful life or the remaining lease term for tenant improvements.
The following table reconciles the change in the balance of real estate during the years ended December 31, 2020 and 2019, respectively (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
|
|
Balance, beginning of period
|
|
$
|
827,255
|
|
|
$
|
563,004
|
|
|
|
Additions:
|
|
|
|
|
|
|
Acquisitions during the period
|
|
257,055
|
|
|
252,817
|
|
|
|
Improvements
|
|
11,129
|
|
|
11,434
|
|
|
|
Deductions:
|
|
|
|
|
|
|
Dispositions during period
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Balance, end of period
|
|
$
|
1,095,439
|
|
|
$
|
827,255
|
|
|
The following table reconciles the change in the balance of accumulated depreciation during the years ended December 31, 2020 and 2019, respectively (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
|
|
Balance, beginning of period
|
|
$
|
35,174
|
|
|
$
|
24,051
|
|
|
|
Additions during period
|
|
16,655
|
|
|
11,230
|
|
|
|
Dispositions during period
|
|
(2,593)
|
|
|
(107)
|
|
|
|
Balance, end of period
|
|
$
|
49,236
|
|
|
$
|
35,174
|
|
|
