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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q 
(Mark One)
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2020
or
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission file number: 001-35795  
GLADSTONE LAND CORPORATION
(Exact name of registrant as specified in its charter)
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)
(703) 287-5800
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
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
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
¨
 
  
Accelerated filer
x 
Non-accelerated filer
¨
 
  
Smaller reporting company
 
 
 
 
Emerging growth company
¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨


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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  ¨    No  ý
The number of shares of the registrant’s Common Stock, $0.001 par value per share, outstanding as of May 5, 2020, was 21,346,458.


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GLADSTONE LAND CORPORATION
FORM 10-Q FOR THE QUARTER ENDED
MARCH 31, 2020
TABLE OF CONTENTS 
 
 
PAGE
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


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PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GLADSTONE LAND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per-share data)
(Unaudited)
 
 
March 31, 2020
 
December 31, 2019
ASSETS
 
 
 
Investments in real estate, net
$
799,456

 
$
792,081

Lease intangibles, net
4,001

 
4,827

Cash and cash equivalents
30,232

 
13,688

Other assets, net
7,431

 
6,191

TOTAL ASSETS
$
841,120

 
$
816,787

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
LIABILITIES:
 
 
 
Borrowings under lines of credit
$
100

 
$
100

Notes and bonds payable, net
477,426

 
481,829

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 March 31, 2020, and December 31, 2019, net
28,418

 
28,359

Accounts payable and accrued expenses
8,733

 
10,132

Due to related parties, net
2,921

 
2,169

Other liabilities, net
15,467

 
15,228

Total liabilities
533,065

 
537,817

Commitments and contingencies (Note 7)

 

 
 
 
 
EQUITY:
 
 
 
Stockholders’ equity:
 
 
 
Series B cumulative redeemable preferred stock, $0.001 par value, $25.00 per share liquidation preference; 6,477,647 shares authorized 5,977,647 shares issued and outstanding as of March 31, 2020; 6,485,400 shares authorized, 4,755,869 shares issued and outstanding as of December 31, 2019
6

 
5

Common stock, $0.001 par value; 65,522,353 shares authorized 21,346,458 shares issued and outstanding as of March 31, 2020; 91,514,600 shares authorized, 20,936,658 shares issued and outstanding as of December 31, 2019
21

 
21

Additional paid-in capital
348,020

 
315,770

Accumulated other comprehensive loss
(1,647
)
 
(390
)
Distributions in excess of accumulated earnings
(40,701
)
 
(38,785
)
Total stockholders’ equity
305,699

 
276,621

Non-controlling interests in Operating Partnership
2,356

 
2,349

Total equity
308,055

 
278,970

 
 
 
 
TOTAL LIABILITIES AND EQUITY
$
841,120

 
$
816,787

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

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GLADSTONE LAND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(In thousands, except share and per-share data)
(Unaudited)
 
For the Three Months Ended March 31,
 
2020
 
2019
OPERATING REVENUES:
 
 
 
Lease revenue, net
$
15,280

 
$
7,830

Total operating revenues
15,280

 
7,830

OPERATING EXPENSES:
 
 
 
Depreciation and amortization
4,257

 
2,597

Property operating expenses
521

 
816

Base management fee
1,034

 
905

Incentive fee
1,334

 

Administration fee
384

 
306

General and administrative expenses
553

 
550

Total operating expenses
8,083

 
5,174

Credits to fees from Adviser

 
(569
)
Total operating expenses, net of credits to fees
8,083

 
4,605

OTHER INCOME (EXPENSE):
 
 
 
Other income
1,324

 
826

Interest expense
(4,963
)
 
(3,453
)
Dividends declared on Series A cumulative term preferred stock
(458
)
 
(458
)
Loss on dispositions of real estate assets, net
(99
)
 
(32
)
Property and casualty recovery
66

 

Income from investments in unconsolidated entities
34

 

Total other expense, net
(4,096
)
 
(3,117
)
NET INCOME
3,101

 
108

Net income attributable to non-controlling interests
(42
)
 
(3
)
NET INCOME ATTRIBUTABLE TO THE COMPANY
3,059

 
105

Dividends declared on Series B cumulative redeemable preferred stock
(2,125
)
 
(601
)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS
$
934

 
$
(496
)
 
 
 
 
EARNINGS (LOSS) PER COMMON SHARE:
 
 
 
Basic and diluted
$
0.04

 
$
(0.03
)
WEIGHTED-AVERAGE SHARES OF COMMON STOCK OUTSTANDING:
 
 
 
Basic and diluted
21,262,080

 
18,028,826


The accompanying notes are an integral part of these condensed consolidated financial statements.

4

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GLADSTONE LAND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (Continued)
(In thousands, except share and per-share data)
(Unaudited)
 
For the Three Months Ended March 31,
 
2020
 
2019
COMPREHENSIVE INCOME:
 
 
 
Net income attributable to the Company
$
3,059

 
$
105

Change in fair value related to interest rate hedging instruments
(1,257
)
 

COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY
$
1,802

 
$
105


The accompanying notes are an integral part of these condensed consolidated financial statements.

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GLADSTONE LAND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(In thousands, except share data)
(Unaudited)
 
Three months ended March 31, 2020
 
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, 2019
4,755,869

 
$
5

 
20,936,658

 
$
21

 
$
315,770

 
$
(390
)
 
$
(38,785
)
 
$
276,621

 
$
2,349

 
$
278,970

Issuance of Series B Preferred Stock, net
1,229,531

 
1

 

 

 
27,115

 

 

 
27,116

 

 
27,116

Redemptions of Series B Preferred Stock
(7,753
)
 
0

 

 

 
(185
)
 

 

 
(185
)
 

 
(185
)
Issuance of common stock, net

 

 
409,800

 
0

 
5,324

 

 

 
5,324

 

 
5,324

Accumulated Other Comprehensive Loss

 

 

 

 

 
(1,257
)
 

 
(1,257
)
 

 
(1,257
)
Net income

 

 

 

 

 

 
3,059

 
3,059

 
42

 
3,101

Dividends—Series B Preferred Stock

 

 

 

 

 

 
(2,125
)
 
(2,125
)
 

 
(2,125
)
Distributions—OP Units and common stock

 

 

 

 

 

 
(2,850
)
 
(2,850
)
 
(39
)
 
(2,889
)
Adjustment to non-controlling interests resulting from changes in ownership of the Operating Partnership

 

 

 

 
(4
)
 

 

 
(4
)
 
4

 

Balance at March 31, 2020
5,977,647

 
$
6

 
21,346,458

 
$
21

 
$
348,020

 
$
(1,647
)
 
$
(40,701
)
 
$
305,699

 
$
2,356

 
$
308,055



 
Three months ended March 31, 2019
 
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, 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
747,916

 
1

 

 

 
16,703

 

 
16,704

 

 
16,704

Redemptions of Series B Preferred Stock
(600
)
 

 

 
0

 
(13
)
 

 
(13
)
 

 
(13
)
Redemption of OP Units

 
0

 
570,879

 

 
4,714

 

 
4,714

 
(4,714
)
 

Issuance of common stock, net

 

 

 

 
(20
)
 

 
(20
)
 

 
(20
)
Net income

 

 

 

 

 
105

 
105

 
3

 
108

Dividends—Series B Preferred Stock

 

 

 

 

 
(601
)
 
(601
)
 

 
(601
)
Distributions—OP Units and common stock

 

 

 

 

 
(2,409
)
 
(2,409
)
 
(53
)
 
(2,462
)
Adjustment to non-controlling interests resulting from changes in ownership of the Operating Partnership

 

 

 

 
43

 

 
43

 
(43
)
 

Balance at March 31, 2019
1,891,709

 
$
2

 
18,462,219

 
$
18

 
$
223,480

 
$
(28,731
)
 
$
194,769

 
$

 
$
194,769


The accompanying notes are an integral part of these condensed consolidated financial statements.

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GLADSTONE LAND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
For the Three Months Ended March 31,
 
2020
 
2019
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net income
$
3,101

 
$
108

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
4,257

 
2,597

Amortization of debt issuance costs
179

 
150

Amortization of deferred rent assets and liabilities, net
(69
)
 
(80
)
Income from investments in unconsolidated entities
(34
)
 

Bad debt expense
12

 
6

Loss on dispositions of real estate assets, net
99

 
32

Changes in operating assets and liabilities:
 
 
 
Other assets, net
(1,857
)
 
(136
)
Accounts payable and accrued expenses and Due to related parties, net
(1,243
)
 
(2,277
)
Other liabilities, net
(949
)
 
2,032

Net cash provided by operating activities
3,496

 
2,432

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Acquisition of new real estate assets
(7,436
)
 
(2,304
)
Capital expenditures on existing real estate assets
(2,682
)
 
(3,063
)
Change in deposits on real estate acquisitions and investments, net
(50
)
 
(350
)
Net cash used in investing activities
(10,168
)
 
(5,717
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Proceeds from issuance of preferred and common equity
35,589

 
18,482

Offering costs
(2,523
)
 
(1,729
)
Redemption of Series B Preferred Stock
(185
)
 
(13
)
Borrowings from mortgage notes and bonds payable

 
1,440

Repayments of mortgage notes and bonds payable
(4,388
)
 
(3,450
)
Payments of financing fees
(263
)
 
(4
)
Dividends paid on Series B cumulative redeemable preferred stock
(2,125
)
 
(601
)
Distributions paid on common stock
(2,850
)
 
(2,409
)
Distributions paid to non-controlling interests in Operating Partnership
(39
)
 
(53
)
Net cash provided by financing activities
23,216

 
11,663

NET INCREASE IN CASH AND CASH EQUIVALENTS
16,544

 
8,378

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
13,688

 
14,730

CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
30,232

 
$
23,108



The accompanying notes are an integral part of these condensed consolidated financial statements.

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GLADSTONE LAND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In thousands)
(Unaudited)

 
For the Three Months Ended March 31,
 
2020
 
2019
NON-CASH OPERATING, INVESTING, AND FINANCING INFORMATION:
 
 
 
Operating lease right-of-use assets included in Other assets, net
$
168

 
$
208

Operating lease liabilities included in Other liabilities, net
127

 
167

Real estate additions included in Accounts payable and accrued expenses and Due to related parties, net
2,699

 
1,428

Stock offering and OP Unit issuance costs included in Accounts payable and accrued expenses and Due to related parties, net
28

 
58

Financing fees included in Accounts payable and accrued expenses and Due to related parties, net
77

 
11

Lender holdback on loan issuance
498

 

Unrealized loss related to interest rate hedging instrument
(1,647
)
 
 


The accompanying notes are an integral part of these condensed consolidated financial statements.

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GLADSTONE LAND CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. 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, a majority of the common units of limited partnership interest in the Operating Partnership (“OP Units”), the financial position and results of operations of the Operating Partnership are consolidated within our financial statements. As of March 31, 2020, and December 31, 2019, the Company owned approximately 98.7% and 98.6%, 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.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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, 2019, as filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 19, 2020 (the “Form 10-K”). The results of operations for the three months ended March 31, 2020, are not necessarily indicative of the results that may be expected for other interim periods or for the full fiscal year.

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. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, including the impact of extraordinary events, such as the novel coronavirus (“COVID-19”) pandemic, the results of which form the basis for making certain judgments. Actual results may materially differ from these estimates.
Impairment of Real Estate Assets

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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 March 31, 2020, and December 31, 2019, we concluded that none of our properties were impaired. There have been no impairments recognized on our real estate assets since our inception.
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. For the tax year ended December 31, 2019 and for the three months ended March 31, 2020, we did not have any undistributed REIT taxable income, nor was there any taxable income or loss from Land Advisers. Should we have any taxable income or loss in the future, we will account for any income taxes in accordance with the provisions of ASC 740, “Income Taxes,” using the asset and liability method.
Reclassifications
Certain information on the accompanying Condensed Consolidated Balance Sheet as of December 31, 2019, has been reclassified to conform to the current period’s presentation. These reclassifications had no impact on previously-reported stockholders’ equity, net income, or net change in cash and cash equivalents.
Recently-Issued Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 requires more timely recognition of credit losses on loans and other financial instruments that are not accounted for at fair market value through net income. The standard also requires that financial assets measured at amortized cost be presented at the net amount anticipated to be collected via an allowance for credit losses that is deducted from the amortized cost basis. Pursuant to ASU 2016-13, we are required to measure all expected credit losses based upon historical experience, current conditions, and reasonable (and supportable) forecasts that affect the collectability of the financial asset. We adopted ASU 2016-13 beginning with the three months ended March 31, 2020, and its adoption has not had a material impact on our consolidated financial statements.
In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848)” (“ASU 2020-04”). The main provisions of this update provide optional expedients and exceptions for contracts, hedging relationships, and other transactions that reference the London Inter-bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. ASU 2020-04 is effective for all entities as of March 12, 2020. We adopted ASU 2020-04 beginning with the three months ended March 31, 2020, and its adoption has not resulted in a material impact to our consolidated financial statements, as ASU 2020-04 allows for prospective application of any changes in the effective interest rate for LIBOR-based debt and also provides for practical expedients that will allow us to continue to treat our derivative instruments designed as cash flow hedges consistent to how they are accounted for now.
NOTE 3. REAL ESTATE AND INTANGIBLE ASSETS
All of our properties are wholly-owned on a fee-simple basis, except where noted. The following table provides certain summary information about the 113 farms we owned as of March 31, 2020 (dollars in thousands, except for footnotes):

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Location
 
No. of Farms
 
Total
Acres
 
Farm Acres
 
Net Cost Basis(1)
 
Encumbrances(2)
California(3)
 
42
 
14,830
 
13,610
 
$
420,149

 
$
259,322

Florida
 
23
 
20,770
 
16,256
 
210,535

 
132,492

Arizona(4)
 
6
 
6,280
 
5,228
 
56,987

 
22,087

Colorado
 
12
 
32,773
 
25,577
 
49,141

 
26,687

Nebraska
 
8
 
7,104
 
6,402
 
27,364

 
17,246

Michigan
 
15
 
962
 
682
 
12,344

 
7,573

Texas
 
1
 
3,667
 
2,219
 
8,317

 
5,227

Washington
 
1
 
746
 
417
 
8,166

 
5,005

Oregon
 
3
 
418
 
363
 
6,233

 
3,785

North Carolina
 
2
 
310
 
295
 
2,274

 
1,238

 
 
113
 
87,860
 
71,049
 
$
801,510

 
$
480,662

(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 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 $3.1 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 March 31, 2020, this investment had a net carrying value of approximately $621,000 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 $2.0 million as of March 31, 2020 (included in Lease intangibles, net on the accompanying Condensed Consolidated Balance Sheet).
Real Estate
The following table sets forth the components of our investments in tangible real estate assets as of March 31, 2020, and December 31, 2019 (dollars in thousands):
 
March 31, 2020
 
December 31, 2019
Real estate:
 
 
 
Land and land improvements
$
590,137

 
$
583,247

Irrigation and drainage systems
111,519

 
108,222

Horticulture
108,102

 
107,941

Farm-related facilities
20,665

 
20,665

Other site improvements
7,180

 
7,180

Real estate, at gross cost
837,603

 
827,255

Accumulated depreciation
(38,147
)
 
(35,174
)
Real estate, net
$
799,456

 
$
792,081

Real estate depreciation expense on these tangible assets was approximately $3.4 million and $2.3 million for the three months ended March 31, 2020 and 2019, respectively.
Included in the figures above are amounts related to improvements made on certain of our properties paid for by our tenants but owned by us, or tenant improvements. As of March 31, 2020, and December 31, 2019, we recorded tenant improvements, net of accumulated depreciation, of approximately $2.1 million and $2.2 million, respectively. We recorded both depreciation expense and additional lease revenue related to these tenant improvements of approximately $75,000 and $74,000 during the three months ended March 31, 2020 and 2019, respectively.
Intangible Assets and Liabilities
The following table summarizes the carrying values of certain lease intangible assets and the related accumulated amortization as of March 31, 2020, and December 31, 2019 (dollars in thousands):

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March 31, 2020
 
December 31, 2019
Lease intangibles:
 
 
 
Leasehold interest – land
$
3,498

 
$
3,498

In-place leases
2,007

 
2,293

Leasing costs
1,585

 
2,066

Tenant relationships
414

 
414

Lease intangibles, at cost
7,504

 
8,271

Accumulated amortization
(3,503
)
 
(3,444
)
Lease intangibles, net
$
4,001

 
$
4,827

Total amortization expense related to these lease intangible assets, including amounts charged to amortization expense due to early lease terminations, was approximately $826,000 and $324,000 for the three months ended March 31, 2020 and 2019, respectively. See below, under “Significant Existing Real Estate Activity—Leasing Activity—Lease Termination” for further discussion of this lease termination.
The following table summarizes the carrying values of certain lease intangible assets or liabilities included in Other assets, net or Other liabilities, net, respectively, on the accompanying Condensed Consolidated Balance Sheets and the related accumulated amortization or accretion, respectively, as of March 31, 2020, and December 31, 2019 (dollars in thousands):
 
 
March 31, 2020
 
December 31, 2019
Intangible Asset or Liability
 
Deferred
Rent Asset
(Liability)
 
Accumulated
(Amortization)
Accretion
 
Deferred
Rent Asset
(Liability)
 
Accumulated
(Amortization)
Accretion
Above-market lease values and lease incentives(1)
 
$
201

 
$
(72
)
 
$
111

 
$
(41
)
Below-market lease values and other deferred revenues(2)
 
(886
)
 
282

 
(886
)
 
257

 
 
$
(685
)
 
$
210

 
$
(775
)
 
$
216

(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.
Total amortization related to above-market lease values and lease incentives was approximately $31,000 and $33,000 for the three months ended March 31, 2020 and 2019, respectively. Total accretion related to below-market lease values and other deferred revenues was approximately $25,000 and $38,000 for the three months ended March 31, 2020 and 2019, respectively.
Acquisitions
Upon our adoption of ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business,” on October 1, 2016, most acquisitions, including those with a prior leasing history, are generally treated as an asset acquisition under ASC 360. For acquisitions accounted for as asset acquisitions under ASC 360, all acquisition-related costs, other than those costs that directly related to either originating new leases we execute upon acquisition or reviewing in-place leases we assumed upon acquisition, are capitalized and included as part of the fair value allocation of the identifiable tangible and intangible assets acquired or liabilities assumed. Upon our adoption of ASU 2016-02 on January 1, 2019, costs that directly related to either negotiating and originating new leases or reviewing assumed leases (generally, external legal costs) are expensed as incurred, whereas these costs were generally capitalized as part of leasing costs under the previous leasing standard. In addition, total consideration for acquisitions may include a combination of cash and equity securities, such as OP Units. When OP Units are issued in connection with acquisitions, we determine the fair value of the OP Units issued based on the number of units issued multiplied by the closing price of the Company’s common stock on the date of acquisition. Unless otherwise noted, all properties acquired since our adoption of ASU 2016-02 were accounted for as asset acquisitions under ASC 360.
2020 Acquisitions

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During the three months ended March 31, 2020, we acquired two new farms, which are summarized in the table below (dollars in thousands, except for footnotes):
Property
Name
 
Property
Location
 
Acquisition
Date
 
Total
Acres
 
No. of
Farms
 
Primary
Crop(s)
 
Lease
Term
 
Renewal
Options
 
Total
Purchase
Price
 
Acquisition
Costs
(1)
 
Annualized
Straight-line
Rent
(2)
 
New
Long-term
Debt
County Road 18
 
Phillips, CO
 
1/15/2020
 
1,325
 
2
 
Sugar beets, edible beans, potatoes, & corn
 
6.0 years
 
None
 
$
7,500

 
$
39

 
$
417

 
$

 
 
 
 
 
 
1,325
 
2
 
 
 
 
 
 
 
$
7,500

 
$
39

 
$
417

 
$

(1) 
Includes approximately $4,000 of external legal fees associated with negotiating and originating the lease associated with this acquisition, which cost was 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.
During the three months ended March 31, 2020, we recognized lease revenue of approximately $88,000 and net income of approximately $70,000 related to the above acquisition.
2019 Acquisitions
During the three months ended March 31, 2019, we acquired one new farm, which is summarized in the table below (dollars in thousands, except for footnotes):
Property
Name
 
Property
Location
 
Acquisition
Date
 
Total
Acres
 
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

 
$
33

 
$
126

 
$
1,440

 
 
 
 
 
 
695
 
1
 
 
 
 
 
 
 
$
2,400

 
$
33

 
$
126

 
$
1,440

(1) 
Includes approximately $4,000 of external legal fees associated with negotiating and originating the lease associated with this acquisition, which cost was 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.
During the three months ended March 31, 2019, we recognized operating revenues of approximately $24,000, and net income of approximately $2,000 related to the above acquisition.
Purchase Price Allocations
The allocation of the aggregate purchase price for the farms acquired during each of the three months ended March 31, 2020 and 2019 is as follows (dollars in thousands):
Acquisition Period
 
Land and Land
Improvements
 
Irrigation &
Drainage Systems
 
Total Purchase
Price
2020 Acquisitions
 
$
6,843

 
$
657

 
$
7,500

2019 Acquisitions
 
2,090

 
310

 
2,400

Significant Existing Real Estate Activity
Leasing Activity
The following table summarizes certain leasing activity that occurred on our existing properties during the three months ended March 31, 2020 (dollars in thousands):
 
 
 
 
PRIOR LEASES
 
NEW LEASES(1)
Farm
Locations
Number
of
Leases
Total
Farm
Acres
 
Total
Annualized
Straight-line
Rent(2)
# of Leases
with
Participation
Rents
Lease
Structures
(# of NNN
/ NN / N)(3)
 
Total
Annualized
Straight-line
Rent
(2)
Wtd. Avg.
Term
(Years)
# of Leases
with
Participation
Rents
Lease
Structures
(# of NNN
/ NN / N)
(3)
AZ, CA, & NE
9
6,287
 
$
4,057

3
5 / 2 / 2
 
$
3,992

5.9
4
5 / 4 / 0
(1) 
In connection with certain of these leases, we committed to provide capital for certain improvements on these farms. See Note 7, “Commitments and Contingencies—Operating Obligations,” for additional information on these commitments.
(2) 
Annualized straight-line rent is based on the minimum cash rental payments guaranteed under the leases (presented on an annualized basis), as required under GAAP, and excludes contingent rental payments, such as participation rents.
(3) 
“NNN” refers to leases under triple-net lease arrangements, “NN” refers to leases under partial-net lease arrangements, and “N” refers to leases under single-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.”
Lease Termination

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On February 10, 2020, we reached an agreement with a tenant occupying four of our farms in Arizona to terminate the existing leases encompassing those four farms effective February 10, 2020. As part of the termination agreement, the outgoing tenant made a one-time termination payment to us of approximately $3.0 million, which we recognized as additional lease revenue during the three months ended March 31, 2020. The prior leases were scheduled to expire on September 15, 2026 (with two of the farms subject to the renewal of certain state leases currently scheduled to expire on February 14, 2022, and February 14, 2025). In connection with the early termination of these leases, during the three months ended March 31, 2020, we recognized approximately $89,000 of prepaid rent as additional lease revenue and wrote off an aggregate net deferred rent balance of approximately $254,000 against lease revenue. In addition, approximately $470,000 of unamortized lease intangible assets related to the terminated leases were written off and charged to amortization expense during the three months ended March 31, 2020. Upon termination of these leases, we entered into a new, seven-year lease with a new tenant effective immediately. These leases are included in the Leasing Activity table above.
Investments in Unconsolidated Entities
In connection with the acquisition of 2,110 gross acres of farmland located in Fresno County, California (“Sutter Avenue”), which occurred in two phases during the year ended December 31, 2019, we also acquired an ownership in a related LLC, the sole purpose of which is to own and maintain a pipeline conveying water to this and other neighboring properties. On August 16, 2019, we acquired an 11.75% ownership interest in the LLC that was valued at approximately $280,000 at the time of acquisition. On November 1, 2019, we acquired an additional 13.25% interest in the LLC that was valued at approximately $307,000 at the time of acquisition. As our investment in the LLC is deemed to constitute “significant influence,” we have accounted for this investment under the equity method.
During the three months ended March 31, 2020, we recorded approximately $34,000 of additional income (included on our Condensed Consolidated Statements of Operations and Comprehensive Income as Income from investments in unconsolidated entities), which represents our pro-rata share of the income recognized by the LLC. Prior to the three months ended March 31, 2020, we had not recorded any material income or loss related to our ownership interest in the LLC. Our combined ownership interest in the LLC, which had an aggregate carrying value of approximately $621,000 and $587,000, as of March 31, 2020, and December 31, 2019, respectively, is included within Other assets, net on the accompanying Condensed Consolidated Balance Sheets.
Future Minimum Lease Payments
We account for all of our leasing arrangements in which we are the lessor as operating leases. The majority of our leases are subject to fixed rental increases, and a small subset of our lease portfolio includes lease payments based on an index, such as the consumer price index (“CPI”). In addition, several of our leases contain participation rent components based on the gross revenues earned on the respective farms. Most of our leases also include tenant renewal options; however, these renewal options are generally based on then-current market rental rates and are therefore typically excluded from the determination of the minimum lease term. Our leases do not generally include tenant termination options.
The following table summarizes the future lease payments to be received under non-cancelable leases as of March 31, 2020, and December 31, 2019 (dollars in thousands):
 
 
 
Future Lease Payments(1)
Period
 
March 31, 2020
 
December 31, 2019
For the remaining nine months ending December 31:
2020
 
$
33,713

 
$
46,483

For the fiscal years ending December 31:
2021
 
41,004

 
40,799

 
2022
 
40,007

 
38,793

 
2023
 
40,291

 
39,351

 
2024
 
34,426

 
34,080

 
Thereafter
 
124,482

 
125,137

 
 
 
$
313,923

 
$
324,643

(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.
Portfolio Diversification and Concentrations
Diversification

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The following table summarizes the geographic locations (by state) of our farms owned and with leases in place as of the three months ended March 31, 2020 and 2019 (dollars in thousands):
 
 
As of and For the three months ended March 31, 2020
 
As of and For the three months ended March 31, 2019
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)
 
42
 
14,830
 
16.9%
 
$
6,816

 
44.6%
 
33
 
10,147
 
13.7%
 
$
3,734

 
47.7%
Florida
 
23
 
20,770
 
23.6%
 
3,335

 
21.8%
 
22
 
17,184
 
23.2%
 
2,339

 
29.9%
Arizona
 
6
 
6,280
 
7.1%
 
3,331

 
21.8%
 
6
 
6,280
 
8.5%
 
539

 
6.9%
Colorado
 
12
 
32,773
 
37.3%
 
823

 
5.4%
 
10
 
31,448
 
42.6%
 
696

 
8.9%
Nebraska
 
8
 
7,104
 
8.1%
 
385

 
2.5%
 
3
 
3,254
 
4.4%
 
60

 
0.8%
Michigan
 
15
 
962
 
1.1%
 
170

 
1.1%
 
5
 
446
 
0.6%
 
21

 
0.2%
Oregon
 
3
 
418
 
0.5%
 
130

 
0.9%
 
3
 
418
 
0.6%
 
128

 
1.6%
Washington
 
1
 
746
 
0.8%
 
123

 
0.8%
 
1
 
746
 
1.0%
 
122

 
1.5%
Texas
 
1
 
3,667
 
4.2%
 
112

 
0.7%
 
1
 
3,667
 
5.0%
 
131

 
1.7%
North Carolina
 
2
 
310
 
0.4%
 
55

 
0.4%
 
2
 
310
 
0.4%
 
60

 
0.8%
TOTALS
 
113
 
87,860
 
100.0%
 
$
15,280

 
100.0%
 
86
 
73,900
 
100.0%
 
$
7,830

 
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.
Concentrations
Credit Risk
As of March 31, 2020, our farms were leased to 70 different, unrelated third-party tenants, with certain tenants leasing more than one farm. Due primarily to an early lease termination payment of approximately $3.0 million received from an outgoing tenant (“Tenant A”) during the three months ended March 31, 2020 (see “—Lease Termination” above), aggregate lease revenue attributable to Tenant A accounted for approximately $3.0 million, or 19.6%, of the total lease revenue recorded during the three months ended March 31, 2020. As of March 31, 2020, we are no longer a party to any contractual agreements with Tenant A. No other individual tenant represented greater than 10.0% of the total lease revenue recorded during the three months ended March 31, 2020.
Geographic Risk
Farms located in California, Florida, and Arizona accounted for approximately $6.8 million (44.6%), $3.3 million (21.8%) and $3.3 million (21.8%), respectively, of the total lease revenue recorded during the three months ended March 31, 2020. Though we seek to continue to further diversify geographically, as may be desirable or feasible, should an unexpected natural disaster occur where our properties are located, there could be a material adverse effect on our financial performance and ability to continue operations. No other single state accounted for more than 10.0% of our total lease revenue recorded during the three months ended March 31, 2020.
NOTE 4. BORROWINGS
Our borrowings as of March 31, 2020, and December 31, 2019, are summarized below (dollars in thousands):

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Carrying Value as of
 
As of March 31, 2020
 
March 31, 2020
 
December 31, 2019
 
Stated Interest
Rates(1)
(Range; Wtd. Avg)
 
Maturity Dates
(Range; Wtd. Avg)
Notes and bonds payable:
 
 
 
 
 
 
 
Fixed-rate notes payable
$
390,431

 
$
394,569

 
3.16%–5.70%; 4.05%
 
6/1/2020–8/1/2044; March 2032
Fixed-rate bonds payable
90,131

 
90,380

 
2.61%–4.57%; 3.44%
 
12/11/2020–9/13/2028; May 2023
Total notes and bonds payable
480,562

 
484,949

 
 
 
 
Debt issuance costs – notes and bonds payable
(3,136
)
 
(3,120
)
 
N/A
 
N/A
Notes and bonds payable, net
$
477,426

 
$
481,829

 
 
 
 
 
 
 
 
 
 
 
 
Variable-rate revolving lines of credit
$
100

 
$
100

 
3.87%
 
4/5/2024
 
 
 
 
 
 
 
 
Total borrowings, net
$
477,526

 
$
481,929

 
 
 
 
 
(1) 
Where applicable, stated interest rates are before interest patronage (as described below).
As of March 31, 2020, the above borrowings were collateralized by certain of our farms with an aggregate net book value of approximately $794.0 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 3.98% for the three months ended March 31, 2020, as compared to 3.93% for the three months ended March 31, 2019. In addition, 2019 interest patronage from our Farm Credit Notes Payable (as defined below), which we recorded during the three months ended March 31, 2020, resulted in a 20.4% reduction (approximately 98 basis points) to the stated interest rates on such borrowings. We are unable to estimate the amount of interest patronage to be received, if any, related to interest accrued during 2020 on our Farm Credit Notes Payable.
As of March 31, 2020, we were in compliance with all covenants applicable to the above borrowings.
New MetLife Facility
As of December 31, 2019, our facility with Metropolitan Life Insurance Company (“MetLife”) consisted of a total of $200.0 million of term notes (the “Prior MetLife Term Notes”) and $75.0 million of revolving equity lines of credit (the “MetLife Lines of Credit,” and together with the Prior MetLife Term Notes, the “Prior MetLife Facility”). The draw period for the Prior MetLife Term Notes expired on December 31, 2019, with approximately $21.5 million being left undrawn, and MetLife had no obligation to disburse the remaining funds under those notes.
On February 20, 2020, we entered into an agreement with MetLife to remove the MetLife Lines of Credit from the Prior MetLife Facility and create a new credit facility consisting of a new $75.0 million long-term note payable (the “New MetLife Term Note”) and the MetLife Lines of Credit (collectively, the “New MetLife Facility”).
The following table summarizes the pertinent terms of the New MetLife Facility as of March 31, 2020 (dollars in thousands, except for footnotes):
Issuance
 
Aggregate
Commitment
 
Maturity
Dates
 
Principal
Outstanding
 
Interest Rate Terms
 
Undrawn
Commitment
 
New MetLife Term Note
 
$
75,000

(1) 
1/5/2030
 
$

 
N/A
(2) 
75,000

(3) 
MetLife Lines of Credit
 
75,000

 
4/5/2024
 
100

 
3-month LIBOR + 2.00%
(4) 
74,900

(3) 
Total principal outstanding
 
 
 
$
100

 
 
 
 
  
 
(1) 
If the aggregate commitment under the New MetLife Term Note is not fully utilized by December 31, 2022, MetLife has the option to be relieved of its obligation to disburse the additional funds under the New MetLife Term Note.
(2) 
Interest rates on any disbursements under the New MetLife Term Note will be based on prevailing market rates at the time of such disbursements. In addition, through December 31, 2022, the New MetLife Term Note is also subject to an unused fee ranging from 0.10% to 0.20% on undrawn amounts (based on the balance drawn under the New MetLife Term Note).
(3) 
Based on the properties that were pledged as collateral under the New MetLife Facility, as of March 31, 2020, the maximum additional amount we could draw under the facility was approximately $24.2 million.
(4) 
The interest rate on the MetLife Lines of Credit is subject to a minimum annualized rate of 2.50%, plus an unused fee ranging from 0.10% to 0.20% on undrawn amounts (based on the balance drawn under each line of credit).
Farm Credit Notes Payable

16

Table of Contents

From time to time since September 2014, 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”).
Interest patronage, or refunded interest, on our borrowings from Farm Credit 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 expense is accrued. During the three months ended March 31, 2020, we recorded interest patronage of approximately $1.3 million related to interest accrued on the Farm Credit Notes Payable during the year ended December 31, 2019, which resulted in a 20.4% reduction (approximately 98 basis points) to the stated interest rates on such borrowings.
Farmer Mac Facility
On December 5, 2014, we, through certain subsidiaries of our Operating Partnership, entered into a bond purchase agreement (the “Bond Purchase Agreement”) with Federal Agricultural Mortgage Corporation (“Farmer Mac”) and Farmer Mac Mortgage Securities Corporation (the “Bond Purchaser”), for a secured note purchase facility. As subsequently amended, the Bond Purchase Agreement provided for bond issuances up to an aggregate amount of $125.0 million (the “Farmer Mac Facility”) through December 11, 2018, after which date the Bond Purchaser had the option to continue buying new bonds issued under the Farmer Mac Facility.

During the three months ended March 31, 2020, we amended and restated one bond for $8.1 million that was previously issued under the Farmer Mac Facility and was originally scheduled to mature on January 10, 2020. The pertinent terms of the amended and restated bond are summarized in the table below (dollars in thousands):
Date of Issuance
 
Amount
 
Maturity Dates
 
Principal Amortization
 
Interest Rate Terms
1/10/2020
 
$
8,100

 
1/12/2024
 
None
(interest only)
 
2.66%
No prepayment penalty was incurred in connection with this amendment, and all other material items of the amended and restated bond remained unchanged.
Debt Service – Aggregate Maturities
Scheduled principal payments of our aggregate notes and bonds payable as of March 31, 2020, for the succeeding years are as follows (dollars in thousands):
Period
 
Scheduled
Principal Payments
For the remaining nine months ending December 31:
2020
 
$
21,561

For the fiscal years ending December 31:
2021
 
18,833

 
2022
 
41,707

 
2023
 
35,974

 
2024
 
35,260

 
2025
 
32,256

 
Thereafter
 
294,971

 
 
 
$
480,562

Fair Value
ASC 820 provides a definition of fair value that focuses on the exchange (exit) price of an asset or liability in the principal, or most advantageous, market and prioritizes the use of market-based inputs to the valuation. ASC 820-10, “Fair Value Measurements and Disclosures,” establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:
Level 1 — inputs that are based upon quoted prices (unadjusted) for identical assets or liabilities in active markets;
Level 2 — inputs are based upon quoted prices for similar assets or liabilities in active or inactive markets or model-based valuation techniques, for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

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Level 3 — inputs are generally unobservable and significant to the fair value measurement. These unobservable inputs are generally supported by little or no market activity and are based upon management’s estimates of assumptions that market participants would use in pricing the asset or liability.
As of March 31, 2020, the aggregate fair value of our long-term notes and bonds payable was approximately $481.3 million, as compared to an aggregate carrying value (excluding unamortized related debt issuance costs) of approximately $480.6 million. The fair value of our long-term 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 and variable interest rates applicable to the MetLife Lines of Credit, their aggregate fair value as of March 31, 2020, is deemed to approximate their aggregate carrying value of $100,000.
Interest Rate Swap Agreement
In order to hedge our exposure to variable interest rates, we have entered into various interest rate swap agreements in connection with certain of our mortgage financings. In accordance with these swap agreements, we will pay our counterparty a fixed interest rate on a quarterly basis and receive payments from our counterparty equal to the respective stipulated floating rates. We have adopted the fair value measurement provision for these financial instruments, and the aggregate fair value of our interest rate swap agreements is recorded in Other assets, net or Other liabilities, net, as appropriate, on our accompanying Condensed Consolidated Balance Sheets. Generally, in the absence of observable market data, we will estimate the fair value of our interest rate swaps using estimates of certain data points, including estimated remaining life, counterparty credit risk, current market yield, and interest rate spreads of similar securities as of the measurement date. As of March 31, 2020, our interest rate swaps were valued using Level 2 inputs.
In addition, we have designated our interest rate swaps as cash flow hedges, and we record changes in the fair values of the interest rate swap agreements to accumulated other comprehensive income on the 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 March 31, 2020, and December 31, 2019 (dollars in thousands):
March 31, 2020
 
December 31, 2019
Aggregate Notional Amount
 
Aggregate Fair Value Asset
 
Aggregate Fair Value Liability
 
Aggregate Notional Amount
 
Aggregate Fair Value Asset
 
Aggregate Fair Value Liability
$
14,077

 
$

 
$
1,647

 
$
14,298

 
$

 
$
390


The following table presents the amount of loss recognized in comprehensive income within our condensed consolidated financial statements for the three months ended March 31, 2020 (dollars in thousands):
 
 
Three Months Ended March 31, 2020
Derivative in cash flow hedging relationship:
 
 
Interest rate swaps
 
$
1,257

Total
 
$
1,257

We were not party to any interest rate swap agreements during the three months ended March 31, 2019.
The following table summarizes certain information regarding our derivative instruments as of March 31, 2020, and December 31, 2019 (dollars in thousands):
 
 
 
 
Derivative Liability Fair Value
Derivative Type
 
Balance Sheet Location
 
March 31, 2020
 
December 31, 2019
Derivatives Designated as Hedging Instruments:
 
 
 
 
 
 
Interest rate swaps
 
Other liabilities, net
 
$
1,647

 
$
390

Total
 
 
 
$
1,647

 
$
390

NOTE 5. MANDATORILY-REDEEMABLE PREFERRED STOCK
In August 2016, we completed a public offering of 6.375% Series A Cumulative Term Preferred Stock, par value $0.001 per share (the “Series A Term Preferred Stock”), at a public offering price of $25.00 per share. As a result of this offering (including the underwriters’ exercise of their option to purchase additional shares to cover over-allotments), we issued a total of 1,150,000 shares of the Series A Term Preferred Stock for gross proceeds of approximately $28.8 million and net proceeds,

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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 March 31, 2020, 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 March 31, 2020, the fair value of our Series A Term Preferred Stock was approximately $28.6 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 March 31, 2020, of $24.90.
For information on the dividends declared by our Board of Directors and paid by us on the Series A Term Preferred Stock during the three months ended March 31, 2020 and 2019, see Note 8, “Equity—Distributions.”
NOTE 6. RELATED-PARTY TRANSACTIONS
Our Adviser and Administrator
We are externally managed pursuant to contractual arrangements with our Adviser and our Administrator, which collectively employ all of our personnel and pay their salaries, benefits, and general expenses directly. Both our Adviser and Administrator are affiliates of ours, as their parent company is owned and controlled by David Gladstone, our chairman, chief executive officer, and president. In addition, two of our executive officers, Mr. Gladstone and Terry Brubaker (our vice chairman and chief operating officer), serve as directors and executive officers of each of our Adviser and Administrator, and Michael LiCalsi, our general counsel and secretary, serves as our Administrator’s president, general counsel, and secretary.
We have entered into an investment advisory agreement with our Adviser and an administration agreement with our Administrator (the “Administration Agreement”). The advisory agreement with our Adviser that was in effect through March 31, 2017, and the Administration Agreement each became effective February 1, 2013. The advisory agreement with our Adviser that was in effect through June 30, 2019 (the “Prior Advisory Agreement”), was amended and restated on July 9, 2019 (as amended, the “2019 Advisory Agreement”), and again amended and restated on January 14, 2020 (as amended, the “2020 Advisory Agreement,” and, together with the Prior Advisory Agreement and the 2019 Advisory Agreement, the “Advisory Agreements”). The Administration Agreement and each of the Advisory Agreements were approved unanimously by our board of directors, including our independent directors.
A summary of the 2019 Advisory Agreement is provided in Note 6 to our consolidated financial statements included in our Form 10-K. A summary of the compensation terms for each of the Prior Advisory Agreement, the 2020 Advisory Agreement, and the Administration Agreement is below.
Advisory Agreements
Pursuant to each of the Prior Advisory Agreement (which was in effect from April 1, 2017, through June 30, 2019), the 2019 Advisory Agreement (which was in effect from July 1, 2019, through December 31, 2019), and the 2020 Advisory Agreement (which has been in effect since January 1, 2020), our Adviser is compensated in the form of a base management fee and, each as applicable, an incentive fee, a capital gains fee, and a termination fee. Our Adviser does not charge acquisition or disposition fees when we acquire or dispose of properties, as is common in other externally-managed REITs. The 2019 Advisory Agreement modified the calculation of the base management and incentive fees to exclude preferred equity from such calculations, while the capital gains and termination fees remained unchanged. The 2020 Advisory Agreement revised and replaced the previous calculation of the base management fee, which was previously based on equity, with a calculation based

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on gross real estate assets (in each case, as further described below), while all other fees remained unchanged. Each of the base management, incentive, capital gains, and termination fees is described below.
Base Management Fee
Pursuant to the Prior Advisory Agreement, a base management fee was paid quarterly and was calculated as 2.0% per annum (0.50% per quarter) of the calendar quarter’s total adjusted equity, which was defined as total equity plus total mezzanine equity, if any (each as reported on our balance sheet), adjusted to exclude unrealized gains and losses and certain other one-time events and non-cash items (“Total Adjusted Equity”).
Under the 2020 Advisory Agreement, a base management fee is paid quarterly and is calculated at an annual rate of 0.50% (0.125% per quarter) of the prior calendar quarter’s “Gross Tangible Real Estate,” defined as the gross cost of tangible real estate owned by us (including land and land improvements, irrigation and drainage systems, horticulture, farm-related facilities, and other tangible site improvements), prior to any accumulated depreciation, and as shown on our balance sheet or the notes thereto for the applicable quarter.
During the three months ended March 31, 2019, our Adviser granted us certain non-contractual, unconditional, and irrevocable waivers, which were applied as credits against the base management fee for the period, as detailed in the table below under “—Related-Party Fees.” We did not have any such waivers for the three months ended March 31, 2020.
Incentive Fee
Pursuant to the Prior Advisory Agreement, an incentive fee was calculated and payable quarterly in arrears if the Pre-Incentive Fee FFO for a particular quarter exceeded a hurdle rate of 1.75% (7.0% annualized) of the prior calendar quarter’s Total Adjusted Equity.
Under the 2020 Advisory Agreement, an incentive fee is calculated and payable quarterly in arrears if the Pre-Incentive Fee FFO for a particular quarter exceeds a hurdle rate of 1.75% (7.0% annualized) of the prior calendar quarter’s “Total Adjusted Common Equity,” defined as common stockholders’ equity plus non-controlling common interests in the Operating Partnership, if any (each as reported on our balance sheet), adjusted to exclude unrealized gains and losses and certain other one-time events and non-cash items.
For purposes of the calculation of the Incentive Fee, Pre-Incentive Fee was defined in each of the Advisory Agreements as FFO (also as defined in each of the Advisory Agreements) accrued by the Company during the current calendar quarter (prior to any incentive fee calculation for the current calendar quarter), less any dividends paid on preferred stock securities that were not treated as a liability for GAAP purposes. Our Adviser would receive: (i) no Incentive Fee in any calendar quarter in which the Pre-Incentive Fee FFO did not exceed the hurdle rate; (ii) 100% of the Pre-Incentive Fee FFO with respect to that portion of such Pre-Incentive Fee FFO, if any, that exceeded the hurdle rate but was less than 2.1875% in any calendar quarter (8.75% annualized); and (iii) 20% of the amount of the Pre-Incentive Fee FFO, if any, that exceeds 2.1875% in any calendar quarter (8.75% annualized).
Capital Gains Fee
Pursuant to each of the Advisory Agreements, a capital gains-based incentive fee will be calculated and payable in arrears at the end of each fiscal year (or upon termination of the Advisory Agreement). The capital gains fee shall equal: (i) 15% of the cumulative aggregate realized capital gains minus the cumulative aggregate realized capital losses, minus (ii) any aggregate capital gains fees paid in prior periods. For purposes of this calculation, realized capital gains and losses will be calculated as (x) the sales price of the property, minus (y) any costs to sell the property and the then-current gross value of the property (which includes the property’s original acquisition price plus any subsequent, non-reimbursed capital improvements). At the end of each fiscal year, if this figure is negative, no capital gains fee shall be paid.
Termination Fee
Pursuant to each of the Advisory Agreements, in the event of our termination of the agreement with our Adviser Amended for any reason (with 120 days’ prior written notice and the vote of at least two-thirds of our independent directors), a termination fee would be payable to the Adviser equal to three times the sum of the average annual base management fee and incentive fee earned by the Adviser during the 24-month period prior to such termination.
Administration Agreement
Pursuant to the Administration Agreement, we pay for our allocable portion of the Administrator’s expenses incurred while performing its obligations to us, including, but not limited to, rent and the salaries and benefits expenses of our Administrator’s employees, including our chief financial officer, treasurer, chief compliance officer, general counsel and secretary (who also serves as our Administrator’s president, general counsel, and secretary), and their respective staffs.

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As approved by our Board of Directors, effective July 1, 2014, our allocable portion of the Administrator’s expenses is generally derived by multiplying our Administrator’s total expenses by the approximate percentage of time the Administrator’s employees perform services for us in relation to their time spent performing services for all companies serviced by our Administrator under similar contractual agreements.
Gladstone Securities
On April 11, 2017, we entered into an agreement with Gladstone Securities, LLC (“Gladstone Securities”), for it to act as our non-exclusive agent to assist us with arranging financing for our properties (the “Financing Arrangement Agreement”). Gladstone Securities is a privately-held broker-dealer and a member of the Financial Industry Regulatory Authority and the Securities Investor Protection Corporation. Gladstone Securities is an affiliate of ours, as its parent company is owned and controlled by Mr. Gladstone, who also serves on the board of managers of Gladstone Securities.
Financing Arrangement Agreement
We pay Gladstone Securities a financing fee in connection with the services it provides to us for securing financing on our properties. Depending on the size of the financing obtained, the maximum amount of the financing fee, which is payable upon closing of the respective financing, ranges from 0.5% to 1.0% of the amount of financing obtained. The amount of the financing fee may be reduced or eliminated as determined by us and Gladstone Securities after taking into consideration various factors, including, but not limited to, the involvement of any unrelated third-party brokers and general market conditions. During the three months ended March 31, 2020 and 2019, we paid total financing fees to Gladstone Securities of approximately $0 and $2,000, respectively. Through March 31, 2020, the total amount of financing fees paid to Gladstone Securities represented approximately 0.13% of the total financings secured since the Financing Arrangement Agreement has been in place.
Series B Dealer-Manager Agreement
On January 10, 2018, we entered into a dealer-manager agreement, which was amended and restated on May 31, 2018 (the “Series B Dealer-Manager Agreement”), with Gladstone Securities, whereby Gladstone Securities served as our exclusive dealer-manager in connection with the offering of our Series B Preferred Stock (as defined in Note 8, “Equity—Series B Preferred Stock”). Pursuant to the Series B Dealer-Manager Agreement, Gladstone Securities provided certain sales, promotional, and marketing services to us in connection with the offering of the Series B Preferred Stock, and we generally paid Gladstone Securities: (i) selling commissions of up to 7.0% of the gross proceeds from sales of Series B Preferred Stock in the offering (the “Series B Selling Commissions”), and (ii) a dealer-manager fee of 3.0% of the gross proceeds from sales of Series B Preferred Stock in the offering (the “Series B Dealer-Manager Fee”).  Gladstone Securities was permitted, in its sole discretion, to remit all or a portion of the Series B Selling Commissions and also to reallow all or a portion of the Series B Dealer-Manager Fees to participating broker-dealers and wholesalers in support of the offering. The terms of the Series B Dealer-Manager Agreement were approved by our board of directors, including all of its independent directors.
During the three months ended March 31, 2020 and 2019, we paid total Series B Selling Commissions and Series B Dealer-Manager Fees to Gladstone Securities in connection with sales of the Series B Preferred Stock of approximately $2.5 million and $1.7 million, respectively, the majority of which amounts were then remitted by Gladstone Securities to unrelated third-parties involved in the offering, including participating broker-dealers and wholesalers. Series B Selling Commissions and Series B Dealer-Manager Fees paid to Gladstone Securities are netted against the gross proceeds received from sales of the Series B Preferred Stock and are included within Additional paid-in capital on the accompanying Condensed Consolidated Balance Sheets. The offering of our Series B Preferred Stock was completed on March 5, 2020.
Series C Dealer-Manager Agreement
On February 20, 2020, we entered into a dealer-manager agreement (the “Series C Dealer-Manager Agreement”), with Gladstone Securities, whereby Gladstone Securities will serve as our exclusive dealer-manager in connection with the offering of our Series C Preferred Stock (as defined in Note 8, “Equity—Equity Issuances—Series C Preferred Stock”). Pursuant to the Series C Dealer-Manager Agreement, Gladstone Securities provides certain sales, promotional, and marketing services to us in connection with the offering of the Series C Preferred Stock, and we pay Gladstone Securities (i) selling commissions of up to 6.0% of the gross proceeds from sales of Series C Preferred Stock (the “Series C Selling Commissions”) in the Primary Series C Offering (as defined in Note 11, “Subsequent Events—Equity Activity—Series C Preferred Stock”), and (ii) a dealer-manager fee of 3.0% of the gross proceeds from sales of Series C Preferred Stock in the Primary Series C Offering (the “Series C Dealer-Manager Fee”).  No Series C Selling Commissions or Series C Dealer-Manager Fee shall be paid with respect to shares of the Series C Preferred Stock sold pursuant to our dividend reinvestment plan (the “DRIP”) for the Series C Preferred Stock. Gladstone Securities may, in its sole discretion, reallow a portion of the Series C Dealer-Manager Fee to participating

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broker-dealers in support of the Primary Series C Offering. The terms of the Series C Dealer-Manager Agreement were approved by our board of directors, including all of our independent directors.
During the three months ended March 31, 2020, we did not pay any Series C Selling Commissions or Series C Dealer-Manager Fees to Gladstone Securities, as we had yet to sell any shares of our Series C Preferred Stock as of March 31, 2020.
Related-Party Fees
The following table summarizes related-party fees paid or accrued for and reflected in our accompanying condensed consolidated financial statements (dollars in thousands):
 
For the Three Months Ended March 31,
 
2020
 
2019
Base management fee(1)(2)
$
1,034

 
$
905

Incentive fee(1)(2)
1,334

 

Credits from non-contractual, unconditional, and irrevocable waiver granted by Adviser’s board of directors(2)

 
(569
)
Total fees to our Adviser, net
$
2,368

 
$
336

 
 
 
 
Administration fee(1)(2)
$
384

 
$
306

 
 
 
 
Selling Commissions and Dealer-Manager Fees(1)(3)
$
2,484

 
$
1,654

Financing fees(1)(4)

 
2

Total fees to Gladstone Securities
$
2,484

 
$
1,656

(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) 
Included within Additional paid-in capital on the accompanying Condensed Consolidated Balance Sheets.
(4) 
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.
Related-Party Fees Due
Amounts due to related parties on our accompanying Condensed Consolidated Balance Sheets as of March 31, 2020, and December 31, 2019, were as follows (dollars in thousands):
 
March 31, 2020
 
December 31, 2019
Base management fee
$
1,034

 
$
881

Incentive fee
1,334

 
847

Other(1)
9

 
25

Total due to Adviser
2,377

 
1,753

Administration fee
384

 
341

Cumulative accrued but unpaid portion of prior Administration Fees(2)
160

 
75

Total due to Administrator
544

 
416

Total due to related parties(3)
$
2,921

 
$
2,169

(1) 
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.
(2) 
Represents the cumulative accrued but unpaid portion of prior Administration fees that are scheduled to be paid during the three months ending September 30, 2020, which is the quarter following our Administrator’s fiscal year end.
(3) 
Reflected as a line item on our accompanying Condensed Consolidated Balance Sheet.
NOTE 7. COMMITMENTS AND CONTINGENCIES
Operating Obligations
In connection with the execution of certain lease agreements, we have committed to provide capital improvements on certain of our farms, which are summarized in the table below (dollars in thousands):

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Farm
Location
 
Farm
Acreage
 
Total
Commitment
 
Obligated
Completion
Date(1)
 
Amount Expended
or Accrued as of
March 31, 2020
Hillsborough, FL
 
55
 
$
2,250

(2) 
Q2 2021
 
$
279

Cochise, AZ
 
1,320
 
1,820

(2)(3) 
Q4 2021
 
575

Cochise, AZ
 
875
 
1,360

(2)(4) 
Q4 2021
 

Van Buren, MI
 
89
 
150

 
Q4 2021
 

Columbia, OR
 
157
 
1,800

(2) 
Q3 2024
 
1,146

Collier & Hendry, FL
 
3,612
 
2,000

(2) 
Q2 2025
 

Salinas, CA
 
304
 
1,248


Q4 2025
 
1

(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.
(3) 
Pursuant to the agreement, we will only earn additional rent if the total amount of capital improvements exceeds $1.3 million.
(4) 
Pursuant to the agreement, we will only earn additional rent if the total amount of capital improvements exceeds $860,000.
Litigation
In the ordinary course of business, we may be involved in legal proceedings from time to time. We are not currently subject to any material known or threatened litigation.
NOTE 8. EQUITY
Amendment to Articles of Incorporation
On February 20, 2020, we filed with the Maryland Department of Assessments and Taxation an Articles Supplementary (i) setting forth the rights, preferences, and terms of the Series C Preferred Stock (as defined below) and (ii) reclassifying and designating 26,000,000 shares of our authorized and unissued shares of common stock as shares of Series C Preferred Stock.  The reclassification decreased the number of shares classified as common stock from approximately 91.5 million shares immediately prior to the reclassification to 65.5 million shares immediately after the reclassification.
Amendment to Operating Partnership Agreement
In connection with the authorization of the Series C Preferred Stock, the Operating Partnership adopted the Fourth Amendment to its First Amended and Restated Agreement of Limited Partnership, including Exhibit SC thereto (collectively, the “Amendment”), as amended from time to time, establishing the rights, privileges, and preferences of 6.00% Series C Cumulative Redeemable Preferred Units, a newly-designated class of limited partnership interests (the “Series C Preferred OP Units”). The Amendment provides for the Operating Partnership’s establishment and issuance of an equal number of Series C Preferred OP Units as are issued shares of Series C Preferred Stock by the Company in connection with the Series C Offering (as defined below) upon the Company’s contributions to the Operating Partnership of the net proceeds of the Series C Offering. Generally, the Series C Preferred OP Units provided for under the Amendment have preferences, distribution rights and other provisions substantially equivalent to those of the Series C Preferred Stock.
Stockholders’ Equity
As of March 31, 2020, there were 6,477,647 shares of Series B Preferred Stock (as defined below), par value $0.001 per share, authorized, with 5,977,647 shares issued and outstanding worth an aggregate liquidation value of approximately $149.4 million; and 65,522,353 shares of common stock, par value $0.001 per share, authorized, with 21,346,458 shares issued and outstanding.
As of December 31, 2019, there were 6,485,400 shares of Series B Preferred Stock (as defined below), par value $0.001 per share, authorized, with 4,755,869 shares issued and outstanding worth an aggregate liquidation value of approximately $118.9 million; and 91,514,600 shares of common stock, par value $0.001 per share, authorized, with 20,936,658 shares issued and outstanding.
Non-Controlling Interests in Operating Partnership
We consolidate our Operating Partnership, which is a majority-owned partnership.  As of March 31, 2020, and December 31, 2019, we owned approximately 98.7% and 98.6%, respectively, of the outstanding OP Units.

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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.
We did not issue any new OP Units during either of the three months ended March 31, 2020 or 2019.
No OP Units were tendered for redemption during the three months ended March 31, 2020. Information related to OP Units tendered for redemption during the three months ended March 31, 2019, is provided in the table below (dollars in thousands, except per-unit amounts):
Period
 
OP Units Tendered for Redemption
 
Shares of Common Stock Issued
 
OP Units Redeemed with Cash
 
Aggregate Cash
Payment
 
Aggregate Cash Paid per OP Unit
Three months ended March 31, 2019
 
570,879
 
570,879
 
0
 
$

 
$

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 each of March 31, 2020, and December 31, 2019, there were 288,303 OP Units held by non-controlling OP Unitholders.
Registration Statement
On March 30, 2017, we filed a universal registration statement on Form S-3 (File No. 333-217042) with the SEC (the “2017 Registration Statement”) to replace our previous registration statement. The 2017 Registration Statement, which was declared effective by the SEC on April 12, 2017, permitted us to issue up to an aggregate of $300.0 million in securities, consisting of common stock, preferred stock, warrants, debt securities, depository shares, subscription rights, and units, including through separate, concurrent offerings of two or more of such securities. Through March 31, 2020, we had issued a total of 9,495,834 shares of common stock (excluding 1,215,565 shares of common stock issued in exchange for certain OP Units that were tendered for redemption) for gross proceeds of approximately $117.4 million and 6,000,000 shares of Series B Preferred Stock (as defined below) for gross proceeds of approximately $147.5 million under the 2017 Registration Statement.
On March 6, 2020, we filed a universal registration statement on Form S-3 (File No. 333-236943) with the SEC (the “2020 Registration Statement”) to replace the 2017 Registration Statement. The 2020 Registration Statement, which was declared effective by the SEC on April 1, 2020, permits us to issue up to an aggregate of $1.0 billion in securities, consisting of common stock, preferred stock, warrants, debt securities, depository shares, subscription rights, and units, including through separate, concurrent offerings of two or more of such securities. As of March 31, 2020, we had not issued any securities under the 2020 Registration Statement. See Note 11, “Subsequent Events,” for equity issuances completed subsequent to March 31, 2020.
In conjunction with the filing of the 2020 Registration Statement, we wrote off approximately $21,000 of unallocated costs associated with the initial filing of the 2017 Registration Statement. These costs were written off to professional fees, which is included within General and administrative expenses on our accompanying Condensed Consolidated Statements of Operations and Comprehensive Income, during the three months ended March 31, 2020.
Equity Issuances
Series B Preferred Stock
On May 31, 2018, we filed a prospectus supplement with the SEC for a continuous public offering of up to 6,000,000 shares (the “Series B Offering”) of our 6.00% Series B Cumulative Redeemable Preferred Stock (the “Series B Preferred Stock”) at an offering price of $25.00 per share. The Series B Preferred Stock was offered on a continuous, “reasonable best efforts” basis by Gladstone Securities, the dealer-manager for the Series B Offering. See Note 6, “Related-Party Transactions—Gladstone Securities—Series B Dealer-Manager Agreement,” for a discussion of the fees and commissions to be paid to Gladstone Securities in connection with the Series B Offering.

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The following table provides information on sales of the Series B Preferred Stock that occurred during the three months ended March 31, 2020 and 2019 (dollars in thousands, except per-share amounts):
Period
 
Number of
Shares Sold
 
Weighted-average
Offering Price per Share
 
Gross Proceeds
 
Net Proceeds(1)
Three months ended March 31, 2020
 
1,229,531
 
$
24.52

 
$
30,148

 
$
27,664

Three months ended March 31, 2019
 
747,916
 
24.71

 
18,482

 
16,828

(1) 
Net of Series B Selling Commissions and Series B Dealer-Manager Fees borne by us.
In addition, during the three months ended March 31, 2020 and 2019, 7,753 and 600 shares, respectively, of the Series B Preferred Stock were tendered for redemption at average cash redemption prices of $23.92 per share and $22.50 per share, respectively. As a result, we paid total redemption costs of approximately $185,000 and $13,000, respectively, to redeem and retire these shares.
The Series B Offering was completed on March 5, 2020 (the “Series B Termination Date”), with the full 6,000,000 allotted shares being sold, and, exclusive of redemptions, resulted in total gross proceeds of approximately $147.5 million and net proceeds, after deducting Series B Selling Commissions, Series B Dealer-Manager Fees, and offering expenses payable by us, of approximately $133.5 million. Excluding Series B Selling Commissions and Series B Dealer-Manager Fees, we incurred approximately $1.5 million of total costs related to the Series B Offering, which were initially recorded as deferred offering costs (included within Other assets, net on the accompanying Condensed Consolidated Balance Sheets) and were applied against the gross proceeds received from the offering through additional paid-in capital as shares of the Series B Preferred Stock were sold.
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 Series B Termination Date, though there can be no assurance that a listing will be achieved in such timeframe, or at all.
Series C Preferred Stock
Offering
On February 20, 2020, we filed a prospectus supplement with the SEC for a continuous public offering of up to 400,000 shares of our newly-designated 6.00% Series C Cumulative Redeemable Preferred Stock, par value $0.001 per share (the “Series C Preferred Stock”), on a “reasonable best efforts” basis through Gladstone Securities at an offering price of $25.00 per share, and up to 120,000 shares of our Series C Preferred Stock pursuant to the DRIP at a price of $22.75 per share. No shares of the Series C Preferred Stock were sold pursuant to the prospectus supplement dated February 20, 2020. Subsequent to March 31, 2020, we filed a new prospectus supplement (the “Series C Prospectus Supplement”) with the SEC for a continuous offering of up to 26,000,000 shares of the Series C Preferred Stock, which superseded and replaced the prospectus supplement dated February 20, 2020. See Note 11, “Subsequent Events—Equity Activity—Series C Preferred Stock” for additional information on this offering.
Common Stock
At-the-Market Program
On August 7, 2015, we entered into equity distribution agreements (commonly referred to as “at-the-market agreements”), as amended from time to time, with Cantor Fitzgerald & Co., Ladenburg Thalmann & Co., Inc., and Virtu Americas, LLC (each a “Sales Agent”), under which we 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”).
No shares of common stock were sold during the three months ended March 31, 2019. The following table provides information on shares of common stock sold by the Sales Agents under the ATM Program during the three months ended March 31, 2020 (dollars in thousands, except per-share amounts):
Period
 
Number of
Shares Sold
 
Weighted-average
Offering Price Per Share
 
Gross Proceeds
 
Net Proceeds(1)
Three months ended March 31, 2020
 
409,800
 
$
13.28

 
$
5,441

 
$
5,386

(1) 
Net of underwriting commissions and discounts.
Distributions
The per-share distributions to preferred and common stockholders declared by our Board of Directors and paid by us (except as noted) during the three months ended March 31, 2020 and 2019 are reflected in the table below.

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For the Three Months Ended March 31,
Issuance
 
2020
 
2019
Series A Term Preferred Stock(1)
 
$
0.3984375

 
$
0.3984375

Series B Preferred Stock(2)
 
0.375

 
0.375

Common Stock(3)
 
0.13395

 
0.13335

(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 January 8, 2019, approximately $236,000 was paid (as scheduled) by us on April 4, 2019.
(3) 
The same amounts were paid as distributions on each OP Unit held by non-controlling OP Unitholders.
NOTE 9. LEASE REVENUES
The following table sets forth the components of our lease revenues for the three months ended March 31, 2020 and 2019 (dollars in thousands, except for footnotes):
 
For the Three Months Ended March 31,
 
2020
 
2019
Fixed lease payments(1)
$
12,262

 
$
7,773

Variable lease payments(2)
3,018

 
57

Lease revenues, net(3)
$
15,280

 
$
7,830

(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 months ended March 31, 2020 and 2019, we recorded participation rents of approximately $30,000 and $27,000, respectively, and reimbursements of certain property operating expenses by tenants of approximately $178,000 and $30,000, respectively. In addition, during the three months ended March 31, 2020, we received a lease termination payment of approximately $3.0 million.
(3) 
Reflected as a line item on our accompanying Condensed Consolidated Statements of Operations and Comprehensive Income.
NOTE 10. EARNINGS (LOSS) PER SHARE OF COMMON STOCK
The following table sets forth the computation of basic and diluted earnings (loss) per common share for the three months ended March 31, 2020 and 2019, computed using the weighted average number of shares outstanding during the respective periods. Net earnings (loss) figures are presented net of non-controlling interests in the earnings per share calculations. The non-controlling limited partners’ outstanding OP Units (which may be redeemed for shares of common stock) have been excluded from the diluted per-share calculation, as there would be no effect on the amounts since the non-controlling OP Unitholders’ share of earnings would also be added back to net income (loss).
 
Three months ended March 31,
 
2020
 
2019
 
(Dollars in thousands, except per-share amounts)
Net income (loss) attributable to common stockholders
$
934

 
$
(496
)
Weighted average shares of common stock outstanding – basic and diluted
21,262,080

 
18,028,826

Earnings (loss) per common share – basic and diluted
$
0.04

 
$
(0.03
)
The weighted-average number of OP Units held by non-controlling OP Unitholders was 288,303 and 433,393 for the three months ended March 31, 2020 and 2019, respectively.
NOTE 11. SUBSEQUENT EVENTS
Portfolio Activity
Property Add-on
In connection with the acquisition of a 366-acre vineyard located in Napa, California (“Withers Road”), on August 28, 2019, we committed to provide up to approximately $4.0 million as additional compensation, contingent upon the County of Napa approving the planting of additional vineyards on up to 47 acres of the property by February 25, 2020 (the “Permit Deadline”).

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In addition, if approval was obtained, we also committed to contribute up to $40,000 per approved acre for the development of such vineyards. Approval of the additional plantings was not received from the County of Napa by the Permit Deadline, and, as such, we were relieved of our obligation to remit any additional compensation. However, in March 2020, we executed an agreement with the tenant on Withers Road to extend the Permit Deadline until August 24, 2020.
In April 2020, we received notification from the County of Napa informing us that it approved of additional vineyard plantings on 38.7 acres on the property. As such, we will be required to pay additional compensation related to this acquisition of approximately $3.2 million, which will be paid during the three months ending June 30, 2020. As provided for in the lease, we will earn additional rent on all of the aforementioned costs as they are incurred by us.
Leasing Activity
The following table summarizes the leasing activity that occurred on our existing properties subsequent to March 31, 2020, through the date of this filing (dollars in thousands):
 
 
 
 
PRIOR LEASES
 
NEW LEASES(1)
Farm
Locations
Number
of
Leases
Total
Farm
Acres
 
Total
Annualized
Straight-line
Rent(2)
# of Leases
with
Participation
Rents
Lease
Structures
(# of NNN
/ NN / N)(3)
 
Total
Annualized
Straight-line
Rent
(2)
Wtd. Avg.
Term
(Years)
# of Leases
with
Participation
Rents
Lease
Structures
(# of NNN
/ NN / N)
(3)
CA
2
542
 
$
1,211

0
2 / 0 / 0
 
$
1,458

6.9
0
2 / 0 / 0
(1) 
In connection with certain of these leases, we committed to provide capital for certain improvements on these farms. See Note 7, “Commitments and Contingencies,” for additional information on these commitments.
(2) 
Annualized straight-line rent is based on the minimum cash rental payments guaranteed under the leases (presented on an annualized basis), as required under GAAP, and excludes contingent rental payments, such as participation rents.
(3) 
“NNN” refers to leases under triple-net lease arrangements, “NN” refers to leases under partial-net lease arrangements, and “N” refers to leases under single-net lease arrangements. For a description of each of these types of lease arrangements, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview—Leases—General.”
Equity Activity
Series C Preferred Stock
Offering
On April 3, 2020, we filed the Series C Prospectus Supplement with the SEC for a continuous public offering (the “Series C Offering”) of up to 26,000,000 shares of the Series C Preferred Stock. The Series C Offering permits us to sell up to 20,000,000 shares (the “Primary Series C Offering”) of our Series C Preferred Stock on a “reasonable best efforts” basis through Gladstone Securities at an offering price of $25.00 per share and up to 6,000,000 shares of our Series C Preferred Stock pursuant to the DRIP at a price of $22.75 per share. See Note 6, “Related-Party Transactions—Gladstone Securities—Series C Dealer-Manager Agreement,” for a discussion of the commissions and fees to be paid to Gladstone Securities in connection with the Series C Offering.
The Primary Series C Offering will terminate on the date (the “Series C Termination Date”) that is the earlier of either June 1, 2025 (unless terminated earlier or extended by our Board of Directors), or the date on which all 20,000,000 shares in the Primary Series C Offering are sold.
There is currently no public market for shares of the Series C Preferred Stock; however, we intend to apply to list the Series C Preferred Stock on Nasdaq or another national securities exchange within one calendar year after the Series C Termination Date, though there can be no assurance that a listing will be achieved in such timeframe, or at all.
Assuming all shares of the Series C Preferred Stock are sold in both the Primary Series C Offering and through the DRIP, we expect the Series C Offering to result in gross proceeds of up to $636.5 million and net proceeds, after deducting selling commissions, dealer-manager fees, and estimated expenses of the offering payable by us, of up to approximately $591.5 million. We intend to use the net proceeds from the Series C Offering to repay existing indebtedness, to fund future acquisitions, and for other general corporate purposes. See below under “—Equity Issuances” for sales of the Series C Preferred Stock that have occurred through the date of this filing. Further, as of March 31, 2020, we had incurred approximately $252,000 of costs related to the Series C Offering, which have been recorded as deferred offering costs and are included in Other assets, net on the accompanying Consolidated Balance Sheets as of March 31, 2020.
Company and Shareholder Redemption Options
We may not redeem the Series C Preferred Stock prior to the later of (i) the first anniversary of the Series C Termination Date (as defined in the Articles Supplementary), or (ii) June 1, 2024 (except in limited circumstances relating to our continuing

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qualification as a REIT). On and after the later of (x) the first anniversary of the Series C Termination Date or (y) June 1, 2024, we may, at our option, redeem the Series C Preferred Stock, in whole or in part, at any time or from time to time, by making payment of $25.00 per share, plus any accumulated and unpaid dividends up to but excluding the date of redemption.
Commencing on April 8, 2020 (or, if after April 8, 2020, we suspend the optional redemption right of the holders of Series C Preferred Stock, on the date we reinstate such right), and terminating on the earlier to occur of (i) the date upon which the Board, by resolution, suspends or terminates the optional redemption right of the holders of Series C Preferred Stock, or (ii) the date on which shares of Series C Preferred Stock are listed on a national securities exchange, holders of Series C Preferred Stock may, at their option, require the Company to redeem any or all of their shares of Series C Preferred Stock at a redemption price per share of Series C Preferred Stock equal to $22.50 in cash. In addition, we have the authority to suspend or terminate all shareholder redemption options at any time, in our sole discretion.
Equity Issuances
The following table provides information on equity sales that have occurred subsequent to March 31, 2020 (dollars in thousands, except per-share amounts):
Type of Issuance
 
Number of
Shares Sold
 
Weighted Average Offering Price
Per Share
 
Gross Proceeds
 
Net Proceeds(1)
Series C Preferred Stock
 
15,600
 
$
25.00

 
$
390

 
$
355

(1) 
Net of Series C Selling Commissions and Series C Dealer-Manager Fees.
In addition, subsequent to March 31, 2020, 400 shares 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 a total redemption cost of $9,000 to redeem and retire these shares.
Distributions
On April 14, 2020, our Board of Directors authorized and we declared the following monthly cash distributions to holders of our preferred and common stock:
Issuance
 
Record Date
 
Payment Date
 
Distribution per Share
Series A Term Preferred Stock:
 
April 24, 2020
 
April 30, 2020
 
$
0.1328125

 
 
May 19, 2020
 
May 29, 2020
 
0.1328125

 
 
June 19, 2020
 
June 30, 2020
 
0.1328125

Total Series A Term Preferred Stock Distributions:
 
$
0.3984375

 
 
 
 
 
 
 
Series B Preferred Stock:
 
April 29, 2020
 
May 5, 2020
 
$
0.125

 
 
May 28, 2020
 
June 5, 2020
 
0.125

 
 
June 25, 2020
 
July 2, 2020
 
0.125

Total Series B Preferred Stock Distributions:
 
$
0.375

 
 
 
 
 
 
 
Series C Preferred Stock:
 
April 29, 2020
 
May 5, 2020
 
$
0.125

 
 
May 28, 2020
 
June 5, 2020
 
0.125

 
 
June 25, 2020
 
July 2, 2020
 
0.125

Total Series C Preferred Stock Distributions:
 
$
0.375

 
 
 
 
 
 
 
Common Stock:
 
April 24, 2020
 
April 30, 2020
 
$
0.0447

 
 
May 19, 2020
 
May 29, 2020
 
0.0447

 
 
June 19, 2020
 
June 30, 2020
 
0.0447

Total Common Stock Distributions:
 
$
0.1341

The same amounts paid to common stockholders will be paid as distributions on each OP Unit held by non-controlling OP Unitholders as of the above record dates.
COVID-19

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During and subsequent to March 31, 2020, the pandemic caused by the spread of COVID-19 has impacted most countries, communities, and markets. The extent to which the COVID-19 pandemic may impact our business, financial condition, liquidity, results of operations, or prospects will depend on numerous evolving factors that are out of our control and that we are not able to predict at this time.
As of the date of this filing, all of our tenants are current in their rental payments to us, with the exception of one tenant who owes us an annual rental installment of approximately $56,000, which payment was due in April. Based on the tenant’s seven-year credit history and reported sales volumes, we ultimately expect full collection of this amount. In addition, we have not received any requests from tenants seeking rent relief as a result of COVID-19. If, however, we receive rent relief requests in the future from tenants that have been materially and adversely impacted by the ongoing COVID-19 pandemic, as assessed by us, in exchange for granting any such relief, we intend to seek certain favorable lease modification terms in exchange for granting such relief, if any, including, but not limited to, extended lease terms, increased rent, and near-term rent deferral repayments. In addition, if we were to grant any rent deferrals, we anticipate that any such agreements would include partial payments in exchange for rent deferrals of varying terms, with all deferred amounts to be paid back to us over a specified, short-term period. At this time, we are unable to quantify the success of any tenant’s financial prospects, the amount of any future relief requests from tenants, or the outcome of any future relief package negotiations, if such relief is granted.