land-20230331

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, 2023


☐			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.

Table of Contents

Large accelerated filer

☒

Accelerated filer

☐

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. ☐

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 5, 2023, was 35,713,982.

Table of Contents

GLADSTONE LAND CORPORATION

FORM 10-Q FOR THE QUARTER ENDED

MARCH 31, 2023

TABLE OF CONTENTS


		PAGE
PART I	FINANCIAL INFORMATION

ITEM 1.	Financial Statements (Unaudited):

	Condensed Consolidated Balance Sheets as of March 31, 2023, and December 31, 2022	3

	Condensed Consolidated Statements of Operations and Comprehensive Income for the three months ended March 3 1 , 202 3 and 202 2	4

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

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

	Notes to Condensed Consolidated Financial Statements	7

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	43

ITEM 4.	Controls and Procedures	43

PART II	OTHER INFORMATION

ITEM 1.	Legal Proceedings	45

ITEM 1A.	Risk Factors	45

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45

ITEM 3.	Defaults Upon Senior Securities	45

ITEM 4.	Mine Safety Disclosures	45

ITEM 5.	Other Information	45

ITEM 6.	Exhibits	46

SIGNATURES		48

Table of Contents

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, 2023		December 31, 2022
ASSETS
Real estate, at cost	$	1,431,761	$	1,432,394
Less: accumulated depreciation	(115,578)		(106,966)
Total real estate, net	1,316,183		1,325,428
Lease intangibles, net	5,518		5,702
Cash and cash equivalents	38,728		61,141

Other assets, net	66,021		64,980
TOTAL ASSETS	$	1,426,450	$	1,457,251

LIABILITIES AND EQUITY
LIABILITIES:
Borrowings under lines of credit	$	100	$	100
Notes and bonds payable, net	598,957		626,400
Series D cumulative term preferred stock, net, $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, 2023, and December 31, 2022	59,210		59,107
Accounts payable and accrued expenses	9,674		16,266
Due to related parties, net	3,034		4,370
Other liabilities, net	20,595		19,646
Total liabilities	691,570		725,889
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, 2023, and December 31, 2022	6		6
Series C cumulative redeemable preferred stock, $0.001 par value, $25.00 per share liquidation preference; 25,941,527 shares authorized, 10,195,602 shares issued and outstanding as of March 31, 2023; 25,951,347 shares authorized, 10,191,353 shares issued and outstanding as of December 31, 2022	10		10
Series E cumulative redeemable preferred stock, $0.001 par value, $25.00 per share liquidation preference; 16,000,000 shares authorized, 60,200 shares issued and outstanding as of March 31, 2023; 16,000,000 shares authorized, 0 shares issued and outstanding as of December 31, 2022	—		—
Common stock, $0.001 par value; 48,002,408 shares authorized, 35,713,982 shares issued and outstanding as of March 31, 2023; 47,992,588 shares authorized, 35,050,397 shares issued and outstanding as of December 31, 2022	36		35
Additional paid-in capital	851,063		836,674
Distributions in excess of accumulated earnings	(123,594)		(114,370)
Accumulated other comprehensive income	7,359		9,007
Total stockholders’ equity	734,880		731,362
Non-controlling interests in Operating Partnership	—		—
Total equity	734,880		731,362
TOTAL LIABILITIES AND EQUITY	$	1,426,450	$	1,457,251

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

Table of Contents

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,
	2023		2022
OPERATING REVENUES:
Lease revenue, net	$	21,202	$	19,943

Total operating revenues	21,202		19,943
OPERATING EXPENSES:
Depreciation and amortization	9,119		8,346
Property operating expenses	1,128		703
Base management fee	2,149		2,037
Incentive fee	—		1,131

Administration fee	575		463
General and administrative expenses	786		684




Total operating expenses	13,757		13,364
OTHER INCOME (EXPENSE):
Other income	2,620		2,767
Interest expense	(6,036)		(6,448)
Dividends declared on cumulative term preferred stock	(755)		(755)
Loss on dispositions of real estate assets, net	(481)		(976)
Property and casualty (loss) recovery, net	(1,016)		49

Loss from investments in unconsolidated entities	(27)		(29)
Total other expense, net	(5,695)		(5,392)
NET INCOME	1,750		1,187
Net income attributable to non-controlling interests	—		(9)
NET INCOME ATTRIBUTABLE TO THE COMPANY	1,750		1,178
Dividends declared on cumulative redeemable preferred stock	(6,068)		(3,912)
Loss on extinguishment of cumulative redeemable preferred stock	(2)		(3)
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(4,320)	$	(2,737)

LOSS PER COMMON SHARE:
Basic and diluted	$	(0.12)	$	(0.08)
WEIGHTED-AVERAGE SHARES OF COMMON STOCK OUTSTANDING:
Basic and diluted	35,547,397		34,285,002

NET INCOME	$	1,750	$	1,187
Change in fair value related to interest rate hedging instruments	(1,648)		4,730
COMPREHENSIVE INCOME	102		5917
Net income attributable to non-controlling interests	—		(9)

COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY	$	102	$	5,908

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

Table of Contents

GLADSTONE LAND CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(In thousands, except share data)

(Unaudited)





















	Three Months Ended March 31, 2023
	Series B Preferred Stock			Series C Preferred Stock			Series E 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
	No. of Shares	Par Value		No. of Shares	Par Value		No. of Shares	Par Value		No. of Shares	Par Value
Balance at December 31, 2022	5,956,065	$	6	10,191,353	$	10	—	$	—	35,050,397	$	35	$	836,674	$	(114,370)	$	9,007	$	731,362	$	—	$	731,362


Issuance of Series C Preferred Stock, net	—	—		14,069	—		—	—		—	—		318		—		—		318		—		318
Redemptions of Series C Preferred Stock	—	—		(9,820)	—		—	—		—	—		(223)		(2)		—		(225)		—		(225)


Issuance of Series E Preferred Stock, net	—	—		—	—		60,200	—		—	—		1,349		—		—		1,349		—		1,349
Issuance of common stock, net	—	—		—	—		—	—		663,585	1		12,945		—		—		12,946		—		12,946
Net income	—	—		—	—		—	—		—	—		—		1,750		—		1,750		—		1,750
Dividends—cumulative redeemable preferred stock	—	—		—	—		—	—		—	—		—		(6,068)		—		(6,068)		—		(6,068)
Distributions—OP Units and common stock	—	—		—	—		—	—		—	—		—		(4,904)		—		(4,904)		—		(4,904)
Comprehensive income attributable to the Company	—	—		—	—		—	—		—	—		—		—		(1,648)		(1,648)		—		(1,648)

Balance at March 31, 2023	5,956,065	$	6	10,195,602	$	10	60,200	$	—	35,713,982	$	36	$	851,063	$	(123,594)	$	7,359	$	734,880	$	—	$	734,880





















	Three Months Ended March 31, 2022
	Series B Preferred Stock			Series C Preferred Stock			Series E 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
	No. of Shares	Par Value		No. of Shares	Par Value		No. of Shares	Par Value		No. 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—cumulative redeemable 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

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

Table of Contents

GLADSTONE LAND CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	For the Three Months Ended March 31,
	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	1,750	$	1,187
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	9,119		8,346
Amortization of debt issuance costs	261		271
Amortization of deferred rent assets and liabilities, net	(32)		(67)
Amortization of right-of-use assets from operating leases and operating lease liabilities, net	23		23
Loss from investments in unconsolidated entities	27		29
Bad debt expense	32		67

Loss on dispositions of real estate assets, net	481		976

Property and casualty loss (recovery), net	1,016		(49)
Changes in operating assets and liabilities:

Other assets, net	(2,586)		(1,558)
Accounts payable and accrued expenses and Due to related parties, net	(6,367)		(344)
Other liabilities, net	990		(1,328)
Net cash provided by operating activities	4,714		7,553
CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures on existing real estate assets	(2,871)		(3,518)


Deposits on prospective real estate acquisitions and investments	(145)		(54)

Net cash used in investing activities	(3,016)		(3,572)
CASH FLOWS FROM FINANCING ACTIVITIES:


Borrowings from notes and bonds payable	—		5,122
Repayments of notes and bonds payable	(27,570)		(12,910)
Payments of financing fees	—		(708)
Proceeds from issuance of preferred and common equity	14,690		48,823
Offering costs	(361)		(3,285)

Redemptions of cumulative redeemable preferred stock	(225)		(59)


Dividends paid on cumulative redeemable preferred stock	(5,741)		(3,599)
Distributions paid on non-controlling common interests in Operating Partnership	—		(28)
Distributions paid on common stock	(4,904)		(4,664)

Net cash (used in) provided by financing activities	(24,111)		28,692
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(22,413)		32,673
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	61,141		16,708
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	38,728	$	49,381

NON-CASH INVESTING AND FINANCING INFORMATION:



Real estate additions included in Accounts payable and accrued expenses and Due to related parties, net	$	712	$	5,162


Stock offering and OP Unit issuance costs included in Accounts payable and accrued expenses and Due to related parties, net	93		22
Financing fees included in Accounts payable and accrued expenses and Due to related parties, net	—		20


Unrealized loss related to interest rate hedging instruments	(7,359)		(3,694)
Dividends paid on Series C Preferred Stock via additional share issuances	320		119

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

Table of Contents

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 March 31, 2023, and December 31, 2022, the Company owned 100.0% 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, 2023, and for the tax year ended December 31, 2022, 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, 2022, as filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 21, 2023 (the “Form 10-K”). The results of operations for the three months ended March 31, 2023, 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, 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, 2023, there were no recently-issued accounting pronouncements that had a material impact on our condensed consolidated financial statements.

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 169 farms we owned as of March 31, 2023 (dollars in thousands, except for footnotes):


Location	No. of Farms	Total Acres	Farm Acres	Acre-feet of Water	Net Cost Basis(1)		Encumbrances(2)
California(3)(4)(5)	63	34,844	32,321	45,000	$	862,632	$	399,914
Florida	26	22,606	17,639	0	222,844		101,171
Washington	6	2,529	1,997	0	63,332		21,005
Arizona(6)	6	6,320	5,333	0	53,760		12,544
Colorado	12	32,773	25,577	0	46,302		15,086
Nebraska	9	7,782	7,050	0	30,718		11,897
Oregon(7)	6	898	736	0	29,724		11,647
Michigan	23	1,892	1,245	0	23,704		14,036
Texas	1	3,667	2,219	0	8,157		4,878
Maryland	6	987	863	0	8,082		4,406
South Carolina	3	597	447	0	3,610		2,170
Georgia	2	230	175	0	2,709		1,667
North Carolina	2	310	295	0	2,151		—
New Jersey	3	116	101	0	2,110		1,256
Delaware	1	180	140	0	1,306		707
	169	115,731	96,138	45,000	$	1,361,141	$	602,384

(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 $3.3 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, 2023, this investment had a net carrying value of approximately $1.0 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 $715,000 as of March 31, 2023 (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 $627,000 as of March 31, 2023 (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 two of our farms. As of March 31, 2023, this investment had a net carrying value of approximately $4.8 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, 2023, and December 31, 2022 (dollars in thousands):


	March 31, 2023		December 31, 2022
Real estate:
Land and land improvements	$	845,684	$	845,779
Permanent plantings	358,259		358,249
Irrigation and drainage systems	165,673		165,438
Farm-related facilities	48,760		48,690
Other site improvements	13,385		14,238
Real estate, at cost	1,431,761		1,432,394
Accumulated depreciation	(115,578)		(106,966)
Total real estate, net	$	1,316,183	$	1,325,428

Real estate depreciation expense on these tangible assets was approximately $8.9 million and $8.1 million for the three months ended March 31, 2023 and 2022, respectively.

Included in the table 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, 2023, and December 31, 2022, we recorded tenant improvements, net of accumulated depreciation, of approximately $2.9 million and $3.0 million, respectively. We recorded both depreciation expense and additional lease revenue related to these tenant improvements of approximately $148,000 and $103,000 for the three months ended March 31, 2023 and 2022, 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, 2023, and December 31, 2022 (dollars in thousands):


	March 31, 2023		December 31, 2022
Lease intangibles:
Leasehold interest – land	$	4,295	$	4,295
In-place lease values	2,763		2,763
Leasing costs	3,144		3,088
Other(1)	141		133
Lease intangibles, at cost	10,343		10,279
Accumulated amortization	(4,825)		(4,577)
Lease intangibles, net	$	5,518	$	5,702

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

Total amortization expense related to these lease intangible assets was approximately $252,000 and $266,000 for the three months ended March 31, 2023 and 2022, 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, 2023, and December 31, 2022 (dollars in thousands):


	March 31, 2023				December 31, 2022
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)	$	4,691	$	(734)	$	4,702	$	(585)
Below-market lease values and other deferred revenue(2)	(2,010)		562		(2,010)		518
	$	2,681	$	(172)	$	2,692	$	(67)

(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 $159,000 and $82,000 for the three months ended March 31, 2023 and 2022, respectively. Total accretion related to below-market lease values and other deferred revenue was approximately $44,000 and $45,000 for the three months ended March 31, 2023 and 2022, respectively.

Acquisitions

We did not acquire any new farms during either of the three months ended March 31, 2023 or 2022.

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, 2023, our aggregate ownership interest in the Fresno LLC and the Umatilla LLC was 50.0% and 20.4%, 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, 2023 and 2022, we recorded an aggregate loss of approximately $27,000 and $29,000, 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. As of both March 31, 2023, and December 31, 2022, our combined ownership interest in the Fresno LLC and Umatilla LLC had an aggregate carrying value of approximately $5.8 million and 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.

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, 2023, 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.

Portfolio Concentrations

Credit Risk

As of March 31, 2023, 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% of the total lease revenue recorded during the three months ended March 31, 2023.

Geographic Risk

Farms located in California and Florida accounted for approximately $13.6 million (64.2%) and $3.7 million (17.5%), respectively, of the total lease revenue recorded during the three months ended March 31, 2023. 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, droughts, or hurricanes that occurred in those respective regions. See “—California Floods” below for a discussion on damage caused on certain of our farms by the recent floods that occurred in California. No other single state accounted for more than 10% of the total rental revenue recorded during the three months ended March 31, 2023.

California Floods

In January 2023, periods of heavy rainfall in California resulted in floods that impacted several areas of the state, including regions where certain of our farms are located. As a result of the flooding, one of our farms in the Central Valley suffered damage to certain structures located on the farm. We are still in the process of assessing the damage; however, as of March 31, 2023, we estimated the carrying value of the structures on this property damaged by the floods to be approximately $855,000. As such, during the three months ended March 31, 2023, we wrote down the carrying value of these structures and also recorded a corresponding property and casualty loss, included within Property and casualty (loss) recovery, net on our Condensed Consolidated Statements of Operations and Comprehensive Income. We currently expect the damage to be fully covered by either insurance or the tenant’s obligations pursuant to the lease. Certain of our other farms in California suffered minor damage as a result of the floods, but no other farms were materially impacted.

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, 2023, and December 31, 2022, 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, 2023, and December 31, 2022, are summarized below (dollars in thousands):


	Carrying Value as of				As of March 31, 2023
	March 31, 2023		December 31, 2022		Stated Interest Rates(1) (Range; Wtd. Avg)	Maturity Dates (Range; Wtd. Avg)
Notes and bonds payable:
Fixed-rate notes payable	$	545,294	$	550,974	2.45%-5.70%; 3.73%	6/1/2023–7/1/2051; June 2033
Variable-rate notes payable	—		1,104		N/A	N/A
Fixed-rate bonds payable	56,990		77,776		2.13%–4.57%; 3.54%	7/31/2023–12/30/2030; May 2026
Total notes and bonds payable	602,284		629,854
Debt issuance costs – notes and bonds payable	(3,327)		(3,454)		N/A	N/A
Notes and bonds payable, net	$	598,957	$	626,400

Variable-rate revolving lines of credit	$	100	$	100	6.79%	4/5/2024

Total borrowings, net	$	599,057	$	626,500

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

As of March 31, 2023, the above borrowings were collateralized by certain of our farms with an aggregate net book value of approximately $1.2 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 3.77% for the three months ended March 31, 2023, as compared to 3.72% for the three months ended March 31, 2022. In addition, 2022 interest patronage from our Farm Credit Notes Payable (as defined below) resulted in a 24.1% reduction (approximately 109 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, 2023, 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 “Prior 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 “Current 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 Prior MetLife Facility remained unchanged.

The following table summarizes the pertinent terms of the Current MetLife Facility as of March 31, 2023 (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		(3)	1/5/2032	—		(4)		100,000
Totals	$	250,000			$	37,000			$	213,000

(1)Based on the properties that were pledged as collateral under the Current MetLife Facility, as of March 31, 2023, the maximum additional amount we could draw under the facility was approximately $110.3 million.

(2)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). Subsequent to March 31, 2023, the index on which the interest rate on the MetLife Lines of Credit is based transitioned from the London Interbank Offered Rate (“LIBOR”) to the Secured Overnight Financing Rate (“SOFR”). Effective April 5, 2023, the MetLife Lines of Credit will bear interest at a rate of 3-month Term SOFR plus a spread of approximately 2.11%.

(3)If the aggregate commitments under the 2020 MetLife Term Note and the 2022 MetLife Term Note are not fully utilized by December 31, 2024, MetLife has no obligation to disburse the additional funds under either note.

(4)Interest rates on future disbursements under each of the 2020 MetLife Term Note and the 2022 MetLife Term Note will be based on prevailing market rates at the time of such disbursements. In addition, through December 31, 2024, the 2020 MetLife Term Note and the 2022 MetLife Term Note are each subject to an unused fee ranging from 0.10% to 0.20% on undrawn amounts (based on the balance drawn under the respective note).

Farmer Mac Facility

Through certain subsidiaries of our Operating Partnership, we have 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 (the “Farmer Mac Facility”). As amended from time to time, the Farmer Mac Facility currently provides for bond issuances up to an aggregate amount of $