Quarterly report pursuant to Section 13 or 15(d)

Real Estate and Intangible Assets (Tables)

v2.4.0.8
Real Estate and Intangible Assets (Tables)
9 Months Ended
Sep. 30, 2013
Summary Information of Fourteen Farms

The following table provides certain summary information about our 14 farms as of September 30, 2013:

 

Property Name

  

Location

   Date
Acquired
   Encumbrances     Net Cost
Basis(1)
     Number
of
Farms
     Number
of
Leases
     Farmable
Acres
     Total
Acres
     Lease
Expiration
Date
 

San Andreas

   Watsonville, CA    6/16/1997    $ 100,000 (2)    $ 4,874,836         1         1         237         306         12/31/2014   

West Gonzales

   Oxnard, CA    9/15/1998      13,473,792        12,501,855         1         2         501         653         6/30/2020   

West Beach

   Watsonville, CA    1/3/2011      5,068,800        8,328,475         3         1         195         198         10/31/2014   

Dalton Lane

   Watsonville, CA    7/7/2011      2,587,853        2,730,527         1         1         70         72         10/31/2015   

Keysville Road

   Plant City, FL    10/26/2011      1,152,000        1,230,758         2         1         50         59         7/1/2016   

Colding Loop

   Wimauma, FL    8/9/2012      3,366,720        3,992,932         1         1         181         219         6/14/2018   

Trapnell Road

   Plant City, FL    9/12/2012      3,840,000        3,854,554         3         1         110         124         6/30/2017   

38th Avenue

   Covert, MI    4/5/2013      —          1,362,134         1         1         89         119         4/4/2020   

Sequoia Street

   Brooks, OR    5/31/2013      —          3,193,919         1         1         206         209         5/31/2028   
        

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    
         $ 29,589,165      $ 42,069,990         14         10         1,639         1,959      
        

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

(1)  Consists of the initial acquisition price (including the costs allocated to both tangible and intangible assets) plus subsequent improvements and other capitalized costs associated with the properties and adjusted for depreciation and amortization accumulated through September 30, 2013.
(2)  Represents borrowings outstanding on our line of credit as of September 30, 2013, under which San Andreas is pledgd as collateral.
Summary of Components of Investments in Real Estate

The following table sets forth the components of our investments in tangible real estate assets as of September 30, 2013, and December 31, 2012:

 

     As of     As of  
     September 30, 2013     December 31, 2012  

Real estate:

    

Land

   $ 33,969,564      $ 30,828,325   

Building

     1,641,120        1,311,027   

Cooler

     4,963,243        4,963,243   

Drain system

     3,845,514        2,576,373   

Horticulture

     447,035        —     
  

 

 

   

 

 

 

Real estate, gross

     44,866,476        39,678,968   

Accumulated depreciation

     (2,978,718     (2,535,084
  

 

 

   

 

 

 

Real estate, net

   $ 41,887,758      $ 37,143,884   
  

 

 

   

 

 

 
Pro-Forma Condensed Consolidated Statements of Operations as Properties Acquired

The table below does not reflect pro-forma financials for the two farms acquired during the nine months ended September 30, 2013, that were treated as asset acquisitions.

 

     For the Nine Months Ended
September 30,
 
     2013     2012  

Operating Data:

    

Total operating revenue

   $ 2,841,846      $ 2,712,548   

Total operating expenses

     (1,784,688     (1,182,885

Other expenses

     (777,585     (873,454
  

 

 

   

 

 

 

Net income before income taxes

     279,573        656,209   

Provision for income taxes

     (195,280     (292,350
  

 

 

   

 

 

 

Net income

   $ 84,293      $ 363,859   
  

 

 

   

 

 

 

Share and Per Share Data:

    

Weighted average common shares outstanding—basic and diluted

     6,108,165        2,750,000   
  

 

 

   

 

 

 

Earnings per share of common stock—basic and diluted

   $ 0.01      $ 0.13   
  

 

 

   

 

 

 
Weighted Average Amortization Period for Intangible Assets Acquired and Liabilities Assumed

The weighted-average amortization period, in years, for the intangible assets acquired and liabilities assumed during the nine months ended September 30, 2013 and 2012, is shown in the table below:

 

Intangible Assets and Liabilities

           2013                      2012          

In-place leases

     —           3.1   

Leasing commissions

     12.7         4.7   

Customer relationships

     —           5.8   

Below-market leases

     —           0.8   
  

 

 

    

 

 

 

All intangible assets and liabilities

     12.7         3.2   
  

 

 

    

 

 

 
Future Operating Lease Payments from Tenants under Non-Cancelable Leases

Future operating lease payments from tenants under all non-cancelable leases, excluding tenant reimbursement of expenses, for the remainder of 2013 and each of the five succeeding fiscal years and thereafter as of September 30, 2013, are as follows:

 

          Tenant Lease  

Period

   Payments  

For the remaining three months ending December 31:

   2013    $ 880,645   

For the fiscal years ending December 31:

   2014      3,796,267   
   2015      3,166,142   
   2016      3,142,955   
   2017      2,975,351   
   2018      2,703,066   
   Thereafter      5,728,667   
Carrying Value of Intangible Assets and Accumulated Amortization

The following table summarizes the carrying value of intangible assets and the accumulated amortization for each intangible asset class as of September 30, 2013, and December 31, 2012:

 

     September 30, 2013     December 31, 2012  
     Lease
Intangibles
     Accumulated
Amortization
    Lease
Intangibles
     Accumulated
Amortization
 

In-place leases

   $ 286,975       $ (225,556   $ 286,975       $ (186,843

Leasing commissions

     103,285         (28,060     63,638         (17,627

Customer relationships

     93,187         (47,599     93,187         (31,270
  

 

 

    

 

 

   

 

 

    

 

 

 
   $ 483,447       $ (301,215   $ 443,800       $ (235,740
  

 

 

    

 

 

   

 

 

    

 

 

 
Aggregate Amortization Expense

The aggregate amortization expense for the remainder of 2013 and each of the five succeeding fiscal years and thereafter is as follows:

 

          Estimated  

Period

   Amortization Expense  

For the remaining three months ending December 31:

   2013    $ 11,251   

For the fiscal years ending December 31:

   2014      45,494   
   2015      43,783   
   2016      32,776   
   2017      21,207   
   2018      7,255   
   Thereafter      20,466   
Summary of Geographic Locations of Properties

The following table summarizes the geographic locations of our properties with leases in place as of September 30, 2013 and 2012:

 

     As of and For the Nine Months Ended September 30, 2013     As of and For the Nine Months Ended September 30, 2012  

State

   Number
of
Farms
     Number
of
Leases
     Total
Acres
     % of
Total
Acres
    Rental
Revenue
     % of
Total
Rental
Revenue
    Number
of
Farms
     Number
of
Leases
     Total
Acres
     % of
Total
Acres
    Rental
Revenue
     % of
Total
Rental
Revenue
 

California

     6         5         1,229         62.7   $ 2,408,110         84.2     6         5         1,229         75.4   $ 2,386,024         96.5

Florida

     6         3         402         20.5     345,113         12.1     6         3         402         24.6     87,813         3.5

Michigan

     1         1         119         6.1     42,673         1.5     0         0         0         0.0     —           0.0

Oregon

     1         1         209         10.7     64,539         2.2     0         0         0         0.0     —           0.0
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 
     14         10         1,959         100.0   $ 2,860,435         100.0     12         8         1,631         100.0   $ 2,473,837         100.0
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 
2013 New Real Estate Activity [Member]
 
Summarized Information of Acquisition of Properties

During the nine months ended September 30, 2013, we acquired two farms in two separate transactions, which are summarized in the table below.

 

Property
Name

   Property
Location
   Acquisition
Date
   Total
Acreage
     Number
of
Farms
     Primary
Crop
   Lease
Term
   Renewal
Options
   Total
Purchase
Price
     Acquisition
Expenses
    Annualized
Straight-line
Rent(1)
 

38th Avenue

   Covert, MI    4/5/2013      119         1       Blueberries    7 Years    1 (7 years)    $ 1,341,000       $ 40,133 (2)    $ 87,286   

Sequoia Street

   Brooks, OR    5/31/2013      209         1       Blueberries    15 Years    3 (5 years each)      3,100,000         106,797 (2)      193,617   
        

 

 

    

 

 

             

 

 

    

 

 

   

 

 

 
           328         2                $ 4,441,000       $ 146,930      $ 280,903   
        

 

 

    

 

 

             

 

 

    

 

 

   

 

 

 

 

(1) Annualized straight-line amount is based on the minimum rental payments required per the lease.
(2) Transaction accounted for as an asset acquisition under ASC 360 instead of a business combination under ASC 805; therefore, related costs associated with the acquisition were capitalized and included as part of the fair value allocation of the identifiable tangible assets acquired.
Fair Value of Acquired Assets and Liabilities Assumed Related to Properties Acquired

We determined the fair value of acquired assets and liabilities assumed related to the properties acquired during the nine months ended September 30, 2013, to be as follows:

 

Property Name

   Land      Building      Drain
System
     Horticulture(1)      Leasing
Commissions(2)
     Total
Purchase
Price
 

38th Avenue

   $ 647,431       $ 42,720       $ 240,105       $ 447,035       $ 3,842       $ 1,381,133   

Sequoia Street

     2,493,809         279,372         424,081         —           9,535         3,206,797   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   $ 3,141,240       $ 322,092       $ 664,186       $ 447,035       $ 13,377       $ 4,587,930   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)  Horticulture acquired on 38th Avenue consists of various types of high-bush variety blueberry bushes.
(2) None of the purchase price was allocated to any intangibles; leasing commissions above represent direct costs incurred in connection with originating new leases on the properties.
2012 New Real Estate Activity [Member]
 
Summarized Information of Acquisition of Properties

During the nine months ended September 30, 2012, we acquired four farms in two separate transactions, which are summarized in the table below:

 

Property
Name

   Property
Location
     Acquisition
Date
     Total
Acreage
     Number
of
Farms
     Primary
Crop
     Lease
Term
  Renewal
Options
  Total
Purchase
Price
     Acquisition
Expenses
     Annualized
Straight-
line Rent(1)
    Debt
Issued
 

Colding Loop

     Wimauma, FL         8/9/2012         219         1         Strawberries       0.9 Years(2)   None(2)   $ 3,400,836       $ 31,879       $ 141,274 (2)    $ 3,507,000   

Trapnell Road

     Plant City, FL         9/12/2012         124         3         Strawberries       4.8 Years   1 (5 Years)     4,000,000         82,412         241,630        4,000,000   
        

 

 

    

 

 

           

 

 

    

 

 

    

 

 

   

 

 

 
           343         4              $ 7,400,836       $ 114,291       $ 382,904      $ 7,507,000   
        

 

 

    

 

 

           

 

 

    

 

 

    

 

 

   

 

 

 

 

(1)  Annualized straight-line amount is based on the minimum rental payments required per the lease.
(2)  The original lease that was assumed upon acquisition of Colding Loop expired on June 14, 2013; thus, the rental income reflected in the table above is the straight-line rent recognized over remaining ten-month term of the lease, which translated to $166,205 on an annual basis. On May 28, 2013, we executed a new, five-year lease on Colding Loop, commencing June 15, 2013. The new lease has one five-year renewal option and provides for minimum annualized straight-line rent of $125,400.
Fair Value of Acquired Assets and Liabilities Assumed Related to Properties Acquired

In accordance with ASC 805, we determined the fair value of acquired assets and liabilities assumed related to the properties acquired during the nine months ended September 30, 2012, as follows:

 

Property Name

   Land      Cooler      Drain
System
     Lease
In-place
     Leasing
Commissions
     Customer
Relationships
     Below-
Market
Leases
    Total
Purchase
Price
 

Colding Loop

   $ 2,513,696       $ —         $ 909,490       $ 43,989       $ 1,676       $ 30,793       $ (98,808   $ 3,400,836   

Trapnell Road

     2,198,728         686,578         970,761         60,627         45,543         37,763         —          4,000,000   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 
   $ 4,712,424       $ 686,578       $ 1,880,251       $ 104,616       $ 47,219       $ 68,556       $ (98,808   $ 7,400,836   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 
Summary of Total Revenue and Earnings Recognized on Properties Acquired

Below is a summary of the total revenue and earnings recognized on the properties acquired during the nine months ended September 30, 2012:

 

          For the Three and Nine Months
Ended September 30, 2012
 

Property Location

   Acquisition
Date
   Rental
Revenue
     Earnings (1)  

Colding Loop

   8/9/2012    $ 24,007       $ 5,838   

Trapnell Road

   9/12/2012      12,554         6,192   

 

(1)  Earnings are calculated as net income less interest expense, if debt was issued to acquire the property, income taxes and any acquisition-related costs that are required to be expensed if the acquisition is treated as a business combination under ASC 805.