Gladstone Land Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Real Estate and Intangible Assets (Tables)

Real Estate and Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2015

The following table provides certain summary information about our 36 farms as of June 30, 2015:


Property Name	Location	Date Acquired	Number of Farms		Total Acres		Farm Acres		Lease Expiration Date	Net Cost Basis⁽¹⁾		Encumbrances
San Andreas	Watsonville, CA	6/16/1997		1		307		238	12/31/2020	$	4,806,449	$	4,072,726
West Gonzales	Oxnard, CA	9/15/1998		1		653		502	6/30/2020		12,309,315		20,720,863
West Beach	Watsonville, CA	1/3/2011		3		196		195	12/31/2023		9,304,059		3,967,397
Dalton Lane	Watsonville, CA	7/7/2011		1		72		70	10/31/2020		2,690,463		1,314,507
Keysville Road	Plant City, FL	10/26/2011		2		59		56	6/30/2020		1,241,322		897,600
Colding Loop	Wimauma, FL	8/9/2012		1		219		181	6/14/2018		4,013,732		2,640,000
Trapnell Road	Plant City, FL	9/12/2012		3		124		110	6/30/2017		4,025,042		2,655,000
38th Avenue	Covert, MI	4/5/2013		1		119		89	4/4/2020		1,293,824		627,762
Sequoia Street	Brooks, OR	5/31/2013		1		218		206	5/31/2028		3,127,897		1,451,202
Natividad Road	Salinas, CA	10/21/2013		1		166		166	10/31/2024		8,189,239		3,276,906
20th Avenue	South Haven, MI	11/5/2013		3		151		94	11/4/2018		1,837,778		936,259
Broadway Road	Moorpark, CA	12/16/2013		1		60		60	12/15/2023		2,891,102		1,404,388
Oregon Trail	Echo, OR	12/27/2013		1		1,895		1,640	12/31/2023		13,955,285		6,553,812
East Shelton	Willcox, AZ	12/27/2013		1		1,761		1,320	2/29/2024		7,972,401		3,136,467
Collins Road	Clatskanie, OR	5/30/2014		2		200		157	9/30/2024		2,478,279		1,263,949
Spring Valley	Watsonville, CA	6/13/2014		1		145		110	9/30/2022		5,807,119		2,761,963
McIntosh Road	Dover, FL	6/20/2014		2		94		78	6/30/2017		2,553,622		1,599,600
Naumann Road	Oxnard, CA	7/23/2014		1		68		66	7/31/2017		6,821,216		3,225,412
Sycamore Road	Arvin, CA	7/25/2014		1		326		322	10/31/2024		6,387,629		2,715,151
Wauchula Road	Duette, FL	9/29/2014		1		808		590	9/30/2024		13,521,618		7,949,287
Santa Clara Avenue	Oxnard, CA	10/29/2014		2		333		331	7/31/2017		24,313,506		11,703,235
Dufau Road	Oxnard, CA	11/4/2014		1		65		64	11/3/2017		6,090,913		3,675,000
Espinosa Road	Salinas, CA	1/5/2015		1		331		329	10/31/2016		16,725,452		10,178,000
Parrish Road	Duette, FL	3/10/2015		1		419		211	6/30/2025		3,867,252		2,374,680
Immokalee Exchange	Immokalee, FL	6/25/2015		2		2,678		1,644	6/30/2020		15,762,300		9,360,000

				36		11,467		8,829		$	181,986,814	$	110,461,166

⁽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 depreciation and amortization accumulated through June 30, 2015.

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 June 30, 2015, and December 31, 2014:


	June 30, 2015			December 31, 2014
Real estate:
Land and land improvements	$	156,085,513		$	122,999,316
Irrigation systems		16,439,003			12,365,514
Buildings and improvements		10,845,136			10,479,301
Horticulture		1,559,339			1,559,340
Other site improvements		1,044,261			968,007

Real estate, at cost		185,973,252			148,371,478
Accumulated depreciation		(5,482,928	)		(4,431,290	)

Real estate, net	$	180,490,324		$	143,940,188

Weighted Average Amortization Period for Intangible Assets Acquired and Liabilities Assumed

The following table shows the weighted-average amortization period, in years, for the intangible assets acquired and liabilities assumed in connection with the new properties acquired during the six months ended June 30, 2015 and 2014:


	Weighted-Average
	Amortization Period (in Years)
Intangible Assets	2015		2014
In-place leases		4.1		4.7
Leasing commissions		6.1		7.8
Tenant relationships		9.5		7.3
Above-market lease values		—		3.0
Below-market lease values		—		2.3

All intangible assets		6.3		5.6

Pro-Forma Condensed Consolidated Statements of Operations as Each Farm Acquired

The following table reflects pro-forma consolidated financial information as if each farm was acquired at the beginning of the previous fiscal year. In addition, pro-forma earnings have been adjusted to assume that acquisition-related costs related to these farms were incurred at the beginning of the previous fiscal year.


	For the Six Months Ended June 30,
	2015			2014
	*(Unaudited)*			*(Unaudited)*
Operating Data:
Total operating revenue	$	6,032,056		$	5,868,815
Total operating expenses		(3,237,854	)		(3,627,657	)
Other expenses		(1,927,153	)		(2,155,079	)

Net income before income taxes		867,049			86,079
Provision for income taxes		—			(13,246	)

Net income	$	867,049		$	72,833

Share and Per-share Data:
Earnings per share of common stock - basic and diluted	$	0.10		$	0.01

Weighted average common shares outstanding - basic and diluted		8,872,584			6,578,270

Carrying Value of Lease Intangibles and Accumulated Amortization for Each Intangible Asset or Liability Class

The following table summarizes the carrying value of lease intangibles and the accumulated amortization for each intangible asset or liability class as of June 30, 2015, and December 31, 2014:


	June 30, 2015						December 31, 2014
	Lease Intangibles			Accumulated Amortization			Lease Intangibles			Accumulated Amortization
In-place leases	$	1,399,490		$	(548,041	)	$	869,207		$	(263,428	)
Leasing costs		634,041			(145,105	)		357,210			(80,617	)
Tenant relationships		898,128			(169,162	)		501,670			(66,467	)

	$	2,931,659		$	(862,308	)	$	1,728,087		$	(410,512	)


	Deferred Rent Asset (Liability)			Accumulated (Amortization) Accretion			Deferred Rent Asset (Liability)			Accumulated (Amortization) Accretion
Above-market lease values⁽¹⁾	$	65,203		$	(19,817	)	$	65,203		$	(9,027	)
Below-market lease values⁽²⁾		(371,707	)		269,927			(371,707	)		162,194

	$	(306,504	)	$	250,110		$	(306,504	)	$	153,167

⁽¹⁾	Above-market lease values are included as a part of Other assets in the accompanying Condensed Consolidated Balance Sheets, and the related amortization is recorded as a reduction of rental income.

⁽²⁾	Below-market lease values are included as a part of Other liabilities in the accompanying Condensed Consolidated Balance Sheets, and the related accretion is recorded as an increase to rental income.

Summary of Geographic Locations, by State, of Properties

The following table summarizes the geographic locations, by state, of our properties with leases in place as of June 30, 2015 and 2014:


	As of and For the Six Months Ended June 30, 2015												As of and For the Six Months Ended June 30, 2014
State	Number of Farms		Total Acres		% of Total Acres			Rental Revenue		% of Total Rental Revenue			Number of Farms		Total Acres		% of Total Acres			Rental Revenue		% of Total Rental Revenue
California		15		2,722		23.7	%	$	3,712,894		68.7	%		9		1,599		24.8	%	$	2,051,017		67.1	%
Florida		12		4,401		38.4	%		820,834		15.2	%		8		496		7.7	%		240,304		7.9	%
Oregon		4		2,313		20.2	%		583,763		10.8	%		4		2,313		35.9	%		492,121		16.1	%
Arizona		1		1,761		15.4	%		161,935		3.0	%		1		1,761		27.4	%		145,328		4.7	%
Michigan		4		270		2.3	%		123,357		2.3	%		4		270		4.2	%		128,157		4.2	%

		36		11,467		100.0	%	$	5,402,783		100.0	%		26		6,439		100.0	%	$	3,056,927		100.0	%

2015 New Real Estate Activity [Member]

Summary Information of Farms

During the six months ended June 30, 2015, we acquired four new farms in three separate transactions, which are summarized in the table below.

Property Name

Property
Location

Acquisition
Date

Total
Acreage

Number
of
Farms

Primary
Crop(s)

Lease
Term

Renewal
Options

Total
Purchase
Price

Acquisition
Costs

Annualized
Straight-line
Rent⁽¹⁾

Espinosa Road⁽²⁾

Salinas, CA

1/5/2015

331

Strawberries

1.8 years

None

16,905,500

87,512⁽³

⁾

778,342

Parrish Road

Duette, FL

3/10/2015

419

Strawberries

10.3 years

2 (5 years)

3,913,280

101,610⁽³

⁾

251,832

Immokalee Exchange

Immokalee, FL

6/25/2015

2,678

Misc.Vegetables

5.0 years

2 (5 years)

15,757,700

148,960⁽³

⁾

960,104

3,428

36,576,480

338,082

1,990,278

⁽¹⁾

Annualized GAAP amount is based on the minimum rental payments required per the lease and includes the amortization of any above-market and below-market lease values recorded.

⁽²⁾

In connection with this acquisition, our Adviser earned a finder’s fee of $320,905, which fee was fully credited back to us by our Adviser during the three months ended March 31, 2015. See Note 4, “Related-Party Transactions” for further discussion on this fee.

⁽³⁾

Acquisition accounted for as a business combination under ASC 805. As such, all acquisition-related costs were expensed as incurred, other than direct leasing costs, which were capitalized. In aggregate, we incurred $7,225 of direct leasing costs in connection with these acquisitions.

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 six months ended June 30, 2015, to be as follows:


Property Name	Land and Land Improvements		Buildings and Improvements		Irrigation System		In-place Leases		Leasing Costs		Customer Relationships		Total Purchase Price
Espinosa Road	$	15,852,466	$	84,478	$	497,401	$	246,472	$	43,894	$	180,789	$	16,905,500
Parrish Road		2,403,064		42,619		1,299,851		54,405		77,449		35,892		3,913,280
Immokalee Exhange		14,410,840		273,107		515,879		229,406		148,691		179,777		15,757,700

	$	32,666,370	$	400,204	$	2,313,131	$	530,283	$	270,034	$	396,458	$	36,576,480

Summary of Total Operating Revenues and Earnings Recognized on Properties Acquired

Below is a summary of the total operating revenues and earnings recognized on the properties acquired during the three and six months ended June 30, 2015:


		For the three months ended June 30, 2015					For the six months ended June 30, 2015
Property Name	Acquisition Date	Operating Revenues		Earnings⁽¹⁾			Operating Revenues		Earnings⁽¹⁾
Espinosa Road	1/5/2015	$	194,585	$	101,813		$	380,802	$	198,871
Parrish Road	3/10/2015		62,958		21,770			77,174		28,949
Immokalee Exchange	6/25/2015		—		(1,223	)		—		(1,223	)

		$	257,543	$	122,360		$	457,976	$	226,597

⁽¹⁾

Earnings are calculated as net income less interest expense and any acquisition-related costs that are required to be expensed if the acquisition is treated as a business combination under ASC 805.

2014 New Real Estate Activity [Member]

Summary Information of Farms

During the six months ended June 30, 2014, we acquired five farms in three separate transactions, which are summarized in the table below.


Property Name	Property Location	Acquisition Date	Total Acreage		Number of Farms		Primary Crop(s)	Lease Term	Renewal Options	Total Purchase Price		Acquisition Costs⁽¹⁾		Annualized Straight-line Rent⁽²⁾
Collins Road	Clatskanie, OR	5/30/2014		200		2	Blueberries	10.3 years	3 (5 years each)	$	2,591,333	$	58,441	$	181,172
Spring Valley	Watsonville, CA	6/13/2014		145		1	Strawberries	2.3 years	None		5,900,000		48,915		270,901
McIntosh Road	Dover, FL	6/20/2014		94		2	Strawberries	3.0 years	None		2,666,000		61,190		136,908

				439		5				$	11,157,333	$	168,546	$	588,981

⁽¹⁾

Each of the properties acquired during the six months ended June 30, 2104, were accounted for as a business combination under ASC 805; therefore, the related costs associated with the acquisitions were expensed in the period incurred. However, $7,175 of these acquisition costs were direct costs incurred related to reviewing and assigning leases we assumed upon acquisition; therefore, we capitalized these costs as part of leasing costs. Further, $19,277 of the acquisition costs related to the closing of McIntosh Road was expensed prior to 2014.

⁽²⁾

Annualized straight-line amount is based on the minimum rental payments required per the lease and includes the amortization of any above-market and below-market leases recorded.

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 six months ended June 30, 2014, to be as follows:


Property Name	Land and Land Improvements		Buildings		Irrigation System		Site Improvements		Horticulture⁽¹⁾		In-place Leases		Leasing Costs		Customer Relationships		Above (Below)- Market Leases			Total Purchase Price
Collins Road	$	1,252,387	$	555,667	$	—	$	126,719	$	520,993	$	45,086	$	65,685	$	24,796	$	—		$	2,591,333
Spring Valley		5,576,138		5,781		200,855		—		—		83,487		17,498		66,217		(49,976	)		5,900,000
McIntosh Road		1,970,074		30,745		537,254		2,846		—		34,674		16,766		27,966		45,675			2,666,000

	$	8,798,599	$	592,193	$	738,109	$	129,565	$	520,993	$	163,247	$	99,949	$	118,979	$	(4,301	)	$	11,157,333

⁽¹⁾

Horticulture acquired on Collins Road consists of various types of blueberry bushes.

Summary of Total Operating Revenues and Earnings Recognized on Properties Acquired

Below is a summary of the total revenue and earnings recognized on the properties acquired during the three and six months ended June 30, 2014:


		For the Three and Six Months Ended June 30, 2014
Property Name	Acquisition Date	Rental Revenue		Earnings ⁽¹⁾
Collins Road	5/30/2014	$	16,072	$	8,278
Spring Valley	6/13/2014		13,545		8,335
McIntosh Road	6/20/2014		4,183		951

		$	33,800	$	17,564