Gladstone Land Corporation Annual report pursuant to Section 13 and 15(d)

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]

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):


Farm Location	Farm Acreage	Total Commitment			Obligated Completion Date(1)	Amount Expended or Accrued as of December 31, 2022
St. Lucie, FL	549	$	230		Q3 2023	$	201

Umatilla, OR	135	2,750		(2)	Q4 2023	2,090



Columbia, OR	157	1,800		(2)	Q3 2024	1,146
Ventura, CA	402	1,000		(2)	Q4 2025	448




Napa, CA	270	1,635		(2)	Q4 2029	844
Wicomico & Caroline, MD, and Sussex, DE	833	115			Q3 2030	49
Yuma, AZ	3,033	941		(2)	Q4 2031	672
Franklin & Grant, WA, & Umatilla, OR	1,126	2,169		(2)	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):


Period		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.