Quarterly report pursuant to Section 13 or 15(d)

Commitments and Contingencies (Tables)

v3.19.3
Commitments and Contingencies (Tables)
9 Months Ended
Sep. 30, 2019
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, which are summarized in the table below (dollars in thousands):
Farm
Location
 
Farm
Gross
Acreage
 
Total
Commitment
 
Obligated
Completion
Date(1)
 
Amount Expended
or Accrued as of
September 30, 2019
Salinas, CA
 
324
 
$
100

 
Q4 2019
 
$

Ventura, CA
 
413
 
1,000

 
Q1 2020
 
100

Santa Barbara, CA
 
361
 
4,000

(2) 
Q1 2020
 
1,725

Madera, CA
 
928
 
500

(2) 
Q2 2020
 
176

Columbia, OR
 
200
 
1,800

(2) 
Q4 2020
 
1,023

Hillsborough, FL
 
55
 
2,250

(2) 
Q2 2021
 

Collier & Hendry, FL
 
5,630
 
2,000

(2) 
Q2 2025
 

(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.
Schedule of Operating Ground Leases
The following table summarizes certain leasing activity that occurred on our existing properties during the nine months ended September 30, 2019 (dollars in thousands, except footnotes):
 
 
 
 
PRIOR LEASES
 
NEW LEASES
Farm
Locations
Number
of
Leases
Total
Farm
Acres
 
Total
Annualized
Straight-line
Rent(1)
# of Leases
with
Participation
Rents
Lease
Structures
(# of NNN
/ NN)(2)
 
Total
Annualized
Straight-line
Rent
(1)
Wtd. Avg.
Term
(Years)
# of Leases
with
Participation
Rents
Lease
Structures
(# of NNN
/ NN)
(2)
AZ, CA,
FL, MI, NE
16
7,364
 
$
3,527

1
10 / 6
 
$
3,804

4.0
3
10 / 6
(1) 
Annualized straight-line rent is based on the minimum cash rental payments guaranteed under the applicable leases (presented on an annualized basis), as required under GAAP, and excludes contingent rental payments, such as participation rents.
(2) 
“NNN” refers to leases under triple-net lease arrangements, and “NN” refers to leases under partial-net lease arrangements. For a description of each of these types of lease arrangements, see “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview—Leases—General.”
As of September 30, 2019, we had recorded the following as a result of these operating ground leases (dollars in thousands, except for footnotes):
Operating lease right-of-use assets(1)
 
$
188

Operating lease liabilities(2)
 
$
171

 
 
 
Weighted-average remaining lease term (years)
 
4.8

Weighted-average discount rate
 
4.20
%
(1) 
Operating lease right-of-use assets are shown net of accrued lease payments of approximately $17,000 and are included within Other assets, net on the accompanying Condensed Consolidated Balance Sheet.
(2) 
Included within Other liabilities, net on the accompanying Condensed Consolidated Balance Sheet.
The following table sets forth the components of our lease revenues for the three and nine months ended September 30, 2019 and 2018 (dollars in thousands, except for footnotes):
 
 
For the Three Months Ended September 30,
 
For the Nine Months Ended September 30,
 
 
2019
 
2018
 
2019
 
2018
Fixed lease payments(1)
 
$
10,131

 
$
7,124

 
$
26,236

 
$
20,427

Variable lease payments(2)
 
881

 
891

 
967

 
917

Lease revenues, net(3)
 
$
11,012

 
$
8,015

 
$
27,203

 
$
21,344

(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 three and nine months ended September 30, 2019, we recorded participation rents of approximately $848,000 and $875,000, respectively, and reimbursements of certain property operating expenses by tenants of approximately $33,000 and $93,000, respectively. During the three and nine months ended September 30, 2018, we recorded participation rents of approximately $889,000 and $906,000, respectively, and reimbursements of certain property operating expenses by tenants of approximately $2,000 and $11,000, respectively.
(3) 
Reflected as a line item on our accompanying Condensed Consolidated Statements of Operations and Comprehensive Income.
Schedule of Future Lease Payments
Future lease payments due under the remaining non-cancelable terms of these leases as of September 30, 2019, and December 31, 2018, are as follows (dollars in thousands):
 
 
Future Lease Payments(1)
Period
 
September 30, 2019
 
December 31, 2018
2019
 
$

 
$
47

2020
 
47

 
47

2021
 
47

 
47

2022
 
30

 
30

2023
 
30

 
30

Thereafter
 
31

 
31

Total undiscounted lease payments
 
185

 
232

Less: imputed interest
 
(14
)
 

Present value of lease payments
 
$
171

 
$
232

(1) 
Annual lease payments are set at the beginning of each year to then-current market rates (as determined by the State of Arizona). The amounts shown above represent estimated amounts based on the lease rates currently in place.