| Schedule of Asset Acquisitions, by Acquisition |
During the nine months ended September 30, 2019, we acquired 12 new farms, which are summarized in the table below (dollars in thousands):
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Property
Name |
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Property
Location |
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Acquisition
Date |
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Total
Acreage |
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No. of
Farms |
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Primary
Crop(s) / Use |
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Lease
Term |
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Renewal
Options |
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Total
Purchase
Price |
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Acquisition
Costs(1)
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Annualized
Straight-line
Rent(2)
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New
Long-term
Debt |
Somerset Road |
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Lincoln, NE |
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1/22/2019 |
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695 |
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1 |
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Popcorn &
edible beans |
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4.9 years |
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1
(5 years) |
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$ |
2,400 |
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$ |
28 |
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$ |
126 |
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$ |
1,440 |
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Greenhills Boulevard(3)
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Madera, CA |
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4/9/2019 |
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928 |
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1 |
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Pistachios |
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10.6 years |
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2
(5 years) |
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28,550 |
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143 |
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1,721 |
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17,130 |
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Van Buren Trail |
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Van Buren, MI |
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5/29/2019 |
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159 |
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1 |
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Blueberries
& cranberries |
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10.6 years |
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2
(5 years) |
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2,682 |
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28 |
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206 |
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1,609 |
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Blue Star Highway |
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Allegran &
Van Buren, MI |
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6/4/2019 |
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357 |
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1 |
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Blueberries |
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10.6 years |
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2
(5 years) |
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5,100 |
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31 |
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390 |
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3,060 |
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Yolo County Line Road |
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Yolo, CA |
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6/13/2019 |
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542 |
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1 |
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Olives for
olive oil |
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14.6 years |
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1
(5 years) |
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9,190 |
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66 |
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624 |
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5,514 |
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San Juan Grade Road(4)
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Monterey, CA |
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7/11/2019 |
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324 |
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1 |
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Strawberries
& vegetables |
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0.3 years |
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None |
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9,000 |
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60 |
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632 |
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5,400 |
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West Citrus Boulevard(5)
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Martin, FL |
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7/22/2019 |
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3,586 |
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1 |
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Water
retention |
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8.4 years |
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2
(10 years) |
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57,790 |
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503 |
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3,696 |
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37,700 |
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Sutter Avenue I(3)(6)
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Fresno, CA |
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8/16/2019 |
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1,011 |
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1 |
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Pistachios |
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8.2 years |
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2
(5 years) |
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33,000 |
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139 |
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2,106 |
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16,500 |
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Las Posas Road(7)
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Ventura, CA |
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8/28/2019 |
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413 |
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3 |
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Sod & vegetables |
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3.3 years |
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1
(2 years) |
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21,320 |
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67 |
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1,283 |
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12,792 |
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Withers Road(8)
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Napa, CA |
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8/29/2019 |
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366 |
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1 |
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Wine grapes |
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10.3 years |
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2
(10 years) |
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32,000 |
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77 |
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2,256 |
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19,254 |
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8,381 |
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12 |
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$ |
201,032 |
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$ |
1,142 |
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$ |
13,040 |
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$ |
120,399 |
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(1) |
Includes approximately $63,000 of aggregate external legal fees associated with negotiating and originating the leases associated with these acquisitions, which costs were expensed in the period incurred.
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(2) |
Annualized straight-line rent is based on the minimum cash rental payments guaranteed under the applicable leases, as required under GAAP, and excludes contingent rental payments, such as participation rents. |
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(3) |
Leases provide for a participation rent component based on the gross crop revenues earned on the respective farms. The rent figures above represent only the minimum cash guaranteed under the respective leases. |
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(4) |
In connection with the acquisition of this property, we executed a 6-year, follow-on lease with a new tenant that will commence upon the expiration of the 4-month lease executed on the date of acquisition. The follow-on lease includes one, 4-year extension option and provides for minimum annualized straight-line rents of approximately $606,000. In connection with the follow-on lease, we committed to provide up to $100,000 for certain irrigation improvements on the property.
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(5) |
As partial consideration for the acquisition of this property, we issued 288,303 OP Units, constituting an aggregate fair value of approximately $3.3 million as of the acquisition date.
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(6) |
In connection with the acquisition of this property, we also acquired an ownership 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 equated to an 11.75% interest in the LLC and was valued at approximately $280,000 at the time of acquisition and is included within Other assets, net on the accompanying Condensed Consolidated Balance Sheets. As our investment in the LLC is deemed to constitute “significant influence,” we have accounted for this investment under the equity method. From the commencement of our ownership in the LLC through September 30, 2019, there was no material income or loss recognized by the LLC; thus, no net income or loss was recorded by us during the three months ended September 30, 2019.
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(7) |
In connection with this acquisition, we executed two separate lease agreements with two different, unrelated third-party tenants. The lease term of 3.3 years represents the weighted-average term of the two leases. In addition, pursuant to one of these lease agreements, we committed to provide up to $1.0 million for certain irrigation improvements on the property.
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(8) |
In connection with the acquisition of this property, we committed to provide up to approximately $4.0 million as additional compensation, contingent upon the County of Napa approving the planting of additional vineyards on up to 47 acres of the property by February 25, 2020. We are currently unable to estimate when this approval will be obtained, if at all. If approval is obtained, we have also committed to contribute up to $40,000 per approved acre for the development of such vineyards. As provided for in the lease, we will earn additional rent on all of the aforementioned costs, if any, incurred by us.
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During the nine months ended September 30, 2018, we acquired ten new farms, which are summarized in the table below (dollars in thousands, except for footnotes):
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Property
Name
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Property
Location
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Acquisition
Date
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Total
Acreage
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No. of
Farms
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Primary
Crop(s)
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Lease
Term
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Renewal
Options
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Total
Purchase
Price
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Acquisition
Costs
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Annualized
Straight-line
Rent(1)
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New
Long-term
Debt
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Taft Highway(2)
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Kern, CA |
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1/31/2018 |
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161 |
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1 |
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Potatoes and Melons |
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N/A |
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N/A |
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$ |
2,945 |
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$ |
32 |
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$ |
— |
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$ |
1,473 |
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Cemetery Road |
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Van Buren, MI |
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3/13/2018 |
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176 |
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1 |
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Blueberries |
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9.6 years |
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None |
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2,100 |
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39 |
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150 |
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1,260 |
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Owl Hammock(3)
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Collier & Hendry, FL |
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7/12/2018 |
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5,630 |
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5 |
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Vegetables and Melons |
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7.0 years |
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2 (5 years) |
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37,350 |
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196 |
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2,148 |
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22,410 |
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Plantation Road |
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Jackson, FL |
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9/6/2018 |
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574 |
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1 |
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Peanuts and Melons |
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2.3 years |
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None |
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2,600 |
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35 |
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142 |
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1,560 |
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Flint Avenue |
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Kings, CA |
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9/13/2018 |
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194 |
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2 |
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Cherries |
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15.3 years |
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1 (5 years) |
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6,850 |
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58 |
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523 |
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4,110 |
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6,735 |
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10 |
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$ |
51,845 |
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$ |
360 |
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$ |
2,963 |
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$ |
30,813 |
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(1) |
Annualized straight-line rent is based on the minimum cash rental payments guaranteed under the applicable lease, as required under GAAP, and excludes contingent rental payments, such as participation rents. |
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(2) |
Farm was purchased with no lease in place at the time of acquisition. |
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(3) |
In connection with the acquisition of this property, we committed to provide up to $2.0 million of capital for certain irrigation and property improvements. As stipulated in the lease, we will earn additional rental income on the total cost of the improvements as disbursements are made by us at a rate commensurate with the annual yield on the farmland (as determined by each year’s minimum cash rent per the follow-on lease).
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Subsequent to September 30, 2019, through the date of this filing, we have acquired six farms, which are summarized in the table below (dollars in thousands, except for footnotes):
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Property
Name |
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Property
Location |
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Acquisition
Date |
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Total
Acreage |
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No. of
Farms |
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Primary
Crop(s) |
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Lease
Term |
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Renewal
Options |
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Total
Purchase
Price |
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Acquisition
Costs(1)
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Annualized
Straight-line
Rent(2)
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Highway 17(3)
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Hayes, NE |
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10/7/2019 |
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2,561 |
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3 |
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Corn, soybeans,
& edible beans |
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0.2 years |
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None |
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$ |
9,690 |
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$ |
39 |
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$ |
489 |
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Indian Highway(4)
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Hayes & Hitchcock, NE |
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10/7/2019 |
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1,289 |
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2 |
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Corn, soybeans,
& edible beans |
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0.3 years |
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None |
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5,000 |
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39 |
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788 |
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Sutter Avenue II |
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Fresno, CA |
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11/1/2019 |
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1,098 |
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1 |
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Pistachios |
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8.0 years |
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2 (5 Years) |
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37,000 |
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68 |
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2,365 |
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4,948 |
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6 |
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$ |
51,690 |
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$ |
146 |
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$ |
3,642 |
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(1) |
Acquisitions will be accounted for as asset acquisitions in accordance with ASC 360. The figures above represent only costs paid or accrued for as of the date of this filing. |
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(2) |
Annualized straight-line rent is based on the minimum cash rental payments guaranteed under the applicable lease, as required under GAAP, and excludes contingent rental payments, such as participation rents. |
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(3) |
In connection with the acquisition of this property, we executed a 10-year, follow-on lease with a new, unrelated third-party tenant that will commence upon the expiration of the 3-month lease executed on the date of acquisition. The follow-on lease provides for minimum annualized straight-line rents of approximately $630,000, plus a participation rent component based on the gross revenues earned on the farm. In addition, the farm is expected to be converted to organic farmland by 2021.
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(4) |
In connection with this acquisition, we executed a 4-month leaseback agreement with the seller that provides for a fixed rental payment of $250,000. In addition, we also executed a 10-year, follow-on lease with a new tenant that will commence upon the expiration of the 4-month leaseback agreement. The follow-on lease provides for minimum annualized straight-line rents of approximately $372,000, plus a participation rent component based on the gross revenues earned on the farm. In addition, the farm is expected to be converted to organic farmland by 2021.
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| Schedule of Finance Activity |
Our borrowings as of September 30, 2019, and December 31, 2018, are summarized below (dollars in thousands):
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Carrying Value as of |
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As of September 30, 2019 |
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September 30, 2019 |
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December 31, 2018 |
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Stated Interest
Rates(1)
(Range; Wtd Avg)
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Maturity Dates
(Range; Wtd Avg)
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Notes and bonds payable: |
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Fixed-rate notes payable |
$ |
360,459 |
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$ |
247,249 |
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3.16%–5.70%; 4.08% |
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6/1/2020–8/1/2044; June 2032 |
Fixed-rate bonds payable |
90,380 |
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90,877 |
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2.80%–4.57%; 3.55% |
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12/11/2019–9/13/2028; November 2022 |
Total notes and bonds payable |
450,839 |
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338,126 |
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Debt issuance costs – notes and bonds payable |
(2,835 |
) |
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(2,338 |
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N/A |
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N/A |
Notes and bonds payable, net |
$ |
448,004 |
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$ |
335,788 |
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Variable-rate revolving lines of credit |
$ |
4,100 |
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$ |
100 |
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4.29%–4.54%; 4.29% |
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4/5/2024 |
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Total borrowings, net |
$ |
452,104 |
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$ |
335,888 |
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(1) |
Where applicable, stated interest rates are before interest patronage (as described below). |
Subsequent to September 30, 2019, through the date of this filing, we have secured the following new financings (dollars in thousands):
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Issuer |
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Date of
Issuance
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Amount |
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Maturity
Date
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Principal
Amortization
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Interest Rate Terms |
Rabo AgriFinance, LLC |
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10/16/2019 |
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$ |
5,739 |
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10/1/2029 |
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25.0 years |
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1-Month LIBOR + 1.75%(1)
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Rabo AgriFinance, LLC |
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10/16/2019 |
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3,045 |
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10/1/2029 |
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25.0 years |
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1-Month LIBOR + 1.75%(1)
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Diversified Financial Services, LLC |
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10/17/2019 |
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976 |
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10/17/2026 |
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7.0 years |
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4.75%, fixed throughout its term |
Metropolitan Life Insurance Company(2)
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11/1/2019 |
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25,500 |
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1/5/2029 |
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28.6 years |
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3.81%, fixed through January 4, 2027 (variable thereafter) |
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(1) |
In connection with each of these loans, we entered into interest rate swap agreements in which we will pay a fixed interest rate to our counterparty of 3.67% through October 1, 2029.
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(2) |
Loan was issued under the MetLife Credit Facility, as defined in Note 4, “Borrowings,” in these notes to our condensed consolidated financial statements.
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