Annual report pursuant to Section 13 and 15(d)

Real Estate and Intangible Assets (Tables)

v3.22.0.1
Real Estate and Intangible Assets (Tables)
 12 Months Ended
Dec. 31, 2021
Real Estate [Abstract]  
Summary Information About Real Estate Properties The following table provides certain summary information about the 164 farms we owned as of December 31, 2021 (dollars in thousands, except for footnotes):
Location No. of Farms Total
Acres		 Farm Acres
Net Cost Basis(1)
Encumbrances(2)
California(3)(4)(5)
62 33,027 30,740 $ 854,859  $ 415,667 
Florida 26 22,591 17,639 221,736  130,929 
Arizona(6)
6 6,280 5,228 55,701  18,253 
Colorado 12 32,773 25,577 47,314  29,466 
Washington 3 1,384 1,001 37,543  24,921 
Nebraska 9 7,782 7,050 30,416  12,173 
Michigan 23 1,892 1,245 24,661  14,608 
Oregon(7)
5 726 606 20,604  10,660 
Texas 1 3,667 2,219 8,250  5,000 
Maryland 6 987 863 7,970  4,584 
South Carolina 3 597 447 3,722  2,215 
Georgia 2 230 175 2,874  — 
North Carolina 2 310 295 2,204  1,172 
New Jersey 3 116 101 2,181  1,290 
Delaware 1 180 140 1,276  735 
Totals 164 112,542 93,326 $ 1,321,311  $ 671,673 
(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, net lease incentives, and net 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 Consolidated Balance Sheets.
(2)Excludes approximately $3.7 million of debt issuance costs related to notes and bonds payable, included in Notes and bonds payable, net on the accompanying Consolidated Balance Sheets.
(3)Includes ownership in a special-purpose LLC that owns a pipeline conveying water to certain of our properties. As of December 31, 2021, this investment had a net carrying value of approximately $1.1 million and is included within Other assets, net on the accompanying Consolidated Balance Sheet.
(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 $763,000 as of December 31, 2021 (included in Lease intangibles, net on the accompanying 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 2022 (which was extended to February 2032 subsequent to December 31, 2021) and February 2025, respectively. In total, these two farms consist of 1,368 total acres and 1,221 farm acres and had an aggregate net cost basis of approximately $1.1 million as of December 31, 2021 (included in Lease intangibles, net on the accompanying Consolidated Balance Sheets).
(7)Includes ownership in a special-purpose LLC that owns certain irrigation infrastructure that provides water to one of our farms. As of December 31, 2021, this investment had a net carrying value of approximately $2.1 million and is included within Other assets, net on the accompanying Consolidated Balance Sheets.
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 December 31, 2021 and 2020 (dollars in thousands):
December 31, 2021 December 31, 2020
Real estate:
Land and land improvements $ 812,830  $ 713,333 
Permanent Plantings 331,969  202,420 
Irrigation and drainage systems 153,688  141,408 
Farm-related facilities 46,804  28,146 
Other site improvements 12,509  10,132 
Real estate, at cost 1,357,800  1,095,439 
Accumulated depreciation (74,002) (49,236)
Real estate, net $ 1,283,798  $ 1,046,203 
Carrying Value of Lease Intangibles and Accumulated Amortization for Each Intangible Asset or Liability Class
The following table summarizes the carrying value of certain lease intangible assets and the related accumulated amortization as of December 31, 2021 and 2020 (dollars in thousands):
December 31, 2021 December 31, 2020
Lease intangibles:
Leasehold interest – land $ 4,295  $ 3,498 
In-place leases 2,174  1,968 
Leasing costs 1,808  1,640 
Other(1)
130  127 
Lease intangibles, at gross cost 8,407  7,233 
Accumulated amortization (3,951) (3,501)
Lease intangibles, net $ 4,456  $ 3,732 
(1)Other consists primarily of tenant relationships.
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 Consolidated Balance Sheets and the related accumulated amortization or accretion, respectively, as of December 31, 2021 and 2020 (dollars in thousands):
  December 31, 2021 December 31, 2020
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)
$ 65  $ (12) $ 308  $ (154)
Below-market lease values and other deferred revenues(2)
(2,010) 340  (908) 336 
$ (1,945) $ 328  $ (600) $ 182 
(1)Net above-market lease values and lease incentives are included as part of Other assets, net on the accompanying Consolidated Balance Sheets, and the related amortization is recorded as a reduction of Lease revenue, net on the accompanying 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 Consolidated Balance Sheets, and the related accretion is recorded as an increase to Lease revenue, net on the accompanying Consolidated Statements of Operations and Comprehensive Income.
Summary of Estimated Aggregate Amortization Expense and Estimated Net Impact on Rental Income The estimated aggregate amortization expense to be recorded related to in-place lease values, leasing costs, and tenant relationships and the estimated net impact on lease revenue from the amortization of above-market lease values and lease incentives or accretion of above-market lease values and other deferred revenues for each of the five succeeding fiscal years and thereafter is as follows (dollars in thousands):
Period Estimated
Amortization
Expense		 Estimated Net
Increase (Decrease)
to Lease Revenue
For the fiscal years ending December 31: 2022 $ 796  $ 179 
2023 660  159 
2024 631  155 
2025 441  155 
2026 362  155 
Thereafter 1,566  814 
$ 4,456  $ 1,617 
Summary of Acquisition Activity
During the year ended December 31, 2021, we acquired 27 new farms, which are summarized in the table below (dollars in thousands, except for footnotes):
Property
Name		 Property
Location		 Acquisition
Date		 Total
Acres		 No. of
Farms		 Primary
Crop(s) / Use		 Lease
Term		 Renewal
Options		 Total
Purchase
Price
Acquisition
Costs(1)
Annualized
Straight-line
Rent(2)
Palmer Mill Road Dorchester, MD 3/3/2021 228 2 Sod 10.0 years
2 (5 years)
 $ 1,600  $ 56  $ 89 
Eight Mile Road – Port Facility San Joaquin, CA 3/11/2021 5 — Cooling facility and storage 9.8 years
3 (5 years)
 3,977  50  189 
South Avenue Tehama, CA 4/5/2021 2,285 1 Olives for olive oil 14.7 years
1 (5 years)
 37,800  149  2,555 
Richards Avenue Atlantic, NJ 6/3/2021 116 3 Blueberries 14.9 years
2 (5 years)
 2,150  63  129 
Lerdo Highway (Phase I)(3)(4)
Kern, CA 6/4/2021 639 1 Conventional & organic almonds and banked water 10.4 years
3 (10 years)
 26,492  111  974 
Almena Drive Van Buren
& Eaton, MI		 6/9/2021 930 8 Blueberries 14.7 years
2 (5 years)
 13,300  51  785 
Maricopa Highway Kern, CA 8/11/2021 277 1  Organic blueberries 14.9 years
3 (5 years)
 30,000  63  2,262 
Wallace Road Yamhill, OR 8/11/2021 143 1 Organic blueberries 10.1 years
3 (5 years)
 12,320  39  768 
West Orange St. Lucie, FL 8/18/2021 617 2 Lemons and oranges 12.0 years None 5,241  184  367 
Lerdo Highway (Phase II)(3)(5)
Kern, CA 8/20/2021 479 1 Conventional & organic almonds and banked water 10.2 years
3 (10 years)
 14,772  53  735 
Lerdo Highway (Phase III)(3)(6)
Kern, CA 10/8/2021 1,291 1 Conventional & organic almonds, conventional & organic pistachios, and banked water 10.1 years
3 10 years)
 42,959  90  1,981 
Raymond Road(3)
Madera, CA 10/21/2021 219 1 Almonds 10.0 years
1 (5 years)
 3,300  78  183 
Cogdell Highway Atkinson, GA 11/12/2021 230 2 Blueberries 14.8 years None 2,850  45  224 
Chuckhole Lane(7)
Umatilla, OR 11/23/2021 165 1 Wine grapes 9.9 years
2 (10 years)
 2,383  117  139 
West Lerdo Highway(3)(8)
Kern, CA 12/3/2021 2,635 1 Pistachios 2.9 years None 88,000  97  4,395 
Farm Road Charlotte, FL 12/16/2021 1,204 1 Sod, watermelons, and cattle 5.0 years
1 (5 years)
 7,350  94  388 
11,463 27 $ 294,494  $ 1,340  $ 16,163 
(1)Includes approximately $78,000 of external legal fees associated with negotiating and originating the leases associated with these acquisitions, which were expensed in the period incurred.
(2)Unaudited; based on the minimum cash rental payments guaranteed under the respective leases, as required under GAAP, and excludes contingent rental payments, such as participation rents.
(3)Lease provides for an annual participation rent component based on the gross crop revenues earned on the farm. The rent figure above represents only the minimum cash guaranteed under the lease.
(4)As part of the acquisition of this property, we acquired a contract to purchase 20,330 acre-feet of water stored with Semitropic Water Storage District, located in Kern County, California, at a fixed price. We executed this contract on June 25, 2021, at an additional cost of approximately $1.2 million, which is included in the total purchase price for this property in the table above. Income is not currently being earned on the value attributable to the water. See “—Investments in Water Assets” below for additional information on this water.
(5)As part of the acquisition of this property, we acquired a contract to purchase 5,000 acre-feet of water stored with Semitropic Water Storage District, located in Kern County, California, at a fixed price. We executed this contract on August 23, 2021, at an additional cost of approximately $306,000, which is included in the total purchase price for this property in the table above. Income is not currently being earned on the value attributable to the water. See “—Investments in Water Assets” below for additional information on this water.
(6)As part of the acquisition of this property, we acquired a contract to purchase 19,670 acre-feet of water stored with Semitropic Water Storage District, located in Kern County, California, at a fixed price. We executed this contract on October 11, 2021, at an additional cost of approximately $1.2 million,
which is included in the total purchase price for this property in the table above. Income is not currently being earned on the value attributable to the water. See “—Investments in Water Assets” below for additional information on this water.
(7)In connection with the acquisition of this property, we also acquired an ownership interest in a related LLC, the sole purpose of which is to own and maintain an irrigation system providing water to this and other neighboring properties. Our acquired ownership, which equated to a 9.1% interest in the LLC, was valued at approximately $2.1 million at the time of acquisition and is included within Other assets, net on the accompanying Consolidated Balance Sheets. See “—Investments in Unconsolidated Entities” below for further information for our aggregate ownership interest in this and other LLCs.
(8)Lease provides for an initial term of 9.9 years but also includes an annual tenant termination option, effective as of the end of the lease year (as defined within the lease) following the exercise of such termination option. The lease term stated above represents the term through the first available termination option, and the annualized straight-line rent amount represents the rent guaranteed through the noncancellable term of the lease.
During the year ended December 31, 2020, we acquired 26 new farms, which are summarized in the table below (dollars in thousands, except for footnotes).
Property Name Property
Location		 Acquisition
Date		 Total
Acreage		 No. of
Farms		 Primary
Crop(s)		 Lease
Term		 Renewal
Options		 Total
Purchase
Price
Acquisition
Costs(1)
Annualized
Straight-line
Rent(2)
County Road 18 Phillips, CO 1/15/2020 1,325 2 Sugar beets, edible beans, potatoes, & corn 6.0 years None $ 7,500  $ 39  $ 416 
Lamar Valley Chase, NE 5/7/2020 678 1 Potatoes, edible beans, & corn 6.7 years
2 (5 years)
 3,500  43  204 
Driver Road(3)
Kern, CA 6/5/2020 590 1 Pecans 4.7 years
2 (10 years)
 14,169  52  784 
Mt. Hermon Wicomico & Caroline, MD, and Sussex, DE 8/31/2020 939 5 Sod & vegetables 10.0 years
2 (5 years)
 7,347  226  432 
Firestone Avenue(4)(5)(6)
Fresno, CA 9/3/2020 2,534 3 Pistachios and misc. organic & conventional vegetables 1.2 years
2 (5 years)
 31,833  131  1,734 
West Lost Hills Road(4)(7)(8)
Fresno, CA 10/1/2020 801 1 Pistachios 1.1 years
4 (3 years)
 31,827  77  1,752 
Tractor Road Bamberg & Orangeburg, SC 10/23/2020 597 3 Sod 9.5 years None 3,765  72  244 
American Ave Fresno, CA 12/11/2020 236 1 Current: Table grapes; Future: Almonds 19.9 years
1 (5 years)
 3,600  55  241 
Round Mountain Ventura, CA 12/15/2020 368 3 Misc. vegetables 1.6 years None 20,750  66  949 
West Sierra Tulare, CA 12/17/2020 4,642 1 Almonds, pomegranates (conventional & organic), pistachios, and oats 9.9 years
1 (10 years)
 61,500  112  3,886 
Eight Mile Road San Joaquin, CA 12/24/2020 1,036 2 Conventional & organic blueberries 10.0 years
3 (5 years)
 34,300  57  2,234 
Rock Road Whatcom, WA 12/24/2020 638 2 Blueberries 10.0 years
3 (5 years)
 31,700  105  1,885 
Fountain Springs(4)
Tulare, CA 12/31/2020 160 1 Citrus (mandarins & lemons) 7.8 years
2 (5 years)
 4,200  51  252 
14,544 26 $ 255,991  $ 1,086  $ 15,013 
(1)Includes approximately $75,000 of aggregate external legal fees associated with negotiating and originating the leases associated with these acquisitions, which costs were expensed in the period incurred.
(2)Unaudited; based on the minimum cash rental payments guaranteed under the respective leases, as required under GAAP, and excludes contingent rental payments, such as participation rents.
(3)The lease provides for an initial term of 14.7 years and includes six tenant termination options throughout the initial term. The lease term stated above represents the term through the first available termination option, and the annualized straight-line rent amount represents the rent guaranteed through the noncancellable term of the lease.
(4)Lease provides for an annual participation rent component based on the gross crop revenues earned on the farm. The rent figure above represents only the minimum cash guaranteed under the lease.
(5)Lease provides for an initial term of 8.2 years but also includes an annual tenant termination option should the tenant become physically unable to continue farming operations on the property, effective as of the end of the then-current lease year (as defined within the lease). The lease term stated above represents the term through the first available termination option, and the annualized straight-line rent amount represents the rent guaranteed through the noncancellable term of the lease.
(6)In connection with the acquisition of this property, we also acquired an ownership interest in a related LLC, the sole purpose of which is to own and maintain a pipeline conveying water to this and other neighboring properties. Our acquired ownership, which equated to a 12.5% interest in the LLC, was valued at approximately $280,000 at the time of acquisition and is included within Other assets, net on the accompanying Consolidated Balance Sheets. See “Investments in Unconsolidated Entities” below for further information on our aggregate ownership interest in this LLC.
(7)Lease provides for an initial term of 5.1 years but also includes an annual tenant termination option should the tenant become physically unable to continue farming operations on the property, effective as of the end of the then-current lease year (as defined within the lease). The lease term stated above represents the term through the first available termination option, and the annualized straight-line rent amount represents the rent guaranteed through the noncancellable term of the lease.
(8)In connection with the acquisition of this property, we also acquired an ownership interest in a related LLC, the sole purpose of which is to own and maintain a pipeline conveying water to this and other neighboring properties. Our acquired ownership, which equated to a 12.5% interest in the LLC, was valued at approximately $294,000 at the time of acquisition and is included within Other assets, net on the accompanying Consolidated Balance Sheets. See “Investments in Unconsolidated Entities” below for further information on our aggregate ownership interest in this LLC.
Recognized Identified Assets and Liabilities Assumed Related to Properties Acquired
The allocation of the aggregate purchase price for the farms acquired during each of the years ended December 31, 2021 and 2020 is as follows (dollars in thousands):
Assets (Liabilities) Acquired 2021 Acquisitions 2020 Acquisitions
Land and land improvements $ 98,403  $ 124,870 
Permanent plantings 129,677  93,751 
Irrigation & drainage systems 11,277  26,837 
Farm-related facilities 17,521  6,620 
Other site improvements 984  2,699 
Leasehold interest—land 790  — 
In-place lease values 688  395 
Leasing costs 511  250 
Above-market lease values(1)
—  54 
Below-market lease values(2)
(1,321) (58)
Investment in LLC(1)
2,054  573 
Water purchase contracts(1)(3)
31,153  — 
Total Purchase Price $ 291,737  255,991 
(1)Included within Other assets, net on the accompanying Consolidated Balance Sheets.
(2)Included within Other liabilities, net on the accompanying Consolidated Balance Sheets.
(3)Represents only the value attributable to the water purchase contracts acquired as part of the acquisition of Lerdo Highway and excludes approximately $2.8 million paid to execute the contracts subsequent to the acquisition.
Weighted Average Amortization Period for Intangible Assets Acquired and Liabilities Assumed
The following table shows the weighted-average amortization periods (in years) for the intangible assets acquired and liabilities assumed in connection with new real estate acquired during the years ended December 31, 2021 and 2020:
Weighted-Average
Amortization Period (in Years)
Intangible Assets and Liabilities 2021 2020
Leasehold interest – land 20.8 0
In-place lease values 13.9 4.6
Leasing costs 13.3 8.3
Above-market lease values and lease incentives 0 10.0
Below-market lease values and other deferred revenue 9.8 1.3
All intangible assets and liabilities 13.8 5.9
Future Operating Lease Payments from Tenants under Non-Cancelable Leases
The following tables summarize the future lease payments to be received under noncancellable leases as of December 31, 2021 (dollars in thousands):
Period Tenant
Lease Revenue
For the fiscal years ending December 31, 2022 $ 75,700 
2023 71,046 
2024 64,985 
2025 57,953 
2026 53,829 
Thereafter 206,361 
$ 529,874