land-20220331

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 March 31, 2022


☐			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

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

LANDO

The Nasdaq Stock Market, LLC

5.00% Series D Cumulative Redeemable Term Preferred Stock, $0.001 par value per share

LANDM

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 May 10, 2022, was 34,210,013.

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GLADSTONE LAND CORPORATION

FORM 10-Q FOR THE QUARTER ENDED

MARCH 31, 2022

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		PAGE
PART I	FINANCIAL INFORMATION

ITEM 1.	Financial Statements (Unaudited):

	Condensed Consolidated Balance Sheets as of March 3 1 , 202 2 , and December 31, 20 21	3

	Condensed Consolidated Statements of Operations and Comprehensive Income for the three months ended March 3 1 , 20 22 and 202 1	4

	Condensed Consolidated Statements of Equity for the three months ended March 3 1 , 202 2 and 202 1	5

	Condensed Consolidated Statements of Cash Flows for the three months ended March 3 1 , 202 2 and 202 1	6

	Notes to Condensed Consolidated Financial Statements	8

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	45

ITEM 4.	Controls and Procedures	45

PART II	OTHER INFORMATION

ITEM 1.	Legal Proceedings	46

ITEM 1A.	Risk Factors	46

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46

ITEM 3.	Defaults Upon Senior Securities	46

ITEM 4.	Mine Safety Disclosures	46

ITEM 5.	Other Information	46

ITEM 6.	Exhibits	47

SIGNATURES		49

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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, 2022		December 31, 2021
ASSETS
Real estate, at cost	$	1,361,757	$	1,357,800
Less: accumulated depreciation	(81,731)		(74,002)
Total real estate, net	1,280,026		1,283,798
Lease intangibles, net	4,190		4,456
Cash and cash equivalents	49,381		16,708

Other assets, net	52,151		46,588
TOTAL ASSETS	$	1,385,748	$	1,351,550

LIABILITIES AND EQUITY
LIABILITIES:
Borrowings under lines of credit	$	100	$	100
Notes and bonds payable, net	659,998		667,882
Series D mandatorily-redeemable preferred stock, $0.001 par value, $25.00 per share liquidation preference; 3,600,000 shares authorized, 2,415,000 shares issued and outstanding as of March 31, 2022, and December 31, 2021, net	58,799		58,696
Accounts payable and accrued expenses	12,707		10,874
Due to related parties, net	3,932		4,224
Other liabilities, net	18,287		20,708
Total liabilities	753,823		762,484
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 March 31, 2022, and December 31, 2021	6		6
Series C cumulative redeemable preferred stock, $0.001 par value, $25.00 per share liquidation preference; 25,987,462 shares authorized, 5,045,023 shares issued and outstanding as of March 31, 2022; 25,989,942 shares authorized, 3,493,333 shares issued and outstanding as of December 31, 2021	5		3
Common stock, $0.001 par value; 63,956,473 shares authorized, 34,520,068 shares issued and outstanding as of March 31, 2022; 63,953,993 shares authorized, 34,210,013 shares issued and outstanding as of December 31, 2021	35		34
Additional paid-in capital	713,805		668,275
Distributions in excess of accumulated earnings	(87,868)		(80,467)
Accumulated other comprehensive income (loss)	3,694		(1,036)
Total stockholders’ equity	629,677		586,815
Non-controlling interests in Operating Partnership	2,248		2,251
Total equity	631,925		589,066
TOTAL LIABILITIES AND EQUITY	$	1,385,748	$	1,351,550

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 March 31,
	2022		2021
OPERATING REVENUES:
Lease revenue, net	$	19,943	$	16,034

Total operating revenues	19,943		16,034
OPERATING EXPENSES:
Depreciation and amortization	8,346		6,051
Property operating expenses	703		429
Base management fee	2,037		1,369
Incentive fee	1,131		1,162

Administration fee	463		357
General and administrative expenses	684		539



Total operating expenses	13,364		9,907
OTHER INCOME (EXPENSE):
Other income	2,767		2,235
Interest expense	(6,448)		(6,193)
Dividends declared on Series A and Series D cumulative term preferred stock	(755)		(804)
Loss on dispositions of real estate assets, net	(976)		(798)
Property and casualty recovery, net	49		—

Loss from investments in unconsolidated entities	(29)		(13)
Total other expense, net	(5,392)		(5,573)
NET INCOME	1,187		554
Net income attributable to non-controlling interests	(9)		(1)
NET INCOME ATTRIBUTABLE TO THE COMPANY	1,178		553
Dividends declared on Series B and Series C cumulative redeemable preferred stock	(3,912)		(2,764)
Loss on extinguishment of Series C cumulative redeemable preferred stock	(3)		—
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(2,737)	$	(2,211)

LOSS PER COMMON SHARE:
Basic and diluted	$	(0.08)	$	(0.08)
WEIGHTED-AVERAGE SHARES OF COMMON STOCK OUTSTANDING:
Basic and diluted	34,285,002		26,874,630

COMPREHENSIVE INCOME:
Net income attributable to the Company	$	1,178	$	553
Change in fair value related to interest rate hedging instruments	4,730		1,367
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY	$	5,908	$	1,920

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, 2022
	Series B Preferred Stock			Series C Preferred Stock			Common Stock			Additional Paid-in Capital		Distributions in Excess of Accumulated Earnings		Accumulated Other Comprehensive Income (Loss)		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, 2021	5,956,065	$	6	3,493,333	$	3	34,210,013	$	34	$	668,275	$	(80,467)	$	(1,036)	$	586,815	$	2,251	$	589,066


Issuance of Series C Preferred Stock, net	—	—		1,554,170	2		—	—		35,281		—		—		35,283		—		35,283
Redemptions of Series C Preferred Stock	—	—		(2,480)	—		—	—		(56)		(3)		—		(59)		—		(59)


Issuance of common stock, net	—	—		—	—		310,055	1		10,321		—		—		10,322		—		10,322
Net income	—	—		—	—		—	—		—		1,178		—		1,178		9		1,187
Dividends—Series B Preferred Stock and Series C Preferred Stock	—	—		—	—		—	—		—		(3,912)		—		(3,912)		—		(3,912)
Distributions—OP Units and common stock	—	—		—	—		—	—		—		(4,664)		—		(4,664)		(28)		(4,692)
Comprehensive income attributable to the Company	—	—		—	—		—	—		—		—		4,730		4,730		—		4,730
Adjustment to non-controlling interests resulting from changes in ownership of the Operating Partnership	—	—		—	—		—	—		(16)		—		—		(16)		16		—
Balance at March 31, 2022	5,956,065	$	6	5,045,023	$	5	34,520,068	$	35	$	713,805	$	(87,868)	$	3,694	$	629,677	$	2,248	$	631,925


	Three Months Ended March 31, 2021
	Series B Preferred Stock			Series C Preferred Stock			Common Stock			Additional Paid-in Capital		Distributions in Excess of Accumulated Earnings		Accumulated Other Comprehensive Income (Loss)		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, 2020	5,956,065	$	6	1,088,435	$	1	26,219,019	$	26	$	440,470	$	(55,213)	$	(1,500)	$	383,790	$	—	$	383,790


Issuance of Series C Preferred Stock, net	—	—		535,678	1		—	—		12,170		—		—		12,171		—		12,171

Issuance of OP Units as consideration in real estate acquisitions, net	—	—		—	—		—	—		—		—		—		—		3,970		3,970

Issuance of common stock, net	—	—		—	—		1,312,932	1		22,229		—		—		22,230		—		22,230
Net income	—	—		—	—		—	—		—		553		—		553		1		554
Dividends—Series B Preferred Stock and Series C Preferred Stock	—	—		—	—		—	—		—		(2,764)		—		(2,764)		—		(2,764)
Distributions—OP Units and common stock	—	—		—	—		—	—		—		(3,642)		—		(3,642)		(9)		(3,651)
Comprehensive income attributable to the Company	—	—		—	—		—	—		—		—		1,367		1,367		—		1,367
Adjustment to non-controlling interests resulting from changes in ownership of the Operating Partnership	—	—		—	—		—	—		2,127		—		—		2,127		(2,127)		—
Balance at March 31, 2021	5,956,065	$	6	1,624,113	$	2	27,531,951	$	27	$	476,996	$	(61,066)	$	(133)	$	415,832	$	1,835	$	417,667

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,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	1,187	$	554
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	8,346		6,051
Amortization of debt issuance costs	271		388
Amortization of deferred rent assets and liabilities, net	(67)		(179)
Amortization of right-of-use assets from operating leases and operating lease liabilities, net	23		(33)
Loss from investments in unconsolidated entities	29		13
Bad debt expense	67		—
Loss on dispositions of real estate assets, net	976		798

Property and casualty recovery, net	(49)		—
Changes in operating assets and liabilities:

Other assets, net	(1,558)		(924)
Accounts payable and accrued expenses and Due to related parties, net	(344)		1,099
Other liabilities, net	(1,328)		(1,111)
Net cash provided by operating activities	7,553		6,656
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of new real estate assets	—		(1,579)
Capital expenditures on existing real estate assets	(3,518)		(3,027)


Deposits on prospective real estate acquisitions and investments	(54)		(800)

Net cash used in investing activities	(3,572)		(5,406)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of preferred and common equity	48,823		35,868
Offering costs	(3,285)		(1,447)
Redemptions of cumulative redeemable preferred stock (Series B and Series C)	(59)		—

Proceeds from issuance of cumulative term preferred stock	—		60,375
Redemption of cumulative term preferred stock (Series A)	—		(28,750)
Borrowings from notes and bonds payable	5,122		9,903
Repayments of notes and bonds payable	(12,910)		(4,973)


Payments of financing fees	(708)		(2,223)
Dividends paid on cumulative redeemable preferred stock (Series B and Series C)	(3,599)		(2,676)
Distributions paid on non-controlling common interests in Operating Partnership	(28)		(9)
Distributions paid on common stock	(4,664)		(3,642)

Net cash provided by financing activities	28,692		62,426
NET INCREASE IN CASH AND CASH EQUIVALENTS	32,673		63,676
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	16,708		9,218
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	49,381	$	72,894

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,
	2022		2021
NON-CASH INVESTING AND FINANCING INFORMATION:
Issuance of non-controlling interests in Operating Partnership in conjunction with acquisitions, net	$	—	$	3,970


Real estate additions included in Accounts payable and accrued expenses and Due to related parties, net	5,162		692


Stock offering and OP Unit issuance costs included in Accounts payable and accrued expenses and Due to related parties, net	22		—
Financing fees included in Accounts payable and accrued expenses and Due to related parties, net	20		165


Unrealized gain (loss) related to interest rate hedging instruments	(3,694)		(133)
Dividends paid on Series C Preferred Stock via additional share issuances	119		21

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 (“we,” “us,” or 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. 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 both March 31, 2022, and December 31, 2021, the Company owned approximately 99.4% 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 taxed 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. For the three months ended March 31, 2022, and for the tax year ended December 31, 2021, there was no taxable income or loss from Land Advisers, nor did we have any undistributed REIT taxable income.

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. 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, 2021, as filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 22, 2022 (the “Form 10-K”). The results of operations for the three months ended March 31, 2022, 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 ongoing coronavirus (“COVID-19”) pandemic, the results of which form the basis for making certain judgments. Actual results may materially differ from these estimates.

Recently-Issued Accounting Pronouncements

As of March 31, 2022, there were no recently-issued accounting pronouncements that had a material impact on our condensed consolidated financial statements.

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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 164 farms we owned as of March 31, 2022 (dollars in thousands, except for footnotes):


Location	No. of Farms	Total Acres	Farm Acres	Net Cost Basis(1)		Encumbrances(2)
California(3)(4)(5)	62	33,027	30,740	$	851,114	$	416,252
Florida	26	22,591	17,639	223,308		122,261
Arizona(6)	6	6,280	5,228	54,943		16,198
Colorado	12	32,773	25,577	47,094		29,063
Washington	3	1,384	1,001	37,055		24,868
Nebraska	9	7,782	7,050	30,833		12,173
Michigan	23	1,892	1,245	24,440		14,396
Oregon(7)	5	726	606	20,734		12,044
Texas	1	3,667	2,219	8,231		5,000
Maryland	6	987	863	7,943		4,526
South Carolina	3	597	447	3,700		2,215
Georgia	2	230	175	2,843		1,710
North Carolina	2	310	295	2,193		1,172
New Jersey	3	116	101	2,167		1,290
Delaware	1	180	140	1,272		726
	164	112,542	93,326	$	1,317,870	$	663,894

(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 Total real estate, net (excluding improvements paid for by the tenant) and Lease intangibles, net; plus long-term water assets, 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 $3.8 million of debt issuance costs related to notes and bonds payable, included in Notes and bonds payable, net on the accompanying Condensed Consolidated Balance Sheets.

(3)Includes ownership in a special-purpose LLC that owns a pipeline conveying water to certain of our properties. As of March 31, 2022, this investment had a net carrying value of approximately $1.1 million and is included within Other assets, net on the accompanying Condensed Consolidated Balance Sheets.

(4)Includes five acres in which we own a leasehold interest via a ground sublease with a California municipality that expires in December 2041. The ground sublease had a net cost basis of approximately $753,000 as of March 31, 2022 (included in Lease intangibles, net on the accompanying Condensed Consolidated Balance Sheets).

(5)Includes 45,000 acre-feet of water stored with Semitropic Water Storage District, located in Kern County, California. See “—Investments in Water Assets” below for additional information on this water.

(6)Includes two farms in which we own a leasehold interest via ground leases with the State of Arizona that expire in February 2025 and February 2032, respectively. In total, these two ground leases consist of 1,368 total acres and 1,221 farm acres and had an aggregate net cost basis of approximately $961,000 as of March 31, 2022 (included in Lease intangibles, net on the accompanying Condensed Consolidated Balance Sheets).

(7)Includes ownership in a special-purpose LLC that owns certain irrigation infrastructure that provides water to one of our farms. As of March 31, 2022, this investment had a net carrying value of approximately $2.0 million and is included within Other assets, net on the accompanying Condensed Consolidated Balance Sheets.

Real Estate

The following table sets forth the components of our investments in tangible real estate assets as of March 31, 2022, and December 31, 2021 (dollars in thousands):


	March 31, 2022		December 31, 2021
Real estate:
Land and land improvements	$	813,421	$	812,830
Permanent plantings	331,775		331,969
Irrigation and drainage systems	156,915		153,688
Farm-related facilities	46,967		46,804
Other site improvements	12,679		12,509
Real estate, at cost	1,361,757		1,357,800
Accumulated depreciation	(81,731)		(74,002)
Total real estate, net	$	1,280,026	$	1,283,798

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Real estate depreciation expense on these tangible assets was approximately $8.1 million and $5.7 million for the three months ended March 31, 2022, and 2021, 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, 2022, and December 31, 2021, we recorded tenant improvements, net of accumulated depreciation, of approximately $2.4 million and $2.5 million, respectively. We recorded both depreciation expense and additional lease revenue related to these tenant improvements of approximately $103,000 and $98,000 for the three months ended March 31, 2022 and 2021, 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, 2022, and December 31, 2021 (dollars in thousands):


	March 31, 2022		December 31, 2021
Lease intangibles:
Leasehold interest – land	$	4,295	$	4,295
In-place lease values	2,174		2,174
Leasing costs	1,808		1,808
Other(1)	130		130
Lease intangibles, at cost	8,407		8,407
Accumulated amortization	(4,217)		(3,951)
Lease intangibles, net	$	4,190	$	4,456

(1)Other consists primarily of acquisition-related costs allocated to miscellaneous lease intangibles.

Total amortization expense related to these lease intangible assets was approximately $266,000 and $383,000 for the three months ended March 31, 2022 and 2021, respectively.

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, 2022, and December 31, 2021 (dollars in thousands):


	March 31, 2022				December 31, 2021
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)	$	625	$	(94)	$	65	$	(12)
Below-market lease values and other deferred revenue(2)	(2,010)		385		(2,010)		340
	$	(1,385)	$	291	$	(1,945)	$	328

(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 $82,000 and $(44,000) for the three months ended March 31, 2022 and 2021, respectively. Total accretion related to below-market lease values and other deferred revenue was approximately $45,000 and $36,000 for the three months ended March 31, 2022 and 2021, respectively.

Acquisitions

2022 Acquisitions

We did not acquire any new farms during the three months ended March 31, 2022.

2021 Acquisitions

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During the three months ended March 31, 2021, 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) / Use	Lease Term	Renewal Options	Total Purchase Price		Acquisition Costs(1)		Annualized Straight-line Rent(2)
Palmer Mill Road	Dorchester, MD	3/3/2021	228	2	Sod	10.0 years	2 (5 years)	$	1,600	$	56	$	89
Eight Mile Road – Port Facility	San Joaquin, CA	3/11/2021	5	—	Cooling facility and storage	9.8 years	3 (5 years)	3,977		50		189








			233	2				$	5,577	$	106	$	278

(1)Includes approximately $4,000 of external legal fees associated with negotiating and originating the leases associated with these acquisitions, which were expensed in the period incurred.

(2)Based on the minimum cash rental payments guaranteed under the respective leases, as required under GAAP, and excludes contingent rental payments, such as participation rents.

During the three months ended March 31, 2021, in the aggregate, we recognized operating revenues of approximately $25,000 and a net loss of approximately $4,000 related to the above acquisitions.

Purchase Price Allocations

The allocation of the aggregate purchase price for the farms acquired during the three months ended March 31, 2021, is as follows (dollars in thousands):


Assets (Liabilities) Acquired	2021 Acquisitions
Land and land improvements	$	1,341

Irrigation & drainage systems	209
Farm-related facilities	4,218
Other site improvements	88
Leasehold interest—land	787
In-place lease values	110
Leasing costs	145

Below-market lease values(1)	(1,321)


Total Purchase Price	$	5,577

(1)Included within Other liabilities, net on the accompanying Condensed Consolidated Balance Sheets.

Investments in Unconsolidated Entities

In connection with the acquisition of certain farmland located in Fresno County, California, we also acquired an ownership in a related limited liability company (the “Fresno LLC”), the sole purpose of which is to own and maintain a pipeline conveying water to our and other neighboring properties. In addition, in connection with the acquisition of certain farmland located in Umatilla County, Oregon, we also acquired an ownership in a related limited liability company (the “Umatilla LLC”), the sole purpose of which is to own and maintain an irrigation system providing water to our and other neighboring properties.

As of March 31, 2022, our aggregate ownership interest in the Fresno LLC and the Umatilla LLC was 50.0% and 9.1%, respectively. As our investments in the Fresno LLC and Umatilla LLC are both deemed to constitute “significant influence,” we have accounted for these investments under the equity method.

During the three months ended March 31, 2022 and 2021, we recorded an aggregate loss of approximately $29,000 and $13,000, respectively (included in Loss from investments in unconsolidated entities on our Condensed Consolidated Statements of Operations and Comprehensive Income), which represents our pro-rata share of the aggregate loss recognized by the Fresno LLC and Umatilla LLC. Our combined ownership interest in the Fresno LLC and Umatilla LLC, which had an aggregate carrying value of approximately $3.1 million as of both March 31, 2022, and December 31, 2021, is included within Other assets, net on the accompanying Condensed Consolidated Balance Sheets.

Investments in Water Assets

In connection with the acquisition of certain farmland located in Kern County, California, we also acquired three contracts to purchase an aggregate of 45,000 acre-feet of banked water held by Semitropic Water Storage District (“SWSD”), a water storage district located in Kern County, California, at a fixed price. The contracts to purchase the banked water could not readily be net settled by means outside of the contracts, and all rights and obligations associated with the purchase contracts were transferred to us at acquisition of the related farmland. We were not required to purchase a specific amount, or any, of the 45,000 acre-feet of water.

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During the year ended December 31, 2021, we executed all three contracts to purchase all 45,000 acre-feet of banked water for an aggregate additional cost of approximately $2.8 million. The purchased banked water was recognized at cost, including any administrative fees necessary to transfer the water to our banked water account. While we may, in the future, sell the banked water to an unrelated third party for a profit, our current intent is to hold the water for the long-term for future use on our farms. There is no amount of time by which we must use the water held by SWSD.

As of March 31, 2022, the investment in banked water had a carrying value of approximately $34.0 million, which includes the subsequent cost to execute the contracts, and is included within Other assets, net on our Condensed Consolidated Balance Sheets.

Each quarter, we will review the investment in banked water for any indicators of impairment and perform an impairment analysis if there are any such indicators. As of March 31, 2022, we concluded that there were no such indicators and that the water was not impaired.

Portfolio Concentrations

Credit Risk

As of March 31, 2022, our farms were leased to various different, unrelated third-party tenants, with certain tenants leasing more than one farm. No individual tenant represented greater than 10.0% of the total lease revenue recorded during the three months ended March 31, 2022.

Geographic Risk

Farms located in California and Florida accounted for approximately $13.2 million (66.4%) and $3.6 million (18.0%), respectively, of the total lease revenue recorded during the three months ended March 31, 2022. Though we seek to continue to further diversify geographically, as may be desirable or feasible, should an unexpected natural disaster (such as an earthquake, wildfire, or flood) occur or climate change impact the regions where our properties are located, there could be a material adverse effect on our financial performance and ability to continue operations. None of our farms in California or Florida have been materially impacted by the recent wildfires or hurricanes that occurred in those respective regions. In addition, with respect to the ongoing drought taking place in the western U.S., all of our farms in the region have independent (and, in most cases, multiple) sources of water, in addition to rainfall, and have not been materially impacted by the current drought conditions. No other single state accounted for more than 10.0% of our total lease revenue recorded during the three months ended March 31, 2022.

Impairment

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, 2022, and December 31, 2021, we concluded that none of our properties were impaired. There have been no impairments recognized on our real estate assets since our inception.

NOTE 4. BORROWINGS

Our borrowings as of March 31, 2022, and December 31, 2021, are summarized below (dollars in thousands):

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	Carrying Value as of				As of March 31, 2022
	March 31, 2022		December 31, 2021		Stated Interest Rates(1) (Range; Wtd. Avg)	Maturity Dates (Range; Wtd. Avg)
Notes and bonds payable:
Fixed-rate notes payable	$	581,292	$	582,665	2.44%–5.70%; 3.73%	7/1/2022–7/1/2051; November 2032
Variable-rate notes payable	1,142		2,856		3.00%	5/1/2044
Fixed-rate bonds payable	81,360		86,052		2.13%–4.57%; 3.46%	12/22/2022–12/30/2030; June 2025
Total notes and bonds payable	663,794		671,573
Debt issuance costs – notes and bonds payable	(3,796)		(3,691)		N/A	N/A
Notes and bonds payable, net	$	659,998	$	667,882

Variable-rate revolving lines of credit	$	100	$	100	2.50%	4/5/2024

Total borrowings, net	$	660,098	$	667,982

(1)Where applicable, stated interest rates are before interest patronage (as described below).

As of March 31, 2022, the above borrowings were collateralized by certain of our farms with an aggregate net book value of approximately $1.3 billion. The weighted-average stated interest rate charged on the above borrowings (excluding the impact of debt issuance costs and before any interest patronage, or refunded interest) was 3.72% and 3.70% for the three months ended March 31, 2022 and 2021, respectively. In addition, 2021 interest patronage from our Farm Credit Notes Payable (as defined below) resulted in a 29.9% reduction (approximately 137 basis points) to the stated interest rates on such borrowings. See below under “—Farm Credit Notes Payable—Interest Patronage” for further discussion on interest patronage.

As of March 31, 2022, we were in compliance with all covenants applicable to the above borrowings.

MetLife Facility

On February 3, 2022, we amended our credit facility with Metropolitan Life Insurance Company (“MetLife”), which previously consisted of a $75.0 million long-term note payable (the “2020 MetLife Term Note”) and $75.0 million of revolving equity lines of credit (the “MetLife Lines of Credit,” and together with the 2020 MetLife Term Note, the “2020 MetLife Facility”). Pursuant to the amendment, our credit facility with MetLife now consists of the 2020 MetLife Term Note, the MetLife Lines of Credit, and a new $100.0 million long-term note payable (the “2022 MetLife Term Note,” and together with the 2020 MetLife Term Note and the MetLife Lines of Credit, the “2022 MetLife Facility”).

The 2022 MetLife Term Note is scheduled to mature on January 5, 2032, and the interest rates on future disbursements under the 2022 MetLife Term Note will be based on the 10-year U.S. Treasury at the time of such disbursements, with the initial disbursement priced based on the 10-year U.S. Treasury plus a spread to be determined by the lender. In addition, through December 31, 2024, the 2022 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 2022 MetLife Term Note). If the full commitment of $100.0 million is not utilized by December 31, 2024, MetLife has no obligation to disburse the remaining funds under the 2022 MetLife Term Note. All other material items of the 2020 MetLife Facility remained unchanged.

The following table summarizes the pertinent terms of the 2022 MetLife Facility as of March 31, 2022 (dollars in thousands, except for footnotes):


Issuance	Aggregate Commitment			Maturity Dates	Principal Outstanding		Interest Rate Terms		Undrawn Commitment(1)
MetLife Lines of Credit	$	75,000		4/5/2024	$	100	3-month LIBOR + 2.00%	(2)	$	74,900
2020 MetLife Term Note	75,000		(3)	1/5/2030	36,900		2.75%, fixed through 1/4/2030	(4)	38,100
2022 MetLife Term Note	100,000		(5)	1/5/2032	—		(6)		100,000
Totals	$	250,000			$	37,000