Mortgage Notes, Lines of Credit and Bonds Payable

9 Months Ended

Sep. 30, 2024

Mortgage Notes, Lines of Credit and Bonds Payable

Mortgage Notes, Lines of Credit and Bonds Payable

Note 7—Mortgage Notes, Lines of Credit and Bonds Payable

As of September 30, 2024 and December 31, 2023, the Company had the following indebtedness outstanding:

										Book
		Annual								Value of
($ in thousands)		Interest			Principal					Collateral
		Rate as of		Next	Outstanding as of					as of
	Interest	September 30,	Interest Rate	Adjustment	September 30,		December 31,		Maturity	September 30,
Loan	Payment Terms	2024	Terms	Date	2024		2023		Date	2024
Farmer Mac Bond #6	Semi-annual	3.69%	Fixed	N/A	$	13,827	$	13,827	April 2025	$	19,516
Farmer Mac Bond #7	Semi-annual	3.68%	Fixed	N/A		11,160		11,160	April 2025		8,258
Farmer Mac Facility	Monthly	6.70%	SOFR + 1.50%	N/A		25,000		30,000	December 2025		92,944
MetLife Term Loan #1	Semi-annual	5.55%	Fixed	N/A		72,586		72,585	March 2026		102,171
MetLife Term Loan #4	Semi-annual	5.55%	Fixed for 3 years	March 2026		5,757		5,756	June 2026		9,582
MetLife Term Loan #5	Semi-annual	5.63%	Fixed for 3 years	January 2026		5,179		5,179	January 2027		7,378
MetLife Term Loan #6	Semi-annual	5.55%	Fixed for 3 years	February 2026		21,726		21,726	February 2027		26,230
MetLife Term Loan #7	Semi-annual	5.87%	Fixed for 3 years	June 2026		15,434		15,434	June 2027		29,725
MetLife Term Loan #8	Semi-annual	4.12%	Fixed for 10 years	December 2027		44,000		44,000	December 2042		110,042
MetLife Term Loan #9	Semi-annual	6.37%	Fixed for 3 years	May 2027		16,800		16,800	May 2028		33,720
MetLife Term Loan #10	Semi-annual	6.36%	Fixed	N/A		48,986		48,986	October 2030		94,846
MetLife Term Loan #11	Semi-annual	2.85%	Fixed for 3 years	October 2024 ⁽³⁾		12,750		12,750	October 2031		27,497
MetLife Term Loan #12	Semi-annual	3.11%	Fixed for 3 years	December 2024		14,359		14,359	December 2031		14,784
MetLife Facility	Quarterly	7.45%	SOFR + 2.10%	N/A		—		—	October 2027		112,630
Rabobank (1)	Semi-annual	7.02%	SOFR + 1.81%	March 2026 ⁽²⁾		45,399		45,533	March 2028		90,275
Rutledge Facility	Quarterly	6.73%	SOFR + 1.40%	N/A		41,000		5,000	February 2027		182,376
Total outstanding principal						393,963		363,095		$	961,974
Debt issuance costs						(1,719)		(2,236)
Unamortized premium						—		—
Total mortgage notes and bonds payable, net					$	392,244	$	360,859

(1) The Company has an interest rate swap agreement with Rabobank for $33.2 million notional of fixed SOFR at 2.114% until March 2026 for a weighted average rate of approximately 4.7% (see “Note 10—Hedge Accounting”). After adjusting the $33.2 million of swapped Rabobank debt as fixed rate debt, the ratio of floating rate debt to total debt decreased from 28.3% to 19.8%.

(2) This adjustment date is for the spread noted under “Interest Rate Terms.”

(3) Effective October 1, 2024, the interest rate on MetLife Term Loan #11 was repriced to 5.35%.

Farmer Mac Debt

As of September 30, 2024 and December 31, 2023, the Operating Partnership had approximately $50.0 million and $55.0 million, respectively, in aggregate principal amount outstanding under the bond purchase agreement entered into in October 2022 (the “Farmer Mac Facility”) with Federal Agricultural Mortgage Corporation and its wholly owned subsidiary, Farmer Mac Mortgage Securities Corporation (collectively, “Farmer Mac”), and $48.1 million and $43.1 million, respectively, in additional capacity available under the Farmer Mac Facility. The Farmer Mac debt is secured by loans which are, in turn, secured by first-lien mortgages on agricultural real estate owned by wholly owned subsidiaries of the Operating Partnership. While Farmer Mac Bond #6 and Farmer Mac Bond #7 bear fixed interest rates of 3.69% and 3.68%, respectively, the Farmer Mac Facility bears interest of one-month term SOFR + 1.50% on drawn amounts and an unused commitment fee of 0.20%. In connection with the agreements, the Company entered into a guaranty agreement whereby the Company agreed to guarantee the full performance of the Operating Partnership’s duties and obligations under the Farmer Mac debt. The Farmer Mac debt is subject to the Company’s ongoing compliance with a number of customary affirmative and negative covenants, as well as a maximum loan-to-value ratio of not more than 60%. The Company was in compliance with all applicable covenants at September 30, 2024. In addition, under the Farmer Mac Facility, the Operating Partnership may request that Farmer Mac purchase additional bonds up to an additional $200.0 million, which Farmer Mac may approve at its sole discretion.

Subsequent to September 30, 2024, the Company made repayments of $25.0 million on the Farmer Mac Facility (see “Note 12—Subsequent Events” for additional information regarding the Company’s repayment of debt subsequent to September 30, 2024).

MetLife Term Debt

As of each of September 30, 2024 and December 31, 2023, the Company had $257.6 million in aggregate principal amount outstanding under the credit agreements between Metropolitan Life Insurance Company (“MetLife”) and certain of the Company’s subsidiaries (collectively, the “MetLife credit agreements”). Each of the MetLife credit agreements

contains a number of customary affirmative and negative covenants, including the requirement to maintain a loan to value ratio of no greater than 60%.

The Company also has a $50.0 million credit facility with MetLife that provides the Company with access to additional liquidity on a revolving credit basis at a floating rate of interest equal to three-month term SOFR plus 210 basis points. As of September 30, 2024, no amounts had been borrowed and all $50.0 million remained available under the senior secured revolving line of credit entered into by the Operating Partnership with MetLife in October 2022 (the “MetLife Facility”). As of September 30, 2024, the Company was in compliance with all covenants under the MetLife credit agreements and MetLife guarantees.

On each adjustment date for MetLife Term Loans #1 and 4-9, MetLife may, at its option, adjust the rate of interest to any rate of interest determined by MetLife consistent with rates for substantially similar loans secured by real estate substantially similar to the collateral. For MetLife Term Loan #11, the interest rate will be adjusted to the greater of the three-year U.S. treasury rate plus 2.20% or 2.85%. For MetLife Term Loan #12, the interest rate will be adjusted to the greater of the three-year U.S. treasury rate plus 2.10% or 2.75%. At the time of rate adjustment, the Company may make a prepayment equal to the unpaid principal balance for each of the MetLife loans. Otherwise, the Company may make a prepayment equal to 20% to 50% of the unpaid principal balance (depending on the tranche of debt) during a calendar year without penalty.

Subsequent to September 30, 2024, the Company made repayments of $89.7 million on MetLife Term Debt (see “Note 12—Subsequent Events” for additional information regarding the Company’s repayment of debt subsequent to September 30, 2024).

Rabobank Mortgage Note

As of September 30, 2024 and December 31, 2023, the Company and the Operating Partnership had $45.4 million and $45.5 million in aggregate principal amount outstanding, respectively, under a mortgage note with Rabobank (the “Rabobank Mortgage Note”). The Company was in compliance with all covenants under the Rabobank Mortgage Note as of September 30, 2024. The Rabobank Mortgage Note was amended in March 2024 to eliminate $2.1 million of annual amortization.

Subsequent to September 30, 2024, the Company made repayments of $33.6 million on the Rabobank Mortgage Note (see “Note 12—Subsequent Events” for additional information regarding the Company’s repayment of debt subsequent to September 30, 2024).

Rutledge Facility

As of September 30, 2024 and December 31, 2023, the Company and the Operating Partnership had $41.0 million and $5.0 million in aggregate principal amount, respectively, outstanding under a credit agreement (the “Rutledge Facility”) with Rutledge Investment Company (“Rutledge”). The credit agreement was amended in June 2024 to reduce the interest rate to three-month SOFR plus 140 basis points, eliminate the 2.5% annual reduction in facility size, reduce the facility size to $75.0 million, and introduce an unused commitment fee of 0.20%.  The Company accounted for this amendment as a debt modification, and as a result, recognized a non-cash loss of $0.06 million during the nine months ended September 30, 2024 within Other (income) expense in the Company’s Consolidated Statement of Operations. Additionally, the Company deferred $0.05 million in debt issuance costs in connection with the refinance. As of September 30, 2024, $34.0 million remained available under the Rutledge Facility.

The interest rate for the Rutledge Facility is based on three-month SOFR plus 140 basis points. Generally, the Rutledge Facility contains terms consistent with the Company’s prior loans with Rutledge, including, among others, the representations and warranties, affirmative, negative and financial covenants and events of default.

In connection with the Rutledge agreement, the Company and the Operating Partnership each entered into separate guarantees whereby the Company and the Operating Partnership jointly and severally agreed to unconditionally guarantee the obligations under the Rutledge Facility (the “Rutledge guarantees”). The Rutledge guarantees contain a number of

customary affirmative and negative covenants. As of September 30, 2024, the Company was in compliance with all covenants under the loan agreements relating to the Rutledge Facility.

Subsequent to September 30, 2024, the Company made repayments of $41.0 million on the Rutledge Facility (see “Note 12—Subsequent Events” for additional information regarding the Company’s repayment of debt subsequent to September 30, 2024).

LIBOR

On July 1, 2023, the Rabobank Mortgage Note, the Company’s only remaining indebtedness with a maturity date beyond 2023 that had exposure to LIBOR, was converted to a SOFR-based instrument. Accordingly, as of September 30, 2024, the Company did not have any indebtedness that had exposure to LIBOR.

Debt Issuance Costs

Costs incurred by the Company in obtaining debt are deducted from the face amount of mortgage notes and bonds payable. Debt issuance costs are amortized using the straight-line method, which approximates the effective interest method, over the respective terms of the related indebtedness. Any unamortized amounts upon early repayment of mortgage notes payable are written off in the period in which repayment occurs. Fully amortized deferred financing fees are removed from the balance sheet upon maturity or repayment of the underlying debt. Accumulated amortization of deferred financing fees was $2.5 million and $1.9 million as of September 30, 2024 and December 31, 2023, respectively.

Aggregate Maturities

As of September 30, 2024, aggregate maturities of long-term debt for the succeeding years are as follows:

($ in thousands)
Year Ending December 31,	Future Maturities
2024 (remaining three months)	$	—
2025		49,987
2026		78,343
2027		83,339
2028		62,199
Thereafter		120,095
	$	393,963

Fair Value

The fair value of the mortgage notes payable is valued using Level 3 inputs under the hierarchy established by GAAP and is calculated based on a discounted cash flow analysis, using interest rates based on management’s estimates of market interest rates on long-term debt with comparable terms whenever the interest rates on the mortgage notes payable are deemed not to be at market rates. As of September 30, 2024 and December 31, 2023, the fair value of the mortgage notes payable was $384.6 million and $349.1 million, respectively.