Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020



☐	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 ☒ 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 ☒ 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	☒
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☐

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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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the registrant’s Common Stock, $0.001 par value per share, outstanding as of August 4, 2020, was 22,022,815.

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GLADSTONE LAND CORPORATION

FORM 10-Q FOR THE QUARTER ENDED

JUNE 30, 2020

TABLE OF CONTENTS



		PAGE
PART I	FINANCIAL INFORMATION

ITEM 1.	Financial Statements (Unaudited):

	Condensed Consolidated Balance Sheets as of June 30, 2020, and December 31, 2019	3

	Condensed Consolidated Statements of Operations and Comprehensive Income for the three and six months ended June 30, 2020 and 2019	4

	Condensed Consolidated Statements of Equity for the three and six months ended June 30, 2020 and 2019	6

	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019	8

	Notes to Condensed Consolidated Financial Statements	10

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	53

ITEM 4.	Controls and Procedures	53

PART II	OTHER INFORMATION

ITEM 1.	Legal Proceedings	54

ITEM 1A.	Risk Factors	54

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54

ITEM 3.	Defaults Upon Senior Securities	55

ITEM 4.	Mine Safety Disclosures	55

ITEM 5.	Other Information	55

ITEM 6.	Exhibits	56

SIGNATURES		58

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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)



	June 30, 2020			December 31, 2019
ASSETS
Investments in real estate, net	$	820,763		$	792,081
Lease intangibles, net	3,680			4,827
Cash and cash equivalents	24,779			13,688
Other assets, net	7,467			6,191
TOTAL ASSETS	$	856,689		$	816,787

LIABILITIES AND EQUITY
LIABILITIES:
Borrowings under lines of credit	$	100		$	100
Notes and bonds payable, net	491,538			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 June 30, 2020, and December 31, 2019, net	28,476			28,359
Accounts payable and accrued expenses	12,443			10,132
Due to related parties, net	1,653			2,169
Other liabilities, net	16,096			15,228
Total liabilities	550,306			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; 6,472,482 shares authorized 5,972,482 shares issued and outstanding as of June 30, 2020; 6,485,400 shares authorized, 4,755,869 shares issued and outstanding as of December 31, 2019	6			5
Series C cumulative redeemable preferred stock, $0.001 par value, $25.00 per share liquidation preference; 26,000,000 shares authorized, 130,702 shares issued and outstanding as of June 30, 2020; no shares authorized, issued, or outstanding as of December 31, 2019	—			—
Common stock, $0.001 par value; 65,527,518 shares authorized 21,534,739 shares issued and outstanding as of June 30, 2020; 91,514,600 shares authorized, 20,936,658 shares issued and outstanding as of December 31, 2019	22			21
Additional paid-in capital	352,677			315,770
Accumulated other comprehensive loss	(1,816		)	(390		)
Distributions in excess of accumulated earnings	(45,653		)	(38,785		)
Total stockholders’ equity	305,236			276,621
Non-controlling interests in Operating Partnership	1,147			2,349
Total equity	306,383			278,970

TOTAL LIABILITIES AND EQUITY	$	856,689		$	816,787

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 OPERATIONS AND COMPREHENSIVE INCOME

(In thousands, except share and per-share data)

(Unaudited)



	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2020			2019			2020			2019
OPERATING REVENUES:
Lease revenue, net	$	12,638		$	8,362		$	27,918		$	16,192
Total operating revenues	12,638			8,362			27,918			16,192
OPERATING EXPENSES:
Depreciation and amortization	3,843			2,936			8,100			5,533
Property operating expenses	717			586			1,238			1,403
Base management fee	1,047			974			2,081			1,879
Incentive fee	—			—			1,334			—
Administration fee	357			250			740			556
General and administrative expenses	490			469			1,044			1,018
Total operating expenses	6,454			5,215			14,537			10,389
Credits to fees from Adviser	—			(974		)	—			(1,543		)
Total operating expenses, net of credits to fees	6,454			4,241			14,537			8,846
OTHER INCOME (EXPENSE):
Other income	21			48			1,345			874
Interest expense	(4,990		)	(3,543		)	(9,953		)	(6,996		)
Dividends declared on Series A cumulative term preferred stock	(458		)	(458		)	(916		)	(916		)
(Loss) gain on dispositions of real estate assets, net	(567		)	13			(666		)	(19		)
Property and casualty (loss) recovery	—			(7		)	66			(7		)
(Loss) income from investments in unconsolidated entities	(8		)	—			26			—
Total other expense, net	(6,002		)	(3,947		)	(10,098		)	(7,064		)
NET INCOME	182			174			3,283			282
Net loss (income) attributable to non-controlling interests	2			(1		)	(39		)	(3		)
NET INCOME ATTRIBUTABLE TO THE COMPANY	184			173			3,244			279
Dividends declared on Series B cumulative redeemable preferred stock	(2,241		)	(893		)	(4,367		)	(1,494		)
Dividends declared on Series C cumulative redeemable preferred stock	(21		)	—			(21		)	—
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(2,078	)	$	(720	)	$	(1,144	)	$	(1,215	)

LOSS PER COMMON SHARE:
Basic and diluted	$	(0.10	)	$	(0.04	)	$	(0.05	)	$	(0.07	)
WEIGHTED-AVERAGE SHARES OF COMMON STOCK OUTSTANDING:
Basic and diluted	21,418,455			18,641,738			21,340,268			18,336,975

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 OPERATIONS

AND COMPREHENSIVE INCOME (Continued)

(In thousands, except share and per-share data)

(Unaudited)



	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2020			2019		2020			2019
COMPREHENSIVE INCOME:
Net income attributable to the Company	$	184		$	173	$	3,244		$	279
Change in fair value related to interest rate hedging instruments	(169		)	—		(1,426		)	—
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY	$	15		$	173	$	1,818		$	279

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 June 30, 2020
	Series B Preferred Stock				Series C Preferred Stock			Common Stock			Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Distributions in Excess of Accumulated Earnings			Total Stockholders’ Equity			Non- Controlling Interests			Total Equity
	Number of Shares		Par Value		Number of Shares	Par Value		Number of Shares	Par Value		Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Distributions in Excess of Accumulated Earnings			Total Stockholders’ Equity			Non- Controlling Interests			Total Equity
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
Issuance of Series B Preferred Stock, net	—		—		—	—		—	—		(66		)	—			—			(66		)	—			(66		)
Redemptions of Series B Preferred Stock	(5,165	)	—		—	—		—	—		(124		)	—			—			(124		)	—			(124		)
Issuance of Series C Preferred Stock, net	—		—		130,702	—		—	—		2,963			—			—			2,963			—			2,963
Redemption of OP Units	—		—		—	—		144,152	0		2,092			—			—			2,092			(2,092		)	—
Issuance of common stock, net	—		—		—	—		44,129	1		707			—			—			708			—			708
Comprehensive loss attributable to the Company	—		—		—	—		—	—		—			(169		)	—			(169		)	—			(169		)
Net income	—		—		—	—		—	—		—			—			184			184			(2		)	182
Dividends—Series B Preferred Stock	—		—		—	—		—	—		—			—			(2,241		)	(2,241		)	—			(2,241		)
Dividends—Series C Preferred Stock					—	—		—	—		—			—			(21		)	(21		)	—			(21		)
Distributions—OP Units and common stock	—		—		—	—		—	—		—			—			(2,874		)	(2,874		)	(30		)	(2,904		)
Adjustment to non-controlling interests resulting from changes in ownership of the Operating Partnership	—		—		—	—		—	—		(915		)	—			—			(915		)	915			—
Balance at June 30, 2020	5,972,482		$	6	130,702	$	—	21,534,739	$	22	$	352,677		$	(1,816	)	$	(45,653	)	$	305,236		$	1,147		$	306,383

	Six months ended June 30, 2020
	Series B Preferred Stock				Series C Preferred Stock			Common Stock			Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Distributions in Excess of Accumulated Earnings			Total Stockholders’ Equity			Non- Controlling Interests			Total Equity
	Number of Shares		Par Value		Number of Shares	Par Value		Number of Shares	Par Value		Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Distributions in Excess of Accumulated Earnings			Total Stockholders’ Equity			Non- Controlling Interests			Total Equity
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		—	—		—	—		27,049			—			—			27,050			—			27,050
Redemptions of Series B Preferred Stock	(12,918)		0		—	—		—	—		(309		)	—			—			(309		)	—			(309		)
Issuance of Series C Preferred Stock, net	—		—		130,702	—		—	—		2,963			—			—			2,963			—			2,963
Redemptions of OP Units	—		—		—	—		144,152	0		2,092			—			—			2,092			(2,092		)	—
Issuance of common stock, net	—		—		—	—		453,929	1		6,031			—			—			6,032			—			6,032
Comprehensive loss attributable to the Company	—		—		—	—		—	—		—			(1,426		)	—			(1,426		)	—			(1,426		)
Net income	—		—		—	—		—	—		—			—			3,244			3,244			39			3,283
Dividends—Series B Preferred Stock	—		—		—	—		—	—		—			—			(4,367		)	(4,367		)	—			(4,367		)
Dividends—Series C Preferred Stock	—		—		—	—		—	—		—			—			(21		)	(21		)	—			(21		)
Distributions—OP Units and common stock	—		—		—	—		—	—		—			—			(5,724		)	(5,724		)	(68		)	(5,792		)
Adjustment to non-controlling interests resulting from changes in ownership of the Operating Partnership	—		—		—	—		—	—		(919		)	—			—			(919		)	919			—
Balance at June 30, 2020	5,972,482		$	6	130,702	$	—	21,534,739	$	22	$	352,677		$	(1,816	)	$	(45,653	)	$	305,236		$	1,147		$	306,383

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

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	Three Months Ended June 30, 2019
	Series B Preferred Stock			Series C Preferred Stock			Common Stock			Additional Paid-in Capital			Accumulated Other Comprehensive Loss		Distributions in Excess of Accumulated Earnings			Total Stockholders’ Equity			Non- Controlling Interests			Total Equity
	Number of Shares	Par Value		Number of Shares	Par Value		Number of Shares	Par Value		Additional Paid-in Capital			Accumulated Other Comprehensive Loss		Distributions in Excess of Accumulated Earnings			Total Stockholders’ Equity			Non- Controlling Interests			Total Equity
Balance at March 31, 2019	1,891,709	$	2	—	—		18,462,219	$	18	$	223,480		$	—	$	(28,731	)	$	194,769		$	—		$	194,769
Issuance of Series B Preferred Stock, net	751,159	1		—	—		—	—		16,755			—		—			16,756			—			16,756
Redemptions of Series B Preferred Stock	(6,800)	0		—	—		—	—		(153		)	—		—			(153		)	—			(153		)
Issuance of common stock, net	—	—		—	—		2,070,551	3		23,167			—		—			23,170			—			23,170
Net income	—	—		—	—		—	—		—			—		174			174			—			174
Dividends—Series B Preferred Stock	—	—		—	—		—	—		—			—		(893		)	(893		)	—			(893		)
Distributions—OP Units and common stock	—	—		—	—		—	—		—			—		(2,469		)	(2,469		)	—			(2,469		)
Balance at June 30, 2019	2,636,068	$	3	—	$	—	20,532,770	$	21	$	263,249		$	—	$	(31,919	)	$	231,354		$	—		$	231,354


	Six Months Ended June 30, 2019
	Series B Preferred Stock			Series C Preferred Stock			Common Stock			Additional Paid-in Capital			Accumulated Other Comprehensive Loss		Distributions in Excess of Accumulated Earnings			Total Stockholders’ Equity			Non- Controlling Interests			Total Equity
	Number of Shares	Par Value		Number of Shares	Par Value		Number of Shares	Par Value		Additional Paid-in Capital			Accumulated Other Comprehensive Loss		Distributions in Excess of Accumulated Earnings			Total Stockholders’ Equity			Non- Controlling Interests			Total Equity
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	1,499,075	2		—	—		—	—		33,458			—		—			33,460			—			33,460
Redemptions of Series B Preferred Stock	(7,400)	0		—	—		—	—		(166		)	—		—			(166		)	—			(166		)
Redemption of OP Units	—	—		—	—		570,879	1		4,714			—		—			4,715			(4,715		)	—
Issuance of common stock, net	—	—		—	—		2,070,551	2		23,147			—		—			23,149			—			23,149
Net income	—	—		—	—		—	—		—			—		279			279			3			282
Dividends—Series B Preferred Stock	—	—		—	—		—	—		—			—		(1,494		)	(1,494		)	—			(1,494		)
Distributions—OP Units and common stock	—	—		—	—		—	—		—			—		(4,878