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What changed in GLADSTONE LAND Corp's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of GLADSTONE LAND Corp's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+345 added−335 removedSource: 10-K (2024-02-20) vs 10-K (2023-02-21)

Top changes in GLADSTONE LAND Corp's 2023 10-K

345 paragraphs added · 335 removed · 255 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeUpon the pricing of our initial public offering (the “IPO”), on January 29, 2013, our shares of common stock began trading on the Nasdaq Global Market (“Nasdaq”) under the symbol “LAND.” Our shares of 6.00% Series B Cumulative Redeemable Preferred Stock, par value $0.001 per share (the “Series B Preferred Stock”) are traded on Nasdaq under the symbol “LANDO,” and our shares of 5.00% Series D Cumulative Term Preferred Stock (the “Series D Term Preferred Stock”) are traded on Nasdaq under the symbol “LANDM.” In addition, we have registered our 6.00% Series C Cumulative Redeemable Preferred Stock, par value $0.001 per share (the “Series C Preferred Stock”) and our 5.00% Series E Cumulative Redeemable Preferred Stock, par value $0.001 per share (the “Series E Preferred Stock”).
Biggest changeUpon the pricing of our initial public offering (the “IPO”), on January 29, 2013, our shares of common stock began trading on the Nasdaq Global Market (“Nasdaq”) under the symbol “LAND.” Our shares of 6.00% Series B Cumulative Redeemable Preferred Stock, par value $0.001 per share (the “Series B Preferred Stock”) are traded on Nasdaq under the symbol “LANDO,” our shares of 6.00% Series C Cumulative Redeemable Preferred Stock, par value $0.001 per share (the “Series C Preferred Stock”) are traded on Nasdaq under the symbol “LANDP,” and our shares of 5.00% Series D Cumulative Term Preferred Stock (the “Series D Term Preferred Stock”) are traded on Nasdaq under the symbol “LANDM.” In addition, we have registered our 5.00% Series E Cumulative Redeemable Preferred Stock, par value $0.001 per share (the “Series E Preferred Stock”).
We believe that the review process of our Adviser’s investment committee gives us a unique competitive advantage over other agricultural real estate companies because of the substantial experience that the members possess and their unique perspective in evaluating the blend of corporate credit, real estate, and lease terms that collectively combine to provide an acceptable risk for our investments.
We believe that the review process of our Adviser’s investment committee gives us a competitive advantage over other agricultural real estate companies because of the substantial experience that the members possess and their unique perspective in evaluating the blend of corporate credit, real estate, and lease terms that collectively combine to provide an acceptable risk for our investments.
We have adopted a policy that without the permission of our Board of Directors, we will not: • invest 50% or more of our total assets in a single property at the time of investment; • invest in real property owned by our Adviser, any of its affiliates or any entity in which our Adviser or any of its affiliates have invested; • invest in commodities or commodity futures contracts, with this limitation not being applicable to futures contracts when used solely for the purpose of hedging in connection with our ordinary business of investing in properties and making mortgage loans; • invest in contracts for the sale of real estate unless the contract is in recordable form and is appropriately recorded in the chain of title; • issue equity securities on a deferred payment basis or other similar arrangement; • grant warrants or options to purchase shares of our stock to our Adviser or its affiliates; • engage in trading, as compared with investment activities, or engage in the business of underwriting, or the agency distribution of, securities issued by other persons; • invest more than 5% of the value of our assets in the securities of any one issuer if the investment would cause us to fail to maintain our qualification as a REIT; • invest in securities representing more than 10% of the outstanding securities (by vote or value) of any one issuer if the investment would cause us to fail to maintain our qualification as a REIT; or 10 Table of Contents • acquire securities in any company holding investments or engaging in activities prohibited in the foregoing clauses.
We have adopted a policy that without the permission of our Board of Directors, we will not: • invest 50% or more of our total assets in a single property at the time of investment; • invest in real property owned by our Adviser, any of its affiliates or any entity in which our Adviser or any of its affiliates have invested; • invest in commodities or commodity futures contracts, with this limitation not being applicable to futures contracts when used solely for the purpose of hedging in connection with our ordinary business of investing in properties and making mortgage loans; • invest in contracts for the sale of real estate unless the contract is in recordable form and is appropriately recorded in the chain of title; • issue equity securities on a deferred payment basis or other similar arrangement; • grant warrants or options to purchase shares of our stock to our Adviser or its affiliates; • engage in trading, as compared with investment activities, or engage in the business of underwriting, or the agency distribution of, securities issued by other persons; • invest more than 5% of the value of our assets in the securities of any one issuer if the investment would cause us to fail to maintain our qualification as a REIT; • invest in securities representing more than 10% of the outstanding securities (by vote or value) of any one issuer if the investment would cause us to fail to maintain our qualification as a REIT; or 9 Table of Content • acquire securities in any company holding investments or engaging in activities prohibited in the foregoing clauses.
We have in the past, and may in the future, offer equity ownership in our Operating Partnership by issuing additional OP Units to farmland owners in consideration for acquiring their farms. See “ Our Investment Process—Types of Investments ” below for additional information regarding OP Units.
We have in the past, and may in the future, offer equity ownership in our Operating Partnership by issuing additional OP Units to farmland owners as consideration for acquiring their farms. See “ Our Investment Process—Types of Investments ” below for additional information regarding OP Units.
Our Adviser has an investment committee that evaluates and approves each of our investments. This investment committee is currently comprised of Messrs. Gladstone, Brubaker, Reiman, and Frisbie; Mr. John Sateri, who is a managing director of our Adviser; and Ms. Laura Gladstone, who is a managing director of our Adviser.
Our Adviser has an investment committee that evaluates and approves each of our investments. This investment committee is currently comprised of Messrs. Gladstone, Brubaker, and Reiman; Mr. John Sateri, who is a managing director of our Adviser; and Ms. Laura Gladstone, who is a managing director of our Adviser.
A breakdown thereof is summarized by functional area in the table below: Number of Individuals Functional Area 13 Executive Management 40 Investment Management, Portfolio Management, and Due Diligence 21 Administration, Accounting, Compliance, Human Resources, Legal, and Treasury The Adviser and the Administrator aim to attract and retain capable advisory and administrative personnel, respectively, by offering competitive base salaries, benefits, and bonus structure and by providing employees with appropriate opportunities for professional development and growth.
A breakdown thereof is summarized by functional area in the table below: Number of Individuals Functional Area 13 Executive Management 35 Investment Management, Portfolio Management, and Due Diligence 21 Administration, Accounting, Compliance, Human Resources, Legal, and Treasury The Adviser and the Administrator aim to attract and retain capable advisory and administrative personnel, respectively, by offering competitive base salaries, benefits, and bonus structure and by providing employees with appropriate opportunities for professional development and growth.
While our primary regions of focus are the Pacific West and the Southeastern regions of the U.S., we believe other regions of the U.S., such as the Pacific Northwest and Mid-Atlantic regions, offer attractive locations for expansion, and, to a lesser extent, we also expect to seek farmland acquisitions in certain regions of the Midwest on a select, opportunistic basis, as well as other areas in the U.S. • Continue Expanding our Crop Varieties.
While our primary regions of focus are the West and the Southeast regions of the U.S., we believe other regions of the U.S., such as the Pacific Northwest and Mid-Atlantic regions, offer attractive locations for expansion, and, to a lesser extent, we also expect to seek farmland acquisitions in certain regions of the Midwest on a select, opportunistic basis, as well as other areas in the U.S. • Continue Expanding our Crop Varieties.
Developments related to public health emergencies, including laws and regulations implemented by federal governmental authorities or state and local governmental authorities in jurisdictions where our properties are located in response to such public health emergencies, may impact our ability to operate our business, or those of our tenants, in the ordinary course, which may materially affect our results of operations for the year ending December 31, 2023.
Developments related to public health emergencies, including laws and regulations implemented by federal governmental authorities or state and local governmental authorities in jurisdictions where our properties are located in response to such public health emergencies, may impact our ability to operate our business, or those of our tenants, in the ordinary course, which may materially affect our results of operations for the year ending December 31, 2024.
Refer to Item 7, “ Management’s Discussion and Analysis of Financial Condition and Results of Operation—Overview—Portfolio Diversification ,” for a summary of our portfolio diversification and concentrations. While our Adviser seeks tenants it believes to be creditworthy, tenants are not required to meet any minimum rating established by an independent credit rating agency.
Refer to Part II, Item 7, “ Management’s Discussion and Analysis of Financial Condition and Results of Operation—Overview—Portfolio Diversification ,” for a summary of our portfolio diversification and concentrations. While our Adviser seeks tenants it believes to be creditworthy, tenants are not required to meet any minimum rating established by an independent credit rating agency.
Otherwise, we do not expect that compliance with the various laws and regulations we are subject to will have a material effect on our capital expenditures, results of operations, or competitive position for the year ending December 31, 2023, as compared to prior periods.
Otherwise, we do not expect that compliance with the various laws and regulations we are subject to will have a material effect on our capital expenditures, results of operations, or competitive position for the year ending December 31, 2024, as compared to prior periods.
Dealer-Manager Agreements In connection with the continuous public offering of our Series B Preferred Stock (which was completed in March 2020), our Series C Preferred Stock (which was completed in December 2022), and our Series E Preferred Stock, we entered into certain dealer-manager agreements with Gladstone Securities, whereby Gladstone Securities served or serves, as appropriate, as our exclusive dealer-manager.
Dealer-Manager Agreements In connection with the continuous public offering of our Series B Preferred Stock (which was completed in March 2020), our Series C Preferred Stock (which was completed in December 2022), and our Series E Preferred Stock (which offering is ongoing), we entered into certain dealer-manager agreements with Gladstone Securities, whereby Gladstone Securities served or serves, as appropriate, as our exclusive dealer-manager.
We believe that, by operating on a leveraged basis, we will have more funds available and, therefore, will be able to make more investments than would otherwise be possible. We believe that this will allow us to pursue a more diversified portfolio.
We believe that, by operating on a leveraged basis, we will have more funds available and, therefore, will be able to make more investments than would otherwise be possible. We believe that this will allow us to assemble a more diversified portfolio.
Since rental contracts in the farming business for annual row crops are customarily short-term agreements, rental rates are typically renegotiated regularly to then-current market rates. Underwriting Criteria and Due Diligence Process Selecting the Property We consider selecting the right properties to purchase or finance as the most important aspect of our business.
Since rental contracts in the farming business for annual row crops are customarily short-term agreements, rental rates are typically renegotiated regularly to then-current market rates. Underwriting Criteria and Due Diligence Process Selecting the Property We consider selecting the right properties to purchase or finance as one of the most important aspects of our business.
Despite the conduct of these reviews, there can be no assurance that hazardous substances or waste, as determined under present or future federal or state laws or regulations, will not be discovered on the property after we acquire it. 8 Table of Contents Our Adviser will also physically inspect each property and the real estate surrounding it to estimate its value.
Despite the conduct of these reviews, there can be no assurance that hazardous substances or waste, as determined under present or future federal or state laws or regulations, will not be discovered on the property after we acquire it. 7 Table of Content Our Adviser will also physically inspect each property and the real estate surrounding it to estimate its value.
Competition We face competition for farmland acreage from many different entities, including, but not limited to, developers, municipalities, individual farmers, agriculture corporations, institutional investors, and others. Investment firms that we might compete directly against could include agricultural investment firms, such as Hancock Agricultural Investment Group, Prudential 13 Table of Contents Agricultural Investments, and UBS AgriVest, LLC.
Competition We face competition for farmland acreage from many different entities, including, but not limited to, developers, municipalities, individual farmers, agriculture corporations, institutional investors, and others. Investment firms that we might compete 12 Table of Content directly against could include agricultural investment firms, such as Hancock Agricultural Investment Group, Prudential Agricultural Investments, and UBS AgriVest, LLC.
We intend to lease acquired properties over the long term. However, from time to time, we may sell one or more properties if we believe it to be in the best interests of our stockholders and best to maintain the overall value of our portfolio.
We intend to lease acquired properties over the long term. However, from time to time, we may sell one or more properties if we believe it to be in the best interests of our stockholders and best to maintain the overall 5 Table of Content value of our portfolio.
Potential purchasers may include real estate developers desiring to develop the property, 6 Table of Contents financial purchasers seeking to acquire property for investment purposes, or farmers who have operated or seek to operate the land. Accordingly, we will seek to acquire properties that we believe have potential for long-term appreciation in value. • Continue Expanding our Operations Geographically.
Potential purchasers may include real estate developers desiring to develop the property, financial purchasers seeking to acquire property for investment purposes, or farmers who have operated or seek to operate the land. Accordingly, we will seek to acquire properties that we believe have potential for long-term appreciation in value. • Continue Expanding our Operations Geographically.
Our Administrator employs our chief financial officer, treasurer, chief compliance officer, general counsel and secretary (who also serves as our Administrator’s president, general counsel, and secretary), and their respective staffs and provides 11 Table of Contents administrative services to us under the amended and restated Administration Agreement entered into on February 1, 2013 (the “Administration Agreement”).
Our Administrator employs our chief financial officer, treasurer, chief compliance officer, general counsel and secretary (who also serves as our Administrator’s president, general counsel, and secretary), and their respective staffs and provides 10 Table of Content administrative services to us under the amended and restated Administration Agreement entered into on February 1, 2013 (the “Administration Agreement”).
Many of the areas in which we purchase or finance properties are likely to have their own microclimates and, although they appear to be in close proximity to one another, generally will not be similarly affected by weather or 9 Table of Contents other natural occurrences at the same time.
Many of the areas in which we purchase or finance properties are likely to have their own microclimates and, although they appear to be in close proximity to one another, generally will not be similarly affected by weather or 8 Table of Content other natural occurrences at the same time.
We currently own properties in 15 different states across the U.S., and over time, we expect to expand our geographic focus to other areas of the Southeast, Pacific Northwest, Midwest, and Mid-Atlantic.
We currently own properties in 15 different states across the U.S., and over time, we expect to expand our geographic focus to other areas in the U.S., including the Pacific Northwest, Midwest, and Mid-Atlantic.
Conflict of Interest Policy We have adopted policies to reduce potential conflicts of interest. In addition, our directors are subject to certain provisions of Maryland law that are designed to minimize conflicts. However, we cannot assure you that these policies or provisions of law will reduce or eliminate the influence of these conflicts.
Conflict of Interest Policy We have adopted policies to reduce potential conflicts of interest. In addition, our directors are subject to certain provisions of Maryland law that are designed to minimize conflicts. However, we cannot provide assurance that these policies or provisions of law will reduce or eliminate the influence of these conflicts.
For a discussion of the risks associated with leasing property to leveraged tenants, see “ Risk Factors—Risks Relating to Our Business and Operations—Some of our tenants may be unable to pay rent, which could adversely affect our cash available to make distributions to our stockholders or otherwise impair the value of your investment .” 7 Table of Contents We intend to own and lease primarily single-tenant, agricultural real property, and we may acquire and lease properties used by businesses that support farming communities.
For a discussion of the risks associated with leasing property to leveraged tenants, see Part I, Item 1A,“ Risk Factors—Risks Relating to Our Business and Operations—Some of our tenants may be unable to pay rent, which could adversely affect our cash available to make distributions to our stockholders or otherwise impair the value of your investment .” 6 Table of Content We intend to own and lease primarily single-tenant, agricultural real property, and we may acquire and lease properties used by businesses that support farming communities.
Some types of transactions, however, will require the prior approval of our Board of Directors, including a majority of our independent directors, including, but not limited to, the following: • any acquisition which at the time of investment would have a cost exceeding 50% of our total assets; and • transactions that involve conflicts of interest with our Adviser (other than reimbursement of expenses in accordance with the Current Advisory Agreement).
Some types of transactions, including the following, require the prior approval of our Board of Directors, including a majority of our independent directors: • any acquisition which at the time of investment would have a cost exceeding 50% of our total assets; and • transactions that involve conflicts of interest with our Adviser (other than reimbursement of expenses in accordance with the Current Advisory Agreement).
David Gladstone, our chairman, chief executive officer, president, and largest stockholder, is also the chairman, chief executive officer, and the controlling stockholder of our Adviser and our Administrator. Terry Lee Brubaker, our vice chairman and chief operating officer and a member of our Board of Directors, also serves in the same capacities for our Adviser and Administrator.
David Gladstone, our chairman, chief executive officer, president, and largest stockholder, is also the chairman, chief executive officer, and the controlling stockholder of our Adviser and our Administrator. Terry Lee Brubaker, our chief operating officer, also serves as vice chairman, chief operating officer, and a member of the Board of Directors for our Adviser and Administrator.
However, under the Current Advisory 12 Table of Contents Agreement, our Adviser is required to devote sufficient resources to the administration of our affairs to discharge its obligations under the agreement.
However, under the Current Advisory 11 Table of Content Agreement, our Adviser is required to devote sufficient resources to the administration of our affairs to discharge its obligations under the agreement.
Refer to Item 7, “ Management Discussion and Analysis of Financial Condition and Results of Operations—Overview—Our Adviser and Administrator ,” for a detailed discussion on the fee structure of each of the Adviser and Administrator.
Refer to Part II, Item 7, “ Management Discussion and Analysis of Financial Condition and Results of Operations—Overview—Our Adviser and Administrator ” of this Form 10-K for a detailed discussion on the fee structure of each of the Adviser and Administrator.
ITEM 1. BUSINESS Overview We are an externally-managed, agricultural REIT that is engaged in the business of owning and leasing farmland. We are not a grower of crops, nor do we typically farm the properties we own. We currently own 169 farms comprised of 115,731 acres across 15 states in the U.S., as well as several farm-related facilities.
ITEM 1. BUSINESS Overview We are an externally-managed, agricultural REIT that is engaged in the business of owning and leasing farmland. We are not a grower of crops, nor do we typically farm the properties we own. We currently own 168 farms comprised of 111,836 acres across 15 states in the U.S.
As of December 31, 2022, our Adviser and Administrator, collectively, had 74 full-time employees.
As of December 31, 2023, our Adviser and Administrator, collectively, had 69 full-time employees.
Neither the Series C Preferred Stock nor the Series E Preferred Stock is listed on a national securities exchange, and there is currently no public market for shares of either series.
The Series E Preferred Stock is not listed on a national securities exchange, and there is currently no public market for shares of this security.
Our farmland is predominantly concentrated in locations where farmers are able to grow either fresh produce annual row crops (e.g., certain berries and vegetables), which are typically planted and harvested annually, or certain permanent crops (e.g., almonds, blueberries, pistachios, and wine grapes). To a much lesser extent, we also own farms that grow certain commodity crops (e.g., corn and beans).
We also own several farm-related facilities that are necessary to the farming operations on the underlying farmland. Our farmland is predominantly concentrated in locations where farmers are able to grow either fresh produce annual row crops (e.g., certain berries and vegetables), which are typically planted and harvested annually, or certain permanent crops (e.g., almonds, blueberries, pistachios, and wine grapes).
Pursuant to each of these dealer-manager agreements, Gladstone Securities provided or provides certain sales, promotional, and marketing services to us in connection with the offering of the respective stock. Refer to Note 6, “ Related-Party Transactions—Gladstone Securities ,” for a discussion of the fees and commissions paid to Gladstone Securities pursuant to each of these dealer-manager agreements.
Pursuant to each of these dealer-manager agreements, Gladstone Securities provided or provides certain sales, promotional, and marketing services to us in connection with the offering of the respective stock.
Pursuant to the agreement, we pay Gladstone Securities a financing fee in connection with the services it provides to us for securing financing on our properties. Refer to Note 6, “ Related-Party Transactions—Gladstone Securities ,” for a discussion of the fees to be paid to Gladstone Securities pursuant to the Financing Arrangement Agreement.
Pursuant to the agreement, we pay Gladstone Securities a financing fee in connection with the services it provides to us for securing financing on our properties.
These and other risks related to governmental regulation and environmental matters are described in more detail in Item 1A, “ Risk Factors .” Other Required Financial Information For other required financial information related to our properties, concentrations, segments, and operations, refer to our consolidated financial statements, including the notes thereto, included within this Form 10-K.
Other Required Financial Information For other required financial information related to our properties, concentrations, segments, and operations, refer to our consolidated financial statements, including the notes thereto, included within this Form 10-K.
Our CFO, accounting team, and the employees of our Adviser who manage our assets and investments spend all of their time on our matters.
We expect that approximately 15 to 25 full-time employees of our Adviser and our Administrator will spend substantial time on our matters during the 2024 calendar year. Our CFO, accounting team, and the employees of our Adviser who manage our assets and investments spend all of their time on our matters.
Human Capital Management We do not currently have any employees and do not expect to have any employees in the foreseeable future. Currently, services necessary for our business are provided by individuals who are employees of our Adviser and our Administrator pursuant to the terms of the Current Advisory Agreement and the Administration Agreement, respectively.
Currently, services necessary for our business are provided by individuals who are employees of our Adviser and our Administrator pursuant to the terms of the Current Advisory Agreement and the Administration Agreement, respectively. Each of our executive officers is an employee or executive officer, or both, of each our Adviser and our Administrator.
In addition, we own several farm-related facilities that are necessary to the farming operations on the underlying farmland, such as cooling facilities, packinghouses, processing facilities, and various storage facilities.
To a much lesser extent, we also own farms that grow certain commodity crops (e.g., corn and beans). In addition, we own several farm-related facilities, such as cooling facilities, packinghouses, processing facilities, and various storage facilities.
Removed
Each of our executive officers is an employee or executive officer, or both, of each our Adviser and our Administrator. We expect that approximately 15 to 25 full-time employees of our Adviser and our Administrator will spend substantial time on our matters during the 2023 calendar year.
Added
Refer to Note 6, “ Related-Party Transactions—Gladstone Securities ,” in the accompanying notes to our consolidated financial statements for a discussion of the fees to be paid to Gladstone Securities pursuant to the Financing Arrangement Agreement.
Added
Refer to Note 6, “ Related-Party Transactions—Gladstone Securities ,” in the accompanying notes to our consolidated financial statements for a discussion of the fees and commissions paid to Gladstone Securities pursuant to each of these dealer-manager agreements. Human Capital Management We do not currently have any employees and do not expect to have any employees in the foreseeable future.
Added
These and other risks related to governmental regulation and environmental matters are described in more detail in Part I, Item 1A, “ Risk Factors, ” of this Form 10-K.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeSales of substantial amounts of our common stock (including shares of our common stock issuable upon the conversion of OP Units that we may issue from time to time), Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, or Series E Preferred Stock or the perception that these sales could occur may adversely affect prevailing market prices for our common stock, Series B Preferred Stock, or Series D Term Preferred Stock (each of which is publicly traded), or, if and when listed on a national securities exchange, our Series C Preferred Stock or Series E Preferred Stock. 30 Table of Contents An increase in market interest rates may have an adverse effect on the market price of our common stock.
Biggest changeSales of substantial amounts of our common stock (including shares of our common stock issuable upon the conversion of OP Units that we may issue from time to time) or our currently-designated preferred securities, or the perception that these sales could occur, may adversely affect prevailing market prices for our publicly-traded common stock and preferred securities.
We expect that a significant number of our future tenants will be independent farming operations, about which there is generally little or no publicly available operating and financial information. As a result, we will rely on our Adviser to perform due diligence investigations of these tenants, their operations, and their prospects.
We expect that a significant number of our future tenants will be independent farming operations, about which there is generally little or no publicly available operating and financial information. As a result, we rely on our Adviser to perform due diligence investigations of these tenants, their operations, and their prospects.
Our stockholders are unable to evaluate the economic merits of our investments or the terms of any dispositions of properties. Our Adviser has broad authority to make acquisitions of properties and dispositions of properties.
Our stockholders are unable to evaluate the economic merits of our investments or the terms of any dispositions of properties. Our Adviser has broad authority to make acquisitions and dispositions of properties.
Although we do not expect that a significant portion our rental payments will be based on the quality of our tenants’ harvests, any of these factors could have a material adverse effect on our tenants’ ability to pay rent to us, which in turn could have a material adverse effect on our ability to make distributions to our stockholders.
Although we do not expect that a significant portion of our rental payments will be based on the quality of our tenants’ harvests, any of these factors could have a material adverse effect on our tenants’ ability to pay rent to us, which in turn could have a material adverse effect on our ability to make distributions to our stockholders.
The effects of climate change may be more significant along coastlines, such as in the California coastal areas where we partially focus our acquisition efforts, due to rising sea levels resulting from melting of polar ice caps, which could result in increased risk of coastal erosion, flooding, degradation in the availability and quality of groundwater aquifers, and expanding agricultural weed and pest populations.
The effects of climate change may be more significant along coastlines, such as in the California coastal areas where we partially focus our acquisition efforts, due to rising sea levels resulting from the melting of polar ice caps, which could result in increased risk of coastal erosion, flooding, degradation in the availability and quality of groundwater aquifers, and expanding agricultural weed and pest populations.
In addition, such agreements may prohibit or limit the ability of our subsidiaries to transfer any of their property or assets to us, any of our other subsidiaries, or to third parties. Our future indebtedness or our subsidiaries’ future indebtedness may also include restrictions with similar effects.
In addition, such agreements may prohibit or limit the ability of our subsidiaries to transfer any of their property or assets to us, any of our other subsidiaries, or to third parties. Our future indebtedness or our subsidiaries’ future indebtedness may also include restrictions with similar effects.
Even if the Series C Preferred Stock or Series E Preferred Stock is listed on Nasdaq or another national securities exchange within one calendar year of the respective offerings’ termination date, as anticipated, there is a risk that such shares may be thinly traded, and the market for such shares may be relatively illiquid compared to the market for other types of securities, with the spread between the bid and asked prices considerably greater than the spreads of other securities with comparable terms and features.
Even if the Series E Preferred Stock is listed on Nasdaq or another national securities exchange within one calendar year of the respective offerings’ termination date, as anticipated, there is a risk that such shares may be thinly traded, and the market for such shares may be relatively illiquid compared to the market for other types of securities, with the spread between the bid and asked prices considerably greater than the spreads of other securities with comparable terms and features.
In addition to the risks associated with real estate investments in general, as described elsewhere in this Form 10-K, the risks associated with our development farms include, among other things: • significant time lag between commencement of development and commercial productivity for permanent crop development farms subjects us to greater risks due to fluctuations in the general economy, crop prices, and adverse weather conditions; • expenditure of money and time on development that may not be completed; • inability to achieve rental rents per acre at newly-developed farms to make the properties profitable; • higher than estimated costs, including labor and planting, irrigation or other related costs; and • possible delays in development due to a number of factors, including weather, labor disruptions, regulatory approvals, acts of terror or other acts of violence, or acts of God (such as fires, earthquakes, or floods).
In addition to the risks associated with real estate investments in general, as described elsewhere in this Form 10-K, the risks associated with our development farms include, among other things: • significant time lag between commencement of development and commercial productivity for permanent crop development farms subjects us to greater risks due to fluctuations in the general economy, crop prices, and adverse weather conditions; • expenditure of money and time on development that may not be completed; • inability to achieve rental rates per acre at newly-developed farms to make the properties profitable; • higher than estimated costs, including labor and planting, irrigation or other related costs; and • possible delays in development due to a number of factors, including weather, labor disruptions, regulatory approvals, acts of terror or other acts of violence, or acts of God (such as fires, earthquakes, or floods).
Until shares of the Series C Preferred Stock or Series E Preferred Stock are listed on Nasdaq or another national securities exchange, if ever, holders of such shares may be unable to sell them at all or, if they are able to, only at substantial discounts from the liquidation preference.
Until shares of the Series E Preferred Stock are listed on Nasdaq or another national securities exchange, if ever, holders of such shares may be unable to sell them at all or, if they are able to, only at substantial discounts from the liquidation preference.
Under those circumstances, in order to pay our debt obligations, including distribution and dividend payments to shareholders, we might be required to sell properties at a loss or be unable to make distributions or decrease distributions to our stockholders.
Under those circumstances, in order to pay our debt obligations, including distribution and dividend payments to stockholders, we might be required to sell properties at a loss or be unable to make distributions or decrease distributions to our stockholders.
The extent of the impact of any public health emergency on the Company’s operational and financial performance will depend on many factors, including the duration and scope of such public health emergency, the extent of any related travel advisories and restrictions implemented, the impact of such public health emergencies on overall supply and demand, goods and services, investor liquidity, consumer confidence and levels of economic activity, and the extent of its disruption to important global, regional, and local supply chains and economic markets, all of which are highly uncertain and cannot be predicted.
The extent of the impact of any public health emergency on our operational and financial performance will depend on many factors, including the duration and scope of such public health emergency, the extent of any related travel advisories and restrictions implemented, the impact of such public health emergencies on overall supply and demand, goods and services, investor liquidity, consumer confidence and levels of economic activity, and the extent of its disruption to important global, regional, and local supply chains and economic markets, all of which are highly uncertain and cannot be predicted.
Additionally, our charter contains restrictions on the ownership and transfer of our securities, including the Series C Preferred Stock and Series E Preferred Stock, and these restrictions may inhibit your ability to sell the Series C Preferred Stock or Series E Preferred Stock promptly, or at all.
Additionally, our charter contains restrictions on the ownership and transfer of our securities, including the Series E Preferred Stock, and these restrictions may inhibit your ability to sell the Series E Preferred Stock promptly, or at all.
Further, the operations of the Company may be significantly impacted, or even temporarily or permanently halted, as a result of government shelter-in-place measures, vaccine mandates, voluntary and precautionary restrictions on travel or meetings, paused or reversed reopening orders, and other factors related to a public health emergency, including its potential adverse impact on the health of the Adviser’s and Administrator’s personnel.
Further, our operations may be significantly impacted, or even temporarily or permanently halted, as a result of government shelter-in-place measures, vaccine mandates, voluntary and precautionary restrictions on travel or meetings, paused or reversed reopening orders, and other factors related to a public health emergency, including its potential adverse impact on the health of our Adviser’s and Administrator’s personnel.
We expect to lease a significant number of our properties to medium-sized farming operations and related agricultural businesses, which will expose us to a number of unique risks related to these entities. For example, medium-sized agricultural businesses may be more likely than larger farming operations to have difficulty making lease payments when they experience adverse events.
We expect to lease a significant number of our properties to medium-sized farming operations and related agricultural businesses, which will expose us to a number of risks specifically related to these entities. For example, medium-sized agricultural businesses may be more likely than larger farming operations to have difficulty making lease payments when they experience adverse events.
Our future success depends to a significant extent on the continued service and coordination of our senior management team, particularly David Gladstone, our chairman, chief executive officer and president; Terry Lee Brubaker, our vice chairman and chief operating officer; Bill Reiman and Bill Frisbie, our Executive Vice Presidents; and Lewis Parrish, our chief financial officer and assistant treasurer. Mr.
Our future success depends to a significant extent on the continued service and coordination of our senior management team, particularly David Gladstone, our chairman, chief executive officer and president; Terry Lee Brubaker, our chief operating officer; Bill Reiman, our Executive Vice President; and Lewis Parrish, our chief financial officer and assistant treasurer. Mr.
However, such a reduction would not be effective for any stockholder who beneficially owns more than the reduced ownership limit. We believe that we have satisfied the ownership diversification requirements, including with respect to our taxable year ended December 31, 2022.
However, such a reduction would not be effective for any stockholder who beneficially owns more than the reduced ownership limit. We believe that we have satisfied the ownership diversification requirements, including with respect to our taxable year ended December 31, 2023.
The ownership restriction may discourage a change of control and may deter individuals or entities from making tender offers for our 25 Table of Contents capital stock, which offers might otherwise be financially attractive to our stockholders or which might cause a change in our management. • Our Board is divided into three classes, with the term of the directors in each class expiring every third year.
The ownership restriction may discourage a change of control and may deter individuals or entities from making tender offers for our capital stock, which offers might otherwise be financially attractive to our stockholders or which might cause a change in our management. • Our Board of Directors is divided into three classes, with the term of the directors in each class expiring every third year.
In the event of a default by a tenant, we may also experience delays in enforcing our rights as landlord and may incur substantial costs in protecting our investment and re-leasing our property. 16 Table of Contents Some of our tenants could be susceptible to bankruptcy, which would affect our ability to generate rents from them and therefore negatively affect our results of operations.
In the event of a default by a tenant, we may also experience delays in enforcing our rights as landlord and may incur substantial costs in protecting our investment and re-leasing our property. Some of our tenants could be susceptible to bankruptcy, which would affect our ability to generate rents from them and therefore negatively affect our results of operations.
It is difficult to predict future legislation, regulation, and executive actions, and we cannot predict or control the impact future actions by regulators or government bodies, such as the U.S. Federal Reserve, will have on our business.
It is difficult to predict future legislation, regulation, and executive actions, and we cannot predict or control the impact future actions by regulators or government bodies, such as the Federal Reserve, will have on our business.
To facilitate compliance with this requirement, our charter prohibits any individual from owning more than 3.3% in value of our outstanding stock. Pursuant to an exception from this limit contained in our charter, as of December 31, 2022, David Gladstone owned, directly or indirectly, including through certain trusts, aggregate beneficial ownership of approximately 8.5% of our outstanding common stock.
To facilitate compliance with this requirement, our charter prohibits any individual from owning more than 3.3% in value of our outstanding stock. Pursuant to an exception from this limit contained in our charter, as of December 31, 2023, David Gladstone owned, directly or indirectly, including through certain trusts, aggregate beneficial ownership of approximately 8.3% of our outstanding common stock.
As a result, there is a risk that this continuing crisis could adversely impact the Company’s ability to source, manage, and divest investments and the Company’s ability to achieve its investment objectives, all of which could result in significant losses to the Company and could impact the Company’s ability to make interest and distribution payments to lenders and stockholders, respectively, including their respective amounts.
As a result, there is a risk that this continuing crisis could adversely impact our ability to source, manage, and divest investments and the Company’s ability to achieve its investment objectives, all of which could result in significant losses to us and could impact our ability to make interest and distribution payments to lenders and stockholders, respectively, including their respective amounts.
Additionally, the ability of our current tenants to be able to make their rental payments is also dependent upon sufficient access to water. Although we expect to acquire properties with sufficient water access, should the need arise for additional wells from which to obtain water, we would be required to obtain permits prior to drilling such wells.
Additionally, the ability of our current tenants to make their rental payments is dependent upon sufficient access to water. Although we expect to acquire properties with sufficient water access, should the need arise for additional wells from which to obtain water, we likely would be required to obtain permits prior to drilling such wells.
Competition for the acquisition of agricultural real estate may impede our ability to make acquisitions, increase the cost of these acquisitions or decrease or prevent increases in the occupancy and rental rates of our current properties. 20 Table of Contents We will compete for the acquisition of properties with many other entities engaged in agricultural and real estate investment activities, including corporate agriculture companies, financial institutions, institutional pension funds, real estate companies, private equity funds and private real estate investors.
Competition for the acquisition of agricultural real estate may impede our ability to make acquisitions, increase the cost of these acquisitions or decrease or prevent increases in the occupancy and rental rates of our current properties. 19 Table of Content We will compete for the acquisition of properties with many other entities engaged in agricultural and real estate investment activities, including corporate agriculture companies, financial institutions, institutional pension funds, real estate companies, private equity funds and private real estate investors.
At the same time, our Advisory Agreement permits our Adviser to conduct other commercial activities and to provide management and advisory services to other entities, including, but not limited to, Gladstone Commercial, Gladstone Capital, and Gladstone Investment, each of which is affiliated with us. Each of our executive officers, other than Mr.
At the same time, our Advisory Agreement permits our Adviser to conduct other 23 Table of Content commercial activities and to provide management and advisory services to other entities, including, but not limited to, Gladstone Commercial, Gladstone Capital, and Gladstone Investment, each of which is affiliated with us. Each of our executive officers, other than Mr.
Risks Relating to the Market for our Common Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, and Series E Preferred Stock Future issuances and sales of shares of our common stock, Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, Series E Preferred Stock, or other series of preferred securities, or the perception that such issuances will occur, may have adverse effects on the trading prices of our shares.
Risks Relating to the Market for our Common Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, and Series E Preferred Stock Future issuances and sales of shares of our common stock, our currently-designated preferred securities, future series of preferred securities, or the perception that such issuances will occur, may have adverse effects on the trading prices of our shares.
Therefore, although it may be in our stockholders’ best interests that we sell one of these properties, it may be economically prohibitive for us to do so if we are a party to such a tax protection agreement.
Therefore, although it may be in our stockholders’ best interests that we sell one of these properties, it may be economically 25 Table of Content prohibitive for us to do so if we are a party to such a tax protection agreement.
In addition, we will incur a 4% nondeductible excise tax on the amount, if any, by which our distributions in any year are less than the sum of: • 85% of our ordinary income for that year; • 95% of our capital gain net income for that year; and 28 Table of Contents • 100% of our undistributed taxable income from prior years.
In addition, we will incur a 4% nondeductible excise tax on the amount, if any, by which our distributions in any year are less than the sum of: • 85% of our ordinary income for that year; • 95% of our capital gain net income for that year; and 27 Table of Content • 100% of our undistributed taxable income from prior years.
The devotion of a portion of our properties to these oil and gas 22 Table of Contents operations would reduce the amount of the surface available for farming or farm-related uses, which could adversely impact the rents that we receive from leasing these properties. Interest rate fluctuations may adversely affect our results of operations.
The devotion of a portion of our properties to these oil and gas 21 Table of Content operations would reduce the amount of the surface available for farming or farm-related uses, which could adversely impact the rents that we receive from leasing these properties. Interest rate fluctuations may adversely affect our results of operations.
Since our IPO, we have expanded our investment focus to include farms used for permanent crops, and we intend to continue to add to our investments in farmland used for permanent crops in the future. Permanent crops have plant structures (such as 17 Table of Contents trees, vines, or bushes) that produce yearly crops without being replanted.
Since our IPO, we have expanded our investment focus to include farms used for permanent crops, and we intend to continue to add to our investments in farmland used for permanent crops in the future. Permanent crops have plant structures (such as trees, vines, or bushes) that produce yearly crops without being replanted.
The departure of any of our executive officers or key personnel of our Adviser could have a material adverse effect on our ability to implement our business strategy and to achieve our investment objectives.
The departure of any of our executive officers or key personnel of our Adviser or Administrator, as applicable, could have a material adverse effect on our ability to implement our business strategy and to achieve our investment objectives.
Parrish, is also an executive officer of Gladstone Commercial, which actively makes real 24 Table of Contents estate investments, and Gladstone Capital and Gladstone Investment, which actively make loans to and invest in small- and medium-sized companies.
Parrish, is also an executive officer of Gladstone Commercial, which actively makes real estate investments, and Gladstone Capital and Gladstone Investment, which actively make loans to and invest in small- and medium-sized companies.
Although the current development market contains uncertainties, these uncertainties may be more acute over time, since we do 21 Table of Contents not intend to acquire properties that are expected to be converted to urban or suburban uses in the near term.
Although the current development market contains uncertainties, these uncertainties may be more acute over time, since we do 20 Table of Content not intend to acquire properties that are expected to be converted to urban or suburban uses in the near term.
A reduction in the rent we receive could have a material adverse effect on our cash flow and ability to make distributions to our stockholders. Our investments in farmland used for permanent crops have a higher risk profile than farmland used for annual row crops.
A reduction in the rent we receive could have a material adverse effect on our cash flow and ability to make distributions to our stockholders. 16 Table of Content Our investments in farmland used for permanent crops have a higher risk profile than farmland used for annual row crops.
Tenants that have been impacted adversely by public health emergencies, including the COVID-19 pandemic, may not be able to make timely rental payments due to labor shortages, supply chain issues, or due to government-mandated lockdowns or other measures taken to address such public health emergencies.
Tenants that have been impacted adversely by public health emergencies may not be able to make timely rental payments due to labor shortages, supply chain issues, or due to government-mandated lockdowns or other measures taken to address such public health emergencies.
These incidents may be an intentional attack or an unintentional event and could involve gaining unauthorized access to our information systems or those of our third-party providers for purposes of misappropriating assets, stealing confidential information, corrupting data, or causing operational disruption.
A cybersecurity incident may be an intentional attack or an unintentional event and could involve gaining unauthorized access to our information systems or those of our third-party providers for purposes of misappropriating assets, stealing confidential information, corrupting data, or causing operational disruption.
In addition, our officers and directors, our Adviser and its affiliates could be deemed to be fiduciaries under ERISA and subject to 29 Table of Contents other conditions, restrictions and prohibitions under Part 4 of Title I of ERISA.
In addition, our officers and directors, our Adviser and its affiliates could be deemed to be fiduciaries under ERISA and subject to 28 Table of Content other conditions, restrictions and prohibitions under Part 4 of Title I of ERISA.
Further, any public health emergency, including any outbreak of COVID-19, SARS, H1N1/09 flu, avian flu, other coronavirus, Ebola or other existing or new epidemic diseases, or the threat thereof, could have a significant adverse impact on the Company and could adversely affect the Company’s ability to fulfill its investment objectives.
Any public health emergency, including any outbreak of COVID-19, SARS, H1N1/09 flu, avian flu, other coronavirus, Ebola or other existing or new epidemic diseases, or the threat thereof, could have a significant adverse impact on us and could adversely affect our ability to fulfill our investment objectives.
As of December 31, 2022, David Gladstone, our chairman, chief executive officer, and president, and pursuant to an exception approved by our Board of Directors and in compliance with our charter, owned, directly or indirectly, including through certain foundations and trusts, approximately 7.2% of our common stock, and the Gladstone Future Trust, for the benefit of Mr.
As of December 31, 2023, David Gladstone, our chairman, chief executive officer, and president, and pursuant to an exception approved by our Board of Directors and in compliance with our charter, owned, directly or indirectly, 24 Table of Content including through certain foundations and trusts, approximately 7.0% of our common stock, and the Gladstone Future Trust, for the benefit of Mr.
Some of our tenants may have been recently restructured using leverage acquired in a leveraged transaction, may otherwise be subject to significant debt obligations, or may have been adversely impacted by public health emergencies, including the COVID-19 pandemic.
Some of our tenants may have been recently restructured using leverage acquired in a leveraged transaction, may otherwise be subject to significant debt obligations, or may have been adversely impacted by public health emergencies.
If we issue additional preferred securities that rank senior to our common shares in our capital structure, the holders of such preferred securities may have separate voting rights and other rights, preferences, or privileges, economic and otherwise, more favorable than those of our common shares and our currently-designated preferred securities (including our Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, and Series E Preferred Stock), and the issuance of such preferred securities could have the effect of delaying, deferring, or preventing a transaction or a change of control that might involve a premium price for common stockholders. 19 Table of Contents Any inability to access additional financing on terms that are favorable to us may adversely affect our ability to grow and our business generally.
If we issue additional preferred securities that rank senior to our common shares in our capital structure, the holders of such preferred securities may have separate voting rights and other rights, preferences, or privileges, economic and otherwise, more favorable than those of our common shares and our currently-designated preferred securities, and the issuance of such preferred securities could have the effect of delaying, deferring, or preventing a transaction or a change of control that might involve a premium price for common stockholders. 18 Table of Content Any inability to access additional financing on terms that are favorable to us may adversely affect our ability to grow and our business generally.
If market interest rates increase, prospective investors may desire a higher distribution yield on our common stock or may seek securities paying higher dividends or interest.
If market interest rates 29 Table of Content increase, prospective investors may desire a higher distribution yield on our common stock or may seek securities paying higher dividends or interest.
One of the factors that investors may consider in deciding whether to buy or sell our common stock is our distribution yield, which is our distribution rate as a percentage of our share price, relative to market interest rates.
An increase in market interest rates may have an adverse effect on the market price of our common stock. One of the factors that investors may consider in deciding whether to buy or sell our common stock is our distribution yield, which is our distribution rate as a percentage of our share price, relative to market interest rates.
In the event that our common stock, Series B Preferred Stock, and Series D Term Preferred Stock are all no longer listed on Nasdaq or another national securities exchange, we will be required to register this offering in any state in which we offer shares of the Series E Preferred Stock.
In the event that our common stock and our publicly-traded, currently-designated preferred securities are all no longer listed on Nasdaq or another national securities exchange, we will be required to register this offering in any state in which we offer shares of the Series E Preferred Stock.
Additionally, our degree of leverage could adversely affect our ability to obtain additional financing and may have an adverse effect on the public market price of shares of our publicly-traded common stock, Series B Preferred Stock, and Series D Term Preferred Stock. We face a risk from the fact that certain of our properties are cross-collateralized.
Additionally, our degree of leverage could adversely affect our ability to obtain additional financing and may have an adverse effect on the public market price of shares of our publicly-traded common stock or currently-designated preferred securities. We face a risk from the fact that certain of our properties are cross-collateralized. The mortgages on certain of our properties are cross-collateralized.
None of the provisions relating to the Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, or Series E Preferred Stock relate to or limit our indebtedness or afford the holders of the Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, or Series E Preferred Stock protection in the event of a highly-leveraged or other transaction, including a merger or the sale, lease or conveyance of all or substantially all our assets or business, that might adversely affect the holders of the Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, or Series E Preferred Stock, other than in connection with a Change of Control Triggering Event (as defined by the Certificate of Designations).
None of the provisions relating to our currently-designated preferred securities relate to or limit our indebtedness or afford the holders of these securities protection in the event of a highly-leveraged or other transaction, including a merger or the sale, lease, or conveyance of all or substantially all our assets or business, that might adversely affect the holders of our currently-designated preferred securities, other than in connection with a Change of Control Triggering Event (as defined by the Certificate of Designations).
If that were to occur, it would result in the amount of distributions that exceed our current and accumulated earnings and profits being treated first as a return of capital to the extent of the holder’s adjusted tax basis in the Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, Series E Preferred Stock, or common stock and then, to the extent of any excess over such adjusted tax basis, as capital gain. 27 Table of Contents We may not be able to maintain our qualification as a REIT for federal income tax purposes, which would subject us to federal income tax on our taxable income at regular corporate rates, thereby reducing the amount of funds available for paying distributions to stockholders.
If that were to occur, it would result in the amount of distributions that exceed our current and accumulated earnings and profits being treated first as a return of capital to the extent of the holder’s adjusted tax basis in the respective security and then, to the extent of any excess over such adjusted tax basis, as capital gain. 26 Table of Content We may not be able to maintain our qualification as a REIT for federal income tax purposes, which would subject us to federal income tax on our taxable income at regular corporate rates, thereby reducing the amount of funds available for paying distributions to stockholders.
Our subsidiaries’ ability to pay such distributions and/or make such loans, advances, leases, or other payments may be restricted by, among other things, applicable laws and regulations, current and future debt agreements, and management agreements into which our subsidiaries may enter, which may impair our ability to make cash payments on our securities, including the Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, and Series E Preferred Stock.
Our subsidiaries’ ability to pay such distributions and/or make such loans, advances, leases, or other payments may be restricted by, among other things, applicable laws and regulations, current and future debt agreements, and management agreements into which our subsidiaries may enter, which may impair our ability to make cash payments on our securities, including our currently-designated preferred securities.
Risks Associated With Our Use of an Adviser to Manage Our Business We are dependent upon our key management personnel for our future success, particularly David Gladstone, Terry Lee Brubaker, Bill Reiman, Bill Frisbie, Lewis Parrish, and Jay Beckhorn. We are dependent on our senior management and other key management members to carry out our business and investment strategies.
Risks Associated With Our Use of an Adviser to Manage Our Business We are dependent upon our key management personnel for our future success, particularly David Gladstone, Terry Lee Brubaker, Bill Reiman, Lewis Parrish, and Jay Beckhorn.
In the event of a liquidation, lenders with respect to any outstanding borrowings (including our lines of credit), holders of any debt securities, and holders of any preferred stock issuances (including our Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, Series E Preferred Stock, and any other preferred stock with parity ranking we may issue in the future) would receive a distribution of our available assets in full prior to the holders of our common stock.
In the event of a liquidation, lenders with respect to any outstanding borrowings, holders of any debt securities, and holders of any preferred stock issuances (including our currently-designated preferred securities and any other preferred stock with parity ranking we may issue in the future) would receive a distribution of our available assets in full prior to the holders of our common stock.
We have implemented or plan on implementing additional processes, procedures, and internal controls to help prevent, detect, and mitigate cybersecurity risks and cyber intrusions, but these measures, as well as our increased awareness of the nature and extent of a risk of a cyber-incident, do not guarantee that a cyber-incident will not occur and/or that our financial results, operations, or confidential information will not be negatively impacted by such an incident.
We have implemented processes, procedures, and internal controls to help prevent, detect, and mitigate cybersecurity threats and cyber intrusions, but these measures, as well as our increased awareness of the nature and extent of a threat of a cyber-incident, 22 Table of Content do not guarantee that a cyber-incident will not occur, will be timely detected, or that our financial results, operations, or confidential information will not be negatively impacted by such an incident.
Our charter grants our Board of Directors the right to classify or reclassify any unissued shares of capital stock, increase or decrease the authorized number of shares and establish the preference and rights of any preferred stock without stockholder approval.
Our charter grants our Board of Directors the right to classify or reclassify any unissued shares of capital stock, increase or decrease the authorized number of shares and establish the preference and rights of any preferred stock without stockholder approval. Under our charter, we currently have authority to issue shares of both common stock and preferred stock.
In extreme cases, entire harvests may be lost in some geographic areas. Further, certain of our properties are reliant upon groundwater, as they are not located within any state or federal water districts and, thus, are not limited by any government-regulated restrictions. Fresh produce is also vulnerable to crop disease, pests and other contaminants.
Further, certain of our properties are reliant upon groundwater, as they are not located within any state or federal water districts and, thus, are not limited by any government-regulated restrictions. Fresh produce is also vulnerable to crop disease, pests, and other contaminants.
The distributions payable by us on the Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, Series E Preferred Stock, or common stock may exceed our current and accumulated earnings and profits, as calculated for U.S. federal income tax purposes, at the time of payment.
The distributions payable by us on our currently-designated preferred securities or common stock may exceed our current and accumulated earnings and profits, as calculated for U.S. federal income tax purposes, at the time of payment.
In addition, we may issue additional shares of another class or series of preferred stock ranking on parity with the Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, or Series E Preferred Stock with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up.
In addition, we may issue additional shares of another class or series of preferred stock ranking on parity with our currently-designated preferred securities with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up.
Because fresh produce is highly perishable and generally must be brought to market and sold soon after harvest, unfavorable 18 Table of Contents growing conditions can reduce both crop size and crop quality. Seasonal factors, including supply and consumer demand, may also have an effect on the crops grown by our tenants.
Because fresh produce is highly perishable and generally must be brought to market and sold soon after harvest, unfavorable growing conditions can reduce both crop size and crop quality. Seasonal factors, including supply and consumer demand, may also have an effect on the crops grown by our tenants. In extreme cases, entire harvests may be lost in some geographic areas.
We cannot predict the impact future actions by regulators or government bodies, including the U.S. Federal Reserve, will have on real estate debt markets, the market value of our capital stock or on our business, and any such actions may negatively impact us. Regulators and U.S. government bodies have a major impact on our business. The U.S.
Federal Reserve, will have on real estate debt markets, the market value of our capital stock or on our business, and any such actions may negatively impact us. Regulators and U.S. government bodies have a major impact on our business. The U.S. Federal Reserve is a major participant in, and its actions significantly impact, the real estate debt markets.
Therefore, in the event of our bankruptcy, liquidation, or reorganization, claims of holders of the Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, and Series E Preferred Stock will be satisfied only after all of our and the Operating Partnership’s and its subsidiaries’ liabilities and obligations have been paid in full.
Therefore, in the event of our bankruptcy, liquidation, or reorganization, claims of holders of our currently-designated preferred securities will be satisfied only after all of our and the Operating Partnership’s and its subsidiaries’ liabilities and obligations have been paid in full.
In the future, we may attempt to increase our capital resources by completing additional offerings of our Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, Series E Preferred Stock or other equity securities or by issuing debt securities.
In the future, we may attempt to increase our capital resources by completing additional offerings of these preferred securities or other equity securities or by issuing debt securities.
Holders of our Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, Series E Preferred Stock and future holders of any securities ranking senior to our common stock have dividend and/or liquidation rights that are senior to the rights of the holders of our common stock.
Holders of our currently-designated preferred securities and future holders of any securities ranking senior to our common stock have dividend and/or liquidation rights that are senior to the rights of the holders of our common stock.
This could cause us to lose part or all of our investment in the property, which in turn could cause the value of our common stock, Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, or Series E Preferred Stock or the distributions to our stockholders to be reduced or delayed.
This could cause us to lose part or all of our investment in the property, which in turn could cause the value of our common stock, any of our currently-designated preferred securities, or the distributions to our stockholders to be reduced or delayed.
We cannot predict the effect, if any, of future issuances and sales of our common stock, Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, Series E Preferred Stock, possible other series of preferred securities, or the availability of shares for future sales, on the market price of our common stock, Series B Preferred Stock, or Series D Term Preferred Stock, each of which is publicly traded.
We cannot predict the effect, if any, of future issuances and sales of our common stock, our currently-designated preferred securities, possible future series of preferred securities, or the availability of shares for future sales on the market price of our publicly-traded common stock and preferred securities.
Shares of the Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, and Series E Preferred Stock are subordinated to existing and future debt, and your interests could be diluted by the issuance of additional preferred stock or by other transactions.
Shares of our currently-designated preferred securities are subordinated to existing and future debt, and your interests could be diluted by the issuance of additional preferred stock or by other transactions.
We intend to apply to list the Series C Preferred Stock on Nasdaq or another national securities exchange by December 31, 2023, and we intend to apply to list the Series E Preferred Stock on Nasdaq or another national securities exchange or to include these shares for quotation on a national securities market sometime within 12 months following the Series E Preferred Stock offering’s 31 Table of Contents termination date.
There is currently no public market for the Series E Preferred Stock. We intend to apply to list the Series E Preferred Stock on Nasdaq or another national securities exchange or to include these shares for quotation on a national securities market sometime within 12 months following the Series E Preferred Stock offering’s termination date.
Additional issuances of securities senior to our common stock may negatively impact the value of our common stock and further restrict the ability of holders of our common stock to receive dividends and/or liquidation rights.
Additional issuances of securities senior to our common stock may negatively impact the value of our common stock and further restrict the ability of holders of our common stock to receive dividends and/or liquidation rights. In addition to our outstanding borrowings and common stock, our capital structure also includes our currently-designated preferred securities.
Payment of accrued dividends on the Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, and Series E Preferred Stock will be subordinated to all of our existing and future debt and will be structurally subordinate to the obligations of our subsidiaries.
Payment of accrued dividends on our currently-designated preferred securities will be subordinated to all of our existing and future debt and will be structurally subordinate to the obligations of our subsidiaries.
This would reduce our ability to make additional investments and limit the further diversification of our portfolio. The Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, and Series E Preferred Stock will bear a risk of redemption by us.
This would reduce our ability to make additional investments and limit the further diversification of our portfolio. Our currently-designated preferred securities all bear a risk of redemption by us.
Risks Relating to Our Business and Operations Our real estate portfolio is concentrated across a limited number of states, which subjects us to an increased risk of significant loss if adverse weather, economic, or regulatory changes or developments in the markets in which our properties are located occur. 14 Table of Contents Since our current real estate profile is concentrated across a limited number of states, we are currently subject to adverse changes in the political or regulatory climate in those states or specific counties where our properties are located that could adversely affect our real estate portfolio and our ability to lease properties.
Risks Relating to Our Business and Operations 13 Table of Content Our real estate portfolio is concentrated across a limited number of states, which subjects us to an increased risk of significant loss if adverse weather, economic, or regulatory changes or developments in the markets in which our properties are located occur.
The death, disability or resignation of one or more of these persons could have a material adverse impact on our tenant and, in turn, on us. 15 Table of Contents Our Adviser has broad authority to make acquisitions and dispositions of properties, and there can be no assurance that, in the future, we will be able to continue to enter into definitive agreements to purchase properties, complete acquisitions, or dispose of properties on favorable terms.
Our Adviser has broad authority to make acquisitions and dispositions of properties, and there can be no assurance that, in the future, we will be able to continue to enter into definitive agreements to purchase properties, complete acquisitions, or dispose of properties on favorable terms.
Before January 31, 2026, we may, at our option, redeem the Series D Term Preferred Stock, in whole or in part, at any time or from time to time.
In addition, we may voluntarily redeem some or all of the Series E Preferred Stock on or after the first anniversary of the offering’s termination date. Before January 31, 2026, we may, at our option, redeem the Series D Term Preferred Stock, in whole or in part, at any time or from time to time.
While we do not currently have any of these tax protection agreements in place currently, we may enter into such agreements in the future. 26 Table of Contents Our redemption of OP Units could result in the issuance of a large number of new shares of our common stock and/or force us to expend significant cash, which may limit our funds necessary to make distributions on our common stock.
Our redemption of OP Units could result in the issuance of a large number of new shares of our common stock and/or force us to expend significant cash, which may limit our funds necessary to make distributions on our common stock.
Even after listing, if achieved, a liquid secondary trading market may not develop, and the features of the Series C Preferred Stock and Series E Preferred Stock may not provide you with favorable liquidity options. There is currently no public market for either the Series C Preferred Stock or the Series E Preferred Stock.
We intend to apply for quotation on Nasdaq for the Series E Preferred Stock in the future; however, there is currently no public market for this security. Even after listing, if achieved, a liquid secondary trading market may not develop, and the features of the Series E Preferred Stock may not provide holders of such shares with favorable liquidity options.
We operate as a holding company dependent upon the assets and operations of our subsidiaries, and because of our structure, we may not be able to generate the funds necessary to make distributions on the Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, or Series E Preferred Stock.
These factors may affect the trading price of our publicly-traded preferred securities. We operate as a holding company dependent upon the assets and operations of our subsidiaries, and because of our structure, we may not be able to generate the funds necessary to make distributions on our currently-designated preferred securities.
These increases in the federal funds rate and any future increases due to other key economic indicators, such as the unemployment rate or inflation, may cause interest rates and borrowing costs to rise, which may negatively impact our ability to access the debt markets on favorable terms and the market value of our capital stock.
Future decisions on the federal funds rate will depend on a variety of key economic indicators, including inflation and the unemployment rate, among others. Any future increases may cause interest rates and borrowing costs to rise even further, which may negatively impact our ability to access the debt markets on favorable terms.
Our agricultural properties are subject to adverse weather conditions, seasonal variability, crop disease and other contaminants, which may affect our tenants’ ability to pay rent and thereby have an adverse effect on our results of operations and our ability to make distributions to stockholders.
Our agricultural properties are subject to adverse weather conditions, seasonal variability, crop disease and other contaminants, which may affect our tenants’ ability to pay rent and thereby have an adverse effect on our results of operations and our ability to make distributions to stockholders. 17 Table of Content Fresh produce, including produce used in canning and other packaged food operations, is vulnerable to adverse weather conditions, including windstorms, floods, drought and temperature extremes, which are common but difficult to predict.
Further, holders of our Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, and Series E Preferred Stock rank senior in priority of dividend payments, which may restrict our ability to declare and pay dividends to our common stockholders at the current rate, or at all.
Further, holders of our currently-designated preferred securities rank senior in priority of dividend payments, which may restrict our ability to declare and pay dividends to our common stockholders at the current rate, or at all. We may not have sufficient earnings and profits to pay distributions on our currently-designated preferred securities or common stock to be treated as dividends.
These companies are more vulnerable to adverse conditions in their businesses or industries and economic conditions generally, as well as to increases in interest rates. In addition, these companies’ revenues and expenses may fluctuate according to the growing season, which may impact their ability to make regular lease payments.
These companies are more vulnerable to adverse conditions in their businesses or industries and economic conditions generally, as well as to increases in interest rates.
The result of these incidents may include disrupted operations, misstated or unreliable financial data, liability for stolen assets or information, increased cybersecurity protection and insurance costs, litigation, and damage to our business relationships. As our reliance on technology has increased, so have the risks posed to our information systems, both internal and those provided to us by third-party service providers.
The result of a cybersecurity incident may include disrupted operations, misstated or unreliable financial data, liability for stolen assets or information, increased cybersecurity protection and insurance costs, litigation, and damage to our business relationships.
Also, since neither the Series C Preferred Stock nor the Series E Preferred Stock has a stated maturity date, you may be forced to hold your Series C Preferred Stock or Series E Preferred Stock and receive stated dividends on the shares when, as, and if authorized by our Board of Directors and declared by us with no assurance as to ever receiving the liquidation preference.
Also, since the Series E Preferred Stock has a stated maturity date, holders may be forced to hold the Series E Preferred Stock and receive stated dividends on the shares when, as, and if authorized by our Board of Directors and declared by us with no assurance as to ever receiving the liquidation preference. 30 Table of Content We will be required to terminate the Series E Offering (as defined elsewhere in this Form 10-K) if our common stock and our publicly-traded, currently-designated preferred securities are all no longer listed on Nasdaq or another national securities exchange.
Any lease payment defaults by a tenant could adversely affect our cash flows and cause us to reduce the amount of distributions to stockholders.
In addition, these companies’ revenues and expenses may fluctuate according to the growing season, which may impact their ability to make regular lease payments. 15 Table of Content Any lease payment defaults by a tenant could adversely affect our cash flows and cause us to reduce the amount of distributions to stockholders.
In addition, cybersecurity risks such as those above have increased in recent years in part due to increasingly numerous and sophisticated malicious cyber actors.
As our reliance on technology has increased, so have the risks posed to our information systems, both internal and those provided to us by third-party service providers. In addition, cybersecurity threats such as those noted above have increased in recent years in part due to increasingly numerous and sophisticated malicious cyber actors.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table provides certain summary information about the 169 farms we owned as of December 31, 2022 (dollars in thousands, except for footnotes): 32 Table of Contents Location No. of Farms Total Acres Farm Acres Net Cost Basis (1) Encumbrances (2) California (3)(4)(5) 63 34,844 32,321 $ 868,539 $ 405,014 Florida 26 22,606 17,639 223,974 109,931 Washington 6 2,529 1,997 64,903 21,059 Arizona (6) 6 6,320 5,333 54,290 12,789 Colorado 12 32,773 25,577 46,429 27,935 Nebraska 9 7,782 7,050 30,815 12,118 Oregon (7) 6 898 736 29,445 11,705 Michigan 23 1,892 1,245 23,928 14,204 Texas 1 3,667 2,219 8,175 4,877 Maryland 6 987 863 8,098 4,467 South Carolina 3 597 447 3,632 2,193 Georgia 2 230 175 2,743 1,689 North Carolina 2 310 295 2,161 — New Jersey 3 116 101 2,124 1,256 Delaware 1 180 140 1,308 717 Totals 169 115,731 96,138 $ 1,370,564 $ 629,954 (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 accumulated depreciation and amortization.
Biggest changeThe following table provides certain summary information about the 169 farms we owned as of December 31, 2023 (dollars in thousands, except for footnotes): 32 Table of Content Location No. of Farms Total Acres Farm Acres Acre-feet of Water Assets Net Cost Basis (1) Encumbrances (2) California (3)(4)(5) 63 34,844 32,321 46,400 $ 850,610 $ 389,405 Florida (6) 26 22,468 17,639 — 221,185 95,012 Washington 6 2,520 2,004 — 59,763 20,133 Arizona (7) 6 6,320 5,333 — 52,119 12,303 Colorado 12 32,773 25,577 — 45,945 14,599 Nebraska 9 7,782 7,050 — 30,402 10,357 Oregon (8) 6 898 736 — 29,534 11,308 Michigan 23 1,892 1,245 — 23,048 13,868 Texas 1 3,667 2,219 — 8,101 — Maryland 6 987 863 — 8,013 4,344 South Carolina 3 597 447 — 3,542 2,147 Georgia 2 230 175 — 2,317 1,645 North Carolina 2 310 295 — 2,117 — New Jersey 3 116 101 — 2,100 1,221 Delaware 1 180 140 — 1,296 697 Totals 169 115,584 96,145 46,400 $ 1,340,092 $ 577,039 (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 accumulated depreciation and amortization.
(2) Excludes approximately $3.5 million of debt issuance costs related to notes and bonds payable, included in Notes and bonds payable, net on the accompanying Consolidated Balance Sheets. (3) Includes ownership in a special-purpose LLC that owns a pipeline conveying water to certain of our properties.
(2) Excludes approximately $2.9 million of debt issuance costs related to notes and bonds payable, included in Notes and bonds payable, net on the accompanying Consolidated Balance Sheets. (3) Includes ownership in a special-purpose LLC that owns a pipeline conveying water to certain of our properties.
As of December 31, 2022, this investment had a net carrying value of approximately $4.8 million and is included within Other assets, net on the accompanying Consolidated Balance Sheets.
As of December 31, 2023, this investment had a net carrying value of approximately $4.8 million and is included within Other assets, net on the accompanying Consolidated Balance Sheets.
In total, these two farms consist of 1,368 total acres and 1,221 farm acres and had an aggregate net cost basis of approximately $710,000 as of December 31, 2022 (included in Lease intangibles, net on the accompanying Consolidated Balance Sheets). (7) Includes ownership in a special-purpose LLC that owns certain irrigation infrastructure that provides water to two of our farms.
As of December 31, 2023, these ground leases had an aggregate net cost basis of approximately $376,000 and are included in Lease intangibles, net on the accompanying Consolidated Balance Sheets. (8) Includes ownership in a special-purpose LLC that owns certain irrigation infrastructure that provides water to two of our farms.
As of December 31, 2022, this investment had a net carrying value of approximately $1.0 million and is included within Other assets, net on the accompanying Consolidated Balance Sheets. (4) Includes five acres in which we own a leasehold interest via a ground sublease with a California municipality that expires in December 2041.
As of December 31, 2023, this investment had a net carrying value of approximately $1.0 million and is included within Other assets, net on the accompanying Consolidated Balance Sheet.
The ground sublease had a net cost basis of approximately $725,000 as of December 31, 2022 (included in Lease intangibles, net on the accompanying Consolidated Balance Sheets). (5) Includes 45,000 acre-feet of water stored with Semitropic Water Storage District, located in Kern County, California.
As of December 31, 2023, these two ground leases had a net cost basis of approximately $689,000 and are included in Lease intangibles, net on the accompanying Consolidated Balance Sheets.
See Note 3, “ Real Estate and Intangible Assets—Investments in Water Assets ,” for additional information on this water. (6) Includes two farms in which we own a leasehold interest via ground leases with the State of Arizona that expire in February 2025 and February 2032, respectively.
(7) Includes two farms consisting of 1,368 total acres and 1,221 farm acres in which we own leasehold interests via two ground leases with the State of Arizona that expire in February 2025 and February 2032, respectively.
Added
(4) Includes eight acres in which we own a leasehold interest via a ground lease with a private individual that expires in December 2040 and five acres in which we own a leasehold interest via a ground sublease with a California municipality that expires in December 2041.
Added
(5) Includes 46.003 acre-feet of water stored with Semitropic Water Storage District, located in Kern County, California and 397 surplus water credits in our account with Westlands Water District, located in Fresno County, California. See Note 3, “ Real Estate and Intangible Assets—Investments in Water Assets, ” in the accompanying notes to our consolidated financial statements for additional information.
Added
(6) Includes one property classified as held for sale; see Note 3, “ Real Estate and Intangible Assets—Real Estate Held for Sale, ” in the accompanying notes to our consolidated financial statements for additional information.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS In the ordinary course of business, we may be involved in legal proceedings from time to time. We are not currently subject to any material legal proceedings, nor, to our knowledge, are any material legal proceedings threatened against us.
Biggest changeITEM 3. LEGAL PROCEEDINGS In the ordinary course of business incidental to our business, we may be involved in various legal proceedings from time to time which we may not consider material. We are not currently subject to any material legal proceedings, nor, to our knowledge, are any material legal proceedings threatened against us.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeSale of Unregistered Securities We did not sell any unregistered shares of stock during the three months or year ended December 31, 2022. Issuer Purchaser of Equity Securities We did not purchase any class of our equity securities registered under Section 12 of the Exchange Act during the three months or year ended December 31, 2022.
Biggest changeIssuer Purchaser of Equity Securities We did not purchase any class of our equity securities registered under Section 12 of the Exchange Act during the three months or year ended December 31, 2023.
Stock Performance Graph 34 Table of Contents The following graph compares the cumulative stockholder return (assuming reinvestment of distributions) of our common stock with that of the Standard and Poor’s 500 Index (“S&P 500”) and the FTSE NAREIT All REIT Index (“FNAR”), which is a market capitalization-weighted index that includes all REITs that are listed on the New York Stock Exchange, the American Stock Exchange, or the Nasdaq National Market List.
Stock Performance Graph The following graph compares the cumulative stockholder return (assuming reinvestment of distributions) of our common stock with that of the Standard and Poor’s 500 Index (“S&P 500”) and the FTSE NAREIT All REIT Index (“FNAR”), which is a market capitalization-weighted index that includes all REITs that are listed on the New York Stock Exchange, the American 34 Table of Content Stock Exchange, or the Nasdaq National Market List.
Our Board of Directors regularly evaluates our per-share distribution payments as they monitor the capital markets and the impact that the economy has on the Company.
Our Board of Directors regularly evaluates our per-share distribution payments as it monitors the capital markets and the impact that the economy has on the Company.
Stockholder Information As of February 13, 2023: • there were 14 registered holders of record and approximately 68,499 beneficial owners of our common stock; and • other than those owned by the Company, there were no holders of record or beneficial owners of our OP Units.
Stockholder Information As of February 12, 2024: • there were 19 registered holders of record and approximately 53,664 beneficial owners of our common stock; and • other than those owned by the Company, there were no holders of record or beneficial owners of our OP Units.
After a mandatory one-year holding period, our OP Units are redeemable at the option of the holder for cash or, at our election, shares of our common stock on a one-for-one basis.
After a mandatory one-year holding period, our OP Units are redeemable at the option of the holder for cash or, at our election, shares of our common stock on a one-for-one basis. OP Unit Redemptions Since January 1, 2023, through the date of this filing, no OP Units were tendered for redemption.
Removed
OP Unit Redemptions Since January 1, 2022, through the date of this filing, a total of 204,778 OP Units were tendered for redemption, which we satisfied by issuing 204,778 shares of common stock.
Added
There are currently no OP Units outstanding other than those owned by the Company. Sale of Unregistered Securities We did not sell any unregistered shares of stock during the three months or year ended December 31, 2023.
Removed
These shares of common stock were issued in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended, which we relied on based upon factual representations received from the limited partners who received the shares of common stock. Currently, there are no OP Units outstanding that are held by non-controlling limited partners.
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The stock performance graph assumes $100 was invested on December 31, 2018. As of December 31, Index 2018 2019 2020 2021 2022 2023 LAND $ 100.00 $ 118.07 $ 138.58 $ 327.40 $ 181.98 $ 148.32 S&P 500 100.00 128.88 149.83 190.13 153.16 190.27 FNAR 100.00 123.50 111.47 152.60 108.78 117.18
Removed
The stock performance graph assumes $100 was invested on December 31, 2017. As of December 31, Index 2017 2018 2019 2020 2021 2022 LAND $ 100.00 $ 89.15 $ 105.26 $ 123.54 $ 291.87 $ 162.23 S&P 500 100.00 93.76 120.84 140.49 178.27 143.61 FNAR 100.00 91.26 112.70 101.72 139.26 99.27

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following table summarizes the geographic locations (by state) of our farms owned and with leases in place as of December 31, 2022, 2021, and 2020 (dollars in thousands): As of and For the Year Ended December 31, 2022 As of and For the Year Ended December 31, 2021 As of and For the Year Ended December 31, 2020 State No. of Farms Total Acres % of Total Acres Lease Revenue % of Total Lease Revenue No. of Farms Total Acres % of Total Acres Lease Revenue % of Total Lease Revenue No. of Farms Total Acres % of Total Acres Lease Revenue % of Total Lease Revenue California (1) 63 34,844 30.1% $ 61,118 68.5% 62 33,027 29.3% $ 49,644 65.9% 55 25,197 24.9% $ 31,536 55.3% Florida 26 22,606 19.5% 14,537 16.3% 26 22,591 20.1% 13,675 18.2% 23 20,770 20.5% 13,342 23.4% Washington 6 2,529 2.2% 3,401 3.8% 3 1,384 1.2% 2,384 3.2% 3 1,384 1.4% 531 1.0% Colorado 12 32,773 28.3% 2,153 2.4% 12 32,773 29.1% 2,675 3.6% 12 32,773 32.4% 3,264 5.7% Arizona 6 6,320 5.5% 2,100 2.4% 6 6,280 5.6% 1,951 2.6% 6 6,280 6.2% 4,739 8.3% Nebraska 9 7,782 6.7% 1,712 1.9% 9 7,782 6.9% 1,588 2.1% 9 7,782 7.7% 1,556 2.7% Oregon 6 898 0.8% 1,710 1.9% 5 726 0.6% 854 1.1% 3 418 0.4% 528 0.9% Michigan 23 1,892 1.6% 786 0.9% 23 1,892 1.7% 1,040 1.4% 15 962 1.0% 723 1.3% Maryland 6 987 0.8% 453 0.5% 6 987 0.9% 476 0.6% 4 759 0.8% 135 0.2% Texas 1 3,667 3.2% 450 0.5% 1 3,667 3.3% 450 0.6% 1 3,667 3.6% 450 0.8% South Carolina 3 597 0.5% 244 0.3% 3 597 0.5% 244 0.3% 3 597 0.6% 47 0.1% Georgia 2 230 0.2% 224 0.3% 2 230 0.2% 31 —% — — —% — —% New Jersey 2 310 0.3% 145 0.2% 2 310 0.3% 150 0.2% — — —% — —% North Carolina 3 116 0.1% 129 0.1% 3 116 0.1% 75 0.1% 2 310 0.3% 153 0.3% Delaware 1 180 0.2% 74 —% 1 180 0.2% 81 0.1% 1 180 0.2% 27 —% TOTALS 169 115,731 100.0% $ 89,236 100.0% 164 112,542 100.0% $ 75,318 100.0% 137 101,079 100.0% $ 57,031 100.0% (1) According to the California Chapter of the American Society of Farm Managers and Rural Appraisers, there are eight distinct growing regions within California; our farms are spread across six of these growing regions.
Biggest changeThe following table summarizes the geographic locations (by state) of our farms owned as of and during the years ended December 31, 2023, 2022, and 2021 (dollars in thousands): 37 Table of Content As of and For the Year Ended December 31, 2023 As of and For the Year Ended December 31, 2022 As of and For the Year Ended December 31, 2021 State No. of Farms Total Acres % of Total Acres Lease Revenue % of Total Lease Revenue No. of Farms Total Acres % of Total Acres Lease Revenue % of Total Lease Revenue No. of Farms Total Acres % of Total Acres Lease Revenue % of Total Lease Revenue California (1) 63 34,844 30.1% $ 59,143 65.5% 63 34,844 30.1% $ 61,118 68.5% 62 33,027 29.3% $ 49,644 65.9% Florida (2) 26 22,468 19.4% 15,076 16.7% 26 22,606 19.5% 14,537 16.3% 26 22,591 20.1% 13,675 18.2% Washington 6 2,520 2.2% 4,651 5.1% 6 2,529 2.2% 3,401 3.8% 3 1,384 1.2% 2,384 3.2% Colorado 12 32,773 28.3% 2,564 2.8% 12 32,773 28.3% 2,153 2.4% 12 32,773 29.1% 2,675 3.6% Arizona 6 6,320 5.5% 2,263 2.5% 6 6,320 5.5% 2,100 2.4% 6 6,280 5.6% 1,951 2.6% Oregon 6 898 0.8% 2,181 2.4% 6 898 0.8% 1,710 1.9% 5 726 0.6% 854 1.1% Nebraska 9 7,782 6.7% 1,778 2.0% 9 7,782 6.7% 1,712 1.9% 9 7,782 6.9% 1,588 2.1% Michigan 23 1,892 1.6% 966 1.1% 23 1,892 1.6% 786 0.9% 23 1,892 1.7% 1,040 1.4% Maryland 6 987 0.9% 461 0.5% 6 987 0.8% 453 0.5% 6 987 0.9% 476 0.6% Texas 1 3,667 3.2% 450 0.5% 1 3,667 3.2% 450 0.5% 1 3,667 3.3% 450 0.6% South Carolina 3 597 0.5% 244 0.3% 3 597 0.5% 244 0.3% 3 597 0.5% 244 0.3% Georgia 2 230 0.2% 224 0.3% 2 230 0.2% 224 0.3% 2 230 0.2% 31 —% New Jersey 3 116 0.1% 129 0.1% 3 116 0.1% 129 —% 3 116 0.1% 75 0.1% North Carolina 2 310 0.3% 114 0.1% 2 310 0.3% 145 0.2% 2 310 0.3% 150 0.2% Delaware 1 180 0.2% 75 0.1% 1 180 0.2% 74 0.1% 1 180 0.2% 81 0.1% TOTALS 169 115,584 100.0% $ 90,319 100.0% 169 115,731 100.0% $ 89,236 100.0% 164 112,542 100.0% $ 75,318 100.0% (1) According to the California Chapter of the American Society of Farm Managers and Rural Appraisers, there are eight distinct growing regions within California; our farms are spread across six of these growing regions.
Common Stock—At-the-Market Program On May 12, 2020, we entered into new equity distribution agreements with Virtu Americas, LLC, and Ladenburg Thalmann & Co., Inc.
Common Stock—At-the-Market Program On May 12, 2020, we entered into equity distribution agreements with Virtu Americas, LLC, and Ladenburg Thalmann & Co., Inc.
We believe that these additional performance metrics, along with the most directly-comparable GAAP measure, provide investors with helpful insight regarding how management measures our ongoing performance, as each of CFFO and AFFO (and their respective per-share amounts) are used by management and our board of directors, as appropriate, in assessing overall performance, as well as in certain decision-making analysis, including, but not limited to, the timing of acquisitions and 52 Table of Contents potential equity raises (and the type of securities to offer in any such equity raises), the determination of any fee credits, and declarations of distributions on our common stock.
We believe that these additional performance metrics, along with the most directly-comparable GAAP measure, provide investors with helpful insight regarding how management measures our ongoing performance, as each of CFFO and AFFO (and their respective per-share amounts) are used by management and our Board of Directors, as appropriate, in assessing overall performance, as well as in certain decision-making analysis, including, but not limited to, the timing of acquisitions and potential equity raises (and the type of securities to offer in any such equity raises), the determination of any fee credits, and declarations of distributions on our common stock.
We expect to meet our long-term liquidity requirements through various sources of capital, including long-term mortgage indebtedness and bond issuances, future equity issuances (including, but not limited to, shares of our Series E Preferred Stock, 50 Table of Contents OP Units through our Operating Partnership as consideration for future acquisitions, and shares of common stock through our ATM Program), and other secured and unsecured borrowings.
We expect to meet our long-term liquidity requirements through 50 Table of Content various sources of capital, including long-term mortgage indebtedness and bond issuances, future equity issuances (including, but not limited to, shares of our Series E Preferred Stock, OP Units through our Operating Partnership as consideration for future acquisitions, and shares of common stock through our ATM Program), and other secured and unsecured borrowings.
Base Management Fee Pursuant to the Prior Advisory Agreement, through June 30, 2021, a base management fee was paid quarterly and was calculated at an annual rate of 0.50% (0.125% per quarter), of the prior calendar quarter’s “Gross Tangible Real Estate,” defined as the gross cost of tangible real estate owned by us (including land and land improvements, permanent plantings, irrigation and drainage systems, farm-related facilities, and other tangible site improvements), prior to any accumulated depreciation, and as shown on our balance sheet or the notes thereto for the applicable quarter.
Base Management Fee Pursuant to the Prior Advisory Agreement, through June 30, 2021, a base management fee was paid quarterly and was calculated at an annual rate of 0.50% (0.125% per quarter), of the prior calendar quarter’s “Gross Tangible Real Estate,” 42 Table of Content defined as the gross cost of tangible real estate owned by us (including land and land improvements, permanent plantings, irrigation and drainage systems, farm-related facilities, and other tangible site improvements), prior to any accumulated depreciation, and as shown on our balance sheet or the notes thereto for the applicable quarter.
This adjustment removes the effects of straight-lining rental income, as well as the amortization related to above-market lease values and lease incentives and accretion related to below-market lease values, other deferred revenue, and tenant improvements, resulting in rental income reflected on a modified accrual cash basis.
This adjustment removes the effects of straight-lining rental income, as well as the amortization related to above-market lease values and certain noncash lease incentives and accretion related to below-market lease values, certain other deferred revenue, and tenant improvements, resulting in rental income reflected on a modified accrual cash basis.
Management believes that the purchase prices of the farms acquired during the previous 12 months and the most recent appraisals available for the farms acquired prior to the previous 12 months fairly represent the current market values of the properties as of December 31, 2022, and, accordingly, did not make any adjustment to these values.
Management believes that the purchase prices of the farms acquired during the previous 12 months and the most recent appraisals available for the farms acquired prior to the previous 12 months fairly represent the current market values of the properties as of December 31, 2023, and, accordingly, did not make any adjustment to these values.
Specifically, we believe that FFO is helpful to investors in better understanding our operating performance, primarily because its calculation excludes depreciation and amortization expense on real estate assets, as we believe that GAAP historical cost depreciation of real estate assets is generally not correlated with changes in the value of those assets, particularly with farmland real estate, the value of which does not diminish in a predictable manner over time, as historical cost depreciation implies.
Specifically, we believe that FFO is helpful to investors in better understanding our operating performance, primarily because its calculation excludes depreciation and amortization expense on real estate assets, as we believe that GAAP historical cost 52 Table of Content depreciation of real estate assets is generally not correlated with changes in the value of those assets, particularly with farmland real estate, the value of which does not diminish in a predictable manner over time, as historical cost depreciation implies.
Existing Properties Leasing Activity The following table summarizes certain leasing activity that has occurred on our existing properties since January 1, 2022, through the date of this filing (dollars in thousands, except for footnotes): PRIOR LEASES NEW LEASES (1) Farm Locations Number of Leases Total Farm Acres Total Annualized Straight-line Rent (2) # of Leases with Participation Rents Lease Structures (# of NNN / NN / N) (3) Total Annualized Straight-line Rent (2)(4) Wtd.
Leasing Activity The following table summarizes certain leasing activity that has occurred on our existing properties since January 1, 2023, through the date of this filing (dollars in thousands, except for footnotes): PRIOR LEASES NEW LEASES (1) Farm Locations Number of Leases Total Farm Acres Total Annualized Straight-line Rent (2) # of Leases with Participation Rents Lease Structures (# of NNN / NN / N) (3) Total Annualized Straight-line Rent (2) Wtd.
Regarding all upcoming lease expirations, there can be no assurance that we will be able to renew the existing leases or execute new leases at rental rates favorable to us, if at all, or be able to find replacement tenants, if necessary.
Regarding all vacancies and upcoming lease expirations, there can be no assurance that we will be able to renew the existing leases or execute new leases at rental rates favorable to us, if at all, or be able to find replacement tenants, if necessary.
Diluted funds from operations (“Diluted FFO”), diluted core funds from operations (“Diluted CFFO”), and diluted adjusted funds from operations (“Diluted AFFO”) per share are FFO, CFFO, and AFFO, respectively, divided by the weighted-average 53 Table of Contents number of total shares (including shares of our common stock and OP Units held by non-controlling limited partners) outstanding on a fully-diluted basis during a period.
Diluted funds from operations (“Diluted FFO”), diluted core funds from operations (“Diluted CFFO”), and diluted adjusted funds from operations (“Diluted AFFO”) per share are FFO, CFFO, and AFFO, respectively, divided by the weighted-average number of total shares (including shares of our common stock and OP Units held by non-controlling limited partners) outstanding on a fully-diluted basis during a period.
ASC 360 further requires that the purchase price of real estate be allocated to (i) the tangible assets acquired and 44 Table of Contents liabilities assumed, and, if applicable, (ii) any identifiable intangible assets and liabilities, by valuing the property as if it was vacant, based on management’s determination of the relative fair values of such assets and liabilities as of the date of acquisition.
ASC 360 further requires that the purchase price of real estate be allocated to (i) the tangible assets acquired and liabilities assumed, and, if applicable, (ii) any identifiable intangible assets and liabilities, by valuing the property as if it was vacant, based on management’s determination of the relative fair values of such assets and liabilities as of the date of acquisition.
Further, while management believes the values presented reflect current market conditions, the ultimate amount realized on any asset will be based on the timing of such dispositions and the then-current market conditions. There can be no assurance that the ultimate realized value upon disposition of an asset will approximate the estimated fair value above.
Further, while management believes the values presented reflect current market conditions, the ultimate amount realized on any asset will be based on the timing of such 57 Table of Content dispositions and the then-current market conditions. There can be no assurance that the ultimate realized value upon disposition of an asset will approximate the estimated fair value above.
Other – 2022 compared to 2021 Lease revenue from properties acquired or disposed of increased primarily due to additional revenues earned on new farms acquired subsequent to December 31, 2020.
Other – 2023 compared to 2022 Lease revenue from properties acquired or disposed of increased primarily due to additional revenues earned on new farms acquired subsequent to December 31, 2021.
Despite ongoing volatility in the markets, based on discussions with our lenders, we do not believe there will be a credit freeze on agricultural lending in the near term.
Despite ongoing uncertainty in the markets, based on discussions with our lenders, we do not believe there will be a credit freeze on agricultural lending in the near term.
We believe that diluted earnings per share is the most directly-comparable GAAP measure to each of Diluted FFO, CFFO, and AFFO per share. Because many REITs provide Diluted FFO, CFFO, and AFFO per share information to the investment community, we believe these are useful supplemental measures when comparing us to other REITs.
We believe that diluted earnings per share is the most directly-comparable GAAP measure to each of Diluted FFO, CFFO, and AFFO per share. Because many REITs provide Diluted FFO, CFFO, and 53 Table of Content AFFO per share information to the investment community, we believe these are useful supplemental measures when comparing us to other REITs.
We also own several farm-related facilities, such as cooling facilities, packinghouses, processing facilities, and various storage facilities. 35 Table of Contents We conduct substantially all of our activities through, and all of our properties are held, directly or indirectly, by, Gladstone Land Limited Partnership (the “Operating Partnership”).
We also own several farm-related facilities, such as cooling facilities, packinghouses, processing facilities, and various storage facilities. We conduct substantially all of our activities through, and all of our properties are held, directly or indirectly, by, Gladstone Land Limited Partnership (the “Operating Partnership”).
Our Adviser earned incentive fees during each of the years ended December 31, 2022 and 2021 due to our Pre-Incentive Fee FFO (as defined in the Advisory Agreements) exceeding the required hurdle rate of the applicable equity base during each of the first, third, and fourth quarters of fiscal years 2022 and 2021.
Our Adviser earned incentive fees during each of the years ended December 31, 2023 and 2022 due to our Pre-Incentive Fee FFO (as defined in the Advisory Agreements) exceeding the required hurdle rate of the applicable equity base during the third and fourth quarters of 2023 and during the first, third, and fourth quarters of 2022.
Finally, pursuant to Financial Industry Regulatory Authority Rule 2310(b)(5), with the assistance of a third-party valuation expert, we determined the estimated value of our Series C Preferred Stock to be $25.00 per share as of December 31, 2022 (see Exhibit 99.1 to this Form 10-K).
Finally, pursuant to Financial Industry Regulatory Authority Rule 2310(b)(5), with the assistance of a third-party valuation expert, we determined the estimated value of our Series E Preferred Stock to be $25.00 per share as of December 31, 2023 (see Exhibit 99.1 to this Form 10-K).
We also have borrowing relationships with several other agricultural lenders and are continuously reaching out to other lenders to establish prospective new relationships. In addition, we expect to enter into additional borrowing agreements with existing and new lenders in connection with certain potential new acquisitions in the future.
We also have borrowing relationships with several other agricultural lenders and are continuously reaching out to other lenders to establish prospective new relationships. As such, we expect to enter into additional borrowing agreements with existing and new lenders in connection with certain potential new acquisitions in the future.
Net Asset Value Real estate companies are required to record real estate using the historical cost basis of the real estate, adjusted for accumulated depreciation and amortization, and, as a result, the carrying value of the real estate does not typically change as the 54 Table of Contents fair value of the assets change.
Net Asset Value Real estate companies are required to record real estate using the historical cost basis of the real estate, adjusted for accumulated depreciation and amortization, and, as a result, the carrying value of the real estate does not typically change as the fair value of the assets change.
Changes in the market environment and other events that may occur during our ownership of these properties may cause the values reported above to 57 Table of Contents vary from the actual fair value that may be obtained in the open market.
Changes in the market environment and other events that may occur during our ownership of these properties may cause the values reported above to vary from the actual fair value that may be obtained in the open market.
Our Registration Statement (as defined in Note 8, “ Equity—Registration Statement ,” within the accompanying notes to our consolidated financial statements) permits us to issue up to an aggregate of $1.0 billion in securities, consisting of common stock, preferred stock, warrants, debt securities, depository shares, subscription rights, and units, including through separate, concurrent offerings of two or more of such securities.
Our 2023 Registration Statement (as defined in Note 8, “Equity—Registration Statement,” within the accompanying notes to our consolidated financial statements) permits us to issue up to an aggregate of $1.5 billion in securities, consisting of common stock, preferred stock, warrants, debt securities, depository shares, subscription rights, and units, including through separate, concurrent offerings of two or more of such securities.
Portfolio Diversification Since our initial public offering in January 2013 (the “IPO”), we have expanded our portfolio from 12 farms leased to 7 different, unrelated tenants to a current portfolio of 169 farms leased to 89 different, unrelated third-party tenants who grow over 60 different types of crops on our farms.
Portfolio Diversification Since our initial public offering in January 2013 (the “IPO”), we have expanded our portfolio from 12 farms leased to 7 different, unrelated tenants to a current portfolio of 168 farms leased to 93 different, unrelated third-party tenants who grow over 60 different types of crops on our farms.
There is currently no public market for shares of Series E Preferred Stock. The Company intends to apply to list the Series E Preferred Stock on Nasdaq or another national securities exchange within one calendar year of the Series E Termination Date; however, there can be no assurance that a listing will be achieved in such timeframe, or at all.
There is currently no public market for shares of Series E Preferred Stock. We intend to apply to list the Series E Preferred Stock on Nasdaq or another national securities exchange within one calendar year after the Series E Termination Date; however, there can be no assurance that a listing will be achieved in such timeframe, or at all.
Our investment focus is in farmland suitable for growing either fresh produce 37 Table of Contents annual row crops (e.g., certain berries and vegetables) or certain permanent crops (e.g., almonds, blueberries, pistachios, and wine grapes), with an ancillary focus on farmland growing certain commodity crops (e.g., beans and corn).
Our investment focus is in farmland suitable for growing either fresh produce annual row crops (e.g., certain berries and vegetables) or certain permanent crops (e.g., almonds, blueberries, pistachios, and wine grapes), with an ancillary focus on farmland growing certain commodity crops (e.g., beans and corn).
Comparison of Results of Operations for the Years Ended December 31, 2021 and 2020 A comparison of our operating results for the years ended December 31, 2021 and 2020 was included in our Annual Report on Form 10-K for the year ended December 31, 2021, beginning on page 43 under Part II, Item 7, “Management’s Discussion and Analysis of Financial Position and Results of Operations,” which was filed with the Securities and Exchange Commission, or SEC, on February 22, 2022.
Comparison of Results of Operations for the Years Ended December 31, 2022 and 2021 A comparison of our operating results for the years ended December 31, 2022 and 2021 was included in our Annual Report on Form 10-K for the year ended December 31, 2022, beginning on page 45 under Part II, Item 7, “Management’s Discussion and Analysis of Financial Position and Results of Operations,” which was filed with the Securities and Exchange Commission, or SEC, on February 21, 2023.
Some of the significant assumptions used by appraisers and the Valuation Team in valuing our portfolio as of December 31, 2022, include land values per farmable acre, market rental rates per farmable acre and the resulting net operating income (“NOI”) at the property level, and capitalization rates, among others.
Some of the significant assumptions used by appraisers and the Valuation Team in valuing our portfolio as of December 31, 2023, include land values per farmable acre, market rental rates per farmable acre and the resulting net operating income 55 Table of Content (“NOI”) at the property level, and capitalization rates, among others.
Under the Series C Offering, we were permitted to sell up to 20,000,000 shares of our Series C Preferred Stock on a “reasonable best efforts” basis through Gladstone Securities at an offering price of $25.00 per share (the “Primary Series C Offering”) and up to 6,000,000 additional shares of our Series C Preferred Stock pursuant to our dividend reinvestment plan (the “DRIP”) at a price of $22.75 per share.
Under the Series C Offering, as amended, we were permitted to sell up to 10,200,000 shares of our Series C Preferred Stock on a “reasonable best efforts” basis through Gladstone Securities at an offering price of $25.00 per share (the “Primary Series C Offering”) and up to 200,000 additional shares of our Series C Preferred Stock pursuant to our dividend reinvestment plan (the “DRIP”) at a price of $22.75 per share.
Determination of Fair Value Our Board of Directors reviews and approves the valuations of our properties pursuant to a valuation policy approved by our Board of Directors (the “Valuation Policy”).
Determination of Fair Value 54 Table of Content Our Board of Directors reviews and approves the valuations of our properties pursuant to a valuation policy approved by our Board of Directors (the “Valuation Policy”).
OVERVIEW General We are an externally-managed, agricultural real estate investment trust (“REIT”) that is engaged in the business of owning and leasing farmland. We are not a grower of crops, nor do we typically farm the properties we own. We currently own 169 farms comprised of 115,731 acres across 15 states in the U.S.
OVERVIEW General We are an externally-managed, agricultural real estate investment trust (“REIT”) that is engaged in the business of owning and leasing farmland. We are not a grower of crops, nor do we typically farm the properties we own. We currently own 168 farms comprised of 111,836 acres across 15 states in the U.S.
Over 99.8% of our borrowings are currently at fixed rates, and on a weighted-average basis, these rates are fixed at an effective interest rate of 3.26% for another 4.9 years.
Over 99.9% of our borrowings are currently at fixed rates, and on a weighted-average basis, these rates are fixed at an effective interest rate of 3.34% for another 4.2 years.
Equity Activity Series C Preferred Stock On April 3, 2020, we filed a prospectus supplement with the SEC for a continuous public offering (the “Series C Offering”) of up to 26,000,000 shares of our 6.00% Series C Cumulative Redeemable Preferred Stock (the “Series C Preferred Stock”).
Equity Activity Series C Preferred Stock On April 3, 2020, we filed a prospectus supplement with the SEC for a continuous public offering (the “Series C Offering”) of our 6.00% Series C Cumulative Redeemable Preferred Stock (the “Series C Preferred Stock”).
Therefore, we further adjust AFFO to normalize the cash rent received pertaining to a lease year over that respective lease year on a straight-line basis, resulting in cash rent being recognized ratably over the period in which the cash rent is earned. • Amortization of debt issuance costs .
Therefore, we further adjust AFFO to normalize the cash rent received pertaining to a lease year over that respective lease year on a straight-line basis, resulting in cash rent being recognized ratably over the period in which the cash rent is earned.
Future Capital Needs Our short- and long-term liquidity requirements consist primarily of making principal and interest payments on outstanding borrowings; funding our general operating costs; making dividend payments on our Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, and Series E Preferred Stock; making distributions to stockholders (including non-controlling OP Unitholders, if any) to maintain our qualification as a REIT; and, as capital is available, funding capital improvements on existing farms and new farmland and farm-related acquisitions consistent with our investment strategy.
Future Capital Needs Our short- and long-term liquidity requirements consist primarily of making principal and interest payments on outstanding borrowings; funding our general operating costs; making dividend payments on our currently-designated preferred securities; making distributions to stockholders (including non-controlling OP Unitholders, if any) to maintain our qualification as a REIT; and, as capital is available, funding capital improvements on existing farms and new farmland and farm-related acquisitions consistent with our investment strategy.
In addition, we currently have certain properties valued at a total of approximately $92.1 million that are unencumbered and eligible to be pledged as collateral. Over 99.8% of our borrowings are currently at fixed rates, and on a weighted-average basis, these rates are fixed at an effective interest rate (after interest patronage) of 3.26% for another 4.9 years.
In addition, we currently have certain properties valued at a total of approximately $130.5 million that are unencumbered and eligible to be pledged as collateral. Over 99.9% of our borrowings are currently at fixed rates, and on a weighted-average basis, these rates are fixed at an effective interest rate (after interest patronage) of 3.34% for another 4.2 years.
Currently, 123 of our farms are leased on a pure, triple-net basis, 43 farms are leased on a partial-net basis (with us, as landlord, responsible for all or a portion of the related property taxes), and 3 farms are leased on a single-net basis (with us, as landlord, responsible for the related property taxes, as well as certain maintenance, repairs, and insurance costs).
Currently, 105 of our farms are leased on a pure, triple-net basis, 45 farms are leased on a partial-net basis (with us, as landlord, responsible for all or a portion of the related property taxes), 3 farms are leased on a single-net basis (with us, as landlord, responsible for the related property taxes, as well as certain maintenance, repairs, and insurance costs), and 15 farms are vacant.
See Note 6, “ Related-Party Transactions—Gladstone Securities—Dealer-Manager Agreements ,” for a discussion of the commissions and fees paid to Gladstone Securities in connection with the Series C Offering.
See Note 6, “Related-Party Transactions—Gladstone Securities—Dealer-Manager Agreements,” for a discussion of the commissions and fees to be paid to Gladstone Securities in connection with the Series E Offering.
Our current available liquidity is approximately $206.4 million, consisting of approximately $56.7 million in cash on hand and, based on the current level of collateral pledged, approximately $149.7 million of availability under the Current MetLife Facility (subject to compliance with covenants) and other undrawn notes or bonds.
Our current available liquidity is approximately $209.7 million, consisting of approximately $60.1 million in cash on hand and, based on the current level of collateral pledged, approximately $149.6 million of availability under the Current MetLife Facility (subject to compliance with covenants) and other undrawn notes or bonds.
The aggregate dividends paid on our Series B Preferred Stock and Series C Preferred Stock increased due to additional shares issued and outstanding during the current year.
The aggregate dividends paid on our cumulative redeemable preferred stock increased due to additional shares of the Series C Preferred Stock and Series E Preferred Stock issued and outstanding during the current year.
In addition, according to the NCREIF Farmland Index, which, as of December 31, 2022, consisted of approximately $15.3 billion of farms across the U.S., the total return on U.S. farmland (including appreciation and income) was 9.6% for the 12 months ended December 31, 2022.
In addition, according to the NCREIF Farmland Index, which, as of December 31, 2023, consisted of approximately $16.6 billion of farms across the U.S., the total return on U.S. farmland (including appreciation and income) was 5.0% for the 12 months ended December 31, 2023.
As of February 20, 2023: • we owned 169 farms comprised of 115,731 total acres across 15 states in the U.S.; • our occupancy rate (based on gross acreage) was 100.0%, and our farms were leased to 89 different, unrelated third-party tenants growing over 60 different types of crops; • the weighted-average remaining lease term across our agricultural real estate holdings was 6.2 years; and • the weighted-average term to maturity of our notes and bonds payable was 9.4 years, and over 99.8% of our notes and bonds payable bore interest at fixed rates; on a weighted-average basis, the remaining fixed-price term of our borrowings was 4.9 years, with an expected weighted-average effective interest rate (after interest patronage, as described below) of 3.26% over that term.
As of February 20, 2024: • we owned 168 farms comprised of 111,836 total acres across 15 states in the U.S.; • our occupancy rate (based on farmable acreage) was 98.9%, and our farms were leased to 93 different, unrelated third-party tenants growing over 60 different types of crops; • the weighted-average remaining lease term across our agricultural real estate holdings was 5.9 years; and • the weighted-average term to maturity of our notes and bonds payable was 8.8 years, and over 99.9% of our notes and bonds payable bore interest at fixed rates; on a weighted-average basis, the remaining fixed-price term of our borrowings was 4.2 years, with an expected weighted-average effective interest rate (after interest patronage, as described below) of 3.34% over that term.
LIBOR Transition The majority of our debt is at fixed rates, and we currently have very limited exposure to variable-rate debt based upon the London Interbank Offered Rate (“LIBOR”), which is currently being phased out and is anticipated to be completely phased out by June 2023.
LIBOR Transition The majority of our debt is at fixed rates, and we currently have very limited exposure to variable-rate debt. Previously, our variable-rate debt was based upon the London Interbank Offered Rate (“LIBOR”), which was phased out in June 2023.
PricewaterhouseCoopers LLP has neither examined, compiled, nor performed any procedures with respect to the fair values or the calculation of net asset value per common share, which utilizes 56 Table of Contents information that is not disclosed within the financial statements, and, accordingly, does not express an opinion or any other form of assurance with respect thereto.
PricewaterhouseCoopers LLP has neither examined, compiled, nor performed any procedures with respect to the fair values or the calculation of net asset value per common share, which utilizes information that is not disclosed within the financial statements, and, accordingly, does not express an opinion or any other form of assurance with respect thereto. 56 Table of Content As of December 31, 2023, we estimate the NAV per common share to be $19.06.
Business Environment Impact of Inflation and Rising Interest Rates According to the U.S. Bureau of Labor Statistics, the consumer price index (“CPI”) grew at an annual rate of 6.5% through December 2022, as overall inflation continued to ease from levels earlier in 2022, when it reached the highest rates seen in over 40 years.
Business Environment Impact of Inflation and Interest Rates According to the U.S. Bureau of Labor Statistics, the consumer price index (“CPI”) grew at an annual rate of 3.4% through December 31, 2023, as overall inflation continued to ease from the peak levels experienced in the summer of 2022, when it reached the highest rates seen in over 40 years.
In addition, the weighted-average remaining term of our notes and bonds payable is approximately 9.4 years. As such, with respect to our current borrowings, we have experienced minimal impact from the recent increases in interest rates, and we believe we are well-protected against any future interest rate increases.
In addition, the weighted-average remaining term of our notes and bonds payable is approximately 8.8 years. As such, with respect to our current borrowings, we have experienced minimal impact from increased interest rates over the past year, and we believe we are well-protected against any further interest rate increases.
Excluding interest patronage received on certain of our Farm Credit borrowings and the impact of debt issuance costs, the overall effective interest rate charged on our aggregate borrowings was 3.77% and 3.72% for the years ended December 31, 2022 and 2021, respectively.
Excluding interest patronage received on certain of our Farm Credit borrowings and the impact of debt issuance costs, the weighted average interest rate charged on our aggregate borrowings was 3.79% and 3.77% for the years ended December 31, 2023 and 2022, respectively.
In the near term, we believe that our current and short-term cash resources will be sufficient to service our debt; fund our current operating costs; pay dividends on our Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, and Series E Preferred Stock; and fund our distributions to stockholders (including non-controlling OP Unitholders).
In the near term, we believe that our current and short-term cash resources will be sufficient to service our debt; fund our current operating costs; pay dividends on our currently-designated preferred securities; and fund our distributions to stockholders (including non-controlling OP Unitholders).
Using a discounted cash flow analysis, management determined that the fair value of all long-term encumbrances on our properties as of December 31, 2022, was approximately $569.1 million, as compared to a carrying value (excluding unamortized related debt issuance costs) of approximately $629.9 million.
Using a discounted cash flow analysis, management determined that the fair value of all long-term encumbrances on our properties as of December 31, 2023, was approximately $529.4 million, as compared to a carrying value (excluding unamortized related debt issuance costs) of approximately $576.8 million.
In addition, the trading price of our common shares may differ significantly from our most recent estimated NAV per common share calculation. For example, while we estimated our NAV per common share to be $17.08 as of December 31, 2022, based on the calculation above, the closing price of our common stock on December 31, 2022, was $18.35 per share.
In addition, the trading price of our common shares may differ significantly from our most recent estimated NAV per common share calculation. For example, while we estimated our NAV per common share to be $19.06 as of December 31, 2023, based on the calculation above, the closing price of our common stock on December 31, 2023, was $14.45 per share.
A quarterly rollforward in the estimated NAV per common share and OP Unit for the three months ended December 31, 2022, is provided below: Estimated NAV per common share and non-controlling OP Unit as of September 30, 2022 $ 16.56 Less net loss attributable to common stockholders and non-controlling OP Unitholders (0.14) Adjustments for net change in valuations: Net change in unrealized fair value of farmland portfolio (1) $ 0.36 Net change in unrealized fair value of long-term indebtedness 0.05 Net change in valuations 0.41 Less distributions on common stock and non-controlling OP Units (0.14) Plus net accretive effect of equity issuances 0.39 Estimated NAV per common share and non-controlling OP Unit as of December 31, 2022 $ 17.08 (1) The net change in unrealized fair value of our farmland portfolio consists of three components: (i) an increase of $0.26 per share due to the net appreciation in value of the farms that were valued during the three months ended December 31, 2022, (ii) an increase of $0.27 per share due to the aggregate depreciation and amortization expense recorded during the three months ended December 31, 2022, and (iii) a decrease of $0.17 per share due to net asset dispositions or capital improvements made on certain farms that have not yet been considered in the determination of the respective farms’ estimated fair values.
A quarterly rollforward in the estimated NAV per common share and OP Unit for the three months ended December 31, 2023, is provided below: Estimated NAV per common share and non-controlling OP Unit as of September 30, 2023 $ 20.33 Less net loss attributable to common stockholders and non-controlling OP Unitholders (0.12) Adjustments for net change in valuations: Net change in unrealized fair value of farmland portfolio (1) $ (0.12) Net change in unrealized fair value of long-term indebtedness (0.35) Net change in unrealized fair value of preferred equity securities (0.46) Net change in valuations (0.93) Less distributions on common stock and non-controlling OP Units (0.14) Less net dilutive effect of equity issuances and redemptions, net (0.08) Estimated NAV per common share and non-controlling OP Unit as of December 31, 2023 $ 19.06 (1) The net change in unrealized fair value of our farmland portfolio consists of three components: (i) a decrease of $0.43 per share due to the net depreciation in value of the farms that were valued during the three months ended December 31, 2023, (ii) an increase of $0.27 per share due to the aggregate depreciation and amortization expense recorded during the three months ended December 31, 2023, and (iii) an increase of $0.04 per share due to net asset dispositions or capital improvements made on certain farms that have not yet been considered in the determination of the respective farms’ estimated fair values.
The Series D Term Preferred Stock was valued based on its closing stock price as of December 31, 2022. (5) The Series B Preferred Stock was valued based on its closing stock price as of December 31, 2022, while the Series C Preferred Stock was valued at its liquidation value, as discussed above.
The Series D Term Preferred Stock was valued based on its closing stock price as of December 31, 2023. (5) The Series B Preferred Stock and Series C Preferred Stock were valued based on their respective closing stock prices as of December 31, 2023, while the Series E Preferred Stock was valued at its liquidation value, as discussed above.
Purchase Price Allocation When we acquire real estate, we allocate the purchase price to: (i) the tangible assets acquired and liabilities assumed, consisting primarily of land, improvements (including irrigation and drainage systems), permanent plantings, and farm-related facilities and, if applicable, (ii) any identifiable intangible assets and liabilities, which primarily consist of the values of above- and below-market leases, in-place lease values, lease origination costs, and tenant relationships, based in each case on their fair values.
There were no material changes in our critical accounting policies during the year ended December 31, 2023. 43 Table of Content Purchase Price Allocation When we acquire real estate, we allocate the purchase price to: (i) the tangible assets acquired and liabilities assumed, consisting primarily of land, improvements (including irrigation and drainage systems), permanent plantings, and farm-related facilities and, if applicable, (ii) any identifiable intangible assets and liabilities, which primarily consist of the values of above- and below-market leases, in-place lease values, lease origination costs, and tenant relationships, based in each case on their fair values.
The following table provides a reconciliation of our FFO, CFFO, and AFFO for the years ended December 31, 2022, 2021, and 2020 to the most directly-comparable GAAP measure, net income, and a computation of diluted FFO, CFFO, and AFFO per share, using the weighted-average number of total shares (including shares of our common stock and OP Units held by non-controlling OP Unitholders) outstanding during the respective periods (dollars in thousands, except per-share amounts): For the Years Ended December 31, 2022 2021 2020 Net income $ 4,716 $ 3,514 $ 4,955 Less: Aggregate dividends declared on and charges related to extinguishment of Series B Preferred Stock and Series C Preferred Stock (1) (19,718) (12,258) (9,322) Net loss attributable to common stockholders and non-controlling OP Unitholders (15,002) (8,744) (4,367) Plus: Real estate and intangible depreciation and amortization 35,366 27,183 16,655 Plus: Losses on dispositions of real estate assets, net 3,760 2,537 2,180 Adjustments for unconsolidated entities (2) 57 36 18 FFO available to common stockholders and non-controlling OP Unitholders 24,181 21,012 14,486 Plus: Acquisition- and disposition-related expenses 438 355 210 Plus (less): Other nonrecurring charges (receipts), net (3) 1,023 (12) 159 CFFO available to common stockholders and non-controlling OP Unitholders 25,642 21,355 14,855 Net rent adjustments (2,835) (2,371) (1,305) Plus: Amortization of debt issuance costs 1,085 1,172 756 Plus: Other non-cash charges, net (4) 907 246 40 AFFO available to common stockholders and non-controlling OP Unitholders $ 24,799 $ 20,402 $ 14,346 Weighted-average common stock outstanding—basic and diluted 34,563,460 30,357,268 22,258,121 Weighted-average common non-controlling OP Units outstanding 61,714 166,067 131,745 Weighted-average total common shares outstanding 34,625,174 30,523,335 22,389,866 Diluted FFO per weighted-average total common share $ 0.70 $ 0.69 $ 0.65 Diluted CFFO per weighted-average total common share $ 0.74 $ 0.70 $ 0.66 Diluted AFFO per weighted-average total common share $ 0.72 $ 0.67 $ 0.64 Distributions declared per total common share $ 0.55 $ 0.54 $ 0.54 (1) Includes (i) cash dividends paid on our Series B Preferred Stock and Series C Preferred Stock, (ii) the value of additional shares of Series C Preferred Stock issued pursuant to the DRIP, and (iii) the pro-rata write-off of offering costs related to shares of Series B Preferred Stock and Series C Preferred Stock that were redeemed during the respective periods.
The following table provides a reconciliation of our FFO, CFFO, and AFFO for the years ended December 31, 2023, 2022, and 2021 to the most directly-comparable GAAP measure, net income, and a computation of diluted FFO, CFFO, and AFFO per share, using the weighted-average number of total shares (including shares of our common stock and OP Units held by non-controlling OP Unitholders) outstanding during the respective periods (dollars in thousands, except per-share amounts): For the Years Ended December 31, 2023 2022 2021 Net income $ 14,565 $ 4,716 $ 3,514 Less: Aggregate dividends declared on and charges related to extinguishment of cumulative redeemable preferred stock (1) (24,417) (19,718) (12,258) Net loss attributable to common stockholders and non-controlling OP Unitholders (9,852) (15,002) (8,744) Plus: Real estate and intangible depreciation and amortization 37,161 35,366 27,183 (Less) plus: (Gains) losses on dispositions of real estate assets, net (5,208) 3,760 2,537 Adjustments for unconsolidated entities (2) 92 57 36 FFO available to common stockholders and non-controlling OP Unitholders 22,193 24,181 21,012 Plus: Acquisition- and disposition-related expenses, net 149 438 355 Plus (less): Other nonrecurring charges (receipts), net (3) 1,418 1,023 (12) CFFO available to common stockholders and non-controlling OP Unitholders 23,760 25,642 21,355 Net rent adjustments (4,519) (3,371) (2,414) Plus: Amortization of debt issuance costs 1,065 1,085 1,172 (Less) plus: Other non-cash (receipts) charges, net (4) 17 907 246 AFFO available to common stockholders and non-controlling OP Unitholders $ 20,323 $ 24,263 $ 20,359 Weighted-average shares of common stock outstanding 35,733,742 34,563,460 30,357,268 Weighted-average common non-controlling OP Units outstanding — 61,714 166,067 Weighted-average shares of common shares outstanding, fully diluted 35,733,742 34,625,174 30,523,335 Diluted FFO per weighted-average total common share $ 0.62 $ 0.70 $ 0.69 Diluted CFFO per weighted-average total common share $ 0.66 $ 0.74 $ 0.70 Diluted AFFO per weighted-average total common share $ 0.57 $ 0.70 $ 0.67 Distributions declared per total common share $ 0.55 $ 0.55 $ 0.54 (1) Includes (i) cash dividends paid on our cumulative redeemable preferred stock, (ii) the value of additional shares of Series C Preferred Stock issued pursuant to the DRIP, and (iii) the pro-rata write-off of offering costs related to shares of cumulative redeemable preferred stock that were redeemed during the respective periods.
(4) Consists of (i) the amount of dividends on the Series C Preferred Stock paid via issuing new shares (pursuant to the DRIP), (ii) the pro-rata write-off of offering costs related to shares of the Series B Preferred Stock and Series C Preferred Stock that were redeemed, which were noncash charges, and (iii) our remaining pro-rata share of (income) loss recorded from investments in unconsolidated entities during the respective periods.
(4) Consists of (i) the amount of dividends on the Series C Preferred Stock paid via issuing new shares (pursuant to the DRIP), (ii) the pro-rata write-off of offering costs related to shares of cumulative redeemable preferred stock that were redeemed, which were noncash charges, (iii) our remaining pro-rata share of (income) loss recorded from investments in unconsolidated entities during the respective periods, and (iv) less noncash income recorded during 2023 as a result of additional water assets received as consideration in certain transactions.
If the increases in food prices continue to outpace inflation, we believe this will help mitigate the increase in input costs currently experienced by our farm operators.
If the increases in food prices continue to outpace or at least keep pace with inflation, we believe this will help mitigate any increase in input costs experienced by our farm operators.
We are currently in negotiations with the existing tenant on the farm, as well as other potential tenants, and we anticipate being able to renew the lease at its current market rental rate without incurring any downtime on the farm.
We currently have one agricultural lease scheduled to expire within the next six months on a farm in California. We are currently in negotiations with the existing tenant on the farm, as well as other potential tenants, and we anticipate being able to renew the lease at its current market rental rate without incurring any downtime on the farm.
Operating Expenses Depreciation and Amortization Depreciation and amortization expense increased primarily due to additional depreciation and amortization expense incurred on new farms acquired subsequent to December 31, 2020, as well as an increase in depreciation associated with additional capital expenditures on certain of our farms.
Operating Expenses Depreciation and Amortization Depreciation and amortization expense increased primarily due to additional depreciation and amortization expense incurred on new farms acquired subsequent to December 31, 2021, as well as additional depreciation expense associated with new capital improvements made on certain of our existing farms.
During the three months ended March 31, 2022, we recorded approximately $2.8 million of interest patronage from Farm Credit related to interest accrued during 2021, and during the three months ended September 30, 2022, we received approximately $113,000 of interest patronage, as certain Farm Credit associations paid a portion of the 2022 interest patronage (which relates to interest accrued during 2022 but is typically paid during the first half of 2023) early.
D uring the three months ended September 30, 2022, we received approximately $113,000 of interest patronage, as certain Farm Credit associations paid a portion of the 2022 interest patronage (which relates to interest accrued during 2022 but is typically paid during the first half of 2023) early.
RESULTS OF OPERATIONS For the purposes of the following discussions on certain operating revenues and expenses with regard to the comparison between the years ended December 31, 2022 and 2021: ▪ Same-property basis represents farms owned as of December 31, 2020, and were not vacant at any point during either period presented; and ▪ Properties acquired or disposed of are farms that were either acquired or disposed of at any point subsequent to December 31, 2020.
RESULTS OF OPERATIONS For the purposes of the following discussions on certain operating revenues and expenses: ▪ With regard to the comparison between the years ended December 31, 2023 and 2022: ▪ Same-property basis represents farms owned as of December 31, 2021, which were not vacant at any point during either period presented and full collectability of future rental payments under the respective leases was deemed probable during the entirety of both periods; ▪ Properties acquired or disposed of are farms that were either acquired or disposed of at any point subsequent to December 31, 2021.
Leases General Most of our leases are on a triple-net basis, an arrangement under which, in addition to rent, the tenant is required to directly pay the related taxes, insurance costs, maintenance, and other operating costs.
(2) Includes a 3,748-acre farm that was sold on January 11, 2024. Leases General Most of our leases are on a triple-net basis, an arrangement under which, in addition to rent, the tenant is required to directly pay the related taxes, insurance costs, maintenance, and other operating costs.
On a weighted-average basis, these borrowings bore interest at a stated rate of 4.14% and an effective interest rate (after interest patronage) of 3.09%.
On a weighted-average basis, these borrowings bore interest at a stated rate of 3.55% and an effective interest rate (after interest patronage, where applicable) of 3.43%.
The fair values of our Series B Preferred Stock and Series D Term Preferred Stock were determined using the closing stock prices as of December 31, 2022, of $23.51 per share and $23.41 per share, respectively.
The fair values of our Series B Preferred Stock, Series C Preferred Stock, and Series D Term Preferred Stock were determined using the closing stock prices as of December 31, 2023, of $19.25 per share, $19.00 per share, and $23.75 per share, respectively.
Interest expense increased primarily due to increased overall borrowings. The weighted- average principal balance of our aggregate borrowings (excluding our Series A Term Preferred Stock and Series D Term Preferred Stock) outstanding for the year ended December 31, 2022, was approximately $654.7 million, as compared to approximately $637.6 million for the prior-year period.
Interest expense decreased, primarily due to a decrease in overall borrowings. The weighted-average principal balance of our aggregate borrowings (excluding our cumulative term preferred stock) outstanding for the year ended December 31, 2023, was approximately $595.8 million, as compared to approximately $654.7 million for the prior-year period.
Losses on dispositions of real estate assets related to the disposals of certain irrigation and other improvements on certain of our farms. The net property and casualty (loss) recovery related to net expenses incurred and insurance recoveries received for certain improvements that were damaged due to natural disasters.
The net losses recorded during the year ended December 31, 2022, related to the disposals of certain irrigation and other improvements on certain of our farms. The net property and casualty loss related to net expenses incurred and insurance recoveries received for certain improvements that were damaged due to natural disasters.
(each a “Sales Agent”), under which we may issue and sell, from time to time and through the Sales Agents, shares of our common stock having an aggregate offering price of up to $100.0 million (the “ATM Program”).
(each a “Sales Agent”), that, as subsequently amended, permitted us to issue and sell, from time to time and through the Sales Agents, shares of our common stock having an aggregate offering price of up to $260.0 million (the “ATM Program”).
As such, with respect to our current borrowings, we have experienced minimal impact from the recent increases in interest rates, and we believe we are well-protected against further interest rate increases, which seem likely to continue in the near term.
As such, with respect to our current borrowings, we have experienced minimal impact from the recent increases in interest rates, and we believe we are well-protected against the potential of continued high interest rates or any further interest rate increases.
Farm Credit and Other Lenders Since September 2014, we have closed on multiple loans with various different Farm Credit associations (for additional information on these associations, see Note 4, “Borrowings,” within the accompanying notes to our consolidated financial statements).
To date, we have issued aggregate bonds of approximately $100.1 million under the Farmer Mac Facility. Farm Credit and Other Lenders Since September 2014, we have closed on multiple loans with various different Farm Credit associations (for additional information on these associations, see Note 4, “ Borrowings ,” within the accompanying notes to our consolidated financial statements).
Term (Years) # of Leases with Participation Rents Lease Structures (# of NNN / NN / N) (3) AZ, CA, CO, FL, MI, & NE 23 31,317 $ 9,446 8 14 / 8 / 1 $ 9,094 5.4 5 11 / 12 / 0 (1) In connection with certain of these leases, we committed to provide capital for certain improvements on these farms.
Term (Years) # of Leases with Participation Rents Lease Structures (# of NNN / NN / N) (3) CA, CO, FL, MI, NC, & NE 31 48,670 $ 24,051 6 18 / 11 / 2 $ 23,838 6.9 4 14 / 17 / 0 (1) In connection with certain of these leases, we committed to provide capital for certain improvements on these farms.
Additionally, 35 of our farms are leased under agreements that include a variable rent component, called “participation rents,” that are based on the gross revenues earned on the respective farms.
Additionally, 27 of our farms are leased under agreements that include a variable rent component, called “participation rents,” that are based on the gross revenues earned on the respective farms (though such leases generally include a guarantee of a minimum amount of rental income).
We consider these policies to be critical because they involve estimates and assumptions that require complex, subjective or significant judgments in their application and that materially affect our results of operations. There were no material changes in our critical accounting policies during the year ended December 31, 2022.
We consider these policies to be critical because they involve estimates and assumptions that require complex, subjective or significant judgments in their application and that materially affect our results of operations.
The following table summarizes the sales of our Series E Preferred Stock that occurred subsequent to December 31, 2022, through the date of this filing (dollars in thousands, except per-share amounts and footnotes): Number of Shares Sold Weighted-average Offering Price Per Share Gross Proceeds Net Proceeds (1) 34,600 $ 24.96 $ 864 $ 779 (1) Net of underwriting discounts and selling commissions and dealer-manager fees borne by us.
The following table summarizes the sales of our Series E Preferred Stock that occurred from January 1, 2023, through the date of this filing (dollars in thousands): Number of Shares Sold Weighted-average Offering Price Per Share Gross Proceeds Net Proceeds (1) 247,781 $ 24.96 $ 6,184 $ 5,575 (1) Net of underwriting discounts and selling commissions and dealer-manager fees borne by us.
The increase was partially offset by a decrease attributable to asset dispositions on certain of our farms and the expiration of certain lease intangible amortization periods. Property-operating Expenses Property operating expenses consist primarily of real estate taxes, repair and maintenance expense, insurance premiums, and other miscellaneous operating expenses paid for certain of our properties.
The increase was partially offset by a decrease attributable to certain assets reaching the end of their useful lives. Property Operating Expenses Property operating expenses consist primarily of real estate taxes, repair and maintenance expense, insurance premiums, and other miscellaneous operating expenses paid for certain of our properties.
LIBOR is currently expected to transition to a new standard rate, the Secured Overnight Financing Rate (“SOFR”), which will incorporate certain overnight repo market data collected from multiple data sets. SOFR was formally adopted by the Alternative Reference Rates Committee in July 2021.
LIBOR has since transitioned to a new standard rate, the Secured Overnight Financing Rate (“SOFR”), which was formally adopted by the Alternative Reference Rates Committee in July 2021 as a benchmark interest rate that incorporates certain overnight repo market data collected from multiple data sets.
MetLife Facility On February 3, 2022, we amended our credit facility with Metropolitan Life Insurance Company (“MetLife”), which previously consisted of a $75.0 million long-term note payable (the “2020 MetLife Term Note”) and $75.0 million of revolving equity lines of credit (the “MetLife Lines of Credit,” and together with the 2020 MetLife Term Note, the “Prior MetLife Facility”).
MetLife Facility On December 14, 2023, we amended our facility with Metropolitan Life Insurance Company (“MetLife”), which currently consists of a $75.0 million long-term note payable (the “2020 MetLife Term Note”), $75.0 million of revolving equity lines of credit (the “MetLife Lines of Credit”), and a $100.0 million long-term note payable (the “2022 MetLife Term Note,” and 40 Table of Content together with the 2020 MetLife Term Note and the MetLife Lines of Credit, the “Current MetLife Facility”).
Gladstone Land Corporation controls the sole general partner of the Operating Partnership and currently owns, directly or indirectly, 100.0% of the units of limited partnership interest in the Operating Partnership (“OP Units”). In addition, we have elected for Gladstone Land Advisers, Inc. (“Land Advisers”), a wholly-owned subsidiary of ours, to be treated as a taxable REIT subsidiary (“TRS”).
Gladstone Land Corporation controls the sole general partner of the Operating Partnership and currently owns, directly or indirectly, 100.0% of the units of limited partnership interest in the 35 Table of Content Operating Partnership (“OP Units”). In addition, we have elected for Gladstone Land Advisers, Inc.
The Series E Offering will terminate on the date (the “Series E Termination Date”) that is the earlier of (i) December 31, 2025 (unless terminated or extended by our Board of Directors) and (ii) the date on which all 8,000,000 shares of Series E Preferred Stock offering in the Series E Offering are sold.
Aggregate selling commissions and dealer-manager fees paid to Gladstone Securities as a result of these sales was approximately $609,000. 41 Table of Content The Series E Offering will terminate on the date (the “Series E Termination Date”) that is the earlier of (i) December 31, 2025 (unless terminated or extended by our Board of Directors) and (ii) the date on which all 8,000,000 shares of Series E Preferred Stock offering in the Series E Offering are sold.
Other – 2022 compared to 2021 Property operating expenses on properties acquired or disposed of increased primarily due to additional miscellaneous property-operating expenses incurred on certain of the new farms we acquired subsequent to December 31, 2020.
Other – 2023 compared to 2022 Property operating expenses on properties acquired or disposed of decreased, primarily due to additional legal fees incurred in the prior year periods on certain farms acquired subsequent to December 31, 2021.
Equity Capital The following table provides information on equity sales that have occurred since January 1, 2022 (dollars in thousands, except per-share amounts): Type of Issuance Number of Shares Sold Weighted-average Offering Price Per Share Gross Proceeds Net Proceeds (1) Series C Preferred Stock (2) 6,701,987 $ 24.76 $ 165,941 $ 152,470 Series E Preferred Stock 34,600 24.96 864 779 Common Stock – ATM Program 1,503,969 23.49 35,325 34,946 (1) Net of selling commissions and dealer-manager fees or underwriting discounts and commissions (in each case, as applicable).
Equity Capital The following table provides information on equity sales that have occurred since January 1, 2023 (dollars in thousands, except per-share amounts): Type of Issuance Number of Shares Sold Weighted-average Offering Price Per Share Gross Proceeds Net Proceeds (1) Series E Preferred Stock 247,781 24.96 6,184 5,575 Common Stock – ATM Program 788,045 19.34 15,240 15,087 (1) Net of selling commissions and dealer-manager fees or underwriting discounts and commissions (in each case, as applicable).
A breakdown of the methodologies used to value our properties and the aggregate value as of December 31, 2022, determined by each method is shown in the table below (dollars in thousands, except in footnotes): Valuation Method Number of Farms Total Acres Farm Acres Acre-feet of Water Net Cost Basis (1) Current Fair Value % of Total Fair Value Purchase Price 5 3,134 2,707 — $ 64,026 $ 64,928 4.1% Internal Valuation 3 6,189 4,730 — 20,438 36,000 2.3% Third-party Appraisal (2) 161 106,408 88,701 45,000 1,286,100 1,467,344 93.6% Total 169 115,731 96,138 45,000 $ 1,370,564 $ 1,568,272 100.0% (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 paid for by us that were associated with the properties, and adjusted for accumulated depreciation and amortization. 55 Table of Contents (2) Appraisals performed between March 2022 and December 2022.
A breakdown of the methodologies used to value our properties and the aggregate value as of December 31, 2023, determined by each method is shown in the table below (dollars in thousands, except in footnotes): Valuation Method Number of Farms Total Acres Farm Acres Acre-feet of Water Net Cost Basis (1) Current Fair Value % of Total Fair Value Purchase Price — — — 1,400 $ 573 $ 573 0.0% Sales Price 1 3,748 3,748 — 53,626 65,652 4.2% Internal Valuation 3 6,189 4,730 — 20,034 36,000 2.3% Third-party Appraisal (2) 165 105,647 87,667 45,000 1,265,859 1,464,249 93.5% Total 169 115,584 96,145 46,400 $ 1,340,092 $ 1,566,474 100.0% (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 paid for by us that were associated with the properties, and adjusted for accumulated depreciation and amortization.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeCurrently, over 99.8% of our borrowings are at fixed rates, and on a weighted-average basis, these rates are fixed at an effective interest rate (after interest patronage) of 3.26% for another 4.9 years. As such, with respect to our current borrowings, we believe fluctuations in interest rates would have a minimal impact on our net income.
Biggest changeCurrently, over 99.9% of our borrowings are at fixed rates, and on a weighted-average basis, these rates are fixed at an effective interest rate (after interest patronage) of 3.34% for another 4.2 years. As such, with respect to our current borrowings, we believe fluctuations in interest rates would have a minimal impact on our net income.
In addition to changes in interest rates, the fair value of our farmland portfolio is subject to fluctuations based on changes in local and regional economic conditions and changes in the creditworthiness of our tenants. Materially adverse changes in the fair value of our real estate may affect our ability to refinance our debt, if necessary. 58 Table of Contents
In addition to changes in interest rates, the fair value of our farmland portfolio is subject to fluctuations based on changes in local and regional economic conditions and changes in the creditworthiness of our tenants. Materially adverse changes in the fair value of our real estate may affect our ability to refinance our debt, if necessary. 58 Table of Content
Although we seek to mitigate this risk by structuring certain provisions into many of our leases, such as escalation clauses or adjusting the rent to prevailing market rents at various intervals, these features do not eliminate this risk.
Although we seek to mitigate this risk by including certain provisions in many of our leases, such as escalation clauses or adjusting the rent to prevailing market rents at various intervals, these features do not eliminate this risk.
However, interest rate fluctuations may affect the fair value of our fixed-rate borrowings. As of December 31, 2022, the fair value of our fixed-rate borrowings outstanding (excluding our Series D Term Preferred Stock) was approximately $569.1 million.
However, interest rate fluctuations may affect the fair value of our fixed-rate borrowings. As of December 31, 2023, the fair value of our fixed-rate borrowings outstanding (excluding our Series D Term Preferred Stock) was approximately $529.4 million.
Removed
If market interest rates had been one percentage point lower or higher than those rates in place as of December 31, 2022, the fair value of our fixed-rate borrowings would have increased or decreased by approximately $19.8 million or $18.7 million, respectively.
Added
The following table summarizes the hypothetical change in fair value of our fixed-rate borrowings at December 31, 2023, if market interest rates had been one or two percentage points lower or higher than those in place as of December 31, 2023 (dollars in thousands): Change in Market Interest Rates Carrying Value (1) Fair Value Difference 2% decrease $ 576,839 $ 562,496 $ (14,343) 1% decrease 576,839 545,510 (31,329) No change 576,839 529,366 (47,473) 1% increase 576,839 514,021 (62,818) 2% increase 576,839 499,421 (77,418) (1) Includes the principal balances outstanding of all long-term borrowings (consisting of notes and bonds payable), excluding unamortized debt issuance costs.

Other LAND 10-K year-over-year comparisons