Revenue Recognition

3 Months Ended

Mar. 31, 2017

Note 2—Revenue Recognition

For the majority of its leases, the Company receives at least 50% of the annual lease payment from tenants either during the first quarter of the year or at the time of acquisition of the related farm, with the remainder of the lease payment due in the second half of the year. The rental income received is recorded on a straight-line basis over the lease term. The lease term generally includes periods when a tenant: (1) may not terminate its lease obligation early; (2) may terminate its lease obligation early in exchange for a fee or penalty that the Company considers material enough such that termination would not be probable; (3) possesses renewal rights and the tenant’s failure to exercise such rights imposes a penalty on the tenant material enough such that renewal appears reasonably assured; or (4) possesses bargain renewal options for such periods. Leases in place as of March 31, 2017 have terms ranging from one to ten years. Payments received in advance are included in deferred revenue until they are earned. As of March 31, 2017 and December 31, 2016, the Company had $13.9 million and $1.0 million, respectively, in deferred revenue.

The following sets forth a summary of rental income recognized for the three ended March 31, 2017 and 2016:


	Rental income recognized
	For the three months ended
	March 31,
(in thousands)	2017		2016
Leases in effect at the beginning of the year	$	3,155	$	3,582
Leases entered into during the year		3,648		835
	$	6,803	$	4,417

Future minimum lease payments from tenants under all non-cancelable leases in place as of March 31, 2017, including lease advances, when contractually due, but excluding tenant reimbursement of expenses for the remainder of 2017 and each of the next four years and thereafter as of March 31, 2017 are as follows:


(in thousands)	Future rental
Year Ending December 31,	payments
2017 (remaining nine months)	$	12,953
2018		24,405
2019		17,548
2020		6,464
2021		2,861
Thereafter		4,095
	$	68,326

Since lease renewal periods are exercisable at the option of the lessee, the preceding table presents future minimum lease payments due during the initial lease term only.

The Company records revenue from the sale of harvested crops when the harvested crop has been delivered to a grain facility and title has transferred. Revenues from the sale of harvested crops totaling $0.2 million and $0.1 million were recognized during the three months ended March 31, 2017 and 2016, respectively. Harvested crops delivered under marketing contracts are recorded using the fixed price of the marketing contract at the time of delivery to a grain facility. Harvested crops delivered without a marketing contract are recorded using the market price at the date the harvested crop is delivered to the grain facility and title has transferred.