Note 5—Real Estate

During the nine months ended September 30, 2017, the Company completed 15 acquisitions which were accounted for as asset acquisitions in Illinois, South Carolina, South Dakota, Arkansas, Michigan, Georgia, Kansas, California, and Colorado. Consideration totaled $111.6 million and was comprised of cash, shares of common stock and Common units. No intangible assets were acquired through these acquisitions.

The estimated fair values for the assets acquired and the liabilities assumed are preliminary and are subject to change as additional information related to the fair value of the assets and liabilities becomes available. Subsequent adjustments to the preliminary purchase price allocation are not expected to have a material impact to the Company's consolidated financial statements. The following outlines the impact of the completion of the AFCO Mergers accounted for as a business combination as of September 30, 2017:


($ in thousands)
Land, at cost	$	181,072
Irrigation improvements		26,155
Permanent plantings		48,513
Buildings		1,499
In-place leases(1)		1,139
Lease origination costs		264
Cash		3,832
Other assets		1,831
Inventory		99
Deferred revenue		(4,434)
Other liabilities		(13,826)
Gross Total Consideration		246,144
Mortgage notes and bonds payable, net		(75,000)
Total Consideration	$	171,144

(1)

Weighted average amortization period of the in-place lease liability is 3 years.

During the period the Company recorded a measurement period adjustment in relation to property tax accruals in the amount of $0.6 million recognized in other liabilities. As the amount was recovered through tenant reimbursements, the Company also increased the other assets category by $0.6 million.

The Company also recorded a measurement period adjustment in relation to deferred revenue associated with acquired leases in the amount of $1.1 million with a corresponding change in land of $0.8 million, irrigation improvements of $0.1 million and permanent plantings of $0.2 million. The statement of operations impact of this adjustment is immaterial to the three months ended September 30, 2017.

The Company has included the results of operations for the acquired real estate in the consolidated statements of operations from the dates of acquisition. The real estate acquired in business combinations during the nine months ended September 30, 2017 contributed $10.1 million to total revenue and $2.4 million to net income.

The pro forma information presented below does not purport to represent what the actual results of operations of the Company would have been had the business combination outlined above occurred as of the beginning of the periods presented, nor does it purport to predict the results of operations of future periods. The pro forma information is presented below as if the real estate acquired in the business combination during the nine months ended September 30, 2017 had been acquired as of January 1, 2016.


	For the three months ended				For the nine months ended
($ in thousands)	September 30,				September 30,
Proforma	2017		2016		2017		2016
Revenue	$	12,046	$	6,946	$	30,655	$	17,669
Pro forma estimate(1)		-		4,146		993		11,244
Total operating revenue	$	12,046	$	11,092	$	31,648	$	28,913

Net income (loss)	$	2,610	$	100	$	2,630	$	(513)
Pro forma estimate		-		431		(367)		2,141
Total net income	$	2,610	$	531	$	2,263	$	1,628

Net income (loss) available to common stockholders of Farmland Partners Inc.	$	221	$	(467)	$	(1,935)	$	(869)

Earnings per share basic and diluted
Income (loss) per basic share attributable to common stockholders	$	0.01	$	(0.02)	$	(0.06)	$	(0.03)
Income (loss) per diluted share attributable to common stockholders	$	0.01	$	(0.02)	$	(0.06)	$	(0.03)
Weighted-average number of common shares - basic		32,862		28,447		32,374		27,427
Weighted-average number of common shares - diluted		32,862		28,447		32,374		27,427

(1)

Represents a linear extrapolation of revenues over the three and nine months ended September 30, 2017 and 2016 and therefore does not take into account the irregularity of certain of the Company's revenue components, such as crop share lease payments.

During the nine months ended September 30, 2016, the Company completed 16 acquisitions which were accounted for as asset acquisitions in Georgia, South Carolina, Texas, Illinois, and Louisiana. Consideration totaled $261.1 million and was comprised of cash, Common units, and Series A preferred units. No intangible assets were acquired through these acquisitions.

The following outlines the fair value allocation of the assets and liabilities acquired as a result of the completion of six acquisitions in Michigan, Mississippi, Texas, Illinois, Colorado and Georgia which were accounted for as business combinations as of September 30, 2016:


($ in thousands)
Land, at cost	$	7,170
Groundwater		634
Irrigation improvements		518
Permanent plantings		763
Below market lease		(29)
Total Consideration	$	9,056

Prudential Termination Agreement

On February 18, 2017, the Company entered into a Termination Agreement (the “Termination Agreement”) with Prudential Capital Mortgage Company (the “Prudential Sub-Advisor”) pursuant to which the Company and the Prudential Sub-Advisor agreed to terminate, effective as of March 31, 2017, the Amended and Restated Sub-Advisory Agreement (the “Sub-Advisory Agreement”), dated as of October 23, 2015, by and among American Farmland Company, American Farmland Advisors, American Farmland Company L.P. and Prudential and certain related property management agreements (together with the Sub-Advisory Agreement, the “Prudential Agreements”).

The Termination Agreement provided that, as of March 31, 2017, Prudential no longer provides services to the Company under the Prudential Agreements. The Company paid the Prudential Sub-Advisor $1.6 million in cash, which is equal to the fee that would have been owed to Prudential for services through the quarter ended March 31, 2017, plus a termination fee of approximately $0.2 million. The statement of operations impact to the Company for the nine months ended September 30, 2017 totaled $0.7 million, which is included in property operating expenses, with the remaining $0.9 million being included in the accruals as a component of the purchase accounting surrounding the AFCO Mergers as this represented the costs incurred by AFCO prior to the AFCO Mergers.