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)

9 Months Ended

Sep. 30, 2013

The following table provides certain summary information about our 14 farms as of September 30, 2013:


Property Name	Location	Date Acquired	Encumbrances			Net Cost Basis⁽¹⁾		Number of Farms		Number of Leases		Farmable Acres		Total Acres		Lease Expiration Date
San Andreas	Watsonville, CA	6/16/1997	$	100,000	⁽²⁾	$	4,874,836		1		1		237		306		12/31/2014
West Gonzales	Oxnard, CA	9/15/1998		13,473,792			12,501,855		1		2		501		653		6/30/2020
West Beach	Watsonville, CA	1/3/2011		5,068,800			8,328,475		3		1		195		198		10/31/2014
Dalton Lane	Watsonville, CA	7/7/2011		2,587,853			2,730,527		1		1		70		72		10/31/2015
Keysville Road	Plant City, FL	10/26/2011		1,152,000			1,230,758		2		1		50		59		7/1/2016
Colding Loop	Wimauma, FL	8/9/2012		3,366,720			3,992,932		1		1		181		219		6/14/2018
Trapnell Road	Plant City, FL	9/12/2012		3,840,000			3,854,554		3		1		110		124		6/30/2017
38th Avenue	Covert, MI	4/5/2013		—			1,362,134		1		1		89		119		4/4/2020
Sequoia Street	Brooks, OR	5/31/2013		—			3,193,919		1		1		206		209		5/31/2028

			$	29,589,165		$	42,069,990		14		10		1,639		1,959

⁽¹⁾

Consists of the initial acquisition price (including the costs allocated to both tangible and intangible assets) plus subsequent improvements and other capitalized costs associated with the properties and adjusted for depreciation and amortization accumulated through September 30, 2013.

⁽²⁾

Represents borrowings outstanding on our line of credit as of September 30, 2013, under which San Andreas is pledgd as collateral.

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 September 30, 2013, and December 31, 2012:


	As of			As of
	September 30, 2013			December 31, 2012
Real estate:
Land	$	33,969,564		$	30,828,325
Building		1,641,120			1,311,027
Cooler		4,963,243			4,963,243
Drain system		3,845,514			2,576,373
Horticulture		447,035			—

Real estate, gross		44,866,476			39,678,968
Accumulated depreciation		(2,978,718	)		(2,535,084	)

Real estate, net	$	41,887,758		$	37,143,884

Pro-Forma Condensed Consolidated Statements of Operations as Properties Acquired

The table below does not reflect pro-forma financials for the two farms acquired during the nine months ended September 30, 2013, that were treated as asset acquisitions.


	For the Nine Months Ended September 30,
	2013			2012
Operating Data:
Total operating revenue	$	2,841,846		$	2,712,548
Total operating expenses		(1,784,688	)		(1,182,885	)
Other expenses		(777,585	)		(873,454	)

Net income before income taxes		279,573			656,209
Provision for income taxes		(195,280	)		(292,350	)

Net income	$	84,293		$	363,859

Share and Per Share Data:
Weighted average common shares outstanding—basic and diluted		6,108,165			2,750,000

Earnings per share of common stock—basic and diluted	$	0.01		$	0.13

Weighted Average Amortization Period for Intangible Assets Acquired and Liabilities Assumed

The weighted-average amortization period, in years, for the intangible assets acquired and liabilities assumed during the nine months ended September 30, 2013 and 2012, is shown in the table below:


Intangible Assets and Liabilities	2013		2012
In-place leases		—		3.1
Leasing commissions		12.7		4.7
Customer relationships		—		5.8
Below-market leases		—		0.8

All intangible assets and liabilities		12.7		3.2

Future Operating Lease Payments from Tenants under Non-Cancelable Leases

Future operating lease payments from tenants under all non-cancelable leases, excluding tenant reimbursement of expenses, for the remainder of 2013 and each of the five succeeding fiscal years and thereafter as of September 30, 2013, are as follows:


		Tenant Lease
Period		Payments
For the remaining three months ending December 31:	2013	$	880,645
For the fiscal years ending December 31:	2014		3,796,267
	2015		3,166,142
	2016		3,142,955
	2017		2,975,351
	2018		2,703,066
	Thereafter		5,728,667

Carrying Value of Intangible Assets and Accumulated Amortization

The following table summarizes the carrying value of intangible assets and the accumulated amortization for each intangible asset class as of September 30, 2013, and December 31, 2012:


	September 30, 2013					December 31, 2012
	Lease Intangibles		Accumulated Amortization			Lease Intangibles		Accumulated Amortization
In-place leases	$	286,975	$	(225,556	)	$	286,975	$	(186,843	)
Leasing commissions		103,285		(28,060	)		63,638		(17,627	)
Customer relationships		93,187		(47,599	)		93,187		(31,270	)

	$	483,447	$	(301,215	)	$	443,800	$	(235,740	)

Aggregate Amortization Expense

The aggregate amortization expense for the remainder of 2013 and each of the five succeeding fiscal years and thereafter is as follows:


		Estimated
Period		Amortization Expense
For the remaining three months ending December 31:	2013	$	11,251
For the fiscal years ending December 31:	2014		45,494
	2015		43,783
	2016		32,776
	2017		21,207
	2018		7,255
	Thereafter		20,466

Summary of Geographic Locations of Properties

The following table summarizes the geographic locations of our properties with leases in place as of September 30, 2013 and 2012:


	As of and For the Nine Months Ended September 30, 2013														As of and For the Nine Months Ended September 30, 2012
State	Number of Farms		Number of Leases		Total Acres		% of Total Acres			Rental Revenue		% of Total Rental Revenue			Number of Farms		Number of Leases		Total Acres		% of Total Acres			Rental Revenue		% of Total Rental Revenue
California		6		5		1,229		62.7	%	$	2,408,110		84.2	%		6		5		1,229		75.4	%	$	2,386,024		96.5	%
Florida		6		3		402		20.5	%		345,113		12.1	%		6		3		402		24.6	%		87,813		3.5	%
Michigan		1		1		119		6.1	%		42,673		1.5	%		0		0		0		0.0	%		—		0.0	%
Oregon		1		1		209		10.7	%		64,539		2.2	%		0		0		0		0.0	%		—		0.0	%

		14		10		1,959		100.0	%	$	2,860,435		100.0	%		12		8		1,631		100.0	%	$	2,473,837		100.0	%

2013 New Real Estate Activity [Member]

Summarized Information of Acquisition of Properties

During the nine months ended September 30, 2013, we acquired two farms in two separate transactions, which are summarized in the table below.


Property Name	Property Location	Acquisition Date	Total Acreage		Number of Farms		Primary Crop	Lease Term	Renewal Options	Total Purchase Price		Acquisition Expenses			Annualized Straight-line Rent⁽¹⁾
38th Avenue	Covert, MI	4/5/2013		119		1	Blueberries	7 Years	1 (7 years)	$	1,341,000	$	40,133	⁽²⁾	$	87,286
Sequoia Street	Brooks, OR	5/31/2013		209		1	Blueberries	15 Years	3 (5 years each)		3,100,000		106,797	⁽²⁾		193,617

				328		2				$	4,441,000	$	146,930		$	280,903

⁽¹⁾

Annualized straight-line amount is based on the minimum rental payments required per the lease.

⁽²⁾

Transaction accounted for as an asset acquisition under ASC 360 instead of a business combination under ASC 805; therefore, related costs associated with the acquisition were capitalized and included as part of the fair value allocation of the identifiable tangible assets acquired.

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 nine months ended September 30, 2013, to be as follows:


Property Name	Land		Building		Drain System		Horticulture⁽¹⁾		Leasing Commissions⁽²⁾		Total Purchase Price
38th Avenue	$	647,431	$	42,720	$	240,105	$	447,035	$	3,842	$	1,381,133
Sequoia Street		2,493,809		279,372		424,081		—		9,535		3,206,797

	$	3,141,240	$	322,092	$	664,186	$	447,035	$	13,377	$	4,587,930

⁽¹⁾

Horticulture acquired on 38th Avenue consists of various types of high-bush variety blueberry bushes.

⁽²⁾

None of the purchase price was allocated to any intangibles; leasing commissions above represent direct costs incurred in connection with originating new leases on the properties.

2012 New Real Estate Activity [Member]

Summarized Information of Acquisition of Properties

During the nine months ended September 30, 2012, we acquired four farms in two separate transactions, which are summarized in the table below:


Property Name	Property Location		Acquisition Date		Total Acreage		Number of Farms		Primary Crop		Lease Term	Renewal Options	Total Purchase Price		Acquisition Expenses		Annualized Straight- line Rent⁽¹⁾			Debt Issued
Colding Loop		Wimauma, FL		8/9/2012		219		1		Strawberries	0.9 Years⁽²⁾	None⁽²⁾	$	3,400,836	$	31,879	$	141,274	⁽²⁾	$	3,507,000
Trapnell Road		Plant City, FL		9/12/2012		124		3		Strawberries	4.8 Years	1 (5 Years)		4,000,000		82,412		241,630			4,000,000

						343		4					$	7,400,836	$	114,291	$	382,904		$	7,507,000

⁽¹⁾

Annualized straight-line amount is based on the minimum rental payments required per the lease.

⁽²⁾

The original lease that was assumed upon acquisition of Colding Loop expired on June 14, 2013; thus, the rental income reflected in the table above is the straight-line rent recognized over remaining ten-month term of the lease, which translated to $166,205 on an annual basis. On May 28, 2013, we executed a new, five-year lease on Colding Loop, commencing June 15, 2013. The new lease has one five-year renewal option and provides for minimum annualized straight-line rent of $125,400.

Fair Value of Acquired Assets and Liabilities Assumed Related to Properties Acquired

In accordance with ASC 805, we determined the fair value of acquired assets and liabilities assumed related to the properties acquired during the nine months ended September 30, 2012, as follows:


Property Name	Land		Cooler		Drain System		Lease In-place		Leasing Commissions		Customer Relationships		Below- Market Leases			Total Purchase Price
Colding Loop	$	2,513,696	$	—	$	909,490	$	43,989	$	1,676	$	30,793	$	(98,808	)	$	3,400,836
Trapnell Road		2,198,728		686,578		970,761		60,627		45,543		37,763		—			4,000,000

	$	4,712,424	$	686,578	$	1,880,251	$	104,616	$	47,219	$	68,556	$	(98,808	)	$	7,400,836

Summary of Total Revenue and Earnings Recognized on Properties Acquired

Below is a summary of the total revenue and earnings recognized on the properties acquired during the nine months ended September 30, 2012:


		For the Three and Nine Months Ended September 30, 2012
Property Location	Acquisition Date	Rental Revenue		Earnings ⁽¹⁾
Colding Loop	8/9/2012	$	24,007	$	5,838
Trapnell Road	9/12/2012		12,554		6,192

⁽¹⁾

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