land-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended June 30, 2024


☐			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

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

LANDP

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.

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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 August 7, 2024, was 35,838,442.

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GLADSTONE LAND CORPORATION

FORM 10-Q FOR THE QUARTER ENDED

JUNE 30, 2024

TABLE OF CONTENTS


		PAGE
PART I	FINANCIAL INFORMATION

ITEM 1.	Financial Statements (Unaudited):

	Condensed Consolidated Balance Sheets as of June 30, 2024, and December 31, 2023	3

	Condensed Consolidated Statements of Operations and Comprehensive Income for the three and six months ended June 30, 2024 and 2023	4

	Condensed Consolidated Statements of Equity for the three and six months ended June 30, 2024 and 2023	5

	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023	7

	Notes to Condensed Consolidated Financial Statements	8

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	46

ITEM 4.	Controls and Procedures	46

PART II	OTHER INFORMATION

ITEM 1.	Legal Proceedings	48

ITEM 1A.	Risk Factors	48

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48

ITEM 3.	Defaults Upon Senior Securities	49

ITEM 4.	Mine Safety Disclosures	49

ITEM 5.	Other Information	50

ITEM 6.	Exhibits	51

SIGNATURES		53

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PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GLADSTONE LAND CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

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

(Unaudited)


	June 30, 2024		December 31, 2023
ASSETS
Real estate, at cost	$	1,380,264	$	1,383,742
Less: accumulated depreciation	(154,861)		(142,212)
Total real estate, net	1,225,403		1,241,530
Lease intangibles, net	4,261		4,782
Real estate and related assets held for sale, net	—		53,626
Cash and cash equivalents	49,757		18,571
Other assets, net	73,132		68,815
TOTAL ASSETS	$	1,352,553	$	1,387,324

LIABILITIES AND EQUITY
LIABILITIES:
Borrowings under lines of credit	$	200	$	200
Notes and bonds payable, net	549,192		573,911
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 June 30, 2024, and December 31, 2023	59,724		59,519
Accounts payable and accrued expenses	11,239		10,298
Due to related parties, net	3,114		3,874
Other liabilities, net	20,615		19,909
Total Liabilities	644,084		667,711
Commitments and contingencies (Note 7)
EQUITY:
Stockholders’ equity:
Series B cumulative redeemable preferred stock, $0.001 par value, $25.00 per share liquidation preference; 6,401,330 shares authorized, 5,901,330 shares issued and outstanding as of June 30, 2024; 6,456,065 shares authorized, 5,956,065 shares issued and outstanding as of December 31, 2023	6		6
Series C cumulative redeemable preferred stock, $0.001 par value, $25.00 per share liquidation preference; 25,816,395 shares authorized, 10,070,467 shares issued and outstanding as of June 30, 2024; 25,902,437 shares authorized, 10,156,509 shares issued and outstanding as of December 31, 2023	10		10
Series E cumulative redeemable preferred stock, $0.001 par value, $25.00 per share liquidation preference; 15,998,400 shares authorized, 247,981 shares issued and outstanding as of June 30, 2024; 15,998,400 shares authorized, 235,841 shares issued and outstanding as of December 31, 2023	—		—
Common stock, $0.001 par value; 48,183,875 shares authorized, 35,838,442 shares issued and outstanding as of June 30, 2024; 48,043,098 shares authorized, 35,838,442 shares issued and outstanding as of December 31, 2023	36		36
Additional paid-in capital	853,302		856,206
Distributions in excess of accumulated earnings	(153,226)		(144,011)
Accumulated other comprehensive income	8,341		7,366
Total stockholders’ equity	708,469		719,613
Non-controlling interests in Operating Partnership	—		—
Total Equity	708,469		719,613
TOTAL LIABILITIES AND EQUITY	$	1,352,553	$	1,387,324

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

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GLADSTONE LAND CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

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

(Unaudited)


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2024		2023		2024		2023
OPERATING REVENUES:
Lease revenue, net	$	21,270	$	21,210	$	41,096	$	42,412
Other operating revenue	27		—		453		—
Total operating revenues	21,297		21,210		41,549		42,412
OPERATING EXPENSES:
Depreciation and amortization	8,813		9,044		17,602		18,163
Property operating expenses	1,219		887		2,096		2,015
Base management fee	2,076		2,148		4,233		4,296

Administration fee	553		514		1,156		1,090
General and administrative expenses	772		790		1,337		1,577




Total operating expenses	13,433		13,383		26,424		27,141
OTHER (EXPENSE) INCOME:
Other income	497		364		2,925		2,984
Interest expense	(5,535)		(5,942)		(11,090)		(11,979)
Dividends declared on cumulative term preferred stock	(755)		(755)		(1,509)		(1,509)
(Loss) gain on dispositions of real estate assets, net	(2,800)		6,394		7,473		5,914
Property and casualty loss, net	(9)		—		(9)		(1,016)

Loss from investments in unconsolidated entities	(85)		(33)		(171)		(60)
Total other (expense) income, net	(8,687)		28		(2,381)		(5,666)
NET (LOSS) INCOME	(823)		7,855		12,744		9,605
Net (loss) income attributable to non-controlling interests	—		—		—		—
NET (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY	(823)		7,855		12,744		9,605
Dividends declared on cumulative redeemable preferred stock	(6,105)		(6,084)		(12,223)		(12,152)
Gain (loss) on extinguishment of cumulative redeemable preferred stock, net	274		(44)		274		(46)
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(6,654)	$	1,727	$	795	$	(2,593)

(LOSS) INCOME PER COMMON SHARE:
Basic and diluted	$	(0.19)	$	0.05	$	0.02	$	(0.07)
WEIGHTED-AVERAGE SHARES OF COMMON STOCK OUTSTANDING:
Basic and diluted	35,838,442		35,722,836		35,838,442		35,635,601

NET (LOSS) INCOME	$	(823)	$	7,855	$	12,744	$	9,605
Change in fair value related to interest rate hedging instruments	(33)		1,355		975		(293)
COMPREHENSIVE (LOSS) INCOME	(856)		9,210		13,719		9,312
Comprehensive (loss) income attributable to non-controlling interests	—		—		—		—

COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY	$	(856)	$	9,210	$	13,719	$	9,312

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

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GLADSTONE LAND CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(In thousands, except share data)

(Unaudited)





















	Three Months Ended June 30, 2024
	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		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 March 31, 2024	5,956,065	$	6	10,156,509	$	10	247,181	$	—	35,838,442	$	36	$	856,455	$	(141,562)	$	8,374	$	723,319	$	—	$	723,319

Redemptions of Series B Preferred Stock, net	(54,735)	—		—	—		—	—		—	—		(1,217)		84		—		(1,133)		—		(1,133)

Redemptions of Series C Preferred Stock, net	—	—		(86,042)	—		—	—		—	—		(1,952)		190		—		(1,762)		—		(1,762)


Issuance of Series E Preferred Stock, net	—	—		—	—		800	—		—	—		16		—		—		16		—		16

Net loss	—	—		—	—		—	—		—	—		—		(823)		—		(823)		—		(823)
Dividends—cumulative redeemable preferred stock	—	—		—	—		—	—		—	—		—		(6,105)		—		(6,105)		—		(6,105)
Distributions—OP Units and common stock	—	—		—	—		—	—		—	—		—		(5,010)		—		(5,010)		—		(5,010)
Comprehensive loss attributable to the Company	—	—		—	—		—	—		—	—		—		—		(33)		(33)		—		(33)

Balance at June 30, 2024	5,901,330	$	6	10,070,467	$	10	247,981	$	—	35,838,442	$	36	$	853,302	$	(153,226)	$	8,341	$	708,469	$	—	$	708,469





















	Six Months Ended June 30, 2024
	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		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, 2023	5,956,065	$	6	10,156,509	$	10	235,841	$	—	35,838,442	$	36	$	856,206	$	(144,011)	$	7,366	$	719,613	$	—	$	719,613

Redemptions of Series B Preferred Stock, net	(54,735)	—		—	—		—	—		—	—		(1,217)		84		—		(1,133)		—		(1,133)

Redemptions of Series C Preferred Stock, net	—	—		(86,042)	—		—	—		—	—		(1,952)		190		—		(1,762)		—		(1,762)


Issuance of Series E Preferred Stock, net	—	—		—	—		12,140	—		—	—		265		—		—		265		—		265

Net income	—	—		—	—		—	—		—	—		—		12,744		—		12,744		—		12,744
Dividends—cumulative redeemable preferred stock	—	—		—	—		—	—		—	—		—		(12,223)		—		(12,223)		—		(12,223)
Distributions—OP Units and common stock	—	—		—	—		—	—		—	—		—		(10,010)		—		(10,010)		—		(10,010)
Comprehensive income attributable to the Company	—	—		—	—		—	—		—	—		—		—		975		975		—		975

Balance at June 30, 2024	5,901,330	$	6	10,070,467	$	10	247,981	$	—	35,838,442	$	36	$	853,302	$	(153,226)	$	8,341	$	708,469	$	—	$	708,469

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 (Continued)

(In thousands, except share data)

(Unaudited)





















	Three Months Ended June 30, 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		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 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



Redemptions of Series C Preferred Stock, net	—	—		(39,093)	—		—	—		—	—		(907)		(44)		—		(951)		—		(951)


Issuance of Series E Preferred Stock, net	—	—		—	—		75,209	—		—	—		1,679		—		—		1,679		—		1,679
Issuance of common stock, net	—	—		—	—		—	—		66,100	—		1,132		—		—		1,132		—		1,132
Net income	—	—		—	—		—	—		—	—		—		7,855		—		7,855		—		7,855
Dividends—cumulative redeemable preferred stock	—	—		—	—		—	—		—	—		—		(6,084)		—		(6,084)		—		(6,084)
Distributions—OP Units and common stock	—	—		—	—		—	—		—	—		—		(4,932)		—		(4,932)		—		(4,932)
Comprehensive income attributable to the Company	—	—		—	—		—	—		—	—		—		—		1,355		1,355		—		1,355

Balance at June 30, 2023	5,956,065	$	6	10,156,509	$	10	135,409	$	—	35,780,082	$	36	$	852,967	$	(126,799)	$	8,714	$	734,934	$	—	$	734,934





















	Six Months Ended June 30, 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		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, net	—	—		(48,913)	—		—	—		—	—		(1,130)		(46)		—		(1,176)		—		(1,176)


Issuance of Series E Preferred Stock, net	—	—		—	—		135,409	—		—	—		3,028		—		—		3,028		—		3,028
Issuance of common stock, net	—	—		—	—		—	—		729,685	1		14,077		—		—		14,078		—		14,078
Net income	—	—		—	—		—	—		—	—		—		9,605		—		9,605		—		9,605
Dividends—cumulative redeemable preferred stock	—	—		—	—		—	—		—	—		—		(12,152)		—		(12,152)		—		(12,152)
Distributions—OP Units and common stock	—	—		—	—		—	—		—	—		—		(9,836)		—		(9,836)		—		(9,836)
Comprehensive loss attributable to the Company	—	—		—	—		—	—		—	—		—		—		(293)		(293)		—		(293)

Balance at June 30, 2023	5,956,065	$	6	10,156,509	$	10	135,409	$	—	35,780,082	$	36	$	852,967	$	(126,799)	$	8,714	$	734,934	$	—	$	734,934

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 Six Months Ended June 30,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	12,744	$	9,605
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	17,602		18,163
Amortization of debt issuance costs	465		519
Amortization of deferred rent assets and liabilities, net	505		(13)
Amortization of right-of-use assets from operating leases and operating lease liabilities, net	46		46
Loss from investments in unconsolidated entities	171		60
Bad debt expense	220		63

Gain on dispositions of real estate assets, net	(7,473)		(5,914)

Property and casualty loss, net	9		1,016
Changes in operating assets and liabilities:

Other assets, net	(4,832)		(1,263)
Accounts payable and accrued expenses and Due to related parties, net	(1,311)		(3,628)
Other liabilities, net	1,187		3,923
Net cash provided by operating activities	19,333		22,577
CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures on existing real estate assets	(2,319)		(5,691)

Proceeds from dispositions of real estate assets, net	63,997		9,037
Deposits on prospective real estate acquisitions and investments	—		(245)

Net cash provided by investing activities	61,678		3,101
CASH FLOWS FROM FINANCING ACTIVITIES:



Repayments of notes and bonds payable	(24,949)		(32,987)
Payments of financing fees	(9)		(3)


Proceeds from issuance of preferred and common equity	304		17,709
Offering costs	(43)		(496)
Redemptions of cumulative redeemable preferred stock	(2,895)		(1,176)

Dividends paid on cumulative redeemable preferred stock	(12,223)		(11,822)

Distributions paid on common stock	(10,010)		(9,836)

Net cash used in financing activities	(49,825)		(38,611)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	31,186		(12,933)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	18,571		61,141
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	49,757	$	48,208

NON-CASH INVESTING AND FINANCING INFORMATION:



Real estate additions included in Accounts payable and accrued expenses and Due to related parties, net	$	887	$	2,510


Tenant-funded improvements included within Real estate, at cost	—		25
Stock offering and OP Unit issuance costs included in Accounts payable and accrued expenses and Due to related parties, net	—		155
Financing fees included in Accounts payable and accrued expenses and Due to related parties, net	18		5



Dividends paid on Series C Preferred Stock via additional share issuances	—		320

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 June 30, 2024, and December 31, 2023, 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 six months ended June 30, 2024, and for the tax year ended December 31, 2023, 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, 2023, as filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 20, 2024 (the “Form 10-K”). The results of operations for the three and six months ended June 30, 2024, 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 our reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and our 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 June 30, 2024, 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 168 farms we owned as of June 30, 2024 (dollars in thousands, except for footnotes):


Location	No. of Farms	Total Acres	Farm Acres	Acre-feet of Water Assets	Net Cost Basis(1)		Encumbrances(2)
California(3)(4)(5)	63	34,844	32,321	53,975	$	840,869	$	383,521
Florida	25	18,720	13,891	0	166,596		77,869
Washington	6	2,520	2,004	0	58,018		19,666
Arizona(6)	6	6,320	5,333	0	51,091		12,058
Colorado	12	32,773	25,577	0	45,757		14,145
Nebraska	9	7,782	7,050	0	30,228		10,135
Oregon(7)	6	898	736	0	29,126		11,084
Michigan	23	1,892	1,245	0	22,613		13,694
Texas	1	3,667	2,219	0	8,063		—
Maryland	6	987	863	0	7,986		4,282
South Carolina	3	597	447	0	3,497		2,123
Georgia	2	230	175	0	2,553		1,623
North Carolina	2	310	295	0	2,096		—
New Jersey	3	116	101	0	2,071		1,203
Delaware	1	180	140	0	1,288		687
	168	111,836	92,397	53,975	$	1,271,852	$	552,090

(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 and related acquisition costs, 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 $2.7 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 June 30, 2024, this investment had a net carrying value of approximately $861,000 and is included within Other assets, net on the accompanying Condensed Consolidated Balance Sheets.

(4)Includes eight acres in which we own a leasehold interest via a ground lease with a private individual that expires in December 2040 and five acres in which we own a leasehold interest via a ground sublease with a California municipality that expires in December 2041. As of June 30, 2024, these two ground leases had a net cost basis of approximately $670,000 and are included in Lease intangibles, net on the accompanying Condensed Consolidated Balance Sheets.

(5)Includes 48,309 acre-feet of water stored with Semitropic Water Storage District, located in Kern County, California, and 5,666 surplus water credits in our account with Westlands Water District, located in Fresno County, California. See “—Investments in Water Assets” below for additional information.

(6)Includes two farms consisting of 1,368 total acres and 1,221 farm acres in which we own leasehold interests via two ground leases with the State of Arizona that expire in February 2025 and February 2032, respectively. As of June 30, 2024, these ground leases had an aggregate net cost basis of approximately $209,000 and are 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 June 30, 2024, this investment had a net carrying value of approximately $4.7 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 June 30, 2024, and December 31, 2023 (dollars in thousands):


	June 30, 2024		December 31, 2023
Real estate:
Land and land improvements	$	791,974	$	792,277
Permanent plantings	354,212		359,131
Irrigation and drainage systems	170,097		168,545
Farm-related facilities	50,508		50,517
Other site improvements	13,473		13,272
Real estate, at cost	1,380,264		1,383,742
Accumulated depreciation	(154,861)		(142,212)
Total real estate, net	$	1,225,403	$	1,241,530

Real estate depreciation expense on these tangible assets was approximately $8.5 million and $17.1 million for the three and six months ended June 30, 2024, respectively, and approximately $8.8 million and $17.7 million for the three and six months ended June 30, 2023, respectively.

Intangible Assets and Liabilities

The following table summarizes the carrying values of certain lease intangible assets and the related accumulated amortization as of June 30, 2024, and December 31, 2023 (dollars in thousands):


	June 30, 2024		December 31, 2023
Lease intangibles:
Leasehold interest – land	$	3,372	$	4,295
In-place lease values	2,470		2,470
Leasing costs	3,016		3,017
Other(1)	140		141
Lease intangibles, at cost	8,998		9,923
Accumulated amortization	(4,737)		(5,141)
Lease intangibles, net	$	4,261	$	4,782

(1)Other includes tenant relationships and acquisition-related costs allocated to miscellaneous lease intangibles.

Total amortization expense related to these lease intangible assets was approximately $289,000 and $521,000 for the three and six months ended June 30, 2024, respectively, and approximately $256,000 and $508,000 for the three and six months ended June 30, 2023, 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 June 30, 2024, and December 31, 2023 (dollars in thousands):


	June 30, 2024				December 31, 2023
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)	$	5,781	$	(2,855)	$	5,342	$	(1,849)
Below-market lease values and other deferred revenue(2)	(1,944)		813		(1,944)		624
	$	3,837	$	(2,042)	$	3,398	$	(1,225)

(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, net 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, net on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income.

Total amortization related to above-market lease values and lease incentives was approximately $372,000 and $1.0 million for the three and six months ended June 30, 2024, respectively, and approximately $200,000 and $359,000 for the three and six months ended June 30, 2023, respectively. Total accretion related to below-market lease values and other deferred revenue was approximately $149,000 and $189,000 for the three and six months ended June 30, 2024, respectively, and approximately $44,000 and $88,000 for the three and six months ended June 30, 2023, respectively.

Acquisitions

We did not acquire any new farms during either of the three or six months ended June 30, 2024 or 2023.

Property Sale

On January 11, 2024, we completed the sale of a 3,748-acre farm in Martin County, Florida, for approximately $65.7 million. Including closing costs, we recognized a net gain on the sale of approximately $10.4 million.

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 June 30, 2024, 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.

We recorded an aggregate loss of approximately $85,000 and $171,000 during the three and six months ended June 30, 2024, respectively, and approximately $33,000 and $60,000 during the three and six months ended June 30, 2023, 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 the Umatilla LLC. As of June 30, 2024, and December 31, 2023, our combined ownership interest in the Fresno LLC and the Umatilla LLC had an aggregate carrying value of approximately $5.6 million and $5.8 million, respectively, and is included within Other assets, net on the accompanying Condensed Consolidated Balance Sheets.

Investments in Water Assets

Semitropic Water Storage District Banked Water

In connection with the acquisition of certain farmland located in Kern County, California, in 2021, 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. We subsequently executed all three contracts to purchase all 45,000 acre-feet of banked water for an aggregate additional cost of approximately $2.8 million.

In addition, since the initial acquisition, additional contracts to purchase banked water held by SWSD were conveyed to us by one of our tenants as partial consideration for rent payments owed. The following table summarizes the total acre-feet of banked water obtained through exercising these contracts as of June 30, 2024 (dollars in thousands):


Period Acquired	Acre-feet of Banked Water Available to Purchase per Contract	Acre-feet of Banked Water Purchased(1)	Value Attributed to Contract(2)		Cost to Exercise Contract		Total Carrying Value of Banked Water Purchased
Three months ended December 31, 2023	1,003	1,003	$	401	$	61	$	463
Three months ended March 31, 2024	2,306	2,306	923		141		1,064
Total	3,309	3,309	$	1,324	$	202	$	1,527

(1)All contracts to purchase additional banked water were exercised in the same quarter in which the respective contract was conveyed to us.

(2)Represents noncash income received during the respective periods. The straight-line impact of these receipts is included within Lease revenue, net on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income.

All banked water acquired was recognized at cost, including the subsequent cost to execute the contracts and any administrative fees necessary to transfer the water to our banked water account. As of June 30, 2024, the 48,309 acre-feet of banked water held by SWSD was recognized as a long-term water asset and had an aggregate carrying value of approximately $35.5 million (included within Other assets, net on our Condensed Consolidated Balance Sheets).

Westlands Water District Groundwater Credits

In addition, from May 2023 through March 2024, we elected to participate in a groundwater recharge program established by Westlands Water District (“WWD”), a water district located in Fresno County, California. Under the program, WWD paid for surplus surface water to be delivered to individual landowners’ properties with district-approved groundwater recharge facilities, also known as “water banks.” The landowner was allowed to keep 50% of the net amount of groundwater credits generated under the program (after allowing for certain leave-behind and evaporative losses), and the remaining 50% was used to recharge the aquifer and retained by WWD. Delivery of water under this program was subject to surplus water availability at WWD’s discretion. WWD terminated the program for the 2024 water year effective March 5, 2024. Through June 30, 2024, we have recognized 2,660 acre-feet of water credits, which represents 50% of the total net water credits generated and confirmed by WWD under the program as of such date. As of June 30, 2024, these water credits were recognized as a long-term water asset and had an aggregate carrying value of approximately $747,000 (included within Other assets, net on our Condensed Consolidated Balance Sheets). In addition, as a result of being granted these water credits in exchange for transferring and storing this surplus water on behalf of WWD, we recognized approximately $27,000 and $453,000 of non-cash revenue during the three and six months ended June 30, 2024, respectively, which represents the estimated fair value of the water credits obtained during the period. No such revenue was recorded during either of the prior-year periods.

Other Groundwater Credits

During 2023, we also entered into various other agreements with certain third parties (including local water districts and private individuals) to either buy water directly, buy a portion of other water districts’ surface water allocations in future years in which allocations are granted, or to store surface water on others’ behalf in one of our groundwater recharge facilities in exchange for a portion of the net groundwater credits produced and recognized by the respective water district. Through June 30, 2024, we have obtained 3,006 acre-feet of water credits as a result of these agreements, which were recognized as a long-term water asset with an aggregate carrying value of approximately $571,000 (included within Other assets, net on our Condensed Consolidated Balance Sheets).

Total Long-term Water Assets

As of June 30, 2024, and December 31, 2023, we owned a total of 53,975 acre-feet and 46,400 acre-feet, respectively, of long-term water assets, and our investments in these assets had an aggregate carrying value of approximately $36.9 million and $34.6 million, respectively, and are included within Other assets, net on our Condensed Consolidated Balance Sheets.

We have invested approximately $1.4 million to construct groundwater recharge facilities on two of our farms, which is included within Real estate, at cost on our Condensed Consolidated Balance Sheets. In addition, through June 30, 2024, we have invested an additional $2.7 million in the aggregate in connection with these agreements that are expected to result in additional groundwater credits in the future; however, the amount and timing of these credits, if any, is currently unknown and is dependent upon and subject to the recognition of such credits by the respective water districts, in their sole discretion. Such costs are held in a deferred asset account (also included within Other assets, net on our Condensed Consolidated Balance Sheets) until the related net water credits become estimable and are recognized by the respective water district, at which time the costs would be reclassed to investments in long-term water assets.

Portfolio Concentrations

Credit Risk

As of June 30, 2024, 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 six months ended June 30, 2024.

Geographic Risk

Farms located in California and Florida accounted for approximately $27.6 million (67.2%) and $6.1 million (14.7%), respectively, of the total lease revenue recorded during the six months ended June 30, 2024. We seek to continue to further diversify geographically, as may be desirable or feasible. If an unexpected natural disaster (such as an earthquake, wildfire, flood, or hurricane) occurs or climate change impacts the regions where our properties are located, there could be a material adverse effect on our financial performance and ability to continue operations. To date, none of our farms have been materially impacted by natural disasters. See “—California Floods” below for a discussion on damage caused on certain of our farms by the January 2023 floods that occurred in California. Besides California and Florida, no other single state accounted for more than 10.0% of the total lease revenue recorded during the six months ended June 30, 2024.

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, and we estimated the carrying value of such structures to be approximately $855,000. As such, during the year ended December 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, net on our Condensed Consolidated Statements of Operations and Comprehensive Income. Certain of our other farms in California suffered minor damage as a result of the floods, but no other farms were materially impacted.

In addition, in February 2024, certain parts of California, particularly the southern part of the state, experienced a “one-in-one-thousand year” rainfall event, as atmospheric river storms caused widespread flooding and mudslides in multiple areas. Certain of our farms suffered minor damage as a result of the storms, but no 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 and water assets that have an indication of impairment. As of June 30, 2024, and December 31, 2023, we concluded that none of our properties or water assets were impaired. There have been no impairments recognized on our real estate assets or water assets since our inception.

NOTE 4. BORROWINGS

Our borrowings as of June 30, 2024, and December 31, 2023, are summarized below (dollars in thousands):


	Carrying Value as of				As of June 30, 2024
	June 30, 2024		December 31, 2023		Stated Interest Rates(1) (Range; Wtd Avg)	Maturity Dates (Range; Wtd Avg)
Variable-rate revolving lines of credit	$	200	$	200	7.31%	12/15/2033

Notes and bonds payable:
Fixed-rate notes payable	$	515,584	$	524,199	2.45%-6.97%; 3.73%	9/1/2024–7/1/2051; May 2033

Fixed-rate bonds payable	36,306		52,640		3.13%–4.57%; 3.86%	8/30/2024–12/30/2030; October 2027
Total notes and bonds payable	551,890		576,839
Debt issuance costs – notes and bonds payable	(2,698)		(2,928)		N/A	N/A
Notes and bonds payable, net	$	549,192	$	573,911

Total borrowings, net	$	549,392	$	574,111

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

As of June 30, 2024, the above borrowings were collateralized by certain of our farms with an aggregate net book value of approximately $1.1 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 3.83% and 3.82% for the three and six months ended June 30, 2024, respectfully, as compared to 3.79% and 3.78% for the three and six months ended June 30, 2023, respectively. In addition, 2023 interest patronage from our Farm Credit Notes Payable (as defined below) resulted in a 22.0% reduction (approximately 101 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 June 30, 2024, we were in compliance with all covenants applicable to the above borrowings.

MetLife Facility

As amended, our credit facility with Metropolitan Life Insurance Company (“MetLife”) consists of $75.0 million of revolving equity lines of credit (the “MetLife Lines of Credit”), a $75.0 million long-term note payable (the “2020 MetLife Term Note”), and a $100.0 million long-term note payable (the “2022 MetLife Term Note,” and together with the MetLife Lines of Credit and the 2020 MetLife Term Note, the “MetLife Facility”).

The following table summarizes the pertinent terms of the MetLife Facility as of June 30, 2024 (dollars in thousands, except for footnotes):