ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
MARYLAND | 54-1892552 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
1521 WESTBRANCH DRIVE, SUITE 100 MCLEAN, VIRGINIA | 22102 | |
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common stock, $0.001 par value per share | LAND | The Nasdaq Stock Market, LLC | ||
6.375% Series A Cumulative Term Preferred Stock, $0.001 par value per share | LANDP | The Nasdaq Stock Market, LLC |
Large accelerated filer | ¨ | Accelerated filer | x | ||
Non-accelerated filer | ¨ | Smaller reporting company | x | ||
Emerging growth company | ¨ |
PAGE | ||
September 30, 2019 | December 31, 2018 | ||||||
ASSETS | |||||||
Investments in real estate, net | $ | 740,608 | $ | 538,953 | |||
Lease intangibles, net | 5,257 | 5,686 | |||||
Cash and cash equivalents | 3,992 | 14,730 | |||||
Other assets, net | 7,170 | 5,750 | |||||
TOTAL ASSETS | $ | 757,027 | $ | 565,119 | |||
LIABILITIES AND EQUITY | |||||||
LIABILITIES: | |||||||
Borrowings under lines of credit | $ | 4,100 | $ | 100 | |||
Notes and bonds payable, net | 448,004 | 335,788 | |||||
Series A cumulative term preferred stock, $0.001 par value; $25.00 per share liquidation preference; 2,000,000 shares authorized, 1,150,000 shares issued and outstanding as of September 30, 2019, and December 31, 2018, net | 28,301 | 28,124 | |||||
Accounts payable and accrued expenses | 7,015 | 9,152 | |||||
Due to related parties, net | 1,194 | 945 | |||||
Other liabilities, net | 15,123 | 9,957 | |||||
Total liabilities | 503,737 | 384,066 | |||||
Commitments and contingencies (Note 7) | |||||||
EQUITY: | |||||||
Stockholders’ equity: | |||||||
Series B cumulative redeemable preferred stock, $0.001 par value; $25.00 per share liquidation preference; 6,500,000 shares authorized; 3,465,527 shares issued and outstanding as of September 30, 2019; 1,144,393 shares issued and outstanding as of December 31, 2018 | 3 | 1 | |||||
Common stock, $0.001 par value; 91,500,000 shares authorized; 20,888,075 shares issued and outstanding as of September 30, 2019; 17,891,340 shares issued and outstanding as of December 31, 2018 | 21 | 18 | |||||
Additional paid-in capital | 286,562 | 202,053 | |||||
Accumulated other comprehensive loss | (347 | ) | — | ||||
Distributions in excess of accumulated earnings | (35,344 | ) | (25,826 | ) | |||
Total stockholders’ equity | 250,895 | 176,246 | |||||
Non-controlling interests in Operating Partnership | 2,395 | 4,807 | |||||
Total equity | 253,290 | 181,053 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 757,027 | $ | 565,119 |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
OPERATING REVENUES: | |||||||||||||||
Lease revenues | $ | 11,012 | $ | 8,015 | $ | 27,203 | $ | 21,344 | |||||||
Other operating revenues | — | 2 | — | 7,313 | |||||||||||
Total operating revenues | 11,012 | 8,017 | 27,203 | 28,657 | |||||||||||
OPERATING EXPENSES: | |||||||||||||||
Depreciation and amortization | 3,419 | 2,374 | 8,952 | 6,805 | |||||||||||
Property operating expenses | 536 | 621 | 1,939 | 1,381 | |||||||||||
Base management fee | 862 | 690 | 2,741 | 2,102 | |||||||||||
Capital gains fee | — | 778 | — | 778 | |||||||||||
Administration fee | 311 | 387 | 866 | 935 | |||||||||||
General and administrative expenses | 447 | 443 | 1,465 | 1,350 | |||||||||||
Other operating expenses | — | 175 | — | 7,673 | |||||||||||
Total operating expenses | 5,575 | 5,468 | 15,963 | 21,024 | |||||||||||
Credits to fees from Adviser | — | (796 | ) | (1,542 | ) | (970 | ) | ||||||||
Total operating expenses, net of credits to fees | 5,575 | 4,672 | 14,421 | 20,054 | |||||||||||
OTHER INCOME (EXPENSE): | |||||||||||||||
Other income | 62 | 1 | 937 | 324 | |||||||||||
Interest expense | (4,401 | ) | (3,082 | ) | (11,396 | ) | (8,728 | ) | |||||||
Dividends declared on Series A cumulative term preferred stock | (458 | ) | (458 | ) | (1,375 | ) | (1,375 | ) | |||||||
(Loss) gain on dispositions of real estate assets, net | (134 | ) | 6,247 | (154 | ) | 6,247 | |||||||||
Property and casualty recovery (loss), net | 17 | — | 10 | (129 | ) | ||||||||||
Loss on write-down of crop inventory | — | (33 | ) | — | (1,093 | ) | |||||||||
Total other (expense) income, net | (4,914 | ) | 2,675 | (11,978 | ) | (4,754 | ) | ||||||||
NET INCOME | 523 | 6,020 | 804 | 3,849 | |||||||||||
Net income attributable to non-controlling interests | (6 | ) | (337 | ) | (9 | ) | (206 | ) | |||||||
NET INCOME ATTRIBUTABLE TO THE COMPANY | 517 | 5,683 | 795 | 3,643 | |||||||||||
Dividends declared on Series B cumulative redeemable preferred stock | (1,161 | ) | (90 | ) | (2,655 | ) | (92 | ) | |||||||
NET (LOSS) GAIN ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ | (644 | ) | $ | 5,593 | $ | (1,860 | ) | $ | 3,551 | |||||
(LOSS) GAIN PER COMMON SHARE: | |||||||||||||||
Basic and diluted | $ | (0.03 | ) | $ | 0.35 | $ | (0.10 | ) | $ | 0.23 | |||||
WEIGHTED-AVERAGE SHARES OF COMMON STOCK OUTSTANDING: | |||||||||||||||
Basic and diluted | 20,763,615 | 16,057,957 | 19,154,744 | 15,181,760 |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
COMPREHENSIVE INCOME: | |||||||||||||||
Net income attributable to the Company | $ | 517 | $ | 5,683 | $ | 795 | $ | 3,643 | |||||||
Change in fair value related to interest rate hedging instruments | (347 | ) | — | (347 | ) | — | |||||||||
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY | $ | 170 | $ | 5,683 | $ | 448 | $ | 3,643 |
Three months ended September 30, 2019 | |||||||||||||||||||||||||||||||||||||
Series B Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Comprehensive Income | Distributions in Excess of Accumulated Earnings | Total Stockholders’ Equity | Non- Controlling Interests | Total Equity | ||||||||||||||||||||||||||||||
Number of Shares | Par Value | Number of Shares | Par Value | ||||||||||||||||||||||||||||||||||
Balance at June 30, 2019 | 2,636,068 | $ | 3 | 20,532,770 | $ | 21 | $ | 263,249 | $ | — | $ | (31,919 | ) | 231,354 | $ | — | $ | 231,354 | |||||||||||||||||||
Issuance of Series B Preferred Stock, net | 831,579 | 0 | — | — | 18,517 | — | — | 18,517 | — | 18,517 | |||||||||||||||||||||||||||
Redemptions of Series B Preferred Stock | (2,120 | ) | 0 | — | — | (48 | ) | — | — | (48 | ) | — | (48 | ) | |||||||||||||||||||||||
Issuance of OP Units as consideration in real estate acquisitions, net | — | — | — | — | — | — | — | — | 3,276 | 3,276 | |||||||||||||||||||||||||||
Issuance of common stock, net | — | — | 355,305 | 0 | 3,996 | — | — | 3,996 | — | 3,996 | |||||||||||||||||||||||||||
Accumulated Other Comprehensive Income | — | — | — | — | — | (347 | ) | — | (347 | ) | — | (347 | ) | ||||||||||||||||||||||||
Net income | — | — | — | — | — | — | 517 | 517 | 6 | 523 | |||||||||||||||||||||||||||
Dividends—Series B Preferred Stock | — | — | — | — | — | — | (1,161 | ) | (1,161 | ) | — | (1,161 | ) | ||||||||||||||||||||||||
Distributions—OP Units and common stock | — | — | — | — | — | — | (2,781 | ) | (2,781 | ) | (39 | ) | (2,820 | ) | |||||||||||||||||||||||
Adjustment to non-controlling interests resulting from changes in ownership of the Operating Partnership | — | — | — | — | 848 | — | — | 848 | (848 | ) | — | ||||||||||||||||||||||||||
Balance at September 30, 2019 | 3,465,527 | $ | 3 | 20,888,075 | $ | 21 | $ | 286,562 | $ | (347 | ) | $ | (35,344 | ) | $ | 250,895 | $ | 2,395 | $ | 253,290 | |||||||||||||||||
Nine months ended September 30, 2019 | |||||||||||||||||||||||||||||||||||||
Series B Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Comprehensive Income | Distributions in Excess of Accumulated Earnings | Total Stockholders’ Equity | Non- Controlling Interests | Total Equity | ||||||||||||||||||||||||||||||
Number of Shares | Par Value | Number of Shares | Par Value | ||||||||||||||||||||||||||||||||||
Balance at December 31, 2018 | 1,144,393 | $ | 1 | 17,891,340 | $ | 18 | $ | 202,053 | $ | — | $ | (25,826 | ) | $ | 176,246 | $ | 4,807 | $ | 181,053 | ||||||||||||||||||
Issuance of Series B Preferred Stock, net | 2,330,654 | 2 | — | — | 51,975 | — | — | 51,977 | — | 51,977 | |||||||||||||||||||||||||||
Redemptions of Series B Preferred Stock | (9,520 | ) | 0 | — | — | (214 | ) | — | — | (214 | ) | — | (214 | ) | |||||||||||||||||||||||
Issuance of OP Units as consideration in real estate acquisitions, net | — | — | — | — | — | — | — | — | 3,276 | 3,276 | |||||||||||||||||||||||||||
Redemption of OP Units | — | — | 570,879 | 1 | 4,714 | — | — | 4,715 | (4,715 | ) | — | ||||||||||||||||||||||||||
Issuance of common stock, net | — | — | 2,425,856 | 2 | 27,143 | — | — | 27,145 | — | 27,145 | |||||||||||||||||||||||||||
Accumulated Other Comprehensive Income | — | — | — | — | — | (347 | ) | — | (347 | ) | — | (347 | ) | ||||||||||||||||||||||||
Net income | — | — | — | — | — | — | 795 | 795 | 9 | 804 | |||||||||||||||||||||||||||
Dividends—Series B Preferred Stock | — | — | — | — | — | — | (2,655 | ) | (2,655 | ) | — | (2,655 | ) | ||||||||||||||||||||||||
Distributions—OP Units and common stock | — | — | — | — | — | — | (7,658 | ) | (7,658 | ) | (91 | ) | (7,749 | ) | |||||||||||||||||||||||
Adjustment to non-controlling interests resulting from changes in ownership of the Operating Partnership | — | — | — | — | 891 | — | — | 891 | (891 | ) | — | ||||||||||||||||||||||||||
Balance at September 30, 2019 | 3,465,527 | $ | 3 | 20,888,075 | $ | 21 | $ | 286,562 | $ | (347 | ) | $ | (35,344 | ) | $ | 250,895 | $ | 2,395 | $ | 253,290 |
Three months ended September 30, 2018 | |||||||||||||||||||||||||||||||||
Series B Preferred Stock | Common Stock | Additional Paid-in Capital | Distributions in Excess of Accumulated Earnings | Total Stockholders’ Equity | Non- Controlling Interests | Total Equity | |||||||||||||||||||||||||||
Number of Shares | Par Value | Number of Shares | Par Value | ||||||||||||||||||||||||||||||
Balance at June 30, 2018 | 20,280 | $ | 0 | 16,023,872 | $ | 16 | $ | 155,106 | $ | (25,763 | ) | $ | 129,359 | $ | 5,792 | $ | 135,151 | ||||||||||||||||
Issuance of Series B Preferred Stock, net | 372,768 | 0 | — | — | 8,344 | — | 8,344 | — | 8,344 | ||||||||||||||||||||||||
Redemption of OP Units | — | — | 46,544 | 0 | 432 | — | 432 | (434 | ) | (2 | ) | ||||||||||||||||||||||
Issuance of common stock, net | — | — | 200 | 0 | 4 | — | 4 | — | 4 | ||||||||||||||||||||||||
Net income | — | — | — | — | — | 5,683 | 5,683 | 337 | 6,020 | ||||||||||||||||||||||||
Dividends—Series B Preferred Stock | — | — | — | — | — | (90 | ) | (90 | ) | — | (90 | ) | |||||||||||||||||||||
Distributions—OP Units and common stock | — | — | — | — | — | (2,135 | ) | (2,135 | ) | (92 | ) | (2,227 | ) | ||||||||||||||||||||
Adjustment to non-controlling interests resulting from changes in ownership of the Operating Partnership | — | — | — | — | 57 | — | 57 | (57 | ) | — | |||||||||||||||||||||||
Balance at September 30, 2018 | 393,048 | $ | — | 16,070,616 | $ | 16 | $ | 163,943 | $ | (22,305 | ) | $ | 141,654 | $ | 5,546 | $ | 147,200 |
Nine months ended September 30, 2018 | |||||||||||||||||||||||||||||||||
Series B Preferred Stock | Common Stock | Additional Paid-in Capital | Distributions in Excess of Accumulated Earnings | Total Stockholders’ Equity | Non- Controlling Interests | Total Equity | |||||||||||||||||||||||||||
Number of Shares | Par Value | Number of Shares | Par Value | ||||||||||||||||||||||||||||||
Balance at December 31, 2017 | — | $ | — | 13,791,574 | $ | 14 | $ | 129,705 | $ | (19,802 | ) | $ | 109,917 | $ | 8,034 | $ | 117,951 | ||||||||||||||||
Issuance of Series B Preferred Stock, net | 393,048 | 0 | — | — | 8,799 | — | 8,799 | — | 8,799 | ||||||||||||||||||||||||
Redemption of OP Units | — | — | 297,811 | 0 | 2,460 | — | 2,460 | (2,983 | ) | (523 | ) | ||||||||||||||||||||||
Issuance of common stock, net | — | — | 1,981,231 | 2 | 23,605 | — | 23,607 | — | 23,607 | ||||||||||||||||||||||||
Net income | — | — | — | — | — | 3,643 | 3,643 | 206 | 3,849 | ||||||||||||||||||||||||
Dividends—Series B Preferred Stock | — | — | — | — | — | (92 | ) | (92 | ) | — | (92 | ) | |||||||||||||||||||||
Distributions—OP Units and common stock | — | — | — | — | — | (6,054 | ) | (6,054 | ) | (337 | ) | (6,391 | ) | ||||||||||||||||||||
Adjustment to non-controlling interests resulting from changes in ownership of the Operating Partnership | — | — | — | — | (626 | ) | — | (626 | ) | 626 | — | ||||||||||||||||||||||
Balance at September 30, 2018 | 393,048 | $ | — | 16,070,616 | $ | 16 | $ | 163,943 | $ | (22,305 | ) | $ | 141,654 | $ | 5,546 | $ | 147,200 |
For the Nine Months Ended September 30, | ||||||||
2019 | 2018 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 804 | $ | 3,849 | ||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 8,952 | 6,805 | ||||||
Amortization of debt issuance costs | 461 | 434 | ||||||
Amortization of deferred rent assets and liabilities, net | (244 | ) | (272 | ) | ||||
Bad debt expense | 24 | 108 | ||||||
Loss (gain) on dispositions of real estate assets, net | 154 | (6,247 | ) | |||||
Property and casualty (recovery) loss, net | (10 | ) | 129 | |||||
Loss on write-down of crop inventory | — | 1,093 | ||||||
Changes in operating assets and liabilities: | ||||||||
Crop inventory and other assets, net | 281 | (1,274 | ) | |||||
Accounts payable and accrued expenses and Due to related parties, net | (1,586 | ) | (677 | ) | ||||
Other liabilities, net | 5,066 | 4,096 | ||||||
Net cash provided by operating activities | 13,902 | 8,044 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Acquisition of new real estate assets | (200,676 | ) | (31,467 | ) | ||||
Capital expenditures on existing real estate assets | (8,974 | ) | (17,157 | ) | ||||
Proceeds from dispositions of real estate assets | — | 132 | ||||||
Change in deposits on real estate acquisitions and investments, net | (300 | ) | (100 | ) | ||||
Net cash used in investing activities | (209,950 | ) | (48,592 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from issuance of preferred and common equity | 86,070 | 34,397 | ||||||
Offering costs | (6,551 | ) | (1,894 | ) | ||||
Payments for redemptions of OP Units | — | (523 | ) | |||||
Redemption of Series B Preferred Stock | (213 | ) | — | |||||
Borrowings from mortgage notes and bonds payable | 120,399 | 48,218 | ||||||
Repayments of mortgage notes and bonds payable | (7,686 | ) | (22,800 | ) | ||||
Borrowings from lines of credit | 22,900 | 14,100 | ||||||
Repayments of lines of credit | (18,900 | ) | (24,000 | ) | ||||
Payments of financing fees | (738 | ) | (525 | ) | ||||
Dividends paid on Series B cumulative redeemable preferred stock | (2,222 | ) | (43 | ) | ||||
Distributions paid on common stock | (7,658 | ) | (6,054 | ) | ||||
Distributions paid to non-controlling interests in Operating Partnership | (91 | ) | (337 | ) | ||||
Net cash provided by financing activities | 185,310 | 40,539 | ||||||
NET DECREASE IN CASH AND CASH EQUIVALENTS | (10,738 | ) | (9 | ) | ||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 14,730 | 2,938 | ||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 3,992 | $ | 2,929 |
For the Nine Months Ended September 30, | ||||||||
2019 | 2018 | |||||||
NON-CASH OPERATING, INVESTING, AND FINANCING INFORMATION: | ||||||||
Issuance of non-controlling interests in Operating Partnership in conjunction with acquisitions | $ | 3,290 | $ | — | ||||
Operating lease right-of-use assets included in Other assets, net | 188 | — | ||||||
Operating lease liabilities included in Other liabilities, net | 171 | — | ||||||
Real estate additions included in Accounts payable and accrued expenses and Due to related parties, net | 1,397 | 2,656 | ||||||
Loss on dispositions of real estate assets, net included in Accounts payable and accrued expenses and Due to related parties, net | 119 | 87 | ||||||
Real estate additions included in Other liabilities, net | — | 136 | ||||||
Stock offering and OP Unit issuance costs included in Accounts payable and accrued expenses and Due to related parties, net | 35 | 100 | ||||||
Financing fees included in Accounts payable and accrued expenses and Due to related parties, net | 14 | — | ||||||
Escrow proceeds from asset sale used for acquisition of new real estate assets | 20,500 | |||||||
Lender holdback on loan issuance | 498 | — | ||||||
Unrealized loss related to interest rate hedging instrument | (347 | ) |
Three Months Ended September 30, 2018 | Nine Months Ended September 30, 2018 | |||||||
Sales revenue(1) | $ | 2 | $ | 7,308 | ||||
Cost of sales(2) | (175 | ) | (7,673 | ) |
(1) | Included within Other operating revenues on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income. |
(2) | Included within Other operating expenses on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income. Excludes rent expense owed to the Company and interest expense owed on a loan from the Company to Land Advisers, both of which expenses were eliminated in consolidation. Also excludes the allocation of a fee earned by our Adviser from Land Advisers of approximately $15,000 and $176,000 during the three and nine months ended September 30, 2018, respectively, which is included within Management Fee on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income (see Note 6, “Related-Party Transactions—TRS Fee Arrangements—TRS Expense Sharing Agreement” for further discussion on this fee). |
Location | No. of Farms | Total Acres | Farm Acres | Net Cost Basis(1) | Encumbrances(2) | |||||||||
California(3) | 41 | 13,731 | 12,570 | $ | 383,358 | $ | 243,763 | |||||||
Florida | 23 | 20,770 | 16,256 | 211,703 | 133,742 | |||||||||
Arizona(4) | 6 | 6,280 | 5,228 | 56,488 | 21,773 | |||||||||
Colorado | 10 | 31,448 | 24,513 | 41,317 | 24,810 | |||||||||
Nebraska | 3 | 3,254 | 2,701 | 12,758 | 8,476 | |||||||||
Michigan | 7 | 962 | 682 | 12,570 | 7,421 | |||||||||
Washington | 1 | 746 | 417 | 8,438 | 5,099 | |||||||||
Texas | 1 | 3,667 | 2,219 | 8,333 | 5,280 | |||||||||
Oregon | 3 | 418 | 363 | 6,150 | 3,337 | |||||||||
North Carolina | 2 | 310 | 295 | 2,294 | 1,238 | |||||||||
97 | 81,586 | 65,244 | $ | 743,409 | $ | 454,939 |
(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 Condensed Consolidated Balance Sheets. |
(2) | Excludes approximately $2.8 million of debt issuance costs related to notes and bonds payable, included in Notes and bonds payable, net on the accompanying Condensed Consolidated Balance Sheet. |
(3) | Includes ownership in a special-purpose LLC that owns a pipeline conveying water to one of our properties. As of September 30, 2019, this investment was valued at approximately $280,000 and is included within Other assets, net on the accompanying Condensed Consolidated Balance Sheet. |
(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 $2.3 million as of September 30, 2019 (included in Lease intangibles, net on the accompanying Condensed Consolidated Balance Sheet). |
September 30, 2019 | December 31, 2018 | ||||||
Real estate: | |||||||
Land and land improvements | $ | 556,557 | $ | 417,310 | |||
Irrigation and drainage systems | 96,913 | 71,583 | |||||
Horticulture | 91,289 | 48,894 | |||||
Farm-related facilities | 20,579 | 18,510 | |||||
Other site improvements | 7,097 | 6,707 | |||||
Real estate, at gross cost | 772,435 | 563,004 | |||||
Accumulated depreciation | (31,827 | ) | (24,051 | ) | |||
Real estate, net | $ | 740,608 | $ | 538,953 |
September 30, 2019 | December 31, 2018 | |||||||
Lease intangibles: | ||||||||
Leasehold interest – land | $ | 3,498 | $ | 3,498 | ||||
In-place leases | 2,601 | 2,046 | ||||||
Leasing costs | 2,073 | 1,963 | ||||||
Tenant relationships | 414 | 414 | ||||||
Lease intangibles, at cost | 8,586 | 7,921 | ||||||
Accumulated amortization | (3,329 | ) | (2,235 | ) | ||||
Lease intangibles, net | $ | 5,257 | $ | 5,686 |
September 30, 2019 | December 31, 2018 | |||||||||||||||
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) | $ | 216 | $ | (115 | ) | $ | 126 | $ | (18 | ) | ||||||
Below-market lease values and other deferred revenue(2) | (1,002 | ) | 325 | (917 | ) | 202 | ||||||||||
$ | (786 | ) | $ | 210 | $ | (791 | ) | $ | 184 |
(1) | Net above-market lease values and lease incentives are included as part of Other assets, net on the accompanying Condensed Consolidated Balance Sheets, and the related amortization is recorded as a reduction of Lease revenue on the accompanying Condensed 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 Condensed Consolidated Balance Sheets, and the related accretion is recorded as an increase to Lease revenue on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income. |
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) | New Long-term Debt | |||||||||||||||||||
Somerset Road | Lincoln, NE | 1/22/2019 | 695 | 1 | Popcorn & edible beans | 4.9 years | 1 (5 years) | $ | 2,400 | $ | 28 | $ | 126 | $ | 1,440 | |||||||||||||||
Greenhills Boulevard(3) | Madera, CA | 4/9/2019 | 928 | 1 | Pistachios | 10.6 years | 2 (5 years) | 28,550 | 143 | 1,721 | 17,130 | |||||||||||||||||||
Van Buren Trail | Van Buren, MI | 5/29/2019 | 159 | 1 | Blueberries & cranberries | 10.6 years | 2 (5 years) | 2,682 | 28 | 206 | 1,609 | |||||||||||||||||||
Blue Star Highway | Allegran & Van Buren, MI | 6/4/2019 | 357 | 1 | Blueberries | 10.6 years | 2 (5 years) | 5,100 | 31 | 390 | 3,060 | |||||||||||||||||||
Yolo County Line Road | Yolo, CA | 6/13/2019 | 542 | 1 | Olives for olive oil | 14.6 years | 1 (5 years) | 9,190 | 66 | 624 | 5,514 | |||||||||||||||||||
San Juan Grade Road(4) | Monterey, CA | 7/11/2019 | 324 | 1 | Strawberries & vegetables | 0.3 years | None | 9,000 | 60 | 632 | 5,400 | |||||||||||||||||||
West Citrus Boulevard(5) | Martin, FL | 7/22/2019 | 3,586 | 1 | Water retention | 8.4 years | 2 (10 years) | 57,790 | 503 | 3,696 | 37,700 | |||||||||||||||||||
Sutter Avenue I(3)(6) | Fresno, CA | 8/16/2019 | 1,011 | 1 | Pistachios | 8.2 years | 2 (5 years) | 33,000 | 139 | 2,106 | 16,500 | |||||||||||||||||||
Las Posas Road(7) | Ventura, CA | 8/28/2019 | 413 | 3 | Sod & vegetables | 3.3 years | 1 (2 years) | 21,320 | 67 | 1,283 | 12,792 | |||||||||||||||||||
Withers Road(8) | Napa, CA | 8/29/2019 | 366 | 1 | Wine grapes | 10.3 years | 2 (10 years) | 32,000 | 77 | 2,256 | 19,254 | |||||||||||||||||||
8,381 | 12 | $ | 201,032 | $ | 1,142 | $ | 13,040 | $ | 120,399 |
(1) | Includes approximately $63,000 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) | Annualized straight-line rent is based on the minimum cash rental payments guaranteed under the applicable leases, as required under GAAP, and excludes contingent rental payments, such as participation rents. |
(3) | Leases provide for a 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 6-year, follow-on lease with a new tenant that will commence upon the expiration of the 4-month lease executed on the date of acquisition. The follow-on lease includes one, 4-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, 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. Our acquired ownership equated to an 11.75% interest in the LLC and was valued at approximately $280,000 at the time of acquisition and is included within Other assets, net on the accompanying Condensed Consolidated Balance Sheets. As our investment in the LLC is deemed to constitute “significant influence,” we have accounted for this investment under the equity method. From the commencement of our ownership in the LLC through September 30, 2019, there was no material income or loss recognized by the LLC; thus, no net income or loss was recorded by us during the three months ended September 30, 2019. |
(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 by February 25, 2020. We are currently unable to estimate when this approval will be obtained, if at all. If approval is obtained, we have 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. |
Property Name | Property Location | Acquisition Date | Total Acreage | No. of Farms | Primary Crop(s) | Lease Term | Renewal Options | Total Purchase Price | Acquisition Costs | Annualized Straight-line Rent(1) | New Long-term Debt | |||||||||||||||||||
Taft Highway(2) | Kern, CA | 1/31/2018 | 161 | 1 | Potatoes and Melons | N/A | N/A | $ | 2,945 | $ | 32 | $ | — | $ | 1,473 | |||||||||||||||
Cemetery Road | Van Buren, MI | 3/13/2018 | 176 | 1 | Blueberries | 9.6 years | None | 2,100 | 39 | 150 | 1,260 | |||||||||||||||||||
Owl Hammock(3) | Collier & Hendry, FL | 7/12/2018 | 5,630 | 5 | Vegetables and Melons | 7.0 years | 2 (5 years) | 37,350 | 196 | 2,148 | 22,410 | |||||||||||||||||||
Plantation Road | Jackson, FL | 9/6/2018 | 574 | 1 | Peanuts and Melons | 2.3 years | None | 2,600 | 35 | 142 | 1,560 | |||||||||||||||||||
Flint Avenue | Kings, CA | 9/13/2018 | 194 | 2 | Cherries | 15.3 years | 1 (5 years) | 6,850 | 58 | 523 | 4,110 | |||||||||||||||||||
6,735 | 10 | $ | 51,845 | $ | 360 | $ | 2,963 | $ | 30,813 |
(1) | Annualized straight-line rent is based on the minimum cash rental payments guaranteed under the applicable lease, as required under GAAP, and excludes contingent rental payments, such as participation rents. |
(2) | Farm was purchased with no lease in place at the time of acquisition. |
(3) | In connection with the acquisition of this property, we committed to provide up to $2.0 million of capital for certain irrigation and property improvements. As stipulated in the lease, we will earn additional rental income on the total cost of the improvements as disbursements are made by us at a rate commensurate with the annual yield on the farmland (as determined by each year’s minimum cash rent per the follow-on lease). |
Acquisition Period | Land and Land Improvements | Irrigation & Drainage Systems | Horticulture | Farm- related Facilities | Other Site Improvements | In- place Leases | Leasing Costs | Below Market Leases(1) | Investment in LLC(2) | Total Purchase Price | ||||||||||||||||||||||||||||||
2019 Acquisitions | $ | 138,245 | $ | 17,804 | $ | 41,739 | $ | 2,014 | $ | 358 | $ | 560 | $ | 118 | $ | (85 | ) | $ | 280 | $ | 201,032 | |||||||||||||||||||
2018 Acquisitions | 44,749 | 1,548 | 4,288 | 123 | — | 626 | 511 | — | — | 51,845 |
(1) | Included within Other liabilities, net on the accompanying Condensed Consolidated Balance Sheets. |
(2) | Included within Other assets, net on the accompanying Condensed Consolidated Balance Sheets. |
Weighted-Average Amortization Period (in Years) | ||||
Intangible Assets and Liabilities | 2019 | 2018 | ||
In-place leases | 1.9 | 7.0 | ||
Leasing costs | 3.0 | 7.1 | ||
All intangible assets and liabilities | 2.1 | 7.1 |
PRIOR LEASES | NEW LEASES | ||||||||||||||
Farm Locations | Number of Leases | Total Farm Acres | Total Annualized Straight-line Rent(1) | # of Leases with Participation Rents | Lease Structures (# of NNN / NN)(2) | Total Annualized Straight-line Rent(1) | Wtd. Avg. Term (Years) | # of Leases with Participation Rents | Lease Structures (# of NNN / NN)(2) | ||||||
AZ, CA, FL, MI, NE | 16 | 7,364 | $ | 3,527 | 1 | 10 / 6 | $ | 3,804 | 4.0 | 3 | 10 / 6 |
(1) | Annualized straight-line rent is based on the minimum cash rental payments guaranteed under the applicable leases (presented on an annualized basis), as required under GAAP, and excludes contingent rental payments, such as participation rents. |
(2) | “NNN” refers to leases under triple-net lease arrangements, and “NN” refers to leases under partial-net lease arrangements. For a description of each of these types of lease arrangements, see “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview—Leases—General.” |
Future Lease Payments(1) | ||||||||
Period | September 30, 2019 | December 31, 2018 | ||||||
2019 | $ | 7,338 | $ | 30,290 | ||||
2020 | 40,972 | 26,917 | ||||||
2021 | 33,045 | 20,980 | ||||||
2022 | 31,602 | 19,775 | ||||||
2023 | 31,903 | 19,413 | ||||||
Thereafter | 123,243 | 59,934 | ||||||
$ | 268,103 | $ | 177,309 |
(1) | Excludes variable rent payments, such as potential rent increases that are based on CPI or future contingent rents based on a percentage of the gross revenues earned on the respective farms. |
As of and For the nine months ended September 30, 2019 | As of and For the nine months ended September 30, 2018 | |||||||||||||||||||||||
State | Number of Farms | Total Acres | % of Total Acres | Lease Revenue | % of Total Lease Revenue | Number of Farms | Total Acres | % of Total Acres | Lease Revenue | % of Total Lease Revenue | ||||||||||||||
California(1) | 41 | 13,731 | 16.8% | $ | 13,872 | 51.0% | 31 | 8,435 | 12.4% | $ | 9,887 | 46.3% | ||||||||||||
Florida | 23 | 20,770 | 25.5% | 7,785 | 28.6% | 22 | 17,184 | 25.3% | 5,790 | 27.1% | ||||||||||||||
Colorado | 10 | 31,448 | 38.5% | 2,126 | 7.8% | 10 | 31,448 | 46.4% | 2,057 | 9.7% | ||||||||||||||
Arizona | 6 | 6,280 | 7.7% | 1,609 | 5.9% | 6 | 6,280 | 9.3% | 1,429 | 6.7% | ||||||||||||||
Michigan | 7 | 962 | 1.2% | 394 | 1.4% | 5 | 446 | 0.7% | 270 | 1.3% | ||||||||||||||
Texas | 1 | 3,667 | 4.5% | 386 | 1.4% | — | — | —% | — | —% | ||||||||||||||
Washington | 1 | 746 | 0.9% | 383 | 1.4% | 1 | 746 | 1.1% | 596 | 2.8% | ||||||||||||||
Oregon | 3 | 418 | 0.5% | 264 | 1.0% | 3 | 418 | 0.6% | 765 | 3.6% | ||||||||||||||
North Carolina | 2 | 310 | 0.4% | 259 | 1.0% | 2 | 310 | 0.4% | 115 | 0.5% | ||||||||||||||
Nebraska | 3 | 3,254 | 4.0% | 125 | 0.5% | 2 | 2,559 | 3.8% | 435 | 2.0% | ||||||||||||||
TOTALS | 97 | 81,586 | 100.0% | $ | 27,203 | 100.0% | 82 | 67,826 | 100.0% | $ | 21,344 | 100.0% |
(1) | According to the California Chapter of the American Society of Farm Managers and Rural Appraisers, there are eight distinct growing regions within California; our farms are spread across six of these growing regions. |
Carrying Value as of | As of September 30, 2019 | ||||||||||
September 30, 2019 | December 31, 2018 | Stated Interest Rates(1) (Range; Wtd Avg) | Maturity Dates (Range; Wtd Avg) | ||||||||
Notes and bonds payable: | |||||||||||
Fixed-rate notes payable | $ | 360,459 | $ | 247,249 | 3.16%–5.70%; 4.08% | 6/1/2020–8/1/2044; June 2032 | |||||
Fixed-rate bonds payable | 90,380 | 90,877 | 2.80%–4.57%; 3.55% | 12/11/2019–9/13/2028; November 2022 | |||||||
Total notes and bonds payable | 450,839 | 338,126 | |||||||||
Debt issuance costs – notes and bonds payable | (2,835 | ) | (2,338 | ) | N/A | N/A | |||||
Notes and bonds payable, net | $ | 448,004 | $ | 335,788 | |||||||
Variable-rate revolving lines of credit | $ | 4,100 | $ | 100 | 4.29%–4.54%; 4.29% | 4/5/2024 | |||||
Total borrowings, net | $ | 452,104 | $ | 335,888 |
(1) | Where applicable, stated interest rates are before interest patronage (as described below). |
Issuance | Aggregate Commitment | Maturity Dates | Principal Outstanding | Interest Rate Terms | Undrawn Commitment | ||||||||||||
MetLife Term Notes | $ | 200,000 | (1) | 1/5/2029 | $ | 138,408 | 3.35%, fixed through 1/4/2027 | (2) | $ | 47,030 | (3) | ||||||
MetLife Lines of Credit | 75,000 | 4/5/2024 | 4,100 | 3-month LIBOR + 2.00%–2.25% | (4) | 70,900 | (3) | ||||||||||
Total principal outstanding | $ | 142,508 |
(1) | If the aggregate commitment under this facility is not fully utilized by December 31, 2019, MetLife has the option to be relieved of its obligation to disburse the additional funds under the MetLife Term Notes. |
(2) | Represents the blended interest rate as of September 30, 2019. Interest rates for subsequent disbursements will be based on then-prevailing market rates. The interest rate on all then-outstanding disbursements will be subject to adjustment on January 5, 2027. Through December 31, 2019, the MetLife Term Notes are also subject to an unused fee ranging from 0.10% to 0.20% on undrawn amounts (based on the balance drawn under the MetLife Term Notes). |
(3) | Based on the properties that were pledged as collateral under the MetLife Facility, as of September 30, 2019, the maximum additional amount we could draw under the facility was approximately $18.9 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). |
Issuer | Date of Issuance | Amount | Maturity Date | Principal Amortization | Interest Rate Terms(1) | |||||||
Premier Farm Credit, FLCA | 2/7/2019 | $ | 1,440 | 11/1/2043 | 25.0 years | 5.45%, fixed through October 31, 2023 (variable thereafter) | ||||||
GreenStone Farm Credit Services | 7/11/2019 | 1,609 | 8/1/2044 | 25.0 years | 5.00%, fixed through June 30, 2029 (variable thereafter) | |||||||
GreenStone Farm Credit Services | 7/11/2019 | 3,060 | 8/1/2044 | 25.0 years | 5.00%, fixed through June 30, 2029 (variable thereafter) | |||||||
Farm Credit West, FLCA | 7/11/2019 | 5,400 | 5/1/2044 | 24.5 years | 4.24%, fixed through July 31, 2026 (variable thereafter) | |||||||
Farm Credit of Central Florida, ACA | 7/22/2019 | 31,850 | 7/1/2027 | 25.2 years | 5.05%, fixed throughout term | |||||||
Farm Credit of Central Florida, ACA | 7/22/2019 | 5,850 | 7/1/2027 | None (interest only) | 5.05%, fixed throughout term | |||||||
Farm Credit West, FLCA | 8/28/2019 | 12,792 | 5/1/2044 | 24.5 years | 3.84%, fixed through August 31, 2026 (variable thereafter)(2) | |||||||
American AgCredit, ACA | 8/29/2019 | 19,254 | 10/1/2039 | 20.0 years | 3.84%, fixed through August 31, 2029 (variable thereafter) |
(1) | Stated rate is before interest patronage, as described below. |
(2) | Loan originally issued as a variable-rate loan and was converted to a fixed-rate loan effective September 1, 2019. |
Date of Issuance | Amount | Maturity Date | Principal Amortization | Interest Rate Terms | ||||||
6/17/2019 | $ | 17,130 | 7/1/2029 | 25.0 years | 4.00%, fixed throughout term |
Date of Issuance | Amount | Maturity Date | Principal Amortization | Interest Rate Terms | ||||||
7/10/2019 | $ | 5,514 | 6/1/2029 | 25.0 years | 1-Month LIBOR + 1.75%(1) |
(1) | In connection with securing this loan and to hedge our exposure to the above variable interest rate, we entered into an interest rate swap agreement in which we agreed to pay a fixed interest rate to our counterparty of 4.04% through June 1, 2029. See “—Interest Rate Swap Agreement” below for additional information on this swap agreement. |
Period | Scheduled Principal Payments | ||||
For the remaining three months ending December 31: | 2019 | $ | 4,825 | ||
For the fiscal years ending December 31: | 2020 | 30,682 | |||
2021 | 19,075 | ||||
2022 | 41,867 | ||||
2023 | 35,658 | ||||
2024 | 26,765 | ||||
Thereafter | 291,967 | ||||
$ | 450,839 |
• | 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. |
Aggregate Notional Amount | Aggregate Fair Value Asset | Aggregate Fair Value Liability | ||||||||
$ | 5,514 | $ | — | $ | 347 |
Three Months Ended September 30, 2019 | Nine Months Ended September 30, 2019 | ||||||
Derivative in cash flow hedging relationship: | |||||||
Interest rate swap | $ | 347 | $ | 347 | |||
Total | $ | 347 | $ | 347 |
Derivative Type | Balance Sheet Location | Derivative Liability Fair Value | ||||
Derivatives Designated as Hedging Instruments: | ||||||
Interest rate swap | Other liabilities, net | $ | 347 | |||
Total | $ | 347 |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Base management fee(1)(2) | $ | 862 | $ | 690 | (3) | $ | 2,741 | $ | 2,102 | (3) | ||||||
Capital gains fee(1)(2) | — | 778 | — | 778 | ||||||||||||
Credits from non-contractual, unconditional, and irrevocable waiver granted by Adviser’s board of directors(2) | — | (796 | ) | (1,542 | ) | (970 | ) | |||||||||
Total fees to our Adviser, net | $ | 862 | $ | 672 | $ | 1,199 | $ | 1,910 | ||||||||
Administration fee(1)(2) | $ | 311 | $ | 387 | (4) | $ | 866 | $ | 935 | (4) | ||||||
Selling Commissions and Dealer-Manager Fees(1)(5) | $ | 1,657 | $ | 890 | $ | 4,781 | $ | 940 | ||||||||
Financing fees(1)(6) | 160 | 57 | 188 | 59 | ||||||||||||
Total fees to Gladstone Securities | $ | 1,817 | $ | 947 | $ | 4,969 | $ | 999 |
(1) | Pursuant to the agreements with the respective related-party entities, as discussed above. |
(2) | Reflected as a line item on our accompanying Condensed Consolidated Statements of Operations and Comprehensive Income. |
(3) | Includes the allocation of approximately $15,000 and $176,000 of the total accumulated costs incurred by our Adviser as a result of the crops harvested and sold on the farm operated by Land Advisers during the three and nine months ended September 30, 2018, respectively, as further described above under “TRS Expense Sharing Agreement.” |
(4) | Includes the portion of administration fee that was allocated to Land Advisers (approximately $18,000 and $48,000 for the three and nine months ended September 30, 2018, respectively), as further described above under “TRS Administration Fee Allocation.” |
(5) | Included within Additional paid-in capital on the accompanying Condensed Consolidated Balance Sheets. Through September 30, 2019, Gladstone Securities has remitted approximately 93.9% of these fees to unrelated third-parties involved in the offering (including participating broker-dealers and wholesalers). |
(6) | Included within Notes and bonds payable, net on the Condensed Consolidated Balance Sheets and amortized into Interest expense on the Condensed Consolidated Statements of Operations and Comprehensive Income. Through September 30, 2019, the total amount of financing fees paid to Gladstone Securities represented approximately 0.14% of the total financings secured during since the Financing Arrangement Agreement has been in place. |
September 30, 2019 | December 31, 2018 | |||||||
Due from Gladstone Securities(1) | $ | 38 | $ | 20 | ||||
Base management fee | 862 | 736 | ||||||
Capital gains fee(2) | — | (150 | ) | |||||
Credits to fees(3) | — | (44 | ) | |||||
Other(4) | 21 | 63 | ||||||
Total due to Adviser | 883 | 605 | ||||||
Administration fee | 311 | 340 | (5) | |||||
Total due to Administrator | 311 | 340 | ||||||
Total due to related parties(6) | $ | 1,194 | $ | 945 |
(1) | Other amounts due from Gladstone Securities generally represent costs for certain sales, promotional, or marketing services related to the offering of the Series B Preferred Stock paid for by us on behalf of Gladstone Securities. As of September 30, 2019 and December 31, 2018, such amounts are included within Other assets, net on our accompanying Condensed Consolidated Balance Sheets. |
(2) | The credit to the capital gains fee as of December 31, 2018, was a result of capital losses recorded in connection with dispositions of certain real estate assets during year ended December 31, 2018, which resulted in a reduction of the capital gains fee accrued for earlier in fiscal year 2018. |
(3) | The credits received from our Adviser during the three months ended September 30, 2019, and December 31, 2018, were granted as non-contractual, unconditional, and irrevocable waivers to be applied as credits against the base management fee. |
(4) | Other amounts 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. The balance owed to our Adviser as of December 31, 2018, includes premium payments for certain insurance policies made by our Adviser on our behalf. |
(5) | Includes approximately $9,000 owed by Land Advisers to our Administrator as of December 31, 2018, in accordance with the TRS Administration Fee Allocation, as discussed above. |
(6) | Reflected as a line item on our accompanying Condensed Consolidated Balance Sheets. |
Farm Location | Farm Gross Acreage | Total Commitment | Obligated Completion Date(1) | Amount Expended or Accrued as of September 30, 2019 | ||||||||
Salinas, CA | 324 | $ | 100 | Q4 2019 | $ | — | ||||||
Ventura, CA | 413 | 1,000 | Q1 2020 | 100 | ||||||||
Santa Barbara, CA | 361 | 4,000 | (2) | Q1 2020 | 1,725 | |||||||
Madera, CA | 928 | 500 | (2) | Q2 2020 | 176 | |||||||
Columbia, OR | 200 | 1,800 | (2) | Q4 2020 | 1,023 | |||||||
Hillsborough, FL | 55 | 2,250 | (2) | Q2 2021 | — | |||||||
Collier & Hendry, FL | 5,630 | 2,000 | (2) | Q2 2025 | — |
(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. |
Operating lease right-of-use assets(1) | $ | 188 | ||
Operating lease liabilities(2) | $ | 171 | ||
Weighted-average remaining lease term (years) | 4.8 | |||
Weighted-average discount rate | 4.20 | % |
(1) | Operating lease right-of-use assets are shown net of accrued lease payments of approximately $17,000 and are included within Other assets, net on the accompanying Condensed Consolidated Balance Sheet. |
(2) | Included within Other liabilities, net on the accompanying Condensed Consolidated Balance Sheet. |
Future Lease Payments(1) | ||||||||
Period | September 30, 2019 | December 31, 2018 | ||||||
2019 | $ | — | $ | 47 | ||||
2020 | 47 | 47 | ||||||
2021 | 47 | 47 | ||||||
2022 | 30 | 30 | ||||||
2023 | 30 | 30 | ||||||
Thereafter | 31 | 31 | ||||||
Total undiscounted lease payments | 185 | 232 | ||||||
Less: imputed interest | (14 | ) | — | |||||
Present value of lease payments | $ | 171 | $ | 232 |
(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. |
Fiscal Year | OP Units Tendered for Redemption | Shares of Common Stock Issued | OP Units Redeemed with Cash | Aggregate Cash Payment | Aggregate Cash Paid per OP Unit | |||||||||
Three months ended September 30, 2019 | 0 | 0 | 0 | $ | — | $ | — | |||||||
Nine months ended September 30, 2019 | 570,879 | 570,879 | 0 | — | — |
Period | Number of Shares Sold | Weighted-average Offering Price per Share | Gross Proceeds | Net Proceeds(1) | ||||||||||
Three months ended September 30, 2019 | 831,579 | $ | 24.64 | $ | 20,487 | $ | 18,711 | |||||||
Nine months ended September 30, 2019 | 2,330,654 | 24.68 | 57,529 | 52,440 |
(1) | Net of selling commissions and dealer-manager fees borne by us. |
Period | Number of Shares Sold | Weighted-average Offering Price Per Share | Gross Proceeds | Net Proceeds(1) | ||||||||||
Three months ended September 30, 2019 | 78,008 | $ | 12.01 | $ | 937 | $ | 923 | |||||||
Nine months ended September 30, 2019 | 148,559 | 12.32 | 1,830 | 1,802 |
(1) | Net of underwriting commissions and discounts. |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
Issuance | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Series A Term Preferred Stock(1) | $ | 0.3984375 | $ | 0.3984375 | $ | 1.1953125 | $ | 1.1953125 | ||||||||
Series B Preferred Stock(2) | 0.375 | 0.375 | 1.125 | 0.500 | ||||||||||||
Common Stock(3) | 0.13365 | 0.13305 | 0.40050 | 0.39870 |
(1) | Treated similar to interest expense on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income. |
(2) | Of the dividends declared on the Series B Preferred Stock by our Board of Directors on July 9, 2019, approximately $433,000 was paid (as scheduled) by us on October 3, 2019. The resulting dividend payable is included within Accounts payable and accrued expenses on the accompanying Condensed Consolidated Balance Sheets as of September 30, 2019. |
(3) | The same amounts were paid as distributions on each OP Unit held by non-controlling limited partners. |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Fixed lease payments(1) | $ | 10,131 | $ | 7,124 | $ | 26,236 | $ | 20,427 | ||||||||
Variable lease payments(2) | 881 | 891 | 967 | 917 | ||||||||||||
Lease revenues, net(3) | $ | 11,012 | $ | 8,015 | $ | 27,203 | $ | 21,344 |
(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 three and nine months ended September 30, 2019, we recorded participation rents of approximately $848,000 and $875,000, respectively, and reimbursements of certain property operating expenses by tenants of approximately $33,000 and $93,000, respectively. During the three and nine months ended September 30, 2018, we recorded participation rents of approximately $889,000 and $906,000, respectively, and reimbursements of certain property operating expenses by tenants of approximately $2,000 and $11,000, respectively. |
(3) | Reflected as a line item on our accompanying Condensed Consolidated Statements of Operations and Comprehensive Income. |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(Dollars in thousands, except per-share amounts) | |||||||||||||||
Net (loss) earnings attributable to common stockholders | $ | (644 | ) | $ | 5,593 | $ | (1,860 | ) | $ | 3,551 | |||||
Weighted average shares of common shares outstanding – basic and diluted | 20,763,615 | 16,057,957 | 19,154,744 | 15,181,760 | |||||||||||
(Loss) earnings per common share – basic and diluted | $ | (0.03 | ) | $ | 0.35 | $ | (0.10 | ) | $ | 0.23 |
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) | ||||||||||||||||
Highway 17(3) | Hayes, NE | 10/7/2019 | 2,561 | 3 | Corn, soybeans, & edible beans | 0.2 years | None | $ | 9,690 | $ | 39 | $ | 489 | |||||||||||||
Indian Highway(4) | Hayes & Hitchcock, NE | 10/7/2019 | 1,289 | 2 | Corn, soybeans, & edible beans | 0.3 years | None | 5,000 | 39 | 788 | ||||||||||||||||
Sutter Avenue II | Fresno, CA | 11/1/2019 | 1,098 | 1 | Pistachios | 8.0 years | 2 (5 Years) | 37,000 | 68 | 2,365 | ||||||||||||||||
4,948 | 6 | $ | 51,690 | $ | 146 | $ | 3,642 |
(1) | Acquisitions will be accounted for as asset acquisitions in accordance with ASC 360. The figures above represent only costs paid or accrued for as of the date of this filing. |
(2) | Annualized straight-line rent is based on the minimum cash rental payments guaranteed under the applicable lease, as required under GAAP, and excludes contingent rental payments, such as participation rents. |
(3) | 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 3-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. In addition, the farm is expected to be converted to organic farmland by 2021. |
(4) | In connection with this acquisition, we executed a 4-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 tenant that will commence upon the expiration of the 4-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 2021. |
PRIOR LEASES | NEW LEASES | ||||||||||||||
Farm Locations | Number of Leases | Total Farm Acres | Total Annualized Straight-line Rent(1) | # of Leases with Participation Rents | Lease Structures (# of NNN / NN)(2) | Total Annualized Straight-line Rent(1) | Wtd. Avg. Term (Years) | # of Leases with Participation Rents | Lease Structures (# of NNN / NN)(2) | ||||||
AZ, CA, FL | 5 | 5,177 | $ | 5,104 | None | 1 / 4 | $ | 5,850 | 7.0 | None | 0 / 5 |
(1) | Annualized straight-line rent is based on the minimum cash rental payments guaranteed under the applicable leases (presented on an annualized basis), as required under GAAP, and excludes contingent rental payments, such as participation rents. |
(2) | “NNN” refers to leases under triple-net lease arrangements, and “NN” refers to leases under partial-net lease arrangements. For a description of each of these types of lease arrangements, see “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview—Leases—General.” |
Issuer | Date of Issuance | Amount | Maturity Date | Principal Amortization | Interest Rate Terms | |||||||
Rabo AgriFinance, LLC | 10/16/2019 | $ | 5,739 | 10/1/2029 | 25.0 years | 1-Month LIBOR + 1.75%(1) | ||||||
Rabo AgriFinance, LLC | 10/16/2019 | 3,045 | 10/1/2029 | 25.0 years | 1-Month LIBOR + 1.75%(1) | |||||||
Diversified Financial Services, LLC | 10/17/2019 | 976 | 10/17/2026 | 7.0 years | 4.75%, fixed throughout its term | |||||||
Metropolitan Life Insurance Company(2) | 11/1/2019 | 25,500 | 1/5/2029 | 28.6 years | 3.81%, fixed through January 4, 2027 (variable thereafter) |
(1) | In connection with each of these loans, we entered into interest rate swap agreements in which we will pay a fixed interest rate to our counterparty of 3.67% through October 1, 2029. |
(2) | Loan was issued under the MetLife Credit Facility, as defined in Note 4, “Borrowings,” in these notes to our condensed consolidated financial statements. |
Type of Issuance | Number of Shares Sold | Weighted Average Offering Price Per Share | Gross Proceeds | Net Proceeds(1) | ||||||||||
Series B Preferred Stock | 244,778 | $ | 24.82 | $ | 6,076 | $ | 5,508 | |||||||
Common Stock – ATM Program | 48,583 | 12.01 | 583 | 574 |
(1) | Net of Selling Commissions and Dealer-Manager Fees or underwriting commissions and discounts (in each case, as applicable) |
Issuance | Record Date | Payment Date | Distribution per Share | |||||
Series A Term Preferred Stock: | October 22, 2019 | October 31, 2019 | $ | 0.1328125 | ||||
November 19, 2019 | November 29, 2019 | 0.1328125 | ||||||
December 19, 2019 | December 31, 2019 | 0.1328125 | ||||||
Total Series A Term Preferred Stock Distributions: | $ | 0.3984375 | ||||||
Series B Preferred Stock: | October 23, 2019 | October 31, 2019 | $ | 0.125 | ||||
November 27, 2019 | December 5, 2019 | 0.125 | ||||||
December 26, 2019 | January 3, 2020 | 0.125 | ||||||
Total Series B Preferred Stock Distributions: | $ | 0.375 | ||||||
Common Stock: | October 22, 2019 | October 31, 2019 | $ | 0.04460 | ||||
November 19, 2019 | November 29, 2019 | 0.04460 | ||||||
December 19, 2019 | December 31, 2019 | 0.04460 | ||||||
Total Common Stock Distributions: | $ | 0.13380 |
As of and For the nine months ended September 30, 2019 | As of and For the nine months ended September 30, 2018 | |||||||||||||||||||||||
State | Number of Farms | Total Acres | % of Total Acres | Lease Revenue | % of Total Lease Revenue | Number of Farms | Total Acres | % of Total Acres | Lease Revenue | % of Total Lease Revenue | ||||||||||||||
California(1) | 41 | 13,731 | 16.8% | $ | 13,872 | 51.0% | 31 | 8,435 | 12.4% | $ | 9,887 | 46.3% | ||||||||||||
Florida | 23 | 20,770 | 25.5% | 7,785 | 28.6% | 22 | 17,184 | 25.3% | 5,790 | 27.1% | ||||||||||||||
Colorado | 10 | 31,448 | 38.5% | 2,126 | 7.8% | 10 | 31,448 | 46.4% | 2,057 | 9.7% | ||||||||||||||
Arizona | 6 | 6,280 | 7.7% | 1,609 | 5.9% | 6 | 6,280 | 9.3% | 1,429 | 6.7% | ||||||||||||||
Michigan | 7 | 962 | 1.2% | 394 | 1.4% | 5 | 446 | 0.7% | 270 | 1.3% | ||||||||||||||
Texas | 1 | 3,667 | 4.5% | 386 | 1.4% | — | — | —% | — | —% | ||||||||||||||
Washington | 1 | 746 | 0.9% | 383 | 1.4% | 1 | 746 | 1.1% | 596 | 2.8% | ||||||||||||||
Oregon | 3 | 418 | 0.5% | 264 | 1.0% | 3 | 418 | 0.6% | 765 | 3.6% | ||||||||||||||
North Carolina | 2 | 310 | 0.4% | 259 | 1.0% | 2 | 310 | 0.4% | 115 | 0.5% | ||||||||||||||
Nebraska | 3 | 3,254 | 4.0% | 125 | 0.5% | 2 | 2,559 | 3.8% | 435 | 2.0% | ||||||||||||||
TOTALS | 97 | 81,586 | 100.0% | $ | 27,203 | 100.0% | 82 | 67,826 | 100.0% | $ | 21,344 | 100.0% |
(1) | According to the California Chapter of the American Society of Farm Managers and Rural Appraisers, there are eight distinct growing regions within California; our farms are spread across six of these growing regions. |
Year | Number of Expiring Leases | Expiring Leased Acreage | % of Total Acreage | Lease Revenues for the Nine Months Ended September 30, 2019 | % of Total Lease Revenues | |||||||
2019 | 2 | 4,906 | 6.0% | $ | 539 | 2.0% | ||||||
2020 | 13 | (1) | 32,684 | 40.1% | 5,463 | 20.1% | ||||||
2021 | 11 | (2) | 8,921 | 10.9% | 1,907 | 7.0% | ||||||
2022 | 4 | 330 | 0.4% | 701 | 2.6% | |||||||
2023 | 7 | 6,032 | 7.4% | 3,533 | 13.0% | |||||||
Thereafter | 34 | 28,706 | 35.2% | 14,967 | 55.0% | |||||||
Other(3) | 7 | 7 | —% | 93 | 0.3% | |||||||
Totals | 78 | 81,586 | 100.0% | $ | 27,203 | 100.0% |
(1) | Subsequent to September 30, 2019, two leases originally scheduled to expire during 2020 were extended through 2025 and 2028, respectively. Collectively, these two leases accounted for approximately 46.4% of the total lease revenues derived from 2020 lease expirations in the table above. See Note 11, “Subsequent Events—Leasing Activity,” within the notes to our accompanying condensed consolidated financial statements for additional information on these and other lease extensions. |
(2) | Subsequent to September 30, 2019, one lease originally scheduled to expire during 2021 was extended through 2029 and 2028, respectively. See Note 11, “Subsequent Events—Leasing Activity,” within the notes to our accompanying condensed consolidated financial statements for additional information on this and other lease extensions. |
(3) | Consists of ancillary leases (e.g., oil, gas, and mineral leases, telecommunications leases, etc.) with varying expirations on certain of our farms. |
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) | ||||||||||||||||
San Juan Grade Road(3) | Monterey, CA | 7/11/2019 | 324 | 1 | Strawberries & vegetables | 0.3 years | None | $ | 9,000 | $ | 60 | $ | 632 | |||||||||||||
West Citrus Boulevard(4) | Martin, FL | 7/22/2019 | 3,586 | 1 | Water retention | 8.4 years | 2 (10 years) | 57,790 | 503 | 3,696 | ||||||||||||||||
Sutter Avenue I(5)(6) | Fresno, CA | 8/16/2019 | 1,011 | 1 | Pistachios | 8.2 years | 2 (5 years) | 33,000 | 139 | 2,106 | ||||||||||||||||
Las Posas Road(7) | Ventura, CA | 8/28/2019 | 413 | 1 | Sod & Vegetables | 3.3 years | 1 (2 years) | 21,320 | 67 | 1,283 | ||||||||||||||||
Withers Road(8) | Napa, CA | 8/29/2019 | 366 | 1 | Wine Grapes | 10.3 years | 2 (10 years) | 32,000 | 77 | 2,256 | ||||||||||||||||
Highway 17(9) | Hayes, NE | 10/7/2019 | 2,561 | 3 | Corn, soybeans, & edible beans | 0.2 years | None | 9,690 | 39 | 489 | ||||||||||||||||
Indian Highway(10) | Hayes & Hitchcock, NE | 10/7/2019 | 1,289 | 2 | Corn, soybeans, & edible beans | 0.3 years | None | 5,000 | 39 | 788 | ||||||||||||||||
Sutter Avenue II | Fresno, CA | 11/1/2019 | 1,098 | 1 | Pistachios | 8.0 years | 2 (5 Years) | 37,000 | 68 | 2,365 | ||||||||||||||||
10,648 | 11 | $ | 204,800 | $ | 992 | $ | 13,615 |
(1) | Acquisitions were accounted for as asset acquisitions in accordance with Accounting Standards Codification 360, “Property, Plant, and Equipment.” As such, all acquisition-related costs (other than external legal fees associated with negotiating and originating the leases associated with the acquisitions, which costs were expensed in the period incurred) were capitalized and allocated among the identifiable assets acquired. The figures above represent only costs paid or accrued for as of the date of this filing. |
(2) | Annualized straight-line rent is based on the minimum cash rental payments guaranteed under the lease, as required under GAAP, and excludes contingent rental payments, such as participation rents. |
(3) | In connection with the acquisition of this property, we executed a 6-year, follow-on lease with a new tenant that will commence upon the expiration of the 4-month lease executed on the date of acquisition. The follow-on lease includes one, 4-year extension option and provides for minimum annualized straight-line rents of approximately $606,000. |
(4) | 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. |
(5) | Lease provides for a 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. |
(6) | In connection with the acquisition of this property, 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. Our acquired ownership equated to an 11.75% interest in the LLC and was valued at approximately $280,000 at the time of acquisition and is included within Other assets, net on the accompanying Condensed Consolidated Balance Sheets. As our investment in the LLC is deemed to constitute “significant influence,” we have accounted for this investment under the equity method. From the commencement of our ownership in the LLC through September 30, 2019, there was no material income or loss recognized by the LLC; thus, no net income or loss was recorded by us during the three months ended September 30, 2019. |
(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 lease 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 by February 25, 2020. We are currently unable to estimate when this approval will be obtained, if at all. If approval is obtained, we have 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. |
(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 3-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. In addition, the farm is expected to be converted to organic farmland by 2021. |
(10) | In connection with this acquisition, we executed a 4-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 tenant that will commence upon the expiration of the 4-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 2021. |
PRIOR LEASES | NEW LEASES | ||||||||||||||
Farm Locations | Number of Leases | Total Farm Acres | Total Annualized Straight-line Rent(1) | # of Leases with Participation Rents | Lease Structures (# of NNN / NN)(2) | Total Annualized Straight-line Rent(1) | Wtd. Avg. Term (Years) | # of Leases with Participation Rents | Lease Structures (# of NNN / NN)(2) | ||||||
AZ, CA, FL | 6 | 5,724 | $ | 5,246 | None | 1 / 5 | $ | 6,006 | 7.0 | None | 0 / 6 |
(1) | Annualized straight-line rent is based on the minimum cash rental payments guaranteed under the applicable leases (presented on an annualized basis), as required under GAAP, and excludes contingent rental payments, such as participation rents. |
(2) | “NNN” refers to leases under triple-net lease arrangements, and “NN” refers to leases under partial-net lease arrangements. For a description of each of these types of lease arrangements, see “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview—Leases—General.” |
Issuer | Date of Issuance | Amount | Maturity Date | Principal Amortization | Interest Rate Terms(1) | |||||||
Rabo AgriFinance, LLC | 7/10/2019 | $ | 5,514 | 6/1/2029 | 25.0 years | 1-Month LIBOR + 1.75%(2) | ||||||
GreenStone Farm Credit Services | 7/11/2019 | 1,609 | 8/1/2044 | 25.0 years | 5.00%, fixed through June 30, 2029 (variable thereafter) | |||||||
GreenStone Farm Credit Services | 7/11/2019 | 3,060 | 8/1/2044 | 25.0 years | 5.00%, fixed through June 30, 2029 (variable thereafter) | |||||||
Farm Credit West, FLCA | 7/11/2019 | 5,400 | 5/1/2044 | 24.5 years | 4.24%, fixed through July 31, 2026 (variable thereafter) | |||||||
Farm Credit of Central Florida, ACA | 7/22/2019 | 31,850 | 7/1/2027 | 25.2 years | 5.05%, fixed throughout term | |||||||
Farm Credit of Central Florida, ACA | 7/22/2019 | 5,850 | 7/1/2027 | None (interest only) | 5.05%, fixed throughout term | |||||||
Metropolitan Life Insurance Company(3) | 8/16/2019 | 16,500 | 1/5/2029 | 28.6 years | 3.70%, fixed through January 4, 2027 (variable thereafter) | |||||||
Farm Credit West, FLCA | 8/28/2019 | 12,792 | 5/1/2044 | 24.5 years | 3.84%, fixed through August 31, 2026 (variable thereafter)(4) | |||||||
American AgCredit, ACA | 8/29/2019 | 19,254 | 10/1/2039 | 20.0 years | 3.84%, fixed through August 31, 2029 (variable thereafter) | |||||||
Rabo Agrifinance, LLC | 10/16/2019 | 5,739 | 10/1/2029 | 25.0 years | 1-Month LIBOR + 1.75%(5) | |||||||
Rabo Agrifinance, LLC | 10/16/2019 | 3,045 | 10/1/2029 | 25.0 years | 1-Month LIBOR + 1.75%(5) | |||||||
Diversified Financial Services, LLC | 10/17/2019 | 976 | 10/17/2026 | 7.0 years | 4.75%, fixed throughout term | |||||||
Metropolitan Life Insurance Company(3) | 11/1/2019 | 25,500 | 1/5/2029 | 28.6 years | 3.81%, fixed through January 4, 2027 (variable thereafter) |
(1) | Stated rate is before refunded interest, or interest patronage (as described further in Note 4, “Borrowings,” in the accompanying notes to our condensed consolidated financial statements). |
(2) | In connection with this loan, we entered into an interest rate swap agreement in which we agreed to pay a fixed interest rate to our counterparty of 4.04% through June 1, 2029. |
(3) | Loans were issued under the MetLife Credit Facility, as defined in Note 4, “Borrowings,” in the accompanying notes to our condensed consolidated financial statements. |
(4) | Loan originally issued as a variable-rate loan and was converted to a fixed-rate loan effective September 1, 2019. |
(5) | In connection with each of these loans, we entered into interest rate swap agreements in which we will pay a fixed interest rate to our counterparty of 3.67% through October 1, 2029. |
Number of Shares Sold | No. Of Shares | Gross Proceeds | Net Proceeds(1) | |||||||||
1,076,357 | $ | 24.68 | $ | 26,563 | $ | 24,218 |
(1) | Net of selling commissions and dealer-manager fees borne by us. Aggregate selling commissions and dealer-manager fees paid to Gladstone Securities as a result of these sales was approximately $2.3 million (of which approximately $2.2 million was remitted by Gladstone Securities to unrelated third-parties involved in the offering, such as participating broker-dealers and wholesalers). |
Number of Shares Sold | No. Of Shares | Gross Proceeds | Net Proceeds(1) | |||||||||
126,591 | $ | 12.01 | $ | 1,520 | $ | 1,497 |
(1) | Net of underwriter commissions and discounts. |
• | With regard to the comparison between the three months ended September 30, 2019 versus 2018: |
◦ | Same-property basis represents farms owned as of June 30, 2018, and were not vacant at any point during either period presented; |
◦ | Properties acquired or disposed of are farms that were either acquired or disposed of at any point subsequent to June 30, 2018. From July 1, 2018, through September 30, 2019, we acquired 16 new farms and disposed of one farm; and |
◦ | Vacant or self-operated properties represent farms that were either vacant (either wholly or partially) at any point during either period presented or operated by a wholly-owned subsidiary of ours (in which case no rental revenue would have been recognized on our consolidated statements of operations). During the three months ended September 30, 2018, we had one farm that was mostly vacant, and one of our farms was leased to Land Advisers during a portion of the period (as revenue from rents owed to us by Land Advisers was eliminated upon consolidation). |
• | With regard to the comparison between the nine months ended September 30, 2019 versus 2018: |
◦ | Same-property basis represents properties owned as of December 31, 2017, and were not vacant at any point during either period presented; |
◦ | Properties acquired or disposed of are farms that were either acquired or disposed of at any point subsequent to December 31, 2017. From January 1, 2018, through September 30, 2019, we acquired 18 new farms (including one farm that we acquired without a lease in place and was mostly vacant during a majority of the nine months ended September 30, 2018) and disposed of one farm; and |
◦ | Vacant or self-operated properties represent farms that were either vacant (either wholly or partially) at any point during either period presented or operated by a wholly-owned subsidiary of ours. We had two farms that were vacant for a portion of the nine months ended September 30, 2019, and one of our farms was leased to Land Advisers during a portion of the nine months ended September 30, 2018. |
For the Three Months Ended September 30, | |||||||||||||
2019 | 2018 | $ Change | % Change | ||||||||||
Operating revenues: | |||||||||||||
Lease revenues: | |||||||||||||
Fixed lease payments | $ | 10,131 | $ | 7,124 | $ | 3,007 | 42.2% | ||||||
Variable lease payments - participation rents | 848 | 889 | (41 | ) | (4.6)% | ||||||||
Variable lease payments - tenant reimbursements | 33 | 2 | 31 | 1,550.0% | |||||||||
Total lease revenues | 11,012 | 8,015 | 2,997 | 37.4% | |||||||||
Other operating revenues | — | 2 | (2 | ) | NM | ||||||||
Total operating revenues | 11,012 | 8,017 | 2,995 | 37.4% | |||||||||
Operating expenses: | |||||||||||||
Depreciation and amortization | 3,419 | 2,374 | 1,045 | 44.0% | |||||||||
Property operating expenses | 536 | 621 | (85 | ) | (13.7)% | ||||||||
Base management and capital gains fees, net of credits | 862 | 672 | 190 | 28.3% | |||||||||
Administration fee | 311 | 387 | (76 | ) | (19.6)% | ||||||||
General and administrative expenses | 447 | 443 | 4 | 0.9% | |||||||||
Other operating expenses | — | 175 | (175 | ) | NM | ||||||||
Total operating expenses, net of credits | 5,575 | 4,672 | 903 | 19.3% | |||||||||
Operating income | 5,437 | 3,345 | 2,092 | 62.5% | |||||||||
Other income (expense): | |||||||||||||
Other income | 62 | 1 | 61 | 6,100.0% | |||||||||
Interest expense | (4,401 | ) | (3,082 | ) | (1,319 | ) | 42.8% | ||||||
Dividends declared on Series A Term Preferred Stock | (458 | ) | (458 | ) | — | —% | |||||||
(Loss) gain on dispositions of real estate assets, net | (134 | ) | 6,247 | (6,381 | ) | NM | |||||||
Property and casualty recovery, net | 17 | — | 17 | NM | |||||||||
Loss on write-down of inventory | — | (33 | ) | 33 | NM | ||||||||
Total other (expense) income, net | (4,914 | ) | 2,675 | (7,589 | ) | NM | |||||||
Net income | 523 | 6,020 | (5,497 | ) | (91.3)% | ||||||||
Net income attributable to non-controlling interests | (6 | ) | (337 | ) | 331 | (98.2)% | |||||||
Net income attributable to the Company | 517 | 5,683 | (5,166 | ) | (90.9)% | ||||||||
Dividends declared on Series B Preferred Stock | (1,161 | ) | (90 | ) | (1,071 | ) | 1,190.0% | ||||||
Net (loss) income attributable to common stockholders | $ | (644 | ) | $ | 5,593 | $ | (6,237 | ) | NM |
For the Nine Months Ended September 30, 2019 | |||||||||||||
2019 | 2018 | $ Change | % Change | ||||||||||
Operating revenues: | |||||||||||||
Lease revenues: | |||||||||||||
Fixed lease payments | $ | 26,236 | $ | 20,427 | $ | 5,809 | 28.4% | ||||||
Variable lease payments - participation rents | 874 | 906 | (32 | ) | (3.5)% | ||||||||
Variable lease payments - tenant reimbursements | 93 | 11 | 82 | 745.5% | |||||||||
Total lease revenues | 27,203 | 21,344 | 5,859 | 27.5% | |||||||||
Other operating revenues | — | 7,313 | (7,313 | ) | NM | ||||||||
Total operating revenues | 27,203 | 28,657 | (1,454 | ) | (5.1)% | ||||||||
Operating expenses: | |||||||||||||
Depreciation and amortization | 8,952 | 6,805 | 2,147 | 31.6% | |||||||||
Property operating expenses | 1,939 | 1,381 | 558 | 40.4% | |||||||||
Base management and capital gains fees, net of credits | 1,199 | 1,910 | (711 | ) | (37.2)% | ||||||||
Administration fee | 866 | 935 | (69 | ) | (7.4)% | ||||||||
General and administrative expenses | 1,465 | 1,350 | 115 | 8.5% | |||||||||
Other operating expenses | — | 7,673 | (7,673 | ) | NM | ||||||||
Total operating expenses, net of credits | 14,421 | 20,054 | (5,633 | ) | (28.1)% | ||||||||
Operating income | 12,782 | 8,603 | 4,179 | 48.6% | |||||||||
Other income (expense): | |||||||||||||
Other income | 937 | 324 | 613 | 189.2% | |||||||||
Interest expense | (11,396 | ) | (8,728 | ) | (2,668 | ) | 30.6% | ||||||
Dividends declared on Series A Term Preferred Stock | (1,375 | ) | (1,375 | ) | — | —% | |||||||
(Loss) gain on dispositions of real estate assets, net | (154 | ) | 6,247 | (6,401 | ) | NM | |||||||
Property and casualty recovery (loss), net | 10 | (129 | ) | 139 | NM | ||||||||
Loss on write-down of inventory | — | (1,093 | ) | 1,093 | NM | ||||||||
Total other expense, net | (11,978 | ) | (4,754 | ) | (7,224 | ) | 152.0% | ||||||
Net income | 804 | 3,849 | (3,045 | ) | (79.1)% | ||||||||
Net income attributable to non-controlling interests | (9 | ) | (206 | ) | 197 | (95.6)% | |||||||
Net income attributable to the Company | 795 | 3,643 | (2,848 | ) | (78.2)% | ||||||||
Dividends declared on Series B Preferred Stock | (2,655 | ) | (92 | ) | (2,563 | ) | 2,785.9% | ||||||
Net (loss) income attributable to common stockholders | $ | (1,860 | ) | $ | 3,551 | $ | (5,411 | ) | NM |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||||||
2019 | 2018 | $ Change | % Change | 2019 | 2018 | $ Change | % Change | ||||||||||||||||||||
Same-property basis – fixed rents | $ | 6,542 | $ | 6,488 | $ | 54 | 0.8% | $ | 19,103 | $ | 18,888 | $ | 215 | 1.1% | |||||||||||||
Same-property basis – participation rents | 381 | 889 | (508 | ) | (57.1)% | 407 | 906 | (499 | ) | (55.1)% | |||||||||||||||||
Properties acquired or disposed of – fixed rents | 3,375 | 528 | 2,847 | 539.2% | 6,356 | 1,004 | 5,352 | 533.1% | |||||||||||||||||||
Properties acquired or disposed of – participation rents | 467 | — | 467 | —% | 467 | — | 467 | —% | |||||||||||||||||||
Vacant or self-operated properties | 214 | 108 | 106 | 98.1% | 777 | 535 | 242 | 45.2% | |||||||||||||||||||
Tenant reimbursements(1) | 33 | 2 | 31 | 1,550.0% | 93 | 11 | 82 | 745.5% | |||||||||||||||||||
Total lease revenues | $ | 11,012 | $ | 8,015 | $ | 2,997 | 37.4% | $ | 27,203 | $ | 21,344 | $ | 5,859 | 27.5% |
(1) | Tenant reimbursements represent tenant-reimbursed property operating expenses on certain of our farms, including property taxes, insurance premiums, and other property-related expenses. Corresponding amounts were also recorded as property operating expenses during the respective periods. |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||||||
2019 | 2018 | $ Change | % Change | 2019 | 2018 | $ Change | % Change | ||||||||||||||||||||
Same-property basis | $ | 2,370 | $ | 2,238 | $ | 132 | 5.9% | $ | 7,085 | $ | 6,476 | $ | 609 | 9.4% | |||||||||||||
Properties acquired or disposed of | 991 | 78 | 913 | 1,170.5% | 1,693 | 157 | 1,536 | 978.3% | |||||||||||||||||||
Vacant or self-operated properties | 58 | 58 | — | —% | 174 | 172 | 2 | 1.2% | |||||||||||||||||||
Total depreciation and amortization | $ | 3,419 | $ | 2,374 | $ | 1,045 | 44.0% | $ | 8,952 | $ | 6,805 | $ | 2,147 | 31.6% |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||||||
2019 | 2018 | $ Change | % Change | 2019 | 2018 | $ Change | % Change | ||||||||||||||||||||
Same-property basis | $ | 372 | $ | 589 | $ | (217 | ) | (36.8)% | $ | 1,613 | $ | 1,274 | $ | 339 | 26.6% | ||||||||||||
Properties acquired or disposed of | 61 | 16 | 45 | 281.3% | 178 | 29 | 149 | 513.8% | |||||||||||||||||||
Vacant or self-operated properties | 70 | 14 | 56 | 400.0% | 55 | 67 | (12 | ) | (17.9)% | ||||||||||||||||||
Tenant-reimbursed property operating expenses(1) | 33 | 2 | 31 | 1,550.0% | 93 | 11 | 82 | 745.5% | |||||||||||||||||||
Total property-operating expenses | $ | 536 | $ | 621 | $ | (85 | ) | (13.7)% | $ | 1,939 | $ | 1,381 | $ | 558 | 40.4% |
(1) | Represents certain operating expenses (property taxes, insurance premiums, and other property-related expenses) paid by us that, per the respective leases, are required to be reimbursed to us by the tenant. Corresponding amounts were also recorded as lease revenues during the respective periods. |
For the Nine Months Ended September 30, | ||||||||||||||
2019 | 2018 | $ Change | % Change | |||||||||||
Net change in cash from: | ||||||||||||||
Operating activities | $ | 13,902 | $ | 8,044 | $ | 5,858 | 72.8 | % | ||||||
Investing activities | (209,950 | ) | (48,592 | ) | (161,358 | ) | 332.1 | % | ||||||
Financing activities | 185,310 | 40,539 | 144,771 | 357.1 | % | |||||||||
Net change in Cash and cash equivalents | $ | (10,738 | ) | $ | (9 | ) | $ | (10,729 | ) | 119,211.1 | % |
Type of Issuance | Number of Shares Sold | Weighted-average Offering Price Per Share | Gross Proceeds | Net Proceeds(1) | ||||||||||
Series B Preferred Stock(2) | 2,575,432 | $ | 24.70 | $ | 63,605 | $ | 57,947 | |||||||
Common Stock – Secondary Offering(3) | 2,277,297 | 11.73 | 26,713 | 25,510 | ||||||||||
Common Stock – ATM Program | 197,142 | 12.24 | 2,413 | 2,377 |
(1) | Net of selling commissions and dealer-manager fees or underwriting discounts (in each case, as applicable). |
(2) | Exclusive of redemptions. |
(3) | Includes the underwriters’ exercise of a portion of the over-allotment option. |
• | Acquisition- and disposition-related expenses. Acquisition- and disposition-related expenses (including due diligence costs on acquisitions not consummated and certain auditing and accounting fees incurred directly related to completed acquisitions or dispositions) are incurred for investment purposes and do not correlate with the ongoing operations of our existing portfolio. Further, certain auditing and accounting fees incurred vary depending on the number and complexity of acquisitions or dispositions completed during a period. Due to the inconsistency in which these costs are incurred and how they have historically been treated for accounting purposes, we believe the exclusion of these expenses improves comparability of our operating results on a period-to-period basis. |
• | Rent adjustments. This adjustment removes the effects of straight-lining rental income, as well as the amortization related to above-market lease values and lease incentives and accretion related to below-market lease values, other deferred revenue, and tenant improvements, resulting in rental income reflected on a modified accrual cash basis. In addition to these adjustments, we also modify the calculation of cash rents within our definition of AFFO to provide greater consistency and comparability due to the period-to-period volatility in which cash rents are received. To coincide with our tenants’ harvest seasons, our leases typically provide for cash rents to be paid at various points throughout the lease year, usually annually or semi-annually. As a result, cash rents received during a particular period may not necessarily be comparable to other periods or represent the cash rents indicative of a given lease year. Therefore, we further adjust AFFO to normalize the cash rent received pertaining to a lease year over that respective lease year on a straight-line basis, resulting in cash rent being recognized ratably over the period in which the cash rent is earned. |
• | Amortization of debt issuance costs. The amortization of costs incurred to obtain financing is excluded from AFFO, as it is a non-cash expense item that is not directly related to the operating performance of our properties. |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net income | $ | 523 | $ | 6,020 | $ | 804 | $ | 3,849 | |||||||
Less: Dividends declared on Series B Preferred Stock | (1,161 | ) | (90 | ) | (2,655 | ) | (92 | ) | |||||||
Net (loss) income available to common stockholders and OP Unitholders | (638 | ) | 5,930 | (1,851 | ) | 3,757 | |||||||||
Plus: Real estate and intangible depreciation and amortization | 3,419 | 2,374 | 8,952 | 6,805 | |||||||||||
Plus (less): Losses (gains) on dispositions of real estate assets, net | 134 | (6,247 | ) | 154 | (6,247 | ) | |||||||||
FFO available to common stockholders and OP Unitholders | 2,915 | 2,057 | 7,255 | 4,315 | |||||||||||
Plus: Acquisition- and disposition-related expenses | 119 | 70 | 272 | 227 | |||||||||||
(Less) plus: Other (receipts) charges, net(1) | (11 | ) | 315 | (2 | ) | 1,717 | |||||||||
CFFO available to common stockholders and OP Unitholders | 3,023 | 2,442 | 7,525 | 6,259 | |||||||||||
Net rent adjustment | (226 | ) | (164 | ) | (265 | ) | (578 | ) | |||||||
Plus: Amortization of debt issuance costs | 161 | 145 | 461 | 434 | |||||||||||
AFFO available to common stockholders and OP Unitholders | 2,958 | 2,423 | 7,721 | 6,115 | |||||||||||
Weighted-average common stock outstanding—basic and diluted | 20,763,615 | 16,057,957 | 19,154,744 | 15,181,760 | |||||||||||
Weighted-average common OP Units outstanding(2) | 222,494 | 683,527 | 217,857 | 857,041 | |||||||||||
Weighted-average total common shares outstanding | 20,986,109 | 16,741,484 | 19,372,601 | 16,038,801 | |||||||||||
Diluted FFO per weighted-average total common share | $ | 0.14 | $ | 0.12 | $ | 0.37 | $ | 0.27 | |||||||
Diluted CFFO per weighted-average total common share | $ | 0.14 | $ | 0.15 | $ | 0.39 | $ | 0.39 | |||||||
Diluted AFFO per weighted-average total common share | $ | 0.14 | $ | 0.14 | $ | 0.40 | $ | 0.38 |
(1) | Consists of net property and casualty (recoveries) losses recorded and the cost of related repairs expensed during each period as a result of the damage and, for the three and nine months ended September 30, 2018, only, the net impact of the Incremental TRS Operations. |
(2) | Represents OP Units held by unrelated third parties during the respective periods. |
• | For properties acquired within 12 months prior to the date of valuation, the purchase price of the property will generally be used as the current fair value unless overriding factors apply. In situations where OP Units are issued as partial or whole consideration in connection with the acquisition of a property, the fair value of the property will generally be the lower of: (i) the agreed-upon purchase price between the seller and the buyer (as shown in the purchase and sale agreement or contribution agreement and using the agreed-upon pricing of the OP Units, if applicable), or (ii) the value as determined by an independent, third-party appraiser. |
• | For real estate we acquired more than one year prior to the date of valuation, we determine the fair value either by relying on estimates provided by independent, third-party appraisers or through an internal valuation process. In addition, if significant capital improvements take place on a property, we will typically have those properties reappraised upon completion of the project by an independent, third-party appraiser. In any case, we intend to have each property valued by an independent, third-party appraiser via a full appraisal at least once every three years, with interim values generally being determined by either: (i) a restricted appraisal (a “desk appraisal”) performed by an independent, third-party appraiser, or (ii) our internal valuation process. |
Valuation Method | Number of Farms | Total Acres | Farm Acres | Net Cost Basis(1) | Current Fair Value | % of Total Fair Value | ||||||||||
Purchase Price | 15 | 13,760 | 11,400 | $ | 240,845 | $ | 240,823 | 29.2% | ||||||||
Third-party Appraisal(2) | 82 | 67,826 | 53,844 | 502,564 | 583,683 | 70.8% | ||||||||||
Total | 97 | 81,586 | 65,244 | $ | 743,409 | $ | 824,506 | 100.0% |
(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 paid for by us that were associated with the properties, and adjusted for accumulated depreciation and amortization. |
(2) | Appraisals performed between November 2018 and October 2019. |
Range (Low - High) | Weighted Average | |||||
Land Value (per farmable acre) | $680 – $87,500 | $ | 31,411 | |||
Market NOI (per farmable acre) | $250 – $4,600 | $ | 2,997 | |||
Market Capitalization Rate | 3.75% – 8.25% | 4.29% |
Total portfolio fair value as of June 30, 2019 | $ | 667,506 | ||||
Plus: Acquisition of seven new farms during the three months ended September 30, 2019 | 153,320 | |||||
Plus net value appreciation during the three months ended September 30, 2019: | ||||||
22 farms valued via third-party appraisals | $ | 3,680 | ||||
Total net appreciation for the three months ended September 30, 2019 | 3,680 | |||||
Total portfolio fair value as of September 30, 2019 | $ | 824,506 |
Total equity per balance sheet | $ | 253,290 | ||||||
Fair value adjustment for long-term assets: | ||||||||
Less: net cost basis of tangible and intangible real estate holdings(1) | $ | (743,409 | ) | |||||
Plus: estimated fair value of real estate holdings(2) | 824,506 | |||||||
Net fair value adjustment for real estate holdings | 81,097 | |||||||
Fair value adjustment for long-term liabilities: | ||||||||
Plus: book value of aggregate long-term indebtedness(3) | 479,589 | |||||||
Less: fair value of aggregate long-term indebtedness(3)(4) | (484,100 | ) | ||||||
Net fair value adjustment for long-term indebtedness | (4,511 | ) | ||||||
Estimated NAV | 329,876 | |||||||
Less: fair value of Series B Preferred Stock(5) | (86,638 | ) | ||||||
Estimated NAV available to common stockholders and OP Unitholders | $ | 243,238 | ||||||
Total common shares and OP Units outstanding(6) | 21,176,378 | |||||||
Estimated NAV per common share and OP Unit | $ | 11.49 |
(1) | Per Net Cost Basis as presented in the table above. |
(2) | Per Current Fair Value as presented in the table above. |
(3) | Includes the principal balances outstanding of all long-term borrowings (consisting of notes and bonds payable) and the Series A Term Preferred Stock. |
(4) | Long-term notes and bonds payable were valued using a discounted cash flow model. The Series A Term Preferred Stock was valued based on its closing stock price as of September 30, 2019. |
(5) | Valued at the security’s liquidation value, as discussed above. |
(6) | Includes 20,888,075 shares of common stock and 288,303 OP Units held by non-controlling limited partners. |
Estimated NAV per common share as of June 30, 2019 | $ | 11.61 | ||||||
Less net loss available to common stockholders and OP Unitholders | (0.03 | ) | ||||||
Plus net change in valuations: | ||||||||
Net change in unrealized fair value of farmland portfolio(1) | $ | 0.18 | ||||||
Net change in unrealized fair value of long-term indebtedness | (0.01 | ) | ||||||
Net change in valuations | 0.17 | |||||||
Less distributions | (0.13 | ) | ||||||
Less dilutive effect of equity issuances | (0.13 | ) | ||||||
Estimated NAV per common share as of September 30, 2019 | $ | 11.49 |
(1) | The net change in unrealized fair value of farmland portfolio consists of three components: (i) an increase of $0.17 due to the net appreciation in value of the farms that were valued during the three months ended September 30, 2019, (ii) an increase of $0.16 due to the aggregate depreciation and amortization expense recorded during the three months ended September 30, 2019, and (iii) a decrease of $0.15 due to capital improvements made on certain properties that have not yet been considered in the determination of the respective properties’ estimated fair values. |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Item 3. | Defaults Upon Senior Securities |
Item 4. | Mine Safety Disclosures |
Item 5. | Other Information |
Item 6. | Exhibits |
Exhibit Number | Exhibit Description | ||
3.1 | |||
3.2 | |||
3.3 | |||
3.4 | |||
3.5 | |||
4.1 | |||
4.2 | |||
4.3 | |||
4.4 | |||
10.1 | |||
31.1 | |||
31.2 | |||
32.1 | |||
32.2 | |||
99.1 | |||
101.INS*** | XBRL Instance Document | ||
101.SCH*** | XBRL Taxonomy Extension Schema Document | ||
101.CAL*** | XBRL Taxonomy Extension Calculation Linkbase Document | ||
101.LAB*** | XBRL Taxonomy Extension Label Linkbase Document | ||
101.PRE*** | XBRL Taxonomy Extension Presentation Linkbase Document | ||
101.DEF*** | XBRL Definition Linkbase |
*** | Attached as Exhibit 101 to this Quarterly Report on Form 10-Q are the following materials, formatted in eXtensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets as of September 30, 2019, and December 31, 2018, (ii) the Condensed Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 30, 2019 and 2018, (iii) the Condensed Consolidated Statements of Equity for the three and nine months ended September 30, 2019 and 2018, (iv) the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018, and (v) the Notes to the Condensed Consolidated Financial Statements. |
Gladstone Land Corporation | |||
Date: November 6, 2019 | By: | /s/ Lewis Parrish | |
Lewis Parrish | |||
Chief Financial Officer and Assistant Treasurer | |||
Date: November 6, 2019 | By: | /s/ David Gladstone | |
David Gladstone | |||
Chief Executive Officer and Chairman of the Board of Directors |
/s/ David Gladstone |
David Gladstone |
Chief Executive Officer and |
Chairman of the Board of Directors |
/s/ Lewis Parrish |
Lewis Parrish |
Chief Financial Officer and |
Assistant Treasurer |
/s/ David Gladstone |
David Gladstone |
Chief Executive Officer and |
Chairman of the Board of Directors |
/s/ Lewis Parrish |
Lewis Parrish |
Chief Financial Officer and |
Assistant Treasurer |
Subsequent Events (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Subsequent Events [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Asset Acquisitions, by Acquisition | During the nine months ended September 30, 2019, we acquired 12 new farms, which are summarized in the table below (dollars in thousands):
During the nine months ended September 30, 2018, we acquired ten new farms, which are summarized in the table below (dollars in thousands, except for footnotes):
Subsequent to September 30, 2019, through the date of this filing, we have acquired six farms, which are summarized in the table below (dollars in thousands, except for footnotes):
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Operating Leases of Lessor, Leasing Activity | The following table summarizes certain leasing activity that occurred on our existing properties subsequent to September 30, 2019, through the date of this filing (dollars in thousands, except footnotes):
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Schedule of Finance Activity | Our borrowings as of September 30, 2019, and December 31, 2018, are summarized below (dollars in thousands):
Subsequent to September 30, 2019, through the date of this filing, we have secured the following new financings (dollars in thousands):
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Schedule of Equity Activity | The following table provides information on equity sales that have occurred subsequent to September 30, 2019 (dollars in thousands, except per-share amounts):
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Monthly Distributions Declared by Company's Board of Directors | On October 8, 2019, our Board of Directors declared the following monthly cash distributions to holders of our preferred and common stock:
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Commitments and Contingencies (Tables) |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Operating Lease 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):
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Schedule of Operating Ground Leases | The following table summarizes certain leasing activity that occurred on our existing properties during the nine months ended September 30, 2019 (dollars in thousands, except footnotes):
As of September 30, 2019, we had recorded the following as a result of these operating ground leases (dollars in thousands, except for footnotes):
The following table sets forth the components of our lease revenues for the three and nine months ended September 30, 2019 and 2018 (dollars in thousands, except for footnotes):
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Schedule of Future Lease Payments | Future lease payments due under the remaining non-cancelable terms of these leases as of September 30, 2019, and December 31, 2018, are as follows (dollars in thousands):
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Business and Organization |
9 Months Ended |
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Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BUSINESS AND ORGANIZATION | BUSINESS AND ORGANIZATION Business and Organization 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. Upon the pricing of our initial public offering on January 29, 2013, our shares of common stock began trading on the Nasdaq Stock Market, LLC (“Nasdaq”), under the symbol “LAND.” We are primarily in the business of owning and leasing farmland, and 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, all of the 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 September 30, 2019, and December 31, 2018, the Company owned approximately 98.6% and 96.9%, respectively, of the outstanding OP Units (see Note 8, “Equity,” for additional discussion regarding OP Units). 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 treated 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. 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). 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. |
Lease Revenues (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Leases [Abstract] | ||||
Fixed lease payments | $ 10,131 | $ 26,236 | ||
Fixed lease payments | $ 7,124 | $ 20,427 | ||
Variable lease payments | 881 | 967 | ||
Variable lease payments | 891 | 917 | ||
Lease revenues, net | 11,012 | 27,203 | ||
Lease revenues, net | 8,015 | 21,344 | ||
Payments for rent | 848 | 889 | 875 | 906 |
Operating expenses, reimbursement | $ 33 | $ 93 | ||
Operating expenses, reimbursement | $ 2 | $ 11 |
Lease Revenues |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease Revenues | LEASE REVENUES The following table sets forth the components of our lease revenues for the three and nine months ended September 30, 2019 and 2018 (dollars in thousands, except for footnotes):
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Series A Term Preferred Stock |
9 Months Ended |
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Sep. 30, 2019 | |
Equity [Abstract] | |
SERIES A TERM PREFERRED STOCK | SERIES A TERM 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. The Series A Term Preferred Stock is traded under the ticker symbol “LANDP” on Nasdaq. 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 have been 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 have a mandatory redemption date of September 30, 2021, and are not convertible into our common stock or any other securities. As of September 30, 2019, no shares of Series A Term Preferred Stock have been 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 Condensed Consolidated Balance Sheets and are being amortized over the mandatory redemption period as a component of interest expense on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income. The Series A Term Preferred Stock is recorded as a liability on our accompanying Condensed 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 Condensed Consolidated Statements of Operations and Comprehensive Income. As of September 30, 2019, the fair value of our Series A Term Preferred Stock was approximately $29.6 million, as compared to the carrying value (exclusive of unamortized offering costs) of approximately $28.8 million. The fair value of our Series A Term Preferred Stock is valued using Level 1 inputs under the hierarchy established by ASC 820-10, “Fair Value Measurements and Disclosures,” and is calculated based on the closing per-share price as of September 30, 2019, of $25.73. For information on the dividends declared by our Board of Directors and paid by us on the Series A Term Preferred Stock during the nine months ended September 30, 2019 and 2018, see Note 8, “Equity—Distributions.” |
Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Revenue and Cost of Sales | Revenue from the sale of harvested crops and accumulated costs allocated to the crops sold during the three and nine months ended September 30, 2018, are shown in the following table (dollars in thousands, except for footnotes):
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Equity - Monthly Distributions Declared and Paid by Company's Board of Directors (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | |||
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Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Apr. 09, 2019 |
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Series A Preferred Stock | |||||
Class of Stock [Line Items] | |||||
Distributions per Preferred Share (in dollars per share) | $ 0.3984375 | $ 0.3984375 | $ 1.1953125 | $ 1.1953125 | |
Series B Preferred Stock | |||||
Class of Stock [Line Items] | |||||
Distributions per Preferred Share (in dollars per share) | 0.375 | 0.375 | 1.125 | 0.500 | |
Dividends payable | $ 433 | ||||
Common Stock | |||||
Class of Stock [Line Items] | |||||
Distributions per Common Share (in dollars per share) | $ 0.13365 | $ 0.13305 | $ 0.40050 | $ 0.39870 |
Commitments and Contingencies - Future Lease Payments (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
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Commitments and Contingencies Disclosure [Abstract] | ||
2019 | $ 0 | $ 47 |
2020 | 47 | 47 |
2021 | 47 | 47 |
2022 | 30 | 30 |
2023 | 30 | 30 |
Thereafter | 31 | 31 |
Total undiscounted lease payments | 185 | 232 |
Less: imputed interest | (14) | 0 |
Present value of lease payments | $ 171 | $ 232 |
Summary of Significant Accounting Policies (Policies) |
9 Months Ended |
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Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Interim Financial Information | Interim Financial Information Our interim financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q in accordance with Article 10 of Regulation S-X. Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with GAAP are omitted. In the opinion of our management, all adjustments (consisting solely of normal recurring accruals) necessary for the fair statement of financial statements for the interim period have been included. The interim financial statements and accompanying notes should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 26, 2019 (the “Form 10-K”). The results of operations for the three and nine months ended September 30, 2019, are not necessarily indicative of the results that may be expected for other interim periods or for the full fiscal year. |
Use of Estimates | Use of Estimates The preparation of financial statements in accordance with 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. Actual results could materially differ from those estimates. |
Impairment of Real Estate Assets | Impairment of Real Estate Assets We account for the impairment of our tangible and identifiable intangible real estate assets in accordance with Accounting Standards Codification (“ASC”) 360, “Property, Plant, and Equipment” (“ASC 360”), which requires us to periodically review the carrying value of each property to determine whether indicators of impairment exist. 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. 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 portfolio each quarter for any impairment indicators and perform an impairment analysis on those select properties that have an indication of impairment. As of September 30, 2019, and December 31, 2018, we concluded that none of our properties were impaired. There have been no impairments recognized on our real estate assets since our inception. |
Crop Inventory | Costs incurred by Land Advisers in operating the farm generally consisted of growing costs (including the costs of land preparation, plants, fertilizers and pesticides, and labor costs), harvesting and selling costs (including labor costs for harvesting, packaging and cooling costs, and sales commissions), and certain overhead costs (including management/oversight costs). |
Crop Sales | Crop Sales Revenue from the sale of harvested crops was recognized when the harvested crops had been delivered to the facility and title had transferred and were recorded using the market price on the date of delivery. Accumulated costs were charged to cost of products sold (based on percentage of gross revenue from sales) as the related crops were harvested and sold. |
Income Taxes | 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”). 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. As such, in general, 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. From October 17, 2017, through July 31, 2018, Land Advisers, which is subject to federal and state income taxes, assumed the operations on one of our farms in California (see Note 6, “Related-Party Transactions—TRS Lease Assumption”). There was no taxable income or loss from Land Advisers for the tax year ended December 31, 2018, nor was there any for the nine months ended September 30, 2019. 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 bases (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. |
Reclassifications | Reclassifications On the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 30, 2019, operating rental revenue has been reclassified to be displayed in accordance with ASU 2016-02 (as defined below), which was adopted on January 1, 2019, and acquisition-related expenses have been reclassified to be included within general and administrative expenses. |
Recently-Issued Accounting Pronouncements | Recently-Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”), which was amended in each of March, April, May, and December of 2016. ASU 2014-09, as amended, supersedes or replaces nearly all GAAP revenue recognition guidance and establishes a new, control-based revenue recognition model, changes the basis for deciding when revenue is recognized over time or at a point in time and will expand disclosures about revenue. We adopted ASU 2014-09 on January 1, 2018, using the modified retrospective method, under which the cumulative effect of initially applying the guidance was recognized at the date of initial application. Our adoption of ASU 2014-09 did not have a material impact on our results of operations or financial condition, as the primary impact of this update is related to common area maintenance and other material tenant reimbursements, whereas the majority of our revenue is from rental income pursuant to net-lease agreements, with very little being attributed to tenant recoveries. The impact of ASU 2014-09 did not take effect until the new leasing standard (ASU 2016-02, as defined below) became effective on January 1, 2019. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842): An Amendment of the FASB Accounting Standards Codification” (“ASU 2016-02”), which supersedes the previous leasing standard, ASC 840, “Leases.” The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee, which classification determines whether lease expense is recognized based on an effective interest method or on a straight-line basis, respectively, over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months, regardless of the classification. Leases with a term of 12 months or less will be accounted for similarly to operating leases under the previous leasing standard. The new standard requires lessors to account for leases using an approach that is substantially equivalent to that under the previous standard for sales-type leases, direct financing leases, and operating leases. We adopted ASU 2016-02 on January 1, 2019, using the modified retrospective method, under which we recorded the cumulative effect of applying the new guidance as of the adoption date. We also elected the package of practical expedients permitted under the transition guidance (which included that: (i) an entity need not reassess whether any expired or existing contracts are or contain leases, (ii) an entity need not reassess the lease classification for any expired or existing leases, and (iii) an entity need not reassess initial direct costs for any existing leases), the land easement practical expedient to carry forward existing accounting treatment on existing land easements, and the lease and non-lease component combined practical expedient. In addition, we elected the short-term lease exception, which allows us to account for leases with a term of 12 months or less similar to existing operating leases. We currently have two operating ground lease arrangements with terms greater than one year for which we are the lessee. See Note 7, “Commitments and Contingencies—Ground Lease Obligations,” for further discussion on the impact of our adoption of ASU 2016-02 and the assumptions used in determine the related right-of-use asset and lease liability |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EQUITY | EQUITY Amendment to Articles of Incorporation On January 10, 2018, we filed with the Maryland Department of Assessments and Taxation Articles Supplementary to reclassify and designate 6,500,000 shares of our authorized and unissued shares of capital stock as shares of Series B Preferred Stock (as defined below). The reclassification decreased the number of shares classified as common stock from 98,000,000 to 91,500,000. Stockholders’ Equity As of September 30, 2019, there were 6,500,000 shares of Series B Preferred Stock (as defined below), par value $0.001 per share, authorized, with 3,465,527 shares issued and outstanding worth an aggregate liquidation value of approximately $86.6 million; and 91,500,000 shares of common stock, par value $0.001 per share, authorized, with 20,888,075 shares issued and outstanding. As of December 31, 2018, there were 6,500,000 shares of Series B Preferred Stock (as defined below), par value $0.001 per share, authorized, with 1,144,393 shares issued and outstanding worth an aggregate liquidation value of approximately $28.6 million; and 91,500,000 shares of common stock, par value $0.001 per share, authorized, with 17,891,340 shares issued and outstanding. Non-Controlling Interests in Operating Partnership We consolidate our Operating Partnership, which is a majority-owned partnership. As of September 30, 2019, and December 31, 2018, we owned approximately 98.6% and 96.9%, respectively, of the outstanding OP Units. On or after 12 months after becoming a holder of OP Units, each limited partner, other than the Company, 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. The following table provides information related to OP Units tendered for redemption during 2019:
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 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. As of September 30, 2019, and December 31, 2018, there were 288,303 and 570,879 OP Units held by non-controlling limited partners outstanding, respectively. 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, which expired on April 1, 2017. The 2017 Registration Statement, which was declared effective by the SEC on April 12, 2017, permits 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. Through September 30, 2019, we have issued a total of 7,821,886 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 $96.1 million, and 3,475,047 shares of Series B Preferred Stock (as defined below) for gross proceeds of approximately $85.6 million under the 2017 Registration Statement. 2019 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 of our newly-designated 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 and expected net proceeds, after deducting Selling Commissions, Dealer-Manager Fees, and estimated expenses of the offering payable by us, of up to approximately $131.3 million, assuming all shares of the Series B Preferred Stock are sold in the offering. The Series B Preferred Stock is being offered on a continuous, “reasonable best efforts” basis by Gladstone Securities, the dealer-manager for the offering. See Note 6, “Related-Party Transactions—Gladstone Securities—Dealer-Manager Agreement,” for a discussion of the fees and commissions to be paid to Gladstone Securities in connection with the offering of the Series B Preferred Stock. The following table provides information on sales of the Series B Preferred Stock that occurred during the three and nine months ended September 30, 2019 (dollars in thousands, except per-share amounts):
In addition, during the three and nine months ended September 30, 2019, 2,120 and 9,520 shares, respectively, of the Series B Preferred Stock were tendered for redemption at a cash redemption price of $22.50 per share. As a result, we paid total redemption costs of approximately $48,000 and $214,000, respectively to redeem and retire these shares. As of September 30, 2019, excluding Selling Commissions and Dealer-Manager Fees, we have incurred approximately $1.2 million of total costs related to this 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 the gross proceeds received from the offering through additional paid-in capital as shares of the Series B Preferred Stock are sold. See Note 11, “Subsequent Events—Equity Activity—Series B Preferred Stock,” for sales of Series B Preferred Stock completed subsequent to September 30, 2019. The offering of the Series B Preferred Stock will terminate on the date that is the earlier of either June 1, 2023 (unless terminated earlier or extended by our Board of Directors), or the date on which all 6,000,000 shares offered are sold (the “Termination Date”). There is currently no public market for shares of the Series B Preferred Stock; however, we intend to apply to list the Series B Preferred Stock on Nasdaq or another national securities exchange within one calendar year after the offering’s Termination Date, though there can be no assurance that a listing will be achieved in such timeframe, or at all. Common Stock Secondary Offering In June 2019, we completed a public offering of 2,000,000 shares of our common stock at a public offering price of $11.73 per share, resulting in gross proceeds of approximately $23.5 million and net proceeds (after deducting underwriting discounts and direct offering expenses borne by us) of approximately $22.3 million. In July 2019, the underwriters exercised a portion of the over-allotment option in connection with the offering, and, as a result, we issued an additional 277,297 shares of our common stock, resulting in gross proceeds of approximately $3.3 million and net proceeds (after deducting underwriting discounts and direct offering expenses borne by us) of approximately $3.1 million. At-the-Market Program On August 7, 2015, we entered into equity distribution agreements (commonly referred to as “at-the-market agreements”) with Cantor Fitzgerald & Co. and Ladenburg Thalmann & Co., Inc. (each a “Sales Agent”), under which we may 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 “ATM Program”). The following table provides information on shares of common stock sold under the ATM Program during 2019 (dollars in thousands, except per-share amounts):
Through September 30, 2019, we have issued and sold a total of 1,744,150 shares of our common stock under the ATM Program at an average sales price of $12.82 per share for gross proceeds of approximately $22.4 million and net proceeds of approximately $22.0 million. 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 three and nine months ended September 30, 2019 and 2018 are reflected in the table below.
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Borrowings |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BORROWINGS | BORROWINGS Our borrowings as of September 30, 2019, and December 31, 2018, are summarized below (dollars in thousands):
As of September 30, 2019, the above borrowings were collateralized by certain of our farms with an aggregate net book value of approximately $743.4 million. 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 4.03% and 3.97% for the three and nine months ended September 30, 2019, respectively, and 3.76% and 3.63% for three and nine months ended September 30, 2018, respectively. In addition, 2018 interest patronage from our Farm Credit Notes Payable (as defined below), which we recorded during the three months ended March 31, 2019, resulted in a 21.2% reduction (approximately 95 basis points) to the stated interest rates on such borrowings. We are unable to estimate the amount of interest patronage to be received, if any, related to interest accrued during 2019 on our Farm Credit Notes Payable. As of September 30, 2019, we were in compliance with all covenants applicable to the above borrowings. MetLife Borrowings MetLife Facility On May 9, 2014, we closed on a credit facility (the “MetLife Facility”) with Metropolitan Life Insurance Company (“MetLife”). As a result of subsequent amendments, the MetLife Facility currently consists of an aggregate of $200.0 million of term notes (the “MetLife Term Notes”) and $75.0 million of revolving equity lines of credit (the “MetLife Lines of Credit”). On August 16, 2019, we drew $16.5 million on the MetLife Term Notes. The interest rate on the new disbursement was 3.70% per annum (which rate is fixed through January 4, 2027) and was blended with the existing interest rate on the previously-outstanding balance under the MetLife Term Notes. The following table summarizes the pertinent terms of the MetLife Facility as of September 30, 2019 (dollars in thousands, except for footnotes):
Farm Credit Notes Payable From time to time since September 2014 through September 30, 2019, we, through certain subsidiaries of our Operating Partnership, have entered into various loan agreements (collectively, the “Farm Credit Notes Payable”) with 10 different Farm Credit associations (collectively, “Farm Credit”). During the nine months ended September 30, 2019, we entered into the following loan agreement with Farm Credit (dollars in thousands):
Interest patronage, or refunded interest, on our borrowings from the various Farm Credit associations is generally recorded upon receipt and is included within Other income on our Condensed 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, 2019, we recorded interest patronage of approximately $700,000 related to interest accrued on loans from Farm Credit during the year ended December 31, 2018, which resulted in a 21.2% reduction (approximately 95 basis points) to the stated interest rates on such borrowings. Prudential Note Payable On June 17, 2019, we entered into a loan agreement with PGMI Real Estate Finance, LLC (“Prudential”), the terms of which are summarized in the following table as of September 30, 2019 (dollars in thousands):
Rabo Note Payable On July 10, 2019, we entered into a loan agreement with Rabo AgriFinance, LLC (“Rabo”), the terms of which are summarized in the following table as of September 30, 2019 (dollars in thousands):
Debt Service – Aggregate Maturities Scheduled principal payments of our aggregate notes and bonds payable as of September 30, 2019, for the succeeding years are as follows (dollars in thousands):
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:
As of September 30, 2019, the aggregate fair value of our notes and bonds payable was approximately $454.5 million, as compared to an aggregate carrying value (excluding unamortized related debt issuance costs) of approximately $450.8 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 calculated based on 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 of the MetLife Lines of Credit and the lack of changes in market credit spreads, their aggregate fair value as of September 30, 2019, is deemed to approximate their aggregate carrying value of $4.1 million. Interest Rate Swap Agreement In order to hedge our exposure to variable interest rates, we entered into an interest rate swap agreement in connection with one of our mortgage financings secured during the three months ended September 30, 2019. In accordance with this swap agreement, we will pay our counterparty a fixed rate interest rate on a quarterly basis and receive payments from our counterparty equivalent to the stipulated floating rate. We have adopted the fair value measurement provision for this financial instrument, and the fair values of our interest rate swap agreement is recorded in Other assets, net or Other liabilities, net, as appropriate, on our accompanying Condensed Consolidated Balance Sheets. Generally, in the absence of observable market data, we will estimate the fair value of our interest rate swap 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 September 30, 2019, our interest rate swap was valued using Level 2 inputs. In addition, we have designated our interest rate swap as a cash flow hedge, and we record changes in the fair value of the interest rate swap agreement to accumulated other comprehensive income on the Condensed 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 swap as of September 30, 2019 (dollars in thousands):
The following table presents the amount of loss recognized in comprehensive income within our condensed consolidated financial statements for the three and nine months ended September 30, 2019 (dollars in thousands):
The following table summarizes certain information regarding our derivative instrument as of September 30, 2019 (dollars in thousands):
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Real Estate and Intangible Assets - Summary of Components of Investments in Real Estate (Details) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
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Real estate: | ||
Land and land improvements | $ 556,557 | $ 417,310 |
Irrigation and drainage systems | 96,913 | 71,583 |
Horticulture | 91,289 | 48,894 |
Farm-related facilities | 20,579 | 18,510 |
Other site improvements | 7,097 | 6,707 |
Real estate, at gross cost | 772,435 | 563,004 |
Accumulated depreciation | (31,827) | (24,051) |
Real estate, net | $ 740,608 | $ 538,953 |
Real Estate and Intangible Assets Real Estate and Intangible Assets - Weighted-Average Amortization Periods For The Intangible Assets Acquired And Liabilities Assumed (Details) |
9 Months Ended | |
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Sep. 30, 2019 |
Sep. 30, 2018 |
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Acquired Finite-Lived Intangible Assets [Line Items] | ||
Weighted-Average Amortization Period (in Years) | 2 years 1 month 6 days | 7 years 1 month 6 days |
In-place leases | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Weighted-Average Amortization Period (in Years) | 1 year 10 months 24 days | 7 years |
Leasing costs | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Weighted-Average Amortization Period (in Years) | 3 years | 7 years 1 month 6 days |
(Loss) Earnings Per Share of Common Stock (Tables) |
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Loss earnings per common share basic and diluted | The following table sets forth the computation of basic and diluted (loss) earnings per common share for the three and nine months ended September 30, 2019 and 2018, computed using the weighted average number of shares outstanding during the respective periods. Net (loss) 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 limited partners’ share of earnings would also be added back to net (loss) earnings.
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Related-Party Transactions (Tables) |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Management Fees, Incentive Fees and Associated Credits and Administration Fees | The following table summarizes related-party fees paid or accrued for and reflected in our accompanying condensed consolidated financial statements (dollars in thousands):
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Details of Amounts Due to Related Parties on Our Accompanying Condensed Consolidated Balance Sheets | Amounts due to related parties on our accompanying Condensed Consolidated Balance Sheets as of September 30, 2019, and December 31, 2018, were as follows (dollars in thousands):
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Borrowings - Aggregate Maturities (Details) - Mortgage notes and bonds payable $ in Thousands |
Sep. 30, 2019
USD ($)
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Debt Instrument [Line Items] | |
For the remaining nine months ending December 31: 2019 | $ 4,825 |
2020 | 30,682 |
2021 | 19,075 |
2022 | 41,867 |
2023 | 35,658 |
2024 | 26,765 |
Thereafter | 291,967 |
Total mortgage notes and bonds payable | $ 450,839 |
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