Annual report pursuant to Section 13 and 15(d)

Commitments and Contingencies (Tables)

Commitments and Contingencies (Tables)
12 Months Ended
Dec. 31, 2022
Commitments and Contingencies Disclosure [Abstract]  
Schedule of Operating Lease Obligations
In connection with the execution of certain lease agreements, we have committed to provide capital improvements on certain of our farms. Below is a summary of certain of those projects for which we have incurred or accrued costs as of December 31, 2022 (dollars in thousands):
Amount Expended
or Accrued as of
December 31, 2022
St. Lucie, FL 549 $ 230  Q3 2023 $ 201 
Umatilla, OR 135 2,750 
Q4 2023 2,090 
Columbia, OR 157 1,800 
Q3 2024 1,146 
Ventura, CA 402 1,000 
Q4 2025 448 
Napa, CA 270 1,635 
Q4 2029 844 
Wicomico & Caroline, MD, and Sussex, DE 833 115  Q3 2030 49 
Yuma, AZ 3,033 941 
Q4 2031 672 
Franklin & Grant, WA, & Umatilla, OR 1,126 2,169 
Q4 2032 287 
(1)Our obligation to provide capital to fund these improvements does not extend beyond these respective dates.
(2)Pursuant to contractual agreements, we will earn additional rent on the cost of these capital improvements as the funds are disbursed by us.
Summary of Leasing Activity
As of December 31, 2022 and 2021, we recorded the following as a result of these operating ground leases (dollars in thousands, except for footnotes):
December 31, 2022 December 31, 2021
Operating lease right-of-use assets(1)
$ 623  $ 671 
Operating lease liabilities(2)
$ 617  $ 664 
Weighted-average remaining lease term (years) 15.3 15.7
Weighted-average incremental borrowing rate 7.93  % 7.78  %
(1)Operating lease right-of-use assets are shown net of prepaid lease payments of approximately $6,000 and $7,000 for the years ended December 31, 2022 and 2021, respectively, and are included within Other assets, net on the accompanying Consolidated Balance Sheets.
(2)Included within Other liabilities, net on the accompanying Consolidated Balance Sheets.
The following table sets forth the components of our lease revenues for the years ended December 31, 2022, 2021, and 2020 (dollars in thousands, except for footnotes):
For the Years Ended December 31,
2022 2021 2020
Fixed lease payments(1)
$ 81,423  $ 69,998  $ 51,377 
Variable lease payments(2)
7,813  5,320  5,654 
Lease revenue, net(3)
$ 89,236  $ 75,318  $ 57,031 
(1)Fixed lease payments include contractual rents under lease agreements with tenants recognized on a straight-line basis over the respective lease terms and includes the amortization of above-market lease values and lease incentives and the accretion of below-market lease values and other deferred revenue.
(2)Variable lease payments include participation rents, which are generally based on a percentage of the gross crop revenues earned on the farm, and reimbursements of certain property operating expenses by tenants. Participation rents are generally recognized when all contingencies have been resolved and when actual results become known or estimable, enabling us to estimate and/or measure our share of such gross revenues. During the years ended December 31, 2022, 2021, and 2020, we recorded participation rents of approximately $7.7 million, $5.2 million, and $2.4 million, respectively, and reimbursements of certain property operating expenses by tenants of approximately $110,000, $101,000, and $457,000, respectively. In addition, during the year ended December 31, 2020, we received a lease termination payment of approximately $3.0 million.
(3)Reflected as a line item on our accompanying Consolidated Statements of Operations and Comprehensive Income.
Schedule of Future Lease Payments
Future minimum lease payments due under the remaining non-cancelable terms of these leases as of December 31, 2022, are as follows (dollars in thousands):
Future Lease Payments(1)
For the fiscal years ending December 31: 2023 $ 92 
2024 92 
2025 62 
2026 62 
2027 62 
Thereafter 693 
Total undiscounted lease payments 1,063 
Less: imputed interest (446)
Present value of lease payments $ 617 
(1)Certain annual lease payments are set at the beginning of each year to then-current market rates (as determined by the lessor). The amounts shown above represent estimated amounts based on the lease rates currently in place.