land-20200930

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 September 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

6.00% Series B Cumulative Redeemable Preferred Stock, $0.001 par value per share

LANDO

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 (§ 232.405 of this chapter) 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 November 3, 2020, was 24,102,406.

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GLADSTONE LAND CORPORATION

FORM 10-Q FOR THE QUARTER ENDED

SEPTEMBER 30, 2020

TABLE OF CONTENTS


		PAGE
PART I	FINANCIAL INFORMATION

ITEM 1.	Financial Statements (Unaudited):

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

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

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

	Condensed Consolidated Statements of Cash Flows for the nine months ended Septemb er 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	33

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	55

ITEM 4.	Controls and Procedures	55

PART II	OTHER INFORMATION

ITEM 1.	Legal Proceedings	56

ITEM 1A.	Risk Factors	56

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	56

ITEM 3.	Defaults Upon Senior Securities	57

ITEM 4.	Mine Safety Disclosures	57

ITEM 5.	Other Information	57

ITEM 6.	Exhibits	58

SIGNATURES		60

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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)


	September 30, 2020		December 31, 2019
ASSETS
Investments in real estate, net	$	858,753	$	792,081
Lease intangibles, net	3,626		4,827
Cash and cash equivalents	6,455		13,688
Other assets, net	9,543		6,191
TOTAL ASSETS	$	878,377	$	816,787

LIABILITIES AND EQUITY
LIABILITIES:
Borrowings under lines of credit	$	11,600	$	100
Notes and bonds payable, net	491,921		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 September 30, 2020, and December 31, 2019, net	28,535		28,359
Accounts payable and accrued expenses	11,997		10,132
Due to related parties, net	2,266		2,169
Other liabilities, net	14,743		15,228
Total liabilities	561,062		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; 6,456,065 shares authorized 5,956,065 shares issued and outstanding as of September 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, 420,230 shares issued and outstanding as of September 30, 2020; no shares authorized, issued, or outstanding as of December 31, 2019	—		—
Common stock, $0.001 par value; 65,543,935 shares authorized 22,204,906 shares issued and outstanding as of September 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	368,465		315,770
Accumulated other comprehensive loss	(1,721)		(390)
Distributions in excess of accumulated earnings	(49,457)		(38,785)
Total stockholders’ equity	317,315		276,621
Non-controlling interests in Operating Partnership	—		2,349
Total equity	317,315		278,970

TOTAL LIABILITIES AND EQUITY	$	878,377	$	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 September 30,				For the Nine Months Ended September 30,
	2020		2019		2020		2019
OPERATING REVENUES:
Lease revenue, net	$	13,989	$	11,012	$	41,907	$	27,203

Total operating revenues	13,989		11,012		41,907		27,203
OPERATING EXPENSES:
Depreciation and amortization	3,909		3,419		12,010		8,952
Property operating expenses	287		536		1,525		1,939
Base management fee	1,078		862		3,159		2,741
Incentive fee	821		—		2,155		—

Administration fee	344		311		1,084		866
General and administrative expenses	419		447		1,462		1,465

Total operating expenses	6,858		5,575		21,395		15,963
Credits to fees from Adviser	—		—		—		(1,542)
Total operating expenses, net of credits to fees	6,858		5,575		21,395		14,421
OTHER INCOME (EXPENSE):
Other income	323		62		1,668		937
Interest expense	(5,202)		(4,401)		(15,155)		(11,396)
Dividends declared on Series A cumulative term preferred stock	(458)		(458)		(1,375)		(1,375)
Loss on dispositions of real estate assets, net	(195)		(134)		(861)		(154)
Property and casualty recovery, net	1		17		68		10

(Loss) income from investments in unconsolidated entities	(19)		—		7		—
Total other expense, net	(5,550)		(4,914)		(15,648)		(11,978)
NET INCOME	1,581		523		4,864		804
Net loss (income) attributable to non-controlling interests	(13)		(6)		(52)		(9)
NET INCOME ATTRIBUTABLE TO THE COMPANY	1,568		517		4,812		795
Dividends declared on Series B cumulative redeemable preferred stock	(2,238)		(1,161)		(6,604)		(2,655)
Other charges related to Series B cumulative redeemable preferred stock	(44)		—		(44)		—
Dividends declared on Series C cumulative redeemable preferred stock	(123)		—		(145)		—
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(837)	$	(644)	$	(1,981)	$	(1,860)

LOSS PER COMMON SHARE:
Basic and diluted	$	(0.04)	$	(0.03)	$	(0.09)	$	(0.10)
WEIGHTED-AVERAGE SHARES OF COMMON STOCK OUTSTANDING:
Basic and diluted	21,991,291		20,763,615		21,558,859		19,154,744

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 September 30,				For the Nine Months Ended September 30,
	2020		2019		2020		2019
COMPREHENSIVE INCOME:
Net income attributable to the Company	$	1,568	$	517	$	4,812	$	795
Change in fair value related to interest rate hedging instruments	95		(347)		(1,331)		(347)
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY	$	1,663	$	170	$	3,481	$	448

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 September 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
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

Redemptions of Series B Preferred Stock	(16,417)	0		—	—		—	—		(327)		—		(44)		(371)		—		(371)
Issuance of Series C Preferred Stock, net	—	—		289,528	0		—	—		6,563		—		—		6,563		—		6,563


Redemption of OP Units	—	—		—	—		144,151	0		2,291		—		—		2,291		(2,291)		—
Issuance of common stock, net	—	—		—	—		526,016	0		8,392		—		—		8,392		—		8,392
Net income	—	—		—	—		—	—		—		—		1,568		1,568		13		1,581
Dividends—Series B Preferred Stock and Series C Preferred Stock	—	—		—	—		—	—		—		—		(2,361)		(2,361)		—		(2,361)
Distributions—OP Units and common stock	—	—		—	—		—	—		—		—		(2,967)		(2,967)				(2,967)
Comprehensive income attributable to the Company	—	—		—	—		—	—		—		95		—		95		—		95
Adjustment to non-controlling interests resulting from changes in ownership of the Operating Partnership	—	—		—	—		—	—		(1,131)		—		—		(1,131)		1,131		—
Balance at September 30, 2020	5,956,065	$	6	420,230	$	—	22,204,906	$	22	$	368,465	$	(1,721)	$	(49,457)	$	317,315	$	—	$	317,315

	Nine months ended September 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
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	(29,335)	0		—	—		—	—		(636)		—		(44)		(680)		—		(680)
Issuance of Series C Preferred Stock, net	—	—		420,230	0		—	—		9,526		—		—		9,526		—		9,526


Redemptions of OP Units	—	—		—	—		288,303	0		4,383		—		—		4,383		(4,383)		—
Issuance of common stock, net	—	—		—	—		979,945	1		14,423		—		—		14,424		—		14,424
Net income	—	—		—	—		—	—		—		—		4,812		4,812		52		4,864
Dividends—Series B Preferred Stock and Series C Preferred Stock	—	—		—	—		—	—		—		—		(6,749)		(6,749)		—		(6,749)
Distributions—OP Units and common stock	—	—		—	—		—	—		—		—		(8,691)		(8,691)		(68)		(8,759)
Comprehensive loss attributable to the Company	—	—		—	—		—	—		—		(1,331)		—		(1,331)		—		(1,331)
Adjustment to non-controlling interests resulting from changes in ownership of the Operating Partnership	—	—		—	—		—	—		(2,050)		—		—		(2,050)		2,050		—
Balance at September 30, 2020	5,956,065	$	6	420,230	$	—	22,204,906	$	22	$	368,465	$	(1,721)	$	(49,457)	$	317,315	$	—	$	317,315

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

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	Three Months Ended September 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
Balance at June 30, 2019	2,636,068	$	3	—		—		20,532,770	$	21	$	263,249	$	—	$	(31,919)	$	231,354	$	—	$	231,354
Issuance of Series B Preferred Stock, net	831,579	0		—		—		—	—		18,517		—		—		18,517		—		18,517
Redemptions of Series B Preferred Stock	(2,120)	0		—		—		—	—		(48)		—		—		(48)		—		(48)


Issuance of OP Units as consideration in real estate acquisitions, net	—	—		—		—		—	—		—		—		—		—		3,276		3,276

Issuance of common stock, net	—	—		—		—		355,305	0		3,996		—		—		3,996		—		3,996
Net income	—	—		—		—		—	—		—		—		517		517		6		523
Dividends—Series B Preferred Stock and Series C Preferred Stock	—	—		—		—		—	—		—		—		(1,161)		(1,161)		—		(1,161)
Distributions—OP Units and common stock	—	—		—		—		—	—		—		—		(2,781)		(2,781)		(39)		(2,820)
Comprehensive loss attributable to the Company													(347)		—		(347)				(347)
Adjustment to non-controlling interests resulting from changes in ownership of the Operating Partnership	—	—		—		—		—	—		848		—		—		848		(848)		—
Balance at September 30, 2019	3,465,527	$	3	—		$	—	20,888,075	$	21	$	286,562	$	(347)	$	(35,344)	$	250,895	$	2,395	$	253,290


	Nine Months Ended September 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
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	2,330,654	2		—		—		—	—		51,975		—		—		51,977		—		51,977
Redemptions of Series B Preferred Stock	(9,520)	0		—		—		—	—		(214)		—		—		(214)		—		(214)


Issuance of OP Units as consideration in real estate acquisitions, net	—	—		—	—	—		—	—		—		—		—		—		3,276		3,276
Redemption of OP Units	—	—		—		—		570,879	1		4,714		—		—		4,715		(4,715)		—
Issuance of common stock, net	—	—		—		—		2,425,856	2		27,143		—		—		27,145		—		27,145
Net income	—	—		—		—		—	—		—		—		795		795		9		804
Dividends—Series B Preferred Stock and Series C Preferred Stock	—	—		—		—		—	—		—		—		(2,655)		(2,655)		—		(2,655)
Distributions—OP Units and common stock	—	—		—		—		—	—		—		—		(7,658)		(7,658)		(91)		(7,749)
Comprehensive loss attributable to the Company													(347)		—		(347)		—		(347)
Adjustment to non-controlling interests resulting from changes in ownership of the Operating Partnership	—	—		—		—		—	—		891		—		—		891		(891)		—
Balance at September 30, 2019	3,465,527	$	3	—		$	—	20,888,075	$	21	$	286,562	$	(347)	$	(35,344)	$	250,895	$	2,395	$	253,290

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 Nine Months Ended September 30,
	2020		2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	4,864	$	804
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	12,010		8,952
Amortization of debt issuance costs	559		461
Amortization of deferred rent assets and liabilities, net	(212)		(226)
Amortization of right-of-use asset from operating leases and operating lease liabilities, net	(12)		(18)
Income from investments in unconsolidated entities	(7)		—
Bad debt expense	12		24
Loss on dispositions of real estate assets, net	861		154
Property and casualty recovery, net	(68)		(10)

Changes in operating assets and liabilities:
Other assets, net	(3,192)		281
Accounts payable and accrued expenses and Due to related parties, net	(