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What changed in Farmland Partners Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Farmland Partners Inc.'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.

+228 added−250 removedSource: 10-K (2024-02-29) vs 10-K (2023-02-23)

Top changes in Farmland Partners Inc.'s 2023 10-K

228 paragraphs added · 250 removed · 189 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeHowever, we may be exposed to tenant credit risk and farming operation risks, particularly with respect to leases that do not require advance payment of 100% of the fixed rent, variable rent arrangements and leases with terms greater than one year. ​ Full Year 2022 Highlights ​ During 2022: ● Operating revenue increased 18.3% from $51.7 million for the year ended December 31, 2021 to $61.2 million for the year ended December 31, 2022; ● Net income increased 16.6% from $10.3 million for the year ended December 31, 2021 to $12.0 million for the year ended December 31, 2022; ● Adjusted Funds from Operation ("AFFO") increased from $0.4 million for the year ended December 31, 2021 to $15.8 million for the year ended December 31, 2022; ● Total indebtedness decreased 14.4% from $513.4 million at December 31, 2021 to $439.5 million at December 31, 2022; ● We completed 17 acquisitions, consisting of 20 properties, in the Corn Belt and High Plains regions during the year ended December 31, 2022.
Biggest changeHowever, we may be exposed to tenant credit risk and farming operation risks, particularly with respect to leases that do not require advance payment of 100% of the fixed rent, variable rent arrangements and leases with terms greater than one year. ​ Full Year 2023 Highlights ​ During 2023: ● Net income increased 164.9% from $12.0 million for the year ended December 31, 2022 to $31.7 million for the year ended December 31, 2023; ● Adjusted Funds from Operation ("AFFO") decreased 48.4% from $15.8 million for the year ended December 31, 2022 to $8.1 million for the year ended December 31, 2023; ● We completed dispositions consisting of 74 properties in the Corn Belt, Delta and South, High Plains, Southeast and West Coast regions.
Lastly, we believe that in most major U.S. agricultural markets, multiple quality farm-operator tenants compete for farmland lease opportunities. 8 Table of Contents ​ We may consider investing in farmland in other countries that, like the United States, offer virtually no land title risk, a sophisticated farm-operator tenant environment and attractive rental rates, such as Canada, Australia or New Zealand. ​ Leased Properties ​ The business of farming carries materially more operating risk than owning and leasing farmland to farm operators, although such risk can be mitigated through crop insurance and other risk management tools.
Lastly, we believe that in most major U.S. agricultural markets, multiple quality farm-operator tenants compete for farmland lease opportunities. ​ We may consider investing in farmland in other countries, such as Canada, Australia or New Zealand, that, like the United States, offer virtually no land title risk, a sophisticated farm-operator tenant environment and attractive rental rates. 8 Table of Contents ​ Leased Properties ​ The business of farming carries materially more operating risk than owning and leasing farmland to farm operators, although such risk can be mitigated through crop insurance and other risk management tools.
This increases our breadth of activities in the farmland sector, while adding additional sources of revenue and market insight. ​ Seasonality ​ We recognize rental revenue from fixed-rate farmland leases on a pro rata basis over the non-cancellable term of the lease in accordance with accounting principles generally accepted in the United States (“GAAP”).
This increases our breadth of activities in the farmland sector, while adding additional sources of revenue and market insight. ​ Seasonality ​ We recognize rental revenue from fixed-rate leases on a pro rata basis over the non-cancellable term of the lease in accordance with accounting principles generally accepted in the United States (“GAAP”).
Over the long term, we expect that our farmland portfolio will continue to be comprised of approximately 70% primary crop farmland and 30% specialty crop farmland by value, which we believe will give investors the economic benefit from increasing global food demand in the face of growing scarcity of high quality farmland and will reflect the approximate allocation of U.S. agricultural output between primary crops and animal protein (whose production relies principally on primary crops as feed), on one hand, and specialty crops, on the other. ​ Primary Crops ​ The most widely grown crop in the United States is corn, at approximately 87 million acres.
Over the long term, we expect that our farmland portfolio will continue to be comprised of approximately 70% primary crop farmland and 30% specialty crop farmland by value, which we believe will give investors the economic benefit from increasing global food demand in the face of growing scarcity of high quality farmland and will reflect the approximate allocation of U.S. agricultural output between primary crops and animal protein (whose production relies principally on primary crops as feed), on one hand, and specialty crops, on the other. ​ Primary Crops ​ The most widely grown crop in the United States is corn, at approximately 93 million acres.
As of December 31, 2022, the Operating Partnership owned a 9.97% equity interest in Promised Land Opportunity Zone Farms I, LLC (the “OZ Fund”), an unconsolidated equity method investment, that holds 12 properties (see “Note 1, Convertible Notes Receivable”).
As of December 31, 2023, the Operating Partnership owned a 9.97% equity interest in Promised Land Opportunity Zone Farms I, LLC (the “OZ Fund”), an unconsolidated equity method investment, that holds 12 properties (see “Note 1, Convertible Notes Receivable”).
USDA data shows that rented land as a percentage of total farmland acres has been in the 35% to 45% range going back to the 1920s. ​ Non-Farming Leases ​ In addition to leases entered into in connection with farming operations, we seek additional sources of income from our properties that are either incremental, such as wind easements and recreational leases, or are higher than farming rents, such as leases for solar power installations.
USDA data shows that rented land as a percentage of total farmland acres has been in the 35% to 45% range since the 1920s. ​ Non-Farming Leases ​ In addition to leases entered into in connection with farming operations, we seek additional sources of income from our properties that are either incremental, such as wind easements and recreational leases, or are higher than farming rents, such as leases for solar power installations.
In addition, as soon as reasonably practicable after such materials are furnished to the SEC, we make copies of these documents available to the public free of charge through our website or by contacting our Secretary at the address set forth above under “—Corporate Information.” ​ Our Corporate Governance Guidelines, Code of Business Conduct and Ethics, and the charters of our audit committee, compensation committee, and nominating and corporate governance committee are all available in the Governance 16 Table of Contents Documents section of the Corporate Information section of our website.
In addition, as soon as reasonably practicable after such materials are furnished to the SEC, we make copies of these documents available to the public free of charge through our website or by contacting our Secretary at the address set forth above under “—Corporate Information.” ​ Our Corporate Governance Guidelines, Code of Business Conduct and Ethics, and the charters of our audit committee, compensation committee, and nominating and corporate governance committee are all available in the Governance Documents section of the Corporate Information section of our website.
As of December 31, 2022, approximately 70% of our owned portfolio (by value) was used to grow primary crops, such as corn, soybeans, wheat, rice and cotton, and approximately 30% was used to produce specialty crops, such as almonds, citrus, blueberries, and vegetables.
As of December 31, 2023, approximately 70% of our owned portfolio (by value) was used to grow primary crops, such as corn, soybeans, wheat, rice and cotton, and approximately 30% was used to produce specialty crops, such as almonds, citrus, blueberries, and vegetables.
Moreover, we are a channel to bring capital, and therefore economic activity, to rural communities throughout the United States, supporting farming as a livelihood as it has been for thousands of years.
Moreover, we act as a channel to bring capital, and therefore economic activity, to rural communities throughout the United States, supporting farming as a livelihood as it has been for thousands of years.
While we do not believe that such non-farming lease income will constitute a 9 Table of Contents significant percentage of our total revenues, they offer opportunities to enhance returns to stockholders at little or no cost to us. ​ Family-Owned Properties ​ According to America’s Farms and Ranches at a Glance 2022 Edition, a USDA report, family farms accounted for approximately 98% of the total farms in the United States.
While we do not believe that such non-farming lease income will constitute a significant percentage of our total revenues, they offer opportunities to enhance returns to stockholders at little or no cost to us. ​ 9 Table of Contents Family-Owned Properties ​ According to America’s Farms and Ranches at a Glance 2023 Edition, a USDA report, family farms accounted for approximately 97% of the total farms in the United States.
These firms engage in the acquisition, asset management, valuation and disposition of farmland properties. ​ Human Capital Resources ​ Our employees are vital to our success. Our goal is to ensure that we have the right talent, in the right place, at the right time.
These firms engage in the acquisition, asset management, valuation and disposition of farmland properties. ​ 15 Table of Contents Human Capital Resources ​ Our employees are vital to our success. Our goal is to ensure that we have the right talent, in the right place, at the right time.
We may also invest in other agriculture-related business, typically through our TRS. ​ Crop Categories ​ Primary vs Specialty Crops ​ Farm crops generally can be divided into two principal categories: primary crops and specialty crops. Primary crops include, among others, corn, soybeans, wheat, rice and cotton.
We may also invest in other agriculture-related business, typically through our TRS. ​ 7 Table of Contents Crop Categories ​ Primary vs Specialty Crops ​ Farm crops generally can be divided into two principal categories: primary crops and specialty crops. Primary crops include, among others, corn, soybeans, wheat, rice and cotton.
As of December 31, 2022, the TRS performed direct farming operations on 2,175 acres of permanent crop farmland owned by the Company located in California. ​ FPI strategically seeks opportunities to promote environmentally friendly usage of our farmland.
As of December 31, 2023, the TRS performed direct farming operations on 2,103 acres of permanent crop farmland owned by the Company located in California. ​ FPI strategically seeks opportunities to promote environmentally friendly usage of our farmland.
In addition, as of December 31, 2022, we owned land and buildings for four agriculture equipment dealerships in Ohio leased to Ag-Pro Ohio, LLC (“Ag Pro”) under the John Deere brand and served as property manager for approximately 30,900 acres, including farms in Iowa (see “Note 4—Related Party Transactions”).
In addition, as of December 31, 2023, we owned land and buildings for four agriculture equipment dealerships in Ohio leased to Ag-Pro Ohio, LLC (“Ag Pro”) under the John Deere brand and served as property manager for approximately 38,300 acres, including farms in Iowa (see “Note 4—Related Party Transactions”).
In exchange for a yearly rental payment, CRP participants agree to remove less-productive land from agricultural production and re-establish native vegetation to improve water quality, prevent erosion, and protect wildlife habitat. We also formed a partnership with Ducks Unlimited in 2021 to sell approximately 1,268 acres in a three-part conservation transaction to support habitat restoration and protection in Virginia.
In exchange for a yearly rental payment, CRP participants agree to remove less-productive land from agricultural production and re-establish native vegetation to improve water quality, prevent erosion, and protect wildlife habitat. We also agreed in 2021 to sell Ducks Unlimited (“DU”) approximately 1,268 acres of farmland in a three-part conservation transaction to support habitat restoration and protection in Virginia.
All of FPI’s assets are held by, and its operations are primarily conducted through, the Operating Partnership and the wholly owned subsidiaries of the Operating Partnership. As of December 31, 2022, FPI owned a 97.8% interest in the Operating Partnership.
All of FPI’s assets are held by, and its operations are primarily conducted through, the Operating Partnership and the wholly owned subsidiaries of the Operating Partnership. As of December 31, 2023, FPI owned a 97.6% interest in the Operating Partnership.
In addition, under the FPI Loan Program, we may provide loans to farm 7 Table of Contents operators secured by farmland, properties related to farming, crops (growing or stored), and/or agricultural equipment.
In addition, under the FPI Loan Program, we may provide loans to farm operators secured by farmland, properties related to farming, crops (growing or stored), and/or agricultural equipment.
In addition, as of December 31, 2022, we owned land and buildings for four agriculture equipment dealerships in Ohio leased to Ag Pro under the John Deere brand and served as property manager for approximately 30,900 acres, including farms in Iowa (see “Note 4—Related Party Transactions”).
In addition, as of December 31, 2023, we owned land and buildings for four agriculture equipment dealerships in Ohio leased to Ag Pro under the John Deere brand and served as property manager for approximately 38,300 acres, including farms in Iowa (see “Note 4—Related Party Transactions”).
As of December 31, 2022, we managed approximately 30,900 acres on behalf of third parties. ​ Brokerage and Auction Services ​ The acquisition of Murray Wise Associates, LLC (“MWA”) in November 2021 also added brokerage and auction business activities for clients seeking to sell farmland.
As of December 31, 2023, we managed approximately 38,300 acres on behalf of third parties. ​ Brokerage and Auction Services ​ The acquisition of Murray Wise Associates, LLC (“MWA”) in November 2021 also added brokerage and auction business activities for clients seeking to sell farmland.
We believe that a mix of fixed and variable rents will help insulate us from the variability of farming operations and reduce our credit-risk exposure to farm-operator tenants while making us an attractive landlord in certain regions where variable leases are customary.
Some of our leases have variable rents based on the revenue generated by our farm-operator tenants. We believe that a mix of fixed and variable rents will help insulate us from the variability of farming operations and reduce our credit-risk exposure to farm-operator tenants while making us an attractive landlord in certain regions where variable leases are customary.
Investment firms that we might compete directly against could include agricultural investment firms such as Westchester Agriculture Asset Management (a TIAA company), Manulife Investment Management, International Farming Corporation, Ceres Partners, Gladstone Land Corp, UBS Agrivest, AgIS Capital, Homestead Capital, and Goldcrest Farm Trust Advisors.
Investment firms that we might compete directly against for investment capital to be deployed in farmland could include agricultural investment firms such as Westchester Agriculture Asset Management (a TIAA company), Manulife Investment Management, International Farming Corporation, Ceres Partners, Gladstone Land Corporation, UBS Agrivest, AgIS Capital, Homestead Capital, and Goldcrest Farm Trust Advisors.
Our financial performance should be evaluated on an annual basis, which eliminates impacts of seasonality and other similar factors that may cause our quarterly results to vary during the course of the year. ​ Our Properties ​ As of December 31, 2022, we owned farms with an aggregate of approximately 165,200 acres in Alabama, Arkansas, California, Colorado, Florida, Georgia, Illinois, Indiana, Kansas, Louisiana, Michigan, Mississippi, Missouri, Nebraska, North Carolina, South Carolina, Texas, and Virginia.
Our financial performance should be evaluated on an annual basis, which eliminates impacts of seasonality and other similar factors that may cause our quarterly results to vary during the course of the year. ​ Our Properties ​ As of December 31, 2023, we owned farms with an aggregate of approximately 132,800 acres in Arkansas, California, Colorado, Florida, Illinois, Indiana, Kansas, Louisiana, Mississippi, Missouri, Nebraska, North Carolina, Oklahoma, South Carolina and Texas.
We are committed to having a diverse workforce, and an inclusive work environment is a natural extension of our culture. ​ At December 31, 2022, we had 30 employees, 28 of which are full time.
We are committed to having a diverse workforce, and an inclusive work environment is a natural extension of our culture. ​ At December 31, 2023, we had 26 employees, 25 of which are full time.
We have long-term lease arrangements on certain farm properties pursuant to which operators engage in solar and wind energy production. 6 Table of Contents As of December 31, 2022, 20 of our farms, which collectively comprised approximately 13,345 acres, had leases for operational or under-construction renewable energy production, and 23 of our farms, which collectively comprise approximately 15,211 acres, had options for potential future solar or wind development and operating lease.
We have long-term lease arrangements on certain farm properties pursuant to which operators engage in solar and wind energy production. 6 Table of Contents As of December 31, 2023, 15 of our farms, which collectively comprised approximately 10,150 acres, had leases for operational or under-construction renewable energy production, and 16 of our farms, which collectively comprise approximately 12,875 acres, had options for potential future solar or wind development and operating lease.
According to the United States Department of Agriculture (“USDA”) forecast data from December 2022, real estate debt on farms is $348 billion, compared to a real estate value of $3.2 trillion, representing an 11% debt-to-equity ratio. The United States has the largest, lowest-cost grain transportation infrastructure in the world, leaving more margin to the grain producer and landowner.
According to the United States Department of Agriculture (“USDA”) forecast data from February 2024, real estate debt on farms is $377 billion, compared to a real estate value of $3.6 trillion, representing a 10% debt-to-equity ratio. The United States has the largest, lowest-cost grain transportation infrastructure in the world, leaving more margin to the grain producer and landowner.
Delta and South includes farms located in Arkansas, Louisiana, and Mississippi. High Plains includes farms located in Colorado, Kansas, western Nebraska and Texas. Southeast includes farms located in Alabama, Florida, Georgia, North Carolina, South Carolina and Virginia. West Coast includes farms located in California.
Delta and South includes farms located in Arkansas, Louisiana, Mississippi and Oklahoma. High Plains includes farms located in Colorado, Kansas and Texas. Southeast includes farms located in Florida, North Carolina and South Carolina. West Coast includes farms located in California.
The uses of corn and approximate percent of total uses during the 2021/2022 marketing year (September 2021 to August 2022) are as follows: animal feed and residual products (34%); ethanol and its animal feed byproducts known as distillers’ dried grains with solubles or DDGS (34%); exports (14%); other sugars, starches, cereals, seeds (9%); and ending stocks or inventory (8%). ​ The second most widely grown crop in the United States is soybeans, at approximately 87 million acres.
The uses of corn projected for the 2023/2024 marketing year (September 2023 to August 2024) are as follows: animal feed and residual products (34%); ethanol and its animal feed byproducts known as distillers’ dried grains with solubles or DDGS (32%); exports (13%); other sugars, starches, cereals, seeds (8%); and ending stocks or inventory (13%). ​ The second most widely grown crop in the United States is soybeans, at approximately 83 million acres.
As of December 31, 2022, we owned farms with an aggregate of approximately 165,200 acres in Alabama, Arkansas, California, Colorado, Florida, Georgia, Illinois, Indiana, Kansas, Louisiana, Michigan, Mississippi, Missouri, Nebraska, North Carolina, South Carolina, Texas, and Virginia.
As of December 31, 2023, we owned farms with an aggregate of approximately 132,800 acres in Arkansas, California, Colorado, Florida, Illinois, Indiana, Kansas, Louisiana, Mississippi, Missouri, Nebraska, North Carolina, Oklahoma, South Carolina and Texas.
As of December 31, 2022, we leased acres to support 6 solar energy operational or under-construction projects across 11 farms and 3 wind energy projects across 9 farms, which have the capacity to generate approximately 214 and 47 megawatts of renewable energy, respectively. We own 23 additional farms which have options for future solar projects.
As of December 31, 2023, we leased acres to support 3 solar energy operational projects across 11 farms and 2 wind energy projects across 4 farms, which have the capacity to generate approximately 214 and 30 megawatts of renewable energy, respectively. We own 16 additional farms which have options for future solar projects.
As shown below, small family farms represent the greatest number of farms and amount of land, while large-scale family farms represent the greatest value of production. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Farm Category Annual Gross Farm Cash Income Number of Farms Percent of Farms ​ Percent of Land Area ​ Value of Production ​ Small Family Farms ​ Less than $350,000 ​ 1,784,536 ​ 89.1 % ​ 45.2 % ​ 17.8 % Midsize Family Farms ​ Less than $1,000,000 ​ 113,005 ​ 5.6 % ​ 17.8 % ​ 18.4 % Large-Scale Family Farms ​ Greater than $1,000,000 ​ 63,153 ​ 3.2 % ​ 26.9 % ​ 46.5 % Nonfamily Farms ​ ​ ​ 43,058 ​ 2.1 % ​ 10.1 % ​ 17.3 % Total ​ ​ ​ 2,003,752 ​ 100.0 % ​ 100.0 % ​ 100.0 % ​ Farmland leases allow farm operators to unlock personal or family capital/net worth that would otherwise be tied up in land ownership while retaining the ability to conduct their livelihoods on land that is familiar to them.
As shown below, small family farms represent the greatest number of farms and amount of land, while large-scale family farms represent the greatest value of production. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Farm Category Annual Gross Farm Cash Income Number of Farms Percent of Farms ​ Percent of Land Area ​ Value of Production ​ Small Family Farms ​ Less than $350,000 ​ 1,756,441 ​ 88.1 % ​ 46.5 % ​ 18.7 % Midsize Family Farms ​ Less than $1,000,000 ​ 115,595 ​ 5.8 % ​ 21.4 % ​ 19.1 % Large-Scale Family Farms ​ Greater than $1,000,000 ​ 67,936 ​ 3.4 % ​ 24.8 % ​ 51.8 % Nonfamily Farms ​ ​ ​ 54,450 ​ 2.7 % ​ 7.3 % ​ 10.4 % Total ​ ​ ​ 1,994,422 ​ 100.0 % ​ 100.0 % ​ 100.0 % ​ Farmland leases allow farm operators to unlock personal or family capital/net worth that would otherwise be tied up in land ownership while retaining the ability to conduct their livelihoods on land that is familiar to them.
In general, we focus on farmland with average or better-than-average soil. ​ ● Water Availability —Appropriate water availability is an essential input to farming and a key consideration in determining the productivity and value of farmland.
In general, we focus on farmland with average or better-than-average soil. ​ ● Water Availability —Appropriate water availability is an essential input to farming and a key consideration in determining the productivity and value of farmland. We seek to acquire farmland where water availability through precipitation and irrigation meets the agronomic needs of the crops expected to be grown.
Soybean meal is used as animal feed both domestically and in the export market. Soybean oil is used for food, biofuel, and is exported. ​ The third most widely grown crop in the United States is wheat, at approximately 47 million acres.
Soybean oil is used for food, biofuel, and is exported. ​ The third most widely grown crop in the United States is wheat, at approximately 51 million acres.
These and other risks related to environmental matters are described in more detail in “Item 1A. Risk Factors.” ​ 14 Table of Contents Environmental, Social and Governance (“ESG”) ​ We believe a strong commitment to ESG supports our business model, promotes environmental stewardship, sustains a safe and healthy workplace, and upholds high standards of business ethics and conduct.
These and other risks related to environmental matters are described in more detail in “Item 1A. Risk Factors.” ​ 14 Table of Contents Sustainability ​ We believe a strong commitment to multi-faceted sustainability supports our business model and promotes environmental stewardship.
Individual farmers are the most active buyers of farmland. Institutional investors, investment funds, other farmland REITs, individual investors and others also compete for farmland acreage.
Institutional investors, investment funds, other farmland REITs, individual investors and others also compete for farmland acreage.
The uses of wheat and approximate percent of total uses during the 2021/2022 marketing year (June 2021 to May 2022) are as follows: food (40%); exports (32%); seed, feed and residual (5%); and ending stocks or inventory (24%). ​ Annual vs. Permanent Crops Our portfolio includes farms that produce both annual and permanent crops.
The uses of wheat projected for the 2023/2024 marketing year (June 2023 to May 2024) are as follows: food (38%); exports (29%); seed, feed and residual (7%); and ending stocks or inventory (26%). ​ Annual vs. Permanent Crops Our portfolio includes farms that produce both annual and permanent crops.
Refer to “– Environmental, Social and Governance–Environmental Sustainability” for more information. ​ Our principal source of revenue is rent from tenants that conduct farming operations on our farmland pursuant to leases with terms ranging primarily from one to three years.
Refer to “–Sustainability” for more information. ​ Our principal source of revenue is rent from tenants that conduct farming operations on our farmland pursuant to leases with terms ranging primarily from one to three years. The majority of the leases that are in place as of the date of this Annual Report on Form 10-K have fixed rent payments.
We seek to acquire farmland where water availability through 10 Table of Contents precipitation and irrigation meets the agronomic needs of the crops expected to be grown. As part of our acquisition due diligence process, we evaluate properties for water availability and any associated ground or surface water rights.
As part of our acquisition due diligence process, we evaluate properties for water availability and any associated ground or surface water rights. Where appropriate, we may also invest in irrigation infrastructure to improve the productivity 10 Table of Contents of properties we own.
Many more of our farms provide habitat for waterfowl and other wildlife. ​ Social Impact, Human Rights, and Company Culture ​ Utilizing land for farming creates a more sustainable future for all by affordably feeding the world’s growing population and supplying food products that support better nutrition, both quantitatively and qualitatively.
Sustainability is considered a high priority topic at all levels of our organization, with a commitment formulated by the Board of Directors and senior management team. ​ Social Impact, Human Rights, and Company Culture ​ Utilizing land for farming creates a more sustainable future for all by affordably feeding the world’s growing population and supplying food products that support better nutrition.
The uses of soybeans and approximate percent of total uses during the 2021/2022 marketing year (September 2021 to August 2022) are as follows: crushings (48%); exports (46%); seed and residual (3%); and ending stocks or inventory (4%). The process of crushing soybean produces soybean oil, soybean meal, hulls and waste.
The uses of soybeans projected for the 2023/2024 marketing year (September 2023 to August 2024) are as follows: crushings (52%); exports (39%); seed and residual (3%); and ending stocks or inventory (6%). The process of crushing soybean produces soybean oil, soybean meal, hulls and waste. Soybean meal is used as animal feed both domestically and in the export market.
Our ESG policy is founded on the principle of helping feed the world, especially people in poverty, with the least negative environmental impact possible. ​ Environmental Sustainability ​ Farmland is more environmentally friendly than most types of commercial real estate, as agriculture naturally uses solar energy to capture carbon dioxide from the atmosphere and convert it into food, feed, fuel, and fiber.
We foster a company culture based on open communication and professional growth, and support employees engaged with non-profit organizations. ​ Environmental Sustainability ​ Farmland is more environmentally friendly than most types of commercial real estate, as agriculture naturally uses solar energy to capture carbon dioxide from the atmosphere and convert it into food, feed, fuel, and fiber.
Also, during the year ended December 31, 2022, the Company completed five dispositions in the Corn Belt, High Plains and Southeast regions. We received cash consideration for these dispositions totaling $17.0 million and recognized an 12 Table of Contents aggregate gain on sale of $2.6 million.
During the year ended December 31, 2023, the Company completed dispositions, consisting of 74 properties, in the Corn Belt, Delta and South, High Plains, Southeast and West Coast regions. We received $195.5 million in aggregate consideration, including $11.8 million in seller financing, and recognized an aggregate gain on sale of $36.1 million.
The distribution of farms owned by regions is as follows: ​ ​ ​ ​ ​ ​ ​ ​ Region (1) Owned Acres Managed Acres Total Acres Corn Belt (2) ​ 47,182 ​ 21,961 ​ 69,143 Delta and South ​ 32,878 ​ 1,489 ​ 34,367 High Plains ​ 33,006 ​ 1,380 ​ 34,386 Southeast ​ 40,354 ​ 6,107 ​ 46,461 West Coast ​ 11,752 ​ — ​ 11,752 ​ ​ 165,172 ​ 30,937 ​ 196,109 (1) Corn Belt includes farms located in Illinois, Indiana, Iowa, Michigan, Missouri and eastern Nebraska.
The distribution of farms owned by regions is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Region (1) Owned Acres Managed Acres ​ Total Acres Corn Belt (2) ​ 44,527 ​ 22,027 ​ ​ 66,554 Delta and South ​ 26,427 ​ 8,763 ​ ​ 35,190 High Plains ​ 21,831 ​ 1,380 ​ ​ 23,211 Southeast ​ 28,825 ​ 6,107 ​ ​ 34,932 West Coast ​ 11,189 ​ — ​ ​ 11,189 ​ ​ 132,799 ​ 38,277 ​ ​ 171,076 (1) Corn Belt includes farms located in Illinois, Indiana, Iowa, Missouri and eastern Nebraska.
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The majority of the leases that are in place as of the date of this Annual Report on Form 10-K have fixed rent payments. Some of our leases have variable rents based on the revenue generated by our farm-operator tenants.
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We received $195.5 million in aggregate consideration, including $11.8 million in seller financing, and recognized an aggregate gain on sale of $36.1 million ; ● We completed acquisitions consisting of four properties in the Corn Belt and Delta and South regions.
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Aggregate cash consideration for these acquisitions totaled $54.4 million for real estate purchases accounted for as asset acquisitions plus $17.3 million for the purchase of land and buildings for four agriculture equipment dealerships in Ohio leased to Ag Pro under the John Deere brand which are accounted for as financing receivables; ● We completed five dispositions, consisting of five properties, in the Corn Belt, High Plains and Southeast regions.
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Aggregate cash consideration for these acquisitions totaled $22.2 million ; ● We repurchased 6,551,087 shares of our common stock at a weighted average price of $11.00 per share; ● Total in debtedness decreased $76.4 million from $439.5 million at December 31, 2022 to $363.1 million at December 31, 2023; ● We increased liquidity to $206.6 million as of December 31, 2023, compared to $176.7 million as of December 31, 2022; and ● We renewed fixed cash farm leases expiring in 2023 at average rent increases of approximately 20%.
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The Company received cash consideration for these dispositions totaling $17.0 million and recognized an aggregate gain on sale of $2.6 million; ● We sold 8,594,940 shares of common stock generating $122.7 million in gross proceeds and $121.3 million in net proceeds under the “ at-the-market ” equity offering programs; and ● We increased liquidity to $176.7 million as of December 31, 2022, compared to $30.2 million as of December 31, 2021.
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Also, during the year ended December 31, 2023, the Company completed acquisitions consisting of four properties in the Corn Belt and Delta and South regions. Aggregate cash consideration for these acquisitions totaled $22.2 million. See “Management’s Discussion and Analysis of Financial 12 Table of Contents Condition and Results of Operations” for more information about our portfolio.
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Where appropriate, we may also invest in irrigation infrastructure to improve the productivity of properties we own.
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Our sustainability policy is founded on the principle of helping feed the world, especially people in poverty, with the least negative environmental impact possible.
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During the year ended December 31, 2022, the Company completed 17 acquisitions, consisting of 20 properties, in the Corn Belt and High Plains regions.
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The multi-year, staged sale concluded in November 2023 and was designed to provide DU maximum flexibility to secure capital for the project. Many more of our farms provide habitat for waterfowl and other wildlife. ​ Competition ​ Competition to acquire farmland can come from many different sources. Individual farmers are the most active buyers of farmland.
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Aggregate cash consideration for these acquisitions totaled $54.4 million for real estate purchases accounted for as asset acquisitions plus $17.3 million for the purchase of land and buildings for four agriculture equipment dealerships in Ohio leased to Ag Pro under the John Deere brand which are accounted for as financing receivables.
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See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for more information about our portfolio.
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We foster a company culture based on open communication and professional growth, and support employees engaged with non-profit organizations. ​ Governance Fiduciary Duties and Ethics ​ We recognize that transparency and employing an array of best practices in corporate governance better serves all stakeholders.
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As of the date of this Annual Report, we have five independent directors who have diverse backgrounds and bring different perspectives to our board, which promotes better strategic thinking and planning in addition to thoughtful and robust oversight.
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Our Board of Directors, management team and employees are all subject to a Code of Business Conduct and Ethics and are committed to always maintaining the highest ethical standards across our processes, business practices, and policies. ​ ESG Leadership and Strategy ​ ESG is considered a high priority topic at all levels in our organization, with a commitment formulated by the Board of Directors and senior management team.
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Going forward, we intend to maintain and expand our focus on ESG principles 15 Table of Contents already embedded in our culture, policies and practices, gradually implementing efforts to measure, improve and communicate our performance.
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We expect our ESG objectives and the resources allocated to ESG matters will continue to evolve over time as we assess strategies that are most appropriate for our organization. ​ ESG Plan and Reporting ​ In 2023, we intend to adopt written ESG Policies and publish our first ESG-focused report, outlining in more detail our ESG-focused efforts, results and objectives. ​ Competition ​ Competition to acquire farmland can come from many different sources.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf increases in interest rates are not accompanied by higher levels of farm income, this could lead to a reduction in our profitability, either of which would have a material adverse effect on our business or results of operations, financial condition, and ability to make distributions to our stockholders. ​ Global economic conditions, including inflation and supply chain disruptions, could adversely affect our and our tenants’ operations. ​ General global economic downturns and macroeconomic trends, including heightened inflation, volatility in the capital markets, interest rate and currency rate fluctuations, the war in Ukraine and economic slowdown or recession, may result in unfavorable conditions that could negatively affect demand for our tenants’ crops and exacerbate some of the other risks that affect our business, financial condition and results of operations.
Biggest changeTo the extent the Series A preferred units are converted to Common units and such Common units are redeemed for shares of common stock, our existing common stockholders would experience an immediate, and potentially significant, dilutive effect on their ownership interest in the Company, which could cause the market price of our common stock to be materially adversely affected. ​ Global economic conditions, including inflation and supply chain disruptions, could adversely affect our and our tenants’ operations. ​ General global economic downturns and macroeconomic trends, including heightened inflation, volatility in the capital markets, interest rate and currency rate fluctuations, the war in Ukraine and the ongoing conflict in the Middle East, changes in trade policies among nations that import and/or export agricultural products and economic slowdown or recession, may result in unfavorable conditions that could negatively affect demand for our tenants’ crops and exacerbate some of the other risks that affect our business, financial condition and results of operations.
If demand for one type of permanent crop decreases, the permanent crop farmer cannot easily convert the farm to another type of crop because permanent crop farmland is dedicated to one crop during the lifespan of the trees or vines and therefore cannot easily be rotated to adapt to changing environmental or market conditions. 19 Table of Contents ​ Our failure to continue to identify and consummate suitable acquisitions would significantly impede our growth and our ability to further diversify our portfolio by geography, crop type and tenant, which could materially and adversely affect our results of operations and cash available for distribution to our stockholders. ​ Our ability to expand through acquisitions is important to our business strategy and requires that we identify and consummate suitable acquisition or investment opportunities that meet our investment criteria and are compatible with our growth strategy.
If demand for one type of permanent crop decreases, the permanent crop farmer cannot easily convert the farm to another type of crop because permanent crop farmland is dedicated to one crop during the lifespan of the trees or vines and therefore cannot easily be rotated to adapt to changing environmental or market conditions. ​ 19 Table of Contents Our failure to continue to identify and consummate suitable acquisitions would significantly impede our growth and our ability to further diversify our portfolio by geography, crop type and tenant, which could materially and adversely affect our results of operations and cash available for distribution to our stockholders. ​ Our ability to expand through farmland acquisitions is important to our business strategy and requires that we identify and consummate suitable acquisition or investment opportunities that meet our investment criteria and are compatible with our growth strategy.
Presidential administration and the Federal Reserve to curb inflation or the impact of future public health crises; ● novel and unforeseen market volatility and trading strategies, such as short squeeze-rallies caused by retail investors on retail trading platforms; ● the market’s view of the quality of our assets; ● the market’s perception of our growth potential; ● our debt levels; ● our current and expected future earnings; ● our cash flow and cash distributions; and ● the market price per share of our common stock. ​ 21 Table of Contents If we cannot obtain capital from third-party sources, we may not be able to acquire properties when strategic opportunities exist, meet the capital and operating needs of our existing properties, satisfy our debt service obligations or make the cash distributions to our stockholders necessary to qualify and maintain our qualification as a REIT. ​ Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our properties and harm our financial condition. ​ The real estate investments made, and to be made, by us may be difficult to sell quickly.
Presidential administration and the Federal Reserve to curb inflation or the impact of future public health crises; ● novel and unforeseen market volatility and trading strategies, such as short squeeze-rallies caused by retail investors on retail trading platforms; ● the market’s view of the quality of our assets; ● the market’s perception of our growth potential; ● our debt levels; ● our current and expected future earnings; ● our cash flow and cash distributions; and ● the market price per share of our common stock. ​ If we cannot obtain capital from third-party sources, we may not be able to acquire properties when strategic opportunities exist, meet the capital and operating needs of our existing properties, satisfy our debt service obligations or make the cash distributions to our stockholders necessary to qualify and maintain our qualification as a REIT. ​ 21 Table of Contents Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our properties and harm our financial condition. ​ The real estate investments made, and to be made, by us may be difficult to sell quickly.
Damages to tenants' crops may vary in severity and effect, depending on the stage of production at the time of infection or infestation, the type of treatment applied and climatic 22 Table of Contents conditions. The costs to control these infestations vary depending on the severity of the damage and the extent of the plantings affected.
Damages to tenants’ crops may vary in severity and effect, depending on the stage of production at the time of infection or infestation, the type of treatment applied and climatic conditions. The costs to control these infestations vary depending on the severity of the damage and the extent of the 22 Table of Contents plantings affected.
Although our Board of Directors has no such intention at the present time, it could establish a class or series of preferred stock that could, depending on the terms of such series, delay, defer or prevent a transaction or a change of control that might involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interests. ​ Certain provisions of Maryland law could inhibit changes in control, which may discourage third parties from conducting a tender offer or seeking other change of control transactions that could involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interests. ​ Certain provisions of the Maryland General Corporation Law, or the MGCL, may have the effect of inhibiting a third party from making a proposal to acquire us or of impeding a change of control under certain circumstances that otherwise 31 Table of Contents could provide the holders of shares of our common stock with the opportunity to realize a premium over the then-prevailing market price of such shares, including: ​ ● “business combination” provisions that, subject to limitations, prohibit certain business combinations between us and an “interested stockholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our outstanding voting stock or any affiliate or associate of ours who, at any time within the two-year period immediately prior to the date in question, was the beneficial owner of 10% or more of the voting power of our then outstanding stock) or an affiliate thereof for five years after the most recent date on which the stockholder becomes an interested stockholder and thereafter impose fair price and/or supermajority voting requirements on these combinations; and ● “control share” provisions that provide that “control shares” of our Company (defined as shares which, when aggregated with other shares controlled by the stockholder, except solely by virtue of a revocable proxy, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of issued and outstanding “control shares”) have no voting rights with respect to their control shares except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares. ​ By resolution of our Board of Directors, we have opted out of the business combination provisions of the MGCL and provided that any business combination between us and any other person is exempt from the business combination provisions of the MGCL, provided that the business combination is first approved by our Board of Directors (including a majority of directors who are not affiliates or associates of such persons).
Although our Board of Directors has no such intention at the present time, it could establish a class or series of preferred stock that could, depending on the terms of such series, delay, defer or prevent a transaction or a change of control that might involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interests. ​ Certain provisions of Maryland law could inhibit changes in control, which may discourage third parties from conducting a tender offer or seeking other change of control transactions that could involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interests. ​ Certain provisions of the Maryland General Corporation Law (the “MGCL”) may have the effect of inhibiting a third party from making a proposal to acquire us or of impeding a change of control under certain circumstances that otherwise could provide the holders of shares of our common stock with the opportunity to realize a premium over the then-prevailing market price of such shares, including: ​ ● “business combination” provisions that, subject to limitations, prohibit certain business combinations between us and an “interested stockholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our outstanding voting stock or any affiliate or associate of ours who, at any time within the two-year period immediately prior to the date in question, was the beneficial owner of 10% or more of the voting power of our then outstanding stock) or an affiliate thereof for five years after the most recent date on which the stockholder becomes an interested stockholder and thereafter impose fair price and/or supermajority voting requirements on these combinations; and ● “control share” provisions that provide that “control shares” of our Company (defined as shares which, when aggregated with other shares controlled by the stockholder, except solely by virtue of a revocable proxy, entitle 31 Table of Contents the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of issued and outstanding “control shares”) have no voting rights with respect to their control shares except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares. ​ By resolution of our Board of Directors, we have opted out of the business combination provisions of the MGCL and provided that any business combination between us and any other person is exempt from the business combination provisions of the MGCL, provided that the business combination is first approved by our Board of Directors (including a majority of directors who are not affiliates or associates of such persons).
Because we do not monitor and evaluate the credit risk exposure related to farm-operator tenants on an ongoing basis, we are subject to the risk that our tenants, particularly those that may depend on debt and leverage to finance their operations, could be susceptible to bankruptcy in the event that their cash flows are insufficient to satisfy their financial obligations, including meeting their obligations to us under their leases.
Because we do not monitor and evaluate the credit risk exposure related to farm-operator tenants on an ongoing basis, we are subject to the risk that our tenants, particularly those that may depend on leverage to finance their operations, could be susceptible to bankruptcy in the event that their cash flows are insufficient to satisfy their financial obligations, including meeting their obligations to us under their leases.
If we fail to operate these new business lines successfully, we may suffer losses. ​ Furthermore, our ownership interest in the OZ Fund, the acquisition of MWA and our management of OZ Fund and MWA client properties could expose us to unknown or contingent liabilities that were not discovered during the course of due diligence.
If we fail to operate these business lines successfully, we may suffer losses. ​ Furthermore, our ownership interest in the OZ Fund, the acquisition of MWA and our management of OZ Fund and MWA client properties could expose us to unknown or contingent liabilities that were not discovered during the course of due diligence.
Although rental payments under the majority of our leases typically are not based on the quality or profitability of our tenants' harvests, any of these factors could adversely affect our tenants' ability to meet their obligations to us and our ability to lease or re-lease properties on favorable terms, or at all, which could have a material adverse effect on the value of our properties, our results of operations and our ability to make distributions to our stockholders. ​ The impacts of trade disputes and geopolitical conflicts, such as the ongoing war in Ukraine, could adversely affect the profitability of our tenants’ farming operations, which could have a material adverse effect on our results of operations, financial condition, ability to make distributions to our stockholders and the value of our properties . ​ The potential for trade disputes between the United States and its primary agricultural trade partners has increased in recent years.
Although rental payments under the majority of our leases typically are not based on the quality or profitability of our tenants' harvests, any of these factors could adversely affect our tenants' ability to meet their obligations to us and our ability to lease or re-lease properties on favorable terms, or at all, which could have a material adverse effect on the value of our properties, our results of operations and our ability to make distributions to our stockholders. ​ The impacts of trade disputes and geopolitical conflicts, such as the ongoing war in Ukraine and in the Middle East, could adversely affect the profitability of our tenants’ farming operations, which could have a material adverse effect on our results of operations, financial condition, ability to make distributions to our stockholders and the value of our properties . ​ The potential for trade disputes between the United States and its primary agricultural trade partners has increased in recent years.
These provisions include, among others: ​ ● redemption rights; ● a requirement that the general partner may not be removed as the general partner of our Operating Partnership without our consent; ● transfer restrictions on Common units; ● our ability, as general partner, in some cases, to amend the partnership agreement and to cause our Operating Partnership to issue units with terms that could delay, defer or prevent a merger or other change of control of us or our Operating Partnership without the consent of the limited partners; and 32 Table of Contents ● the right of the limited partners to consent to direct or indirect transfers of the general partnership interest, including as a result of a merger or a sale of all or substantially all of our assets, in the event that such transfer requires approval by our common stockholders. ​ Our Board of Directors may change our strategies, policies and procedures without stockholder approval. ​ Our investment, financing, leverage and distribution policies, and our policies with respect to all other activities, including growth, capitalization and operations, are determined exclusively by our Board of Directors, and may be amended or revised at any time by our Board of Directors without notice to or a vote of our stockholders.
These provisions include, among others: ​ ● redemption rights; ● a requirement that the general partner may not be removed as the general partner of our Operating Partnership without our consent; ● transfer restrictions on Common units; ● our ability, as general partner, in some cases, to amend the partnership agreement and to cause our Operating Partnership to issue units with terms that could delay, defer or prevent a merger or other change of control of us or our Operating Partnership without the consent of the limited partners; and ● the right of the limited partners to consent to direct or indirect transfers of the general partnership interest, including as a result of a merger or a sale of all or substantially all of our assets, in the event that such transfer requires approval by our common stockholders. ​ Our Board of Directors may change our strategies, policies and procedures without stockholder approval. ​ Our investment, financing, leverage and distribution policies, and our policies with respect to all other activities, including growth, capitalization and operations, are determined exclusively by our Board of Directors, and may be amended or revised at any time by our Board of Directors without notice to or a vote of our stockholders.
Higher interest rates also tend to decrease U.S. and world economic growth, thus decreasing the demand for agricultural commodities. ​ All of these consequences could reduce farm income.
Higher interest rates also tend to decrease U.S. and world economic growth, thus decreasing the demand for certain agricultural commodities. ​ All of these consequences could reduce farm income.
Please refer to the section entitled “Special Note Regarding Forward-Looking Statements” at the beginning of this Annual Report on Form 10-K. ​ Risks Related to Our Business and Properties ​ Our business is dependent in part upon the profitability of our tenants' farming operations, and a sustained downturn in the profitability of their farming operations could have a material adverse effect on the amount of rent we can collect and, consequently, our cash flow and ability to make distributions to our stockholders. ​ We depend on our tenants to operate the farms we own in a manner that generates revenues sufficient to allow them to meet their obligations to us, including their obligations to pay rent and real estate taxes, maintain certain insurance coverage and maintain the properties generally.
Please refer to the section entitled “Special Note Regarding Forward-Looking Statements” at the beginning of this Annual Report on Form 10-K. ​ 16 Table of Contents Risks Related to Our Business and Properties ​ Our business is dependent in part upon the profitability of our tenants' farming operations, and a sustained downturn in the profitability of their farming operations could have a material adverse effect on the amount of rent we can collect and, consequently, our cash flow and ability to make distributions to our stockholders. ​ We depend on our tenants to operate the farms we own in a manner that generates revenues sufficient to allow them to meet their obligations to us, including their obligations to pay rent and real estate taxes, maintain certain insurance coverage and maintain the properties generally.
No reported decision of a Delaware appellate court has interpreted provisions similar to the provisions of the partnership agreement that modify and reduce our fiduciary duties or obligations as the sole member of the general partner or reduce or eliminate our liability for money damages to our Operating Partnership and its partners, and we have not obtained an opinion of counsel as to the enforceability of the provisions set forth in the partnership agreement that purport to modify or reduce the fiduciary duties that would be in effect were it not for the partnership agreement. ​ Our charter contains certain provisions restricting the ownership and transfer of our stock that may delay, defer or prevent a change of control transaction that might involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interests. ​ Our charter contains certain ownership limits with respect to our stock.
No reported decision of a Delaware appellate court has interpreted provisions similar to the provisions of the partnership agreement that modify and reduce our fiduciary duties or obligations as the sole member of the general partner or reduce or eliminate our liability for money damages to our Operating Partnership and its partners, and we have not obtained an opinion of counsel as to the enforceability of the provisions set forth in the partnership 30 Table of Contents agreement that purport to modify or reduce the fiduciary duties that would be in effect were it not for the partnership agreement. ​ Our charter contains certain provisions restricting the ownership and transfer of our stock that may delay, defer or prevent a change of control transaction that might involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interests. ​ Our charter contains certain ownership limits with respect to our stock.
However, for taxable years prior to 2026, individual stockholders are generally allowed to deduct 20% of the aggregate amount of ordinary dividends distributed by us, subject to certain limitations, which would reduce the maximum marginal effective federal income tax rate for individuals on the receipt of such ordinary dividends to 29.6%. ​ Changes to the U.S. federal income tax laws, including the enactment of certain tax reform measures, could have an adverse impact on our business and financial results. ​ In recent years, numerous legislative, judicial and administrative changes have been made to the U.S. federal income tax laws applicable to investments in real estate and REITs.
However, for taxable years prior to 2026, individual stockholders are generally allowed to deduct 20% of the aggregate amount of ordinary dividends distributed by us, subject to certain limitations, which would reduce the maximum marginal effective federal income tax rate for individuals on the receipt of such ordinary dividends to 29.6%. ​ 36 Table of Contents Changes to the U.S. federal income tax laws, including the enactment of certain tax reform measures, could have an adverse impact on our business and financial results. ​ In recent years, numerous legislative, judicial and administrative changes have been made to the U.S. federal income tax laws applicable to investments in real estate and REITs.
Additionally, we could become subject to new, stricter environmental regulations, which could diminish the utility of our properties and have a material adverse impact on our results of operations and financial condition. ​ 28 Table of Contents We may be required to permit the owners of certain third-party access rights on our properties to enter and occupy parts of the properties, including owners of mineral rights and power generation and transportation infrastructure, which could materially and adversely impact the rental value of our properties. ​ Although we own the surface rights to our farms and expect to own the surface rights to properties that we acquire in the future, other persons or entities may own third-party access rights on our properties based upon their ownership of certain minerals, power generation and transportation infrastructure or similar property rights.
Additionally, we could become subject to new, stricter environmental regulations, which could diminish the utility of our properties and have a material adverse impact on our results of operations and financial condition. ​ We may be required to permit the owners of certain third-party access rights on our properties to enter and occupy parts of the properties, including owners of mineral rights and power generation and transportation infrastructure, which could materially and adversely impact the rental value of our properties. ​ Although we own the surface rights to our farms and expect to own the surface rights to properties that we acquire in the future, other persons or entities may own third-party access rights on our properties based upon their ownership of certain minerals, power generation and transportation infrastructure or similar property rights.
For more information about our resolved and ongoing legal proceedings see Note 8 to our Consolidated Financial Statements included in Part IV, Item 8 of this Annual Report on Form 10-K. ​ We may incur significant unrecoverable costs if we are not successful in connection with the litigation we have filed against Sabrepoint. ​ As described in further detail in Note 8 to our Consolidated Financial Statements included in Part IV, Item 8 of this Annual Report on Form 10-K, on July 2, 2021, the Company filed a complaint against First Sabrepoint Capital Management, LP, Sabrepoint Capital Partners, LP, Sabrepoint Capital Participation, LP, George Baxter, and Donald Marchiony (collectively, “Sabrepoint”) seeking relief for Sabrepoint’s alleged role in a “short and distort scheme” to profit from an artificial decline in the Company’s stock price stemming from an article posted on Seeking Alpha, which contained numerous false statements about the Company.
For more information about our resolved and ongoing legal proceedings see “Note 8—Commitments and Contingencies” to our Consolidated Financial Statements included in Part IV, Item 8 of this Annual Report on Form 10-K. ​ We may incur significant unrecoverable costs if we are not successful in connection with the litigation we have filed against Sabrepoint. ​ As described in further detail in “Note 8—Commitments and Contingencies” to our Consolidated Financial Statements included in Part IV, Item 8 of this Annual Report on Form 10-K, on July 2, 2021, the Company filed a complaint against First Sabrepoint Capital Management, LP, Sabrepoint Capital Partners, LP, Sabrepoint Capital Participation, LP, George Baxter, and Donald Marchiony (collectively, “Sabrepoint”) seeking relief for Sabrepoint’s alleged role in a “short and distort scheme” to profit from an artificial decline in the Company’s stock price stemming from an article posted on Seeking Alpha, which contained numerous false statements about the Company.
To the extent that any such adverse effects exceed any benefits we may realize from pursuing this litigation, our business, prospects, financial condition and results of operations may suffer materially. ​ 27 Table of Contents A cybersecurity incident and other technology disruptions could result in a violation of law or negatively impact our reputation and relationships with our tenants, any of which could have a material adverse effect on our results of operations and our financial condition. ​ Information and security risks have generally increased in recent years due to the rise in new technologies and the increased sophistication and activities of perpetrators of cyber-attacks.
To the extent that any such adverse effects exceed any benefits we may realize from pursuing this litigation, our business, prospects, financial condition and results of operations may suffer materially. ​ A cybersecurity incident and other technology disruptions could result in a violation of law or negatively impact our reputation and relationships with our tenants, any of which could have a material adverse effect on our results of operations and our financial condition. ​ Information and security risks have generally increased in recent years due to the rise in new technologies and the increased sophistication and activities of perpetrators of cyber-attacks.
Our Operating Partnership must indemnify the general partner, us, our directors and officers, officers of our Operating Partnership and others designated by the general partner from and against any and all claims that relate to the operations of our Operating Partnership, unless (1) an act or omission of the indemnified person was material to the matter giving rise to the action and either was committed in bad faith or was the result of active and deliberate dishonesty, (2) the indemnified person actually received an improper personal benefit in money, property or services or (3) in the case of a criminal proceeding, the indemnified person had 30 Table of Contents reasonable cause to believe that the act or omission was unlawful.
Our Operating Partnership must indemnify the general partner, us, our directors and officers, officers of our Operating Partnership and others designated by the general partner from and against any and all claims that relate to the operations of our Operating Partnership, unless (1) an act or omission of the indemnified person was material to the matter giving rise to the action and either was committed in bad faith or was the result of active and deliberate dishonesty, (2) the indemnified person actually received an improper personal benefit in money, property or services or (3) in the case of a criminal proceeding, the indemnified person had reasonable cause to believe that the act or omission was unlawful.
In some cases, we may have to restructure tenants’ long-term rent obligations and may not be able to do so on terms that are as favorable to us as those currently in place. ​ The scope and duration of any future public health crisis, including the potential emergence of new variants of the COVID-19 virus, the pace at which government restrictions are imposed and lifted, the scope of additional actions taken to mitigate the spread of disease, global vaccination and booster rates, the speed and extent to which global markets and utilization rates for our products fully recover from the disruptions caused by such a public health crisis, and the impact of these factors on our business, financial condition and results of operations, will depend on future developments that are highly uncertain and cannot be predicted with confidence. ​ To the extent the COVID-19 pandemic or other public health crises adversely affect our operations and global economic conditions more generally, it may also have the effect of heightening many of the other risks described herein.
In some cases, we may have to restructure tenants’ long-term rent obligations and may not be able to do so on terms that are as favorable to us as those currently in place. ​ The scope and duration of any future public health crisis, including the potential emergence of new variants of the COVID-19 virus, the pace at which government restrictions are imposed and lifted, the scope of additional actions taken to mitigate the spread of disease, global vaccination and booster rates, the speed and extent to which global markets and utilization rates for our products fully recover from the disruptions caused by such a public health crisis, and the impact of these factors on our business, financial condition and results of operations, will depend on future developments that are highly uncertain and cannot be predicted with confidence. ​ 29 Table of Contents To the extent public health crises adversely affect our operations and global economic conditions more generally, it may also have the effect of heightening many of the other risks described herein.
Some of these laws could subject us to: ​ ● responsibility and liability for the cost of removal or remediation of hazardous substances released on our properties, generally without regard to our knowledge of or responsibility for the presence of the contaminants; ● liability for the costs of investigation, removal or remediation of hazardous substances or chemical releases at disposal facilities for persons who arrange for the disposal or treatment of these substances; and ● potential liability for claims by third parties for damages resulting from environmental contaminants. ​ Environmental site assessments were not conducted on all the farms in our portfolio and we do not expect to conduct environment site assessments on all farms we acquire in the future.
Some of these laws could subject us to: ​ ● responsibility and liability for the cost of removal or remediation of hazardous substances released on our properties, generally without regard to our knowledge of or responsibility for the presence of the contaminants; ● liability for the costs of investigation, removal or remediation of hazardous substances or chemical releases at disposal facilities for persons who arrange for the disposal or treatment of these substances; and 28 Table of Contents ● potential liability for claims by third parties for damages resulting from environmental contaminants. ​ Environmental site assessments were not conducted on all the farms in our portfolio and we do not expect to conduct environment site assessments on all farms we acquire in the future.
Such dispositions may come at inopportune times or on disadvantageous terms, which could result in losses. ​ In addition, our debt agreements include customary events of default, the occurrence of any of which, after any applicable cure period, would permit the lenders to, among other things, accelerate payment of all amounts outstanding 17 Table of Contents under the loans and to exercise their remedies with respect to the collateral, including foreclosure and sale of the agricultural real estate securing the loans.
Such dispositions may come at inopportune times or on disadvantageous terms, which could result in losses. ​ In addition, our debt agreements include customary events of default, the occurrence of any of which, after any applicable cure period, would permit the lenders to, among other things, accelerate payment of all amounts outstanding under the loans and to exercise their remedies with respect to the collateral, including foreclosure and sale of the agricultural real estate securing the loans.
If we cease to qualify as a REIT, we would become subject to U.S. federal income tax on our taxable income at regular corporate rates and would no longer be required to distribute most of our taxable income to our stockholders, which may have adverse consequences on our total return to our stockholders. ​ If our Operating Partnership were classified as a “publicly traded partnership” taxable as a corporation for U.S. federal income tax purposes, we would fail to qualify as a REIT and would suffer other adverse tax consequences. ​ We intend for our Operating Partnership to be treated as a “partnership” for U.S. federal income tax purposes.
If we cease to qualify as a REIT, we would become subject to U.S. federal income tax on our taxable income at regular corporate rates and would no longer be required to distribute most of our taxable income to our stockholders, which may have adverse consequences on our total return to our stockholders. ​ 35 Table of Contents If our Operating Partnership were classified as a “publicly traded partnership” taxable as a corporation for U.S. federal income tax purposes, we would fail to qualify as a REIT and would suffer other adverse tax consequences. ​ We intend for our Operating Partnership to be treated as a “partnership” for U.S. federal income tax purposes.
Any U.S. federal or state taxes we pay will reduce our cash available for distribution to our stockholders. 35 Table of Contents ​ The ability of our Board of Directors to revoke or otherwise terminate our REIT qualification without stockholder approval may cause adverse consequences to our stockholders. ​ Our charter provides that our Board of Directors may revoke or otherwise terminate our REIT election, without the approval of our stockholders, if it determines that it is no longer in our best interest to continue to qualify as a REIT.
Any U.S. federal or state taxes we pay will reduce our cash available for distribution to our stockholders. ​ The ability of our Board of Directors to revoke or otherwise terminate our REIT qualification without stockholder approval may cause adverse consequences to our stockholders. ​ Our charter provides that our Board of Directors may revoke or otherwise terminate our REIT election, without the approval of our stockholders, if it determines that it is no longer in our best interest to continue to qualify as a REIT.
Although the favorable tax rates applicable to qualified dividend income do not adversely affect the taxation of REITs or dividends paid by REITs, such favorable tax rates could cause investors who are individuals, 36 Table of Contents trusts and estates to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including our common stock.
Although the favorable tax rates applicable to qualified dividend income do not adversely affect the taxation of REITs or dividends paid by REITs, such favorable tax rates could cause investors who are individuals, trusts and estates to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including our common stock.
If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the property, we would recognize taxable income on foreclosure, but would not receive any cash proceeds, which could hinder our ability to meet the REIT distribution requirements imposed by the Code. ​ Our debt financing agreements restrict our ability to engage in certain business activities, including our ability to incur additional indebtedness, make capital expenditures and make certain investments. ​ Our existing debt financing agreements contain, and other debt financing agreements we may enter into in the future may contain, customary negative covenants and other financial and operating covenants that, among other things: ​ ● restrict our ability to incur additional indebtedness; ● restrict our ability to incur additional liens; ● restrict our ability to make certain investments (including certain capital expenditures); ● restrict our ability to merge with another company; ● restrict our ability to sell or dispose of assets; ● restrict our ability to make distributions to stockholders; and ● require us to satisfy minimum financial coverage ratios, minimum tangible net worth requirements and maximum leverage ratios. ​ Increases in benchmark interest rates will increase our borrowing costs, which will negatively impact our financial condition, results of operations, growth prospects and ability to make distributions to stockholders. ​ Over the past year, the Board of Governors of the United States Federal Reserve Bank (the “Federal Reserve”) has undertaken a significant tightening of monetary policy, which has increased borrowing costs (through the resulting increase in interest rates) and decreased credit availability.
If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the property, we would recognize taxable income on foreclosure, but would not receive any cash proceeds, which could hinder our ability to meet the REIT distribution requirements imposed by the Code. 17 Table of Contents ​ Our debt financing agreements restrict our ability to engage in certain business activities, including our ability to incur additional indebtedness, make capital expenditures and make certain investments. ​ Our existing debt financing agreements contain, and other debt financing agreements we may enter into in the future may contain customary negative covenants and other financial and operating covenants that, among other things: ​ ● restrict our ability to incur additional indebtedness; ● restrict our ability to incur additional liens; ● restrict our ability to make certain investments (including certain capital expenditures); ● restrict our ability to merge with another company; ● restrict our ability to sell or dispose of assets; ● restrict our ability to make distributions to stockholders; and ● require us to satisfy minimum financial coverage ratios, minimum tangible net worth requirements and maximum leverage ratios. ​ Increases in benchmark interest rates will increase our borrowing costs, which will negatively impact our financial condition, results of operations, growth prospects and ability to make distributions to stockholders. ​ Beginning in 2022, the Board of Governors of the United States Federal Reserve Bank (the “Federal Reserve”) has undertaken a significant tightening of monetary policy, which has increased borrowing costs (through the resulting increase in interest rates) and decreased credit availability.
Our common stockholders do not have any voting rights with respect to any such issuances or other partnership level activities of our Operating Partnership. ​ Certain aspects of our Series A preferred units may limit our ability to make distributions to our common stockholders. ​ The distribution rate on our Series A preferred units is fixed, and no distributions can be paid to our common stockholders unless we have paid all cumulative dividends on our Series A preferred units.
Our common stockholders do not have any voting rights with respect to any such issuances or other partnership level activities of our Operating Partnership. ​ 33 Table of Contents Certain aspects of our Series A preferred units may limit our ability to make distributions to our common stockholders. ​ The distribution rate on our Series A preferred units is fixed, and no distributions can be paid to our common stockholders unless we have paid all cumulative dividends on our Series A preferred units.
We will be subject to U.S. federal income tax on our undistributed taxable income and net 34 Table of Contents capital gain and to a 4% nondeductible excise tax on any amount by which distributions we pay with respect to any calendar year are less than the sum of (1) 85% of our ordinary income, (2) 95% of our capital gain net income and (3) 100% of our undistributed income from prior years.
We will be subject to U.S. federal income tax on our undistributed taxable income and net capital gain and to a 4% nondeductible excise tax on any amount by which distributions we pay with respect to any calendar year are less than the sum of (1) 85% of our ordinary income, (2) 95% of our capital gain net income and (3) 100% of our undistributed income from prior years.
The price of our common stock could be subject to wide fluctuations in response to a number of factors, including those listed in this “Risk Factors” section of this Annual Report on Form 10-K and others such as: ​ ● actual or anticipated variations in our quarterly results of operations or dividends; ● changes in our funds from operations or earnings estimates; ● changes in government regulations or policies affecting our business or the farming business; ● publication of research reports about us or the real estate or farming industries; ● sustained decreases in agricultural commodity and crop prices; ● increases in market interest rates that lead purchasers of our common stock to demand a higher yield; ● changes in market valuations of similar companies; ● adverse market reaction to any additional debt we incur in the future; ● additions or departures of key management personnel; ● actions by institutional stockholders; ● speculation in the press or investment community; ● the realization of any of the other risk factors presented in this Annual Report on Form 10-K; ● the extent of investor interest in our securities; ● the general reputation of REITs and the attractiveness of our equity securities in comparison to other equity securities, including securities issued by other real estate-based companies; ● our underlying asset value; ● investor confidence in the stock and bond markets generally; ● changes in tax laws; ● future equity issuances; ● failure to meet earnings estimates; ● failure to meet and maintain REIT qualifications and requirements; ● low trading volume of our common stock; and ● general market and economic conditions, including conditions that are outside of our control, such as the impact of public health and safety concerns, such as the ongoing coronavirus pandemic and efforts to mitigate its spread. ​ In the past, securities class action litigation has often been instituted against companies following periods of volatility in the price of their common stock.
The price of our common stock could be subject 37 Table of Contents to wide fluctuations in response to a number of factors, including those listed in this “Risk Factors” section of this Annual Report on Form 10-K and others such as: ​ ● actual or anticipated variations in our quarterly results of operations or dividends; ● changes in our funds from operations or earnings estimates; ● changes in government regulations or policies affecting our business or the farming business; ● publication of research reports about us or the real estate or farming industries; ● sustained decreases in agricultural commodity and crop prices; ● increases in market interest rates that lead purchasers of our common stock to demand a higher yield; ● changes in market valuations of similar companies; ● adverse market reaction to any additional debt we incur in the future; ● additions or departures of key management personnel; ● actions by institutional stockholders; ● speculation in the press or investment community; ● the realization of any of the other risk factors presented in this Annual Report on Form 10-K; ● the extent of investor interest in our securities; ● the general reputation of REITs and the attractiveness of our equity securities in comparison to other equity securities, including securities issued by other real estate-based companies; ● our underlying asset value; ● investor confidence in the stock and bond markets generally; ● changes in tax laws; ● future equity issuances; ● failure to meet earnings estimates; ● failure to meet and maintain REIT qualifications and requirements; ● low trading volume of our common stock; and ● general market and economic conditions, including conditions that are outside of our control, such as the impact of public health and safety concerns. ​ In the past, securities class action litigation has often been instituted against companies following periods of volatility in the price of their common stock.
As a result, interest rate fluctuations and capital market conditions are likely to affect the market price of our common stock and such effects could be significant. ​ 37 Table of Contents The market price and trading volume of our common stock may be highly volatile and low, respectively. ​ The stock markets, including the New York Stock Exchange (the “NYSE”), on which our common stock is listed, historically have experienced significant price and volume fluctuations.
As a result, interest rate fluctuations and capital market conditions are likely to affect the market price of our common stock and such effects could be significant. ​ The market price and trading volume of our common stock may be highly volatile and low, respectively. ​ The stock markets, including the New York Stock Exchange (the “NYSE”), on which our common stock is listed, historically have experienced significant price and volume fluctuations.
Our tenants, particularly those that may depend on debt and leverage, could be susceptible to defaults under their leases or bankruptcy in the event that their cash flows are insufficient to satisfy their financial obligations.
Our tenants, particularly those that may depend on leverage, could be susceptible to defaults under their leases or bankruptcy in the event that their cash flows are insufficient to satisfy their financial obligations.
Our Board of Directors may alter or eliminate our current policy on borrowing at any time without stockholder approval. If this policy changed, we could become more highly leveraged which could result in an increase in our debt service. Higher leverage also increases the risk of default on our obligations.
Our Board of Directors may alter or eliminate our current policy on borrowing at any time without stockholder approval. If this policy changed, we could become more highly leveraged 32 Table of Contents which could result in an increase in our debt service. Higher leverage also increases the risk of default on our obligations.
Where we are a limited partner or non-managing member in any partnership or limited liability company, if such entity takes or expects to take actions that could 24 Table of Contents jeopardize our status as a REIT or require us to pay tax, we may be forced to dispose of our interest in such entity.
Where we are a limited partner or non-managing member in any partnership or limited liability company, if such entity takes or expects to take actions that could jeopardize our status as a REIT or require us to pay tax, we may be forced to dispose of our interest in such entity.
The Code sets forth a safe harbor for REITs that wish to sell property without risking the imposition of the 100% tax. A principal requirement of the safe harbor is that the REIT must hold the applicable property for not less than two years prior to its sale for the production of rental income.
The 34 Table of Contents Code sets forth a safe harbor for REITs that wish to sell property without risking the imposition of the 100% tax. A principal requirement of the safe harbor is that the REIT must hold the applicable property for not less than two years prior to its sale for the production of rental income.
In addition, we may experience delays in enforcing our rights as landlord and may incur substantial costs in protecting our investment. ​ As a result, any downturn in the profitability of the farming operations of our tenants or a downturn in the farming industry as a whole could have a material adverse effect on our financial condition, results of operations, cash flow and ability to make distributions to our stockholders. ​ We have a substantial amount of indebtedness outstanding, which may expose us to the risk of default under our debt obligations, restrict our operations and our ability to grow our business and revenues and restrict our ability to pay distributions to our stockholders. ​ As of December 31, 2022, we had approximately $439.5 million of outstanding indebtedness excluding debt issuance costs, most of which is secured by mortgages on our farms.
In addition, we may experience delays in enforcing our rights as landlord and may incur substantial costs in protecting our investment. ​ As a result, any downturn in the profitability of the farming operations of our tenants or a downturn in the farming industry as a whole could have a material adverse effect on our financial condition, results of operations, cash flow and ability to make distributions to our stockholders. ​ We have a substantial amount of indebtedness outstanding, which may expose us to the risk of default under our debt obligations, restrict our operations and our ability to grow our business and revenues and restrict our ability to pay distributions to our stockholders. ​ As of December 31, 2023, we had approximately $363.1 million of outstanding indebtedness excluding debt issuance costs, most of which is secured by mortgages on our farms.
As a result, we are required to frequently re-lease our properties upon the expiration of our leases, which will make us more susceptible to declines in market rental rates than we would be if we were to enter into longer term leases.
As a result, we are required to frequently re-lease our 20 Table of Contents properties upon the expiration of our leases, which will make us more susceptible to declines in market rental rates than we would be if we were to enter into longer term leases.
The future results of our Company will suffer if we do not effectively manage properties on behalf of the OZ Fund and MWA clients. ​ Our ability to realize the anticipated benefits of our ownership interest in the OZ Fund, our long-term management agreement with the OZ Fund, the acquisition of MWA and the launch of a joint asset management platform with MWA depends, in part, on our ability to successfully manage the business and operations of OZ Fund and MWA client properties.
The future results of our Company will suffer if we do not effectively manage properties on behalf of the OZ Fund and MWA clients. ​ Our ability to realize the anticipated benefits of our ownership interest in the OZ Fund, our long-term management agreement with the OZ Fund, the acquisition of MWA and the asset management platform within MWA depends, in part, on our ability to successfully manage the business and operations of OZ Fund and MWA client properties.
While we have sought to engage 38 Table of Contents regulators to address activities that we believe are intentionally misleading, we can make no guarantees that regulatory authorities will take action on these types of activities, and we cannot guarantee that any action taken by regulators or legislators will timely address damage done by the activities of these websites and authors. ​ The number of shares of our common stock available for future issuance or sale may have adverse effects on the market price of our common stock. ​ As of December 31, 2022, approximately 54.3 million shares of our common stock were outstanding.
While we have sought to engage regulators to address activities that we believe are intentionally misleading, we can make no guarantees that regulatory authorities will take action on these types of activities, and we cannot guarantee that any action taken by regulators or legislators will timely address damage done by the activities of these websites and authors. ​ 38 Table of Contents The number of shares of our common stock available for future issuance or sale may have adverse effects on the market price of our common stock. ​ As of December 31, 2023, approximately 48.0 million shares of our common stock were outstanding.
These requirements make it more difficult to change our senior management by removing and replacing directors and may prevent a change in control of our Company that is in the best interests of our stockholders. ​ 33 Table of Contents Our Operating Partnership may issue additional Common units or one or more classes of preferred units to third parties without the consent of our stockholders, which would reduce our ownership percentage in our Operating Partnership and could have a dilutive effect on the amount of distributions made to us by our Operating Partnership and, therefore, the amount of distributions we can make to our stockholders. ​ As of December 31, 2022, we owned approximately 97.8% of the outstanding Common units in our Operating Partnership (on a fully diluted basis).
These requirements make it more difficult to change our senior management by removing and replacing directors and may prevent a change in control of our Company that is in the best interests of our stockholders. ​ Our Operating Partnership may issue additional Common units or one or more classes of preferred units to third parties without the consent of our stockholders, which would reduce our ownership percentage in our Operating Partnership and could have a dilutive effect on the amount of distributions made to us by our Operating Partnership and, therefore, the amount of distributions we can make to our stockholders. ​ As of December 31, 2023, we owned approximately 97.6% of the outstanding Common units in our Operating Partnership (on a fully diluted basis).
These expected increases in borrowing costs could reduce our income and cash flow and materially and adversely impact our results of operations, financial condition and our ability to make distributions to our stockholders. ​ 18 Table of Contents Increases in interest rates will increase our tenants’ borrowing costs and make it more difficult for them to obtain credit and may cause land prices to decline . ​ Increasing interest rates result in higher borrowing costs for farmers and may make it more difficult for farm operators to obtain indebtedness to fund their operations, which could have an adverse impact on our tenant’s ability to make rental payments to us.
Increases in borrowing costs could reduce our income and cash flow and materially and adversely impact our results of operations, financial condition and our ability to make distributions to our stockholders. ​ Increases in interest rates will increase our tenants’ borrowing costs and make it more difficult for them to obtain credit and may cause land prices to decline. ​ Increasing interest rates result in higher borrowing costs for farmers and may make it more difficult for farm operators to obtain indebtedness to fund their operations, which could have an adverse impact on our tenants’ ability to make rental payments to us.
As of December 31, 2022, the weighted average interest rate of the indebtedness subject to interest rate resets in 2023 was 3.23%, which we expect to increase significantly if benchmark interest rate levels remain constant or increase as we expect them to during the course of 2023 (for more information on rate resets see “Note 7—Mortgage Notes, Lines of Credit and Bonds Payable”).
As of December 31, 2023, the weighted average interest rate of the indebtedness subject to interest rate resets in 2024 was 3.07%, which we expect to increase significantly if benchmark interest rate levels remain constant as we expect them to during the course of 2024 (for more information on rate resets see “Note 7—Mortgage Notes, Lines of Credit and Bonds Payable”).
If the impacts of the pandemic or a future public health crisis continue for an extended period of time, we expect that certain tenants may 29 Table of Contents experience greater financial distress, which could result in late payments, requests for rental relief, business closures, rent concessions or other accommodations, as applicable.
If the impacts of a future public health crisis continue for an extended period of time, we expect that certain tenants may experience financial distress, which could result in late payments, requests for rental relief, business closures, rent concessions or other accommodations, as applicable.
Pittman or Fabbri could have a material adverse effect on our ability to implement our business strategy and to achieve our investment objectives. ​ Joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on co-venturers’ financial condition and disputes between us and our co-venturers. ​ We have entered into joint investments (including our ownership interest in the OZ Fund) and may in the future, co-invest with third parties through partnerships, joint ventures or other entities, acquiring noncontrolling interests in or sharing responsibility for developing properties and managing the affairs of a property, partnership, joint venture or other entity.
Luca Fabbri, our President, Chief Executive Officer and a member of our Board of Directors, could have a material adverse effect on our ability to implement our business strategy and to achieve our investment objectives. ​ Joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on co-venturers’ financial condition and disputes between us and our co-venturers. ​ We have entered into joint investments (including our ownership interest in the OZ Fund) and may in the future, co-invest with third parties through partnerships, joint ventures or other entities, acquiring noncontrolling interests in or sharing responsibility for developing properties and managing the affairs of a property, partnership, joint venture or other entity.
If market interest rates continue to 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 continue to stay elevated or increase further, prospective investors may desire a higher distribution yield on our common stock or may seek securities paying higher dividends or interest.
Additional states may, in the future, pass similar or more restrictive laws, and we may not be legally permitted, or it may become overly burdensome or expensive, to acquire properties in these states, which could impede the growth of our portfolio and our ability to diversify geographically in states that might otherwise have attractive investment opportunities. ​ Our farms are subject to adverse weather conditions, seasonal variability, crop disease and other contaminants, which may adversely affect the amount of variable rent or income from direct operations and/or our tenants' ability to pay fixed or variable rent and thereby have a material adverse effect on our results of operations, financial condition, and our ability to make distributions to stockholders. ​ Crops are vulnerable to adverse weather conditions, including windstorms, tornados, floods, drought and temperature extremes, which are common but difficult to predict.
Additional states may, in the future, pass similar or more restrictive laws, and we may not be legally permitted, or it may become overly burdensome or expensive, to acquire properties in these states, which could impede the growth of our portfolio and our ability to diversify geographically in states that might otherwise have attractive investment opportunities. ​ Our farms are subject to adverse weather conditions, seasonal variability, crop disease and other contaminants, natural disasters and other natural conditions, including the effects of climate change and water availability, which may adversely affect the amount of variable rent or income from direct operations and/or our tenants' ability to pay fixed or variable rent and thereby have a material adverse effect on our results of operations, financial condition, and our ability to make distributions to stockholders. ​ Crops are vulnerable to adverse weather conditions, including windstorms, tornados, floods, drought and temperature extremes, which are common but difficult to predict, and may occur with higher frequency or be even less predictable in the future due to the effects of climate change.
We expect that most of the leases 20 Table of Contents we enter into in the future will have two to seven-year terms.
We expect that most of the leases we enter into in the future will have two to seven-year terms.
Mortgage debt obligations expose us to the possibility of foreclosure, which could result in the loss of our investment in a property or group of properties subject to mortgage debt. ​ As of December 31, 2022, we had approximately $439.5 million of outstanding mortgage indebtedness excluding debt issuance costs.
Mortgage debt obligations expose us to the possibility of foreclosure, which could result in the loss of our investment in a property or group of properties subject to mortgage debt. ​ As of December 31, 2023, we had approximately $363.1 million of outstanding mortgage indebtedness excluding debt issuance costs.
Adverse weather conditions, seasonal variability, crop disease, pests and contaminants could adversely affect the value of production on properties. This could impact our variable rent proceeds and our tenants' ability to continue to meet their obligations to us.
Adverse weather conditions, seasonal variability, crop disease, pests and contaminants, natural disasters and other natural conditions, including the effects of climate change, could adversely affect the value of production on properties. This could impact our variable rent proceeds and our tenants' ability to continue to meet their obligations to us.
As of December 31, 2022, we owned 1,959 acres of farmland in Kansas and 815 acres in Missouri, and our ownership of those farms may be challenged under Kansas, or Missouri law, in which case we may be required to sell those farms at an unfavorable time and on unfavorable terms.
As of December 31, 2023, we owned 320 acres of farmland in Kansas, 815 acres in Missouri and 2,114 acres in Oklahoma, and our ownership of those farms may be challenged under Kansas, Missouri or Oklahoma law, in which case we may be required to sell those farms at an unfavorable time and on unfavorable terms.
These loans consist of: 12 loan agreements which were originally secured by senior first-lien mortgage loans secured against farmland; three loan agreements which were originally secured by working capital assets of the borrower; and one loan agreement which was originally secured by equipment of the borrower.
These loans consist of: 15 loan agreements which were originally secured by senior first-lien mortgage loans secured against farmland; one loan is secured by a second mortgage secured against farmland and a personal guaranty; three loan agreements which were originally secured by working capital assets of the borrower; and one loan agreement which was originally secured by equipment of the borrower.
In addition, as of the date of this Annual Report on Form 10-K, other than the Common units held by us, approximately 1.2 million Common units in our Operating Partnership were outstanding, 1.2 million of which currently may be tendered for redemption by the holders, for cash, or at our option, for shares of our common stock, on a one-for-one basis.
In addition, as of December 31, 2023, other than the Common units held by us, approximately 1.2 million Common units in our Operating Partnership were outstanding, 1.2 million of which currently may be tendered for redemption by the holders, for cash, or at our option, for shares of our common stock, on a one-for-one basis.
As of December 31, 2022, $262.0 million of our outstanding indebtedness was subject to interest rates that reset from time to time (excluding our floating rate debt), of which $174.1 million was subject to interest rates that will be reset in 2023.
As of December 31, 2023, $136.0 million of our outstanding indebtedness was subject to interest rates that reset from time to time (excluding our floating rate debt), of which $43.9 million was subject to interest rates that will be reset in 2024.
Pittman and Luca Fabbri, could have a material adverse effect on our ability to implement our business strategy and to achieve our investment objectives. ​ Our future success depends to a significant extent on the continued service and coordination of our senior management team and the successful implementation of our Chief Executive Officer transition announced in November 2022.
Pittman and Luca Fabbri, could have a material adverse effect on our ability to implement our business strategy and to achieve our investment objectives. ​ Our future success depends to a significant extent on the continued service and coordination of our senior management team.
This impacts the volatility of the market prices of certain crops that our tenants grow on our properties. There can be no assurances as to the impact of any change in trade policy on market prices of crops. ​ Similarly, our and our tenants’ operations are subject to risks stemming from geopolitical conflicts, such as the ongoing war in Ukraine.
There can be no assurances as to the impact of any change in trade policy on market prices of crops. ​ Similarly, our and our tenants’ operations are subject to risks stemming from geopolitical conflicts, such as the ongoing war in Ukraine and the conflict in the Middle East.
We can provide no assurances that the measures we have implemented to prevent security breaches and cyber incidents will be effective in the event of a cyber-attack. ​ The theft, destruction, loss, misappropriation or release of sensitive and/or confidential information or intellectual property, or interference with our information technology systems or the technology systems of third-parties on which we rely, could result in business disruption, negative publicity, violation of privacy laws, loss of tenants, potential liability and competitive disadvantage, any of which could result in a material adverse effect on financial condition or results of operations. ​ Potential liability for environmental matters could materially and adversely affect our results of operations and financial condition. ​ We are subject to the risk of liabilities under federal, state and local environmental laws applicable to agricultural properties, including those related to wetlands, groundwater and water runoff.
We can provide no assurances that the measures we have implemented to prevent security breaches and cyber incidents will be effective in the event of a cyber-attack. ​ The theft, destruction, loss, misappropriation or release of sensitive and/or confidential information or intellectual property, or interference with our information technology systems or the technology systems of third-parties on which we rely, could result in business disruption, negative publicity, violation of privacy laws, loss of tenants, potential liability and competitive disadvantage, any of which could result in a material adverse effect on financial condition or results of operations. ​ For more information on cybersecurity, see “Item 1C.
Interest rate increases or other government actions taken to reduce inflation could also result in an economic recession. ​ Our tenants have experienced challenges in their supply chains and related price increases.
In addition, during 2022 and 2023 the Federal Reserve repeatedly raised interest rates in response to concerns about inflation. Interest rate increases or other government actions taken to reduce inflation could also result in an economic recession. ​ Our tenants have experienced challenges in their supply chains and related price increases.
We can provide no assurances that any of our key personnel will continue their employment with us. The loss of the services of Messrs.
We can provide no assurances that any of our key personnel will continue their employment with us. In particular, the loss of the services of Mr. Paul A. Pittman, our Executive Chairman of the Board of Directors, or Mr.
The remaining loan balances are secured exclusively by senior first-lien mortgages, with $4.8 million outstanding at December 31, 2022 (representing less than 1% of our total assets as of December 31, 2022), and we intend to make similar loans under the FPI Loan Program in the future.
As of December 31, 2023, the remaining loan balances total $13.9 million (representing 1% of our total assets as of December 31, 2023), of which $13.4 million were secured by senior first-lien mortgages and $0.5 million was secured by a second mortgage. We intend to make similar loans under the FPI Loan Program in the future.
Disputes between us and partners or co-venturers may result in litigation or arbitration that would increase our expenses and prevent our officers and directors from focusing their time and effort on our business. Consequently, actions by or disputes with partners or co-venturers might result in subjecting properties owned by the partnership or joint venture to additional risk.
Disputes 24 Table of Contents between us and partners or co-venturers may result in litigation or arbitration that would increase our expenses and prevent our officers and directors from focusing their time and effort on our business.
Such activities might also disrupt the productivity of the farmland or property related to farming or increase the risk of environmental liabilities, any of which could adversely impact the rents that we receive from leasing these properties. ​ Changes to the base rate on our floating rate indebtedness could increase our borrowing costs.
Such activities might also disrupt the productivity of the farmland or property related to farming or increase the risk of environmental liabilities, any of which could adversely impact the rents that we receive from leasing these properties. ​ We are subject to risks associated with public health crises, such as pandemics and epidemics which may have a material adverse effect on our business.
In addition, we may in certain circumstances be liable for the actions of our third-party partners or co-venturers.
Consequently, actions by or disputes with partners or co-venturers might result in subjecting properties owned by the partnership or joint venture to additional risk. In addition, we may in certain circumstances be liable for the actions of our third-party partners or co-venturers.
The nature and extent of future impacts are highly uncertain and unpredictable . ​ We are subject to risks associated with public health crises, such as pandemics and epidemics, including the COVID-19 pandemic.
The nature and extent of future impacts are highly uncertain and unpredictable . ​ We are subject to risks associated with public health crises, such as pandemics and epidemics. Our rental revenue and operating results depend significantly on the ability of our tenants to meet their rent and other obligations to us.
We may not be successful in this litigation, in which case we would have incurred significant costs and expenses. Even if we are successful, there can be no assurance that we will be able to recover damages.
Even if we are successful, there can be no assurance that we will be able to recover damages.
The Federal Reserve has indicated that it expects to maintain elevated benchmark interest rates during 2023 and 2024 to help curb inflation. Rising interest rates will increase our borrowing costs on our existing floating-rate indebtedness as well as on any future fixed or floating rate indebtedness used to refinance existing indebtedness or to acquire new properties.
Future periods of rising interest rates could increase our borrowing costs on our existing floating-rate indebtedness as well as on any future fixed or floating rate indebtedness used to refinance existing indebtedness or to acquire new properties.
As of the date of this Annual Report on Form 10-K, we have made loans to nine distinct borrowers with original principal amounts totaling $24.9 million.
As of December 31, 2023, we have made loans to twelve distinct borrowers with original principal amounts totaling $36.7 million.
Removed
Both domestic and international markets experienced significant inflationary pressures in 2022, and inflation rates in the U.S. are currently expected to continue at elevated levels for the near-term.
Added
The Federal Reserve has maintained elevated benchmark interest rates during 2022 and 2023 to help curb inflation, and although the Federal Reserve may reduce benchmark interest rates in 2024, there are no assurances that interest rates will be reduced on the anticipated timeline, and interest rates remain high.
Removed
In addition, the Federal Reserve has raised, and is expected to continue to raise, interest rates in response to concerns about inflation, which, coupled with reduced government spending and volatility in financial markets, may have the effect of further increasing economic uncertainty and heightening these risks.
Added
If increases in interest rates are not accompanied by higher levels of farm income, this could lead to a reduction in our tenants’ profitability, which could have a material adverse effect on our business or results of operations, financial condition, and ability to make distributions to our stockholders. ​ We have issued Series A preferred units that may be converted to Common units on or after February 10, 2026, which Common units would be immediately redeemable, for cash or shares of common stock at the Company’s option.
Removed
Effective following the filing of this Annual Report on Form 10-K, Luca Fabbri will assume the position of Chief Executive Officer and be appointed to the Board of Directors and Paul A. Pittman will continue to serve as Executive Chairman of the Board of Directors.
Added
The conversion of such Series A preferred units and potential redemption of the converted Common units for shares of common stock could have an immediate dilutive effect on the ownership interests of our common stockholders. ​ On or after February 10, 2026 (the “Conversion Right Date”), holders of the Series A preferred units have the right to convert each Series A preferred unit into a number of Common units equal to (i) the $1,000 liquidation preference plus all accrued and unpaid distributions, divided by (ii) the volume-weighted average price per share of the Company’s common 18 Table of Contents stock for the 20 trading days immediately preceding the applicable conversion date.
Removed
On December 17, 2021, the Company's claims against Sabrepoint were dismissed by the court. We are pursuing an appeal of that order. The parties have briefed the narrowed appeal before the Texas Court of Appeals and oral argument was conducted on November 30, 2022.
Added
All Common units received upon conversion may be immediately tendered for redemption for cash or, at the Company’s option, for shares of common stock on a one-for-one basis, subject to the terms and conditions set forth in the Partnership Agreement. Prior to the Conversion Right Date, the Series A preferred units may not be tendered for redemption by the Holder.
Removed
As of December 31, 2022, $59.5 million of our outstanding indebtedness bears interest at floating rates based on the London interbank offered rate (“LIBOR”) and has maturity dates beyond December 31, 2022. The use of LIBOR was phased out at the end of 2021, although the phase out of U.S. dollar LIBOR has been delayed until mid-2023.
Added
This impacts the volatility of the market prices of certain crops that our tenants grow on our properties.
Removed
Currently, the Company is in process of converting its remaining LIBOR-based indebtedness to a Secured Overnight Financing Rate (“SOFR”) based instrument.
Added
On December 17, 2021, the Company's claims against Sabrepoint were dismissed by the court , which granted (i) Sabrepoint's motion for summary judgment on collateral estoppel grounds, and (ii) motion to dismiss pursuant to the Texas Citizens Participation Act (“TCPA”).
Removed
The impact of the transition from LIBOR on us could result in interest rate increases on our debt, which could adversely affect our cash flow, operating results and ability to make distributions to our stockholders at expected levels or at all. ​ We are subject to risks associated with public health crises, such as pandemics and epidemics, including the COVID-19 pandemic, which may have a material adverse effect on our business.
Added
On March 21, 2022, after the Company filed a notice signaling an intent to appeal both orders, the Court of Appeals for the Fifth District of Texas (the “Court of Appeals”) entered an order declaring the trial court's TCPA order “VOID because the motion was denied by operation of law….” Accordingly, the Company narrowed its appeal to the trial court's grant of summary judgment.
Removed
While many countries around the world have removed or reduced the restrictions taken in response to the COVID-19 pandemic, the emergence of new variants of COVID-19 virus may result in new governmental lockdowns, quarantine requirements or other restrictions to slow the spread of the virus.
Added
On January 26, 2022, Sabrepoint filed a motion for attorney's fees relating to the defense of that action.
Removed
In addition, any such measures could also impact the global economy more broadly, for example by leading to further economic slowdowns. While COVID-19 case volumes have decreased in the U.S and certain other countries, the global outlook remains uncertain as case counts fluctuate and vaccination and booster rates remain relatively low in many parts of the world.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

9 edited+3 added−0 removed13 unchanged
Biggest changeAs of the date of this report, we had $40.5 million of availability under the program. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands except per share amounts) Total Number of Common Shares Purchased Average Price Paid per Share Total Number of Preferred Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet be Purchased Under the Share Repurchase Program October 1, 2022 - October 31, 2022 ​ — ​ $ — ​ — ​ $ — ​ — ​ $ 40,456 November 1, 2022 - November 30, 2022 ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ 40,456 December 1, 2022 - December 31, 2022 ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ 40,456 Total ​ — ​ $ — ​ — ​ $ — ​ — ​ $ 40,456 ​ Subsequent to December 31, 2022, the Company did not repurchase any shares of common or preferred stock. ​
Biggest changeAs of December 31, 2023, we had $83.3 million of availability under the program. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands except per share amounts) Total Number of Common Shares Purchased ⁽ ¹ ⁾ Average Price Paid per Share Total Number of Preferred Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet be Purchased Under the Share Repurchase Program October 1, 2023 - October 31, 2023 ​ 152 ​ $ 10.28 ​ — ​ $ — ​ 152 ​ $ 45,459 November 1, 2023 - November 30, 2023 ​ 186 ​ ​ 11.72 ​ — ​ ​ — ​ 185 ​ ​ 83,283 December 1, 2023 - December 31, 2023 ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ 83,283 Total ​ 338 ​ $ 11.07 ​ — ​ $ — ​ 337 ​ ​ ​ ⁽¹⁾ The total number of shares purchased includes shares of our common stock transferred to us in order to satisfy tax withholding obligations incurred upon the vesting of restricted stock awards held by our employees. ​ Subsequent to December 31, 2023, we did not repurchase any shares of common or preferred stock. ​
Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ​ Market Information ​ Our common stock trades on the NYSE under the symbol “FPI.” ​ Stock Performance Graph ​ The following graph compares the total stockholder return of our common stock (assuming reinvestment of dividends) against the cumulative returns of the Standard & Poor’s Corporation Composite 500 Index and the Dow Jones Equity All REIT Index for the past five years.
Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ​ Market Information ​ Our common stock trades on the NYSE under the symbol “FPI.” ​ 41 Table of Contents Stock Performance Graph ​ The following graph compares the total stockholder return of our common stock (assuming reinvestment of dividends) against the cumulative returns of the Standard & Poor’s Corporation Composite 500 Index and the Dow Jones Equity All REIT Index for the past five years.
However, because many shares of our common stock are held by brokers and other institutions on behalf of stockholders, we believe there are substantially more beneficial holders of our common stock than record holders. As of February 17, 2023, there were approximately 11 holders (other than our Company) of our Common units.
However, because many shares of our common stock are held by brokers and other institutions on behalf of stockholders, we believe there are substantially more beneficial holders of our common stock than record holders. As of February 23, 2024, there were approximately 11 holders (other than our Company) of our Common units.
As of February 17, 2023, there were six holders of our Series A preferred units. ​ Issuer Purchases of Equity Securities ​ Share Repurchase Program ​ On March 15, 2017, our Board of Directors approved a program to repurchase up to $25.0 million in shares of our common stock.
As of February 23, 2024, there were five holders of our Series A preferred units. ​ Issuer Purchases of Equity Securities ​ Share Repurchase Program ​ On March 15, 2017, our Board of Directors approved a program to repurchase up to $25.0 million in shares of our common stock.
No distributions can be paid on our common stock unless we have paid all cumulative dividends on our Series A preferred units.
No distributions can be paid on our common stock 42 Table of Contents unless we have paid all cumulative dividends on our Series A preferred units.
As a result, the gain (or loss) recognized on a sale of that common stock or upon our liquidation would be increased (or decreased) accordingly. ​ 41 Table of Contents Stockholder Information ​ As of February 17, 2023, there were approximately 61 direct holders of record of our common stock.
As a result, the gain (or loss) recognized on a sale of that common stock or upon our liquidation would be increased (or decreased) accordingly. ​ Stockholder Information ​ As of February 23, 2024, there were approximately 53 direct holders of record of our common stock.
On August 1, 2018, our Board of Directors increased the authority under the share repurchase to $38.5 million. On November 7, 2019, the Board of Directors approved an additional $50 million under the share repurchase program. Our repurchase activity for the three months ended December 31, 2022 under the share repurchase program is presented in the following table.
On August 1, 2018, our Board of Directors increased the authority under the share repurchase to $38.5 million. On November 7, 2019, the Board of Directors approved an additional $50 million under the share repurchase program.
See “Risk Factors — Certain aspects of our Series A preferred units may limit our ability to make distributions to our common stockholders.” Holders of shares of our Series B Participating Preferred Stock received cash dividends at a rate of 6.00% per annum on the initial liquidation preference per share of $25.00 (equivalent to the fixed annual rate of $1.50 per share) until the Company converted all outstanding shares of Series B Participating Preferred Stock into shares of common stock on October 4, 2021. ​ In order to maintain qualification as a REIT, we must distribute to our stockholders, on an annual basis, at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains.
See “Risk Factors — Certain aspects of our Series A preferred units may limit our ability to make distributions to our common stockholders.” ​ In order to maintain qualification as a REIT, we must distribute to our stockholders, on an annual basis, at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains.
Our common stock began trading on the NYSE on September 8, 2015 and was previously traded on the NYSE MKT following our initial public offering on April 19, 2014. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Ending Index 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 Farmland Partners Inc. 100.00 54.88 84.42 111.49 155.76 165.29 S&P 500 Index 100.00 95.61 125.70 148.81 191.48 156.77 Dow Jones Equity All REIT Index 100.00 95.90 123.46 117.54 165.97 124.47 ​ 40 Table of Contents Distribution Information ​ Since our initial quarter as a publicly traded REIT, we have made regular quarterly distributions to our stockholders.
Our common stock began trading on the NYSE on September 8, 2015 and was previously traded on the NYSE MKT following our initial public offering on April 19, 2014. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Ending Index 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Farmland Partners Inc. 100.00 153.84 203.17 283.83 301.19 313.12 S&P 500 Index 100.00 131.47 155.65 200.29 163.98 207.04 Dow Jones Equity All REIT Index 100.00 128.74 122.57 173.07 129.79 144.46 ​ Distribution Information ​ Since our initial quarter as a publicly traded REIT, we have made regular quarterly distributions to our stockholders.
Added
On May 3, 2023, our Board of Directors approved a $75.0 million increase resulting in total availability under the share repurchase program of approximately $88.0 million as of such date.
Added
On 43 Table of Contents November 1, 2023, our Board of Directors approved a $40.0 million increase in the total authorization available under the program, increasing the total availability under the share repurchase program to approximately $85.0 million as of such date.
Added
Our repurchase activity for the three months ended December 31, 2023 under the share repurchase program is presented in the following table.

Item 7. Management's Discussion & Analysis

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

72 edited+17 added−38 removed54 unchanged
Biggest changeWe currently have authority to repurchase up to an aggregate of $40.5 million in additional shares of our common stock or shares. ​ 52 Table of Contents Consolidated Indebtedness ​ For further details relating to our consolidated indebtedness refer to “– Recent Developments – Financing Activity” and Note 7 – Mortgage Notes, Line of Credit and Bonds Payable included in the financial statement section of this Annual Report on Form 10-K. ​ Sources and Uses of Cash and Cash Equivalents ​ The following table summarizes our cash flows for the years ended December 31, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, (in thousands) 2022 2021 Net cash and cash equivalents provided by operating activities ​ $ 17,051 ​ $ 7,856 Net cash and cash equivalents (used in) investing activities ​ $ (60,398) ​ $ (18,769) Net cash and cash equivalents provided by financing activities ​ $ 20,830 ​ $ 13,867 ​ Comparison of the year ended December 31, 2022 to the year ended December 31, 2021 ​ As of December 31, 2022, we had $7.7 million of cash and cash equivalents compared to $30.2 million at December 31, 2021. ​ Cash Flows from Operating Activities ​ Net cash and cash equivalents provided by operating activities increased by $9.2 million primarily as a result of the following: ​ ● Receipt of $35.8 million in fixed rents, $9.5 million in variable rent and $2.2 million in tenant reimbursements for the year ended December 31, 2022 as compared to the receipt of $34.4 million in fixed rents, $9.4 million in variable rents, and $4.7 million in tenant reimbursements in the year ended December 31, 2021; ● Stock-based compensation and incentive during the year ended December 31, 2022 of $1.9 million as compared to $1.3 million during the year ended December 31, 2021; ● Gain on disposition of assets during the year ended December 31, 2022 of $2.6 million as compared to $9.3 million during the year ended December 31, 2021; ● A change in accounts receivable of $(2.3) million for the year ended December 31, 2022 compared to $(1.0) million for the year ended December 31, 2021; ● A change in other assets of $(0.1) million for the year ended December 31, 2022 compared to $(0.6) million for the year ended December 31, 2021; ● A change in accrued interest of $1.4 million for the year ended December 31, 2022 compared to $(0.5) million for the year ended December 31, 2021; ● A change in accrued expenses of $(1.5) million for the year ended December 31, 2022 compared to $0.1 million for the year ended December 31, 2021; and ● A change in deferred revenue of $0.1 million for the year ended December 31, 2022 compared to $(0.1) million for the year ended December 31, 2021. ​ Cash Flows from Investing Activities ​ Net cash and cash equivalents used in investing activities increased by $41.6 million primarily as a result of the following: ​ ● Property acquisitions during the year ended December 31, 2022 of $54.4 million as compared to $81.2 million during the year ended December 31, 2021 ; ● Property dispositions during the year ended December 31, 2022 for cash consideration of $17.0 million as compared to $70.6 million during the year ended December 31, 2021 ; ● An increase of $1.5 million in real estate improvements as compared to the year ended December 31, 2021; 53 Table of Contents ● Collections on notes receivable under the FPI Loan Program and financing receivables of $2.8 million during the year ended December 31, 2022 as compared to $0.0 million during the year ended December 31, 2021; and ● Issuances of notes receivable under the FPI Loan Program and financing receivables of $20.8 million during the year ended December 31, 2022, including $17.3 million for the purchase of land and buildings for four agriculture equipment dealerships in Ohio leased to Ag Pro under the John Deere brand which are accounted for as financing receivables, as compared to $3.7 million during the year ended December 31, 2021. ​ Cash Flows from Financing Activities ​ Net cash and cash equivalents provided by financing activities increased by $7.0 million primarily as a result of the following: ​ ● Borrowings from mortgage notes payable during the year ended December 31, 2022 of $223.0 million as compared to $41.1 million during the year ended December 31, 2021; ● Repayments on mortgage notes payable during the year ended December 31, 2022 of $296.9 million as compared to $35.9 million during the year ended December 31, 2021; ● Net proceeds from the ATM Program during the year ended December 31, 2022 of $121.3 million as compared to $27.2 million during the year ended December 31, 2021; ● A decrease of $0.7 million in participating preferred stock repurchases as compared to the year ended December 31, 2021; ● Redemption of Series A preferred units during the year ended December 31, 2022 of $10.2 million as compared to $0.0 million during the year ended December 31, 2021; ● Dividends on common stock during the year ended December 31, 2022 of $11.1 million as compared to $6.4 million during the year ended December 31, 2021; and ● Distributions on Series B participating preferred stock during the year ended December 31, 2022 of $0.0 million as compared to $6.5 million during the year ended December 31, 2021. ​ Non-GAAP Financial Measures ​ Funds from Operations (“FFO”) and Adjusted Funds from Operations (“AFFO”) ​ We calculate FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts, or Nareit.
Biggest changeIn addition, the Company redeemed 34,000 Common units in exchange for cash of approximately $0.4 million. ​ Consolidated Indebtedness ​ For further details relating to our consolidated indebtedness refer to “– Recent Developments – Financing Activity” and Note 7 – Mortgage Notes, Line of Credit and Bonds Payable included in the financial statement section of this Annual Report on Form 10-K. ​ 54 Table of Contents Sources and Uses of Cash and Cash Equivalents ​ The following table summarizes our cash flows for the years ended December 31, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, (in thousands) 2023 2022 Net cash and cash equivalents provided by operating activities ​ $ 12,887 ​ $ 17,051 Net cash and cash equivalents provided by (used in) investing activities ​ $ 158,461 ​ $ (60,398) Net cash and cash equivalents provided by (used in) financing activities ​ $ (173,513) ​ $ 20,830 ​ Comparison of the year ended December 31, 2023 to the year ended December 31, 2022 ​ As of December 31, 2023, we had $5.5 million of cash and cash equivalents compared to $7.7 million at December 31, 2022. ​ Cash Flows from Operating Activities ​ Net cash and cash equivalents provided by operating activities decreased by $4.2 million primarily as a result of the following: ​ ● Receipt of $39.8 million in fixed rents, $9.0 million in variable rent and $2.2 million in tenant reimbursements for the year ended December 31, 2023 as compared to the receipt of $35.8 million in fixed rents, $9.5 million in variable rents, and $2.2 million in tenant reimbursements for the year ended December 31, 2022; ● A change in depreciation, depletion and amortization of $7.5 million for the year ended December 31, 2023 compared to $7.0 million for the year ended December 31, 2022; ● (Gain) on disposition of assets, net during the year ended December 31, 2023 of $36.1 million as compared to $2.6 million during the year ended December 31, 2022; ● A change in accounts receivable of $0.9 million for the year ended December 31, 2023 compared to $(2.3) million for the year ended December 31, 2022; ● A change in accrued interest of $0.6 million for the year ended December 31, 2023 compared to $1.4 million for the year ended December 31, 2022; and ● A change in deferred revenue of $0.6 million for the year ended December 31, 2023 compared to $0.1 million for the year ended December 31, 2022. ​ Cash Flows from Investing Activities ​ Net cash and cash equivalents provided by (used in) investing activities increased by $218.9 million primarily as a result of the following: ​ ● Property acquisitions during the year ended December 31, 2023 of $22.2 million as compared to $54.4 million during the year ended December 31, 2022 ; ● Property dispositions during the year ended December 31, 2023 for cash consideration of $195.5 million as compared to $17.0 million during the year ended December 31, 2022 ; ● An increase of $1.6 million in real estate improvements during the year ended December 31, 2023 as compared to the year ended December 31, 2022; and ● Issuances of notes receivable under the FPI Loan Program and financing receivables of $11.8 million during the year ended December 31, 2023 as compared to $20.8 million during the year ended December 31, 2022. ​ 55 Table of Contents Cash Flows from Financing Activities ​ Net cash and cash equivalents provided by (used in) financing activities increased by $194.3 million primarily as a result of the following: ​ ● Borrowings from mortgage notes payable during the year ended December 31, 2023 of $79.5 million as compared to $223.0 million during the year ended December 31, 2022; ● Repayments on mortgage notes payable during the year ended December 31, 2023 of $155.9 million as compared to $296.9 million during the year ended December 31, 2022; ● Net proceeds from the ATM Program during the year ended December 31, 2023 of $0.0 million as compared to $121.3 million during the year ended December 31, 2022; ● Common stock repurchases during the year ended December 31, 2023 of $72.2 million as compared to $0.0 million during the year ended December 31, 2022; ● Redemption of Series A preferred units during the year ended December 31, 2023 of $8.1 million as compared to $10.2 million during the year ended December 31, 2022; and ● Dividends on common stock during the year ended December 31, 2023 of $12.3 million as compared to $11.1 million during the year ended December 31, 2022. ​ Non-GAAP Financial Measures ​ Funds from Operations (“FFO”) and Adjusted Funds from Operations (“AFFO”) ​ We calculate FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts, or Nareit.
Fixed farm rent simplifies the administrative requirements for the landlord and the tenant significantly, as farmers benefit from the fundamental revenue hedging that occurs when large crop yields mitigate the effect of lower crop prices. Similarly, lower crop yields have a tendency to trigger higher crop prices and help increase revenue even when confronted by lower crop yields.
Fixed farm rent significantly simplifies the administrative requirements for the landlord and the tenant, as farmers benefit from the fundamental revenue hedging that occurs when large crop yields mitigate the effect of lower crop prices. Similarly, lower crop yields have a tendency to trigger higher crop prices and help increase revenue even when confronted by lower crop yields.
These exclusions also improve the comparability of our results over each reporting period and of the Company with other real estate operators. ​ ● Stock-based compensation and incentive. Stock-based compensation and incentive is a non-cash expense and, therefore, does not correlate with the ongoing operations.
These exclusions also improve the comparability of our results over each reporting period and of the Company with other real estate operators. ​ ● Stock-based compensation and incentive. Stock-based compensation and incentive is a non-cash expense and, therefore, does not correlate with the ongoing operations of our portfolio.
We expect that global demand for most crops will continue to grow to keep pace with global population growth. We also believe that growth in global GDP per capita, particularly in developing nations, will contribute significantly to increasing demand for primary crops.
We expect that global demand for most crops will continue to keep pace with global population growth. We also believe that growth in global GDP per capita, particularly in developing nations, will contribute significantly to increasing demand for primary crops.
Many of our leases provide for the reimbursement by the tenant of the property’s real estate taxes that we pay in connection with the farms they rent from us. ​ Expenses ​ Substantially all of our farm leases are structured in such a way that we are responsible for major maintenance expenses, certain liability and casualty insurance and taxes (which are sometimes reimbursed to us by our tenants), while our tenant is responsible for operating expenses, minor maintenance, water usage and all of the additional input costs related to farming operations on the property, such as seed, fertilizer, labor and fuel.
Many of our leases provide for the reimbursement by the tenant of the property’s real estate taxes that we pay in connection with the farms they rent from us. 48 Table of Contents ​ Expenses ​ Substantially all of our farm leases are structured in such a way that we are responsible for major maintenance expenses, certain liability and casualty insurance and taxes (which are sometimes reimbursed to us by our tenants), while our tenant is responsible for operating expenses, minor maintenance, water usage and all of the additional input costs related to farming operations on the property, such as seed, fertilizer, labor and fuel.
We can provide no assurances as to whether this anticipated increase in profitability will have an impact on rental rates in the regions in which we operate. ​ Inflation and Interest Rates ​ Most of our farming leases have lease terms of two to three years for row crops and one to seven years for permanent crops, pursuant to which each tenant is responsible for substantially all of the operating expenses related to the property, including maintenance, water usage and insurance.
We can provide no assurances as to whether this anticipated increase in profitability will have an impact on rental rates in the regions in which we operate. ​ Inflation and Interest Rates ​ Most of our farming leases have lease terms of three years for row crops and up to seven years for permanent crops, pursuant to which each tenant is responsible for substantially all of the operating expenses related to the property, including maintenance, water usage and insurance.
Although farmland prices may show a decline from time to time, we believe that any reduction in U.S. farmland values overall is likely to be short-lived as global demand for food and agricultural commodities typically exceeds global supply and quality farmland becomes more scarce. ​ Demand ​ We expect that global demand for food, driven primarily by significant increases in the gross domestic product (“GDP”) per capita and global population, will continue to be the key driver of farmland values.
Although farmland prices may show a decline from time to time, we believe that any reduction in U.S. farmland values overall is likely to be short-lived as global demand for food and agricultural commodities typically exceeds global supply and quality farmland becomes scarcer. ​ Food Demand ​ We expect that global demand for food, driven primarily by significant increases in the gross domestic product (“GDP”) per capita and global population, will continue to be the key driver of farmland values.
As discussed above, the vacancy rate for quality U.S. farmland is near-zero and there is often competition among tenants for quality farmland; accordingly, we do not believe that re-leasing farmland upon the expiration of existing leases is a significant risk for FPI. ​ The leases for the majority of the row-crop properties in our portfolio provide that tenants pay us, typically, 50% of their fixed farm rent in advance of each spring planting season.
As discussed above, the vacancy rate for quality U.S. farmland is near-zero and there is often competition among prospective tenants for quality farmland; accordingly, we do not believe that re-leasing farmland upon the expiration of existing leases is a significant risk for the Company. ​ The leases for the majority of the row-crop properties in our portfolio provide that tenants pay us, typically, 50% of their fixed farm rent in advance of each spring planting season.
Therefore, in addition to EBITDAre, management uses Adjusted EBITDAre, a non-GAAP measure. ​ We further adjust EBITDAre for certain additional items such as stock-based compensation and incentive, indirect offering costs, real estate acquisition related audit fees and real estate related acquisition and due diligence costs (for a full discussion of these adjustments, see AFFO adjustments discussed above) that we consider necessary to understand our operating performance.
Therefore, in addition to EBITDAre, management uses Adjusted EBITDAre, a non-GAAP measure. ​ 58 Table of Contents We further adjust EBITDAre for certain additional items such as stock-based compensation and incentive, indirect offering costs, real estate acquisition related audit fees and real estate related acquisition and due diligence costs (for a full discussion of these adjustments, see AFFO adjustments discussed above) that we consider necessary to understand our operating performance.
United States farmers, including our tenants, however, generally source fertilizers from the United States and Canada. ​ We anticipate that U.S. farmers will continue to be an important contributor to global food imports as Russia continues its aggression against Ukraine, and high demand for primary crops, which are the core of our business, together with high commodity prices, will enhance profitability for U.S. farmers.
United States farmers, including our tenants, however, generally source fertilizers from the United States and Canada. ​ We anticipate that U.S. farmers will continue to be an important contributor to global food imports as Russia continues its aggression against Ukraine, and high demand for primary crops, which are the core of our business, together with high commodity prices, will sustain high levels of profitability for U.S. farmers.
We generally see firm demand for high quality properties across all regions and crop types. ​ Farmland values are typically very stable, often showing modest increases even in years of commodity price weakness. We expect this trend to continue, with modest but consistent annual increases that compound into significant appreciation in the long term.
We generally see firm demand for high quality properties across all regions and crop types. ​ Farmland values are typically very stable, often showing modest increases even in years of commodity price weakness. We expect this trend to continue, with modest but consistent annual increases that compound into significant appreciation 47 Table of Contents in the long term.
As of December 31, 2022, approximately 70% of our portfolio (by value) was used to grow primary crops, such as corn, soybeans, wheat, rice and cotton, and approximately 30% was used to produce specialty crops, such as almonds, citrus, blueberries, and vegetables.
As of December 31, 2023, approximately 70% of our portfolio (by value) was used to grow primary crops, such as corn, soybeans, wheat, rice and cotton, and approximately 30% was used to produce specialty crops, such as almonds, citrus, blueberries, and vegetables.
We may utilize various sources, including third-party appraisals, our own analysis of recently acquired or developed and existing comparable properties in our portfolio, other market data and property specific characteristics such as soil types, water availability and the existence of leases acquired with the acquisition.
We may utilize various sources, including third-party appraisals, our own analysis of recently acquired or developed properties and existing comparable properties in our portfolio, other market data and property specific characteristics such as soil types, water availability and the existence of leases acquired with 50 Table of Contents the acquisition.
In particular, these estimates are sensitive to significant assumptions, including the estimation of future rental revenues, operating expenses, 49 Table of Contents discount and capitalization rates and our intent and ability to hold the related asset, all of which could be affected by our expectations about future market or economic conditions.
In particular, these estimates are sensitive to significant assumptions, including the estimation of future rental revenues, operating expenses, discount and capitalization rates and our intent and ability to hold the related asset, all of which could be affected by our expectations about future market or economic conditions.
The highly seasonal nature of the agriculture industry causes seasonality in our business to some extent. Our financial performance should be evaluated on an annual basis, which eliminates impacts of seasonality and other similar factors that may cause our quarterly results to vary during the course of the year. ​
The highly seasonal nature of the agriculture industry causes seasonality in our business to some extent. Our financial performance should be evaluated on an annual basis, which eliminates impacts of seasonality and other similar factors that may cause our quarterly results to vary during the course of the year. ​ 59 Table of Contents
Our TRS also takes advantage of these risk mitigation programs and strategies with respect to the properties it owns. ​ Crop prices are affected by many factors that can differ on a yearly basis. Weather conditions and crop diseases can create a significant risk of price volatility.
Our TRS also takes advantage of these risk mitigation programs and strategies with respect to the properties it directly operates. ​ Crop prices are affected by many factors that can differ on a yearly basis. Weather conditions and crop diseases can create a significant risk of price volatility.
We receive a significant 57 Table of Contents portion of our variable rental payments in the fourth calendar quarter of each year, following harvest, with only a portion of such payments being recognized ratably through the year in accordance with GAAP, in relation to crop insurance contracts entered into by our tenants.
We receive a significant portion of our variable rental payments in the fourth calendar quarter of each year, following harvest, with only a portion of such payments being recognized ratably through the year in accordance with GAAP, in relation to crop insurance contracts entered into by our tenants.
We incur costs associated with running a public company and managing farmland assets, including, among others, costs associated with our personnel, our Board of Directors, compliance, legal and accounting, due diligence and acquisitions, including, among others, travel expenses, and consulting fees.
We incur costs associated with running a public company, including, among others, costs associated with our personnel, Board of Directors, compliance, legal and accounting, due diligence and acquisitions (including, among others, travel expenses and consulting fees).
Management considers AFFO per share, fully diluted to be a supplemental metric to GAAP earnings per share. AFFO per share, fully diluted provides additional insight into how our operating performance could be allocated to potential shares outstanding at a specific point in time.
Management considers AFFO per share, fully diluted to be a supplemental metric to GAAP earnings per share. AFFO per share, fully diluted provides additional insight into 56 Table of Contents how our operating performance could be allocated to potential shares outstanding at a specific point in time.
All of FPI’s assets are held by, and its operations are primarily conducted through, the Operating Partnership and its wholly owned subsidiaries. As of December 31, 2022, FPI owned 97.8% of the Common units and none of the Series A preferred units.
All of FPI’s assets are held by, and its operations are primarily conducted through, the Operating Partnership and its wholly owned subsidiaries. As of December 31, 2023, FPI owned 97.6% of the Common units and none of the Series A preferred units.
Nareit defines FFO as net income (loss) (calculated in accordance with GAAP), excluding gains (or losses) from sales of depreciable operating property, plus real estate related depreciation, depletion and amortization (excluding amortization of deferred financing costs), and after adjustments for unconsolidated partnerships and joint ventures. FFO is a supplemental non-GAAP financial measure.
Nareit defines FFO as net income (loss) (calculated in accordance with GAAP), excluding gains (or losses) from sales of depreciable operating property, real estate related depreciation, depletion and amortization (excluding amortization of deferred financing costs), impairment write-downs of depreciated property, and adjustments for unconsolidated partnerships and joint ventures. FFO is a supplemental non-GAAP financial measure.
Dividends on Series A preferred units, which are convertible into Common units on or after February 10, 2026, have a fixed and certain impact on our cash flow, and therefore are excluded from AFFO. We believe this improves the comparability of the Company with other real estate operators. ​ ● Dividends on Series B Participating Preferred Stock .
Dividends on Series A preferred units, which are convertible into Common units on or after February 10, 2026, have a fixed and certain impact on our cash flow, and therefore are excluded from AFFO. We believe this improves the comparability of the Company with other real estate operators. ​ ● Common shares fully diluted.
See “Note 9—Stockholders’ Equity and Non-controlling Interests” within the notes to the consolidated financial statements included in this Annual Report on Form 10-K for additional information regarding the non-controlling interests. ​ FPI has elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, commencing with its short taxable year ended December 31, 2014. ​ Recent Developments ​ 2022 Completed Acquisitions and Dispositions ​ During 2022, we completed 17 asset acquisitions, consisting of 20 properties, in the Corn Belt and High Plains regions.
See “Note 9—Stockholders’ Equity and Non-controlling Interests” within the notes to the consolidated financial statements included in this Annual Report on Form 10-K for additional information regarding the non-controlling interests. ​ FPI has elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, commencing with its short taxable year ended December 31, 2014. ​ Recent Developments ​ 2023 Dispositions ​ During 2023, we completed dispositions consisting of 74 properties in the Corn Belt, Delta and South, High Plains, Southeast and West Coast regions.
The Company believes that EBITDAre is a useful performance 56 Table of Contents measure commonly reported and will be widely used by analysts and investors in the Company’s industry.
The Company believes that EBITDAre is a useful performance measure commonly reported and will be widely used by analysts and investors in the Company’s industry.
In addition, as of December 31, 2022, we owned land and buildings for four agriculture equipment dealerships in Ohio leased to Ag Pro under the John Deere brand and served as property manager for approximately 30,900 acres, including farms in Iowa.
In addition, as of December 31, 2023, we owned land and buildings for four agriculture equipment dealerships in Ohio leased to Ag Pro under the John Deere brand and served as property manager for approximately 38,300 acres, including farms in Iowa.
Changes in GAAP accounting and reporting rules that were put in effect after the establishment of Nareit’s definition of FFO in 1999 result in the inclusion of a number of items in FFO that do not correlate with the sustainability of our operating performance.
We do not, however, believe that FFO is the only measure of our operating performance. Changes in GAAP accounting and reporting rules that were put in effect after the establishment of Nareit’s definition of FFO in 1999 result in the inclusion of a number of items in FFO that do not correlate with the sustainability of our operating performance.
We are currently in an environment of appreciating land values, driven by, among other things, inflation, strong commodity prices (further exacerbated by the war in Ukraine) and a positive outlook for farmer profitability. Rapidly rising interest rates can serve as a counter-balancing external factor to this favorable environment.
We are currently in an 46 Table of Contents environment of appreciating land values, driven by, among other things, inflation, strong commodity prices (further exacerbated by the war in Ukraine) and an outlook for high levels of farmer profitability. Sustained high interest rates can serve as a counter-balancing external factor to this favorable environment.
Exports to China for fiscal year 2023 are forecast to decrease to $34 billion, while exports to Canada and Mexico are expected to be the same for 2023. ​ Critical Accounting Policies and Estimates ​ The preparation of financial statements in conformity with GAAP requires that management make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of our financial statements and the reported amounts of revenues and expenses during the reporting period.
Exports to China for fiscal year 2024 are forecast to decrease to $30 billion, while exports to Mexico and Canada are expected to decrease slightly to $27.9 billion and $27.7 billion, respectively. ​ Critical Accounting Policies and Estimates ​ The preparation of financial statements in conformity with GAAP requires that management make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of our financial statements and the reported amounts of revenues and expenses during the reporting period.
Furthermore, high levels of inflation are causing the Federal Reserve to increase interest rates which may increase interest expense for many businesses, including the Company. ​ Factors That May Influence Future Results of Operations and Farmland Values ​ The principal factors affecting our operating results and the value of our farmland include long-term global demand for food relative to the global supply of food, farmland fundamentals and economic conditions in the markets in which we own farmland and our ability to increase or maintain rental revenues while controlling expenses.
The Federal Reserve may continue this policy of maintaining elevated rates, which would further increase interest expense for many businesses, including the Company. ​ Factors That May Influence Future Results of Operations and Farmland Values ​ The principal factors affecting our operating results and the value of our farmland include long-term global demand for food relative to the global supply of food; farmland fundamentals and economic conditions in the markets in which we own farmland; and our ability to increase or maintain rental revenues while controlling expenses.
The conversion of Series A preferred units is excluded from the calculation of common shares fully diluted as they are not participating securities, and therefore do not share in the performance of the Company and their impact on shares outstanding is uncertain. ​ The following table sets forth a reconciliation of net income (loss) to FFO, AFFO and net income (loss) available to common stockholders per share to AFFO per share, fully diluted, the most directly comparable GAAP equivalents, respectively, for the periods indicated below (unaudited): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, (in thousands except per share amounts) 2022 2021 Net income ​ $ 11,960 ​ $ 10,259 (Gain) on disposition of assets ​ ​ (2,641) ​ ​ (9,290) Depreciation, depletion and amortization ​ 6,960 ​ ​ 7,629 FFO ​ $ 16,279 ​ $ 8,598 ​ ​ ​ ​ ​ ​ ​ Stock-based compensation and incentive ​ 1,999 ​ ​ 1,263 Deferred impact of interest rate swap terminations ​ ​ 582 546 Real estate related acquisition and due diligence costs ​ ​ 111 ​ ​ 55 Distributions on Preferred units and stock ​ ​ (3,210) ​ ​ (10,052) AFFO ​ $ 15,761 ​ $ 410 ​ ​ ​ ​ ​ ​ ​ AFFO per diluted weighted average share data: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ AFFO weighted average common shares ​ 52,531 ​ 36,410 ​ ​ ​ ​ ​ ​ ​ Net income (loss) available to common stockholders of Farmland Partners Inc. ​ $ 0.16 ​ $ (0.17) Income available to redeemable non-controlling interest and non-controlling interest in operating partnership ​ ​ 0.08 0.48 Depreciation, depletion and amortization ​ 0.13 ​ 0.21 Stock-based compensation and incentive ​ 0.04 ​ 0.03 (Gain) on disposition of assets ​ ​ (0.05) ​ ​ (0.26) Distributions on Preferred units and stock ​ (0.06) ​ ​ (0.28) AFFO per diluted weighted average share ​ $ 0.30 ​ $ 0.01 ​ The following table sets forth a reconciliation of AFFO share information to basic weighted average common shares outstanding, the most directly comparable GAAP equivalent, for the periods indicated below (unaudited): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, (in thousands) ​ 2022 ​ 2021 Basic weighted average shares outstanding ​ 50,953 34,641 Weighted average OP units on an as-if converted basis ​ 1,292 1,484 Weighted average unvested restricted stock ​ 286 285 AFFO weighted average common shares ​ 52,531 36,410 ​ EBITDAre ​ The Company calculates Earnings Before Interest Taxes Depreciation and Amortization for real estate (“EBITDAre”) in accordance with the standards established by NAREIT in its September 2017 White Paper.
The conversion of Series A preferred units is excluded from the calculation of common shares fully diluted as they are not participating securities, and therefore do not share in the performance of the Company and their impact on shares outstanding is uncertain. ​ 57 Table of Contents The following table sets forth a reconciliation of net income (loss) to FFO, AFFO and net income (loss) available to common stockholders per share to AFFO per share, fully diluted, the most directly comparable GAAP equivalents, respectively, for the periods indicated below (unaudited): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, (in thousands except per share amounts) 2023 2022 Net income ​ $ 31,681 ​ $ 11,960 (Gain) on disposition of assets, net ​ ​ (36,133) ​ ​ (2,641) Depreciation, depletion and amortization ​ 7,499 ​ ​ 6,960 Impairment of assets ​ 5,840 ​ ​ — FFO ​ $ 8,887 ​ $ 16,279 ​ ​ ​ ​ ​ ​ ​ Stock-based compensation and incentive ​ 2,008 ​ ​ 1,999 Deferred impact of interest rate swap terminations ​ ​ 198 582 Real estate related acquisition and due diligence costs ​ ​ 17 ​ ​ 111 Distributions on Preferred units and stock ​ ​ (2,970) ​ ​ (3,210) AFFO ​ $ 8,140 ​ $ 15,761 ​ ​ ​ ​ ​ ​ ​ AFFO per diluted weighted average share data: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ AFFO weighted average common shares ​ 51,810 ​ 52,531 ​ ​ ​ ​ ​ ​ ​ Net income available to common stockholders of Farmland Partners Inc. ​ $ 0.55 ​ $ 0.16 Income available to redeemable non-controlling interest and non-controlling interest in operating partnership ​ ​ 0.08 0.08 Depreciation, depletion and amortization ​ 0.14 ​ 0.13 Impairment of assets ​ 0.11 ​ 0.00 Stock-based compensation and incentive ​ 0.04 ​ 0.04 (Gain) on disposition of assets, net ​ ​ (0.70) ​ ​ (0.05) Distributions on Preferred units and stock ​ (0.06) ​ ​ (0.06) AFFO per diluted weighted average share ​ $ 0.16 ​ $ 0.30 ​ The following table sets forth a reconciliation of AFFO share information to basic weighted average common shares outstanding, the most directly comparable GAAP equivalent, for the periods indicated below (unaudited): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, (in thousands) ​ 2023 ​ 2022 Basic weighted average shares outstanding ​ 50,243 50,953 Weighted average OP units on an as-if converted basis ​ 1,220 1,292 Weighted average unvested restricted stock ​ 347 286 AFFO weighted average common shares ​ 51,810 52,531 ​ EBITDAre ​ The Company calculates Earnings Before Interest Taxes Depreciation and Amortization for real estate (“EBITDAre”) in accordance with the standards established by NAREIT in its September 2017 White Paper.
However, our business model anticipates that over time the value of our farmland will increase, as it has in the past, at a rate that is equal to or greater than the rate of inflation, which may in part offset the impact of rising interest rates on the value of our farmland, but there can be no guarantee that this appreciation will occur to the extent that we anticipate or at all. ​ International Trade ​ After a 55% increase in exports of corn for the 2020/2021 marketing year (September 2020 to August 2021), the USDA estimates corn exports will be down 10% for the 2021/2022 marketing year (September 2021 to August 2022) and a further 22% for the 2022/2023 marketing year (September 2022 to August 2023), based on a smaller crop and higher expected prices.
However, our business model anticipates that over time the value of our farmland will increase, as it has in the past, at a rate that is equal to or greater than the rate of inflation, which may in part offset the impact of rising interest rates on the value of our farmland, but there can be no guarantee that this appreciation will occur to the extent that we anticipate or at all. ​ International Trade ​ After a 33% decrease in exports of corn for the 2022/2023 marketing year (September 2022 to August 2023), the USDA estimates corn exports will be up 26% for the 2023/2024 marketing year (September 2023 to August 2024).
We compensate for these limitations by relying primarily on our GAAP results of operations and using EBITDAre and Adjusted EBITDAre only as a supplemental measure of our performance. ​ The following table sets forth a reconciliation of our net income to our EBITDAre and Adjusted EBITDAre for the periods indicated below (unaudited): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended ​ ​ December 31, (in thousands) 2022 2021 Net income ​ $ 11,960 ​ $ 10,259 Interest expense ​ ​ 16,143 ​ 15,929 Income tax expense ​ ​ 227 ​ — Depreciation, depletion and amortization ​ ​ 6,960 ​ 7,629 (Gain) on disposition of assets ​ ​ (2,641) ​ ​ (9,290) EBITDAre ​ $ 32,649 ​ $ 24,527 ​ ​ ​ ​ ​ ​ ​ Stock-based compensation and incentive ​ ​ 1,999 ​ ​ 1,263 Real estate related acquisition and due diligence costs ​ ​ 111 ​ ​ 55 Adjusted EBITDAre ​ $ 34,759 ​ $ 25,845 ​ Seasonality ​ We recognize rental revenue from fixed-rate farmland leases on a pro rata basis over the non-cancellable term of the lease in accordance with accounting principles generally accepted in the United States (“GAAP”).
We compensate for these limitations by relying primarily on our GAAP results of operations and using EBITDAre and Adjusted EBITDAre only as a supplemental measure of our performance. ​ The following table sets forth a reconciliation of our net income to our EBITDAre and Adjusted EBITDAre for the periods indicated below (unaudited): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, (in thousands) 2023 2022 Net income ​ $ 31,681 ​ $ 11,960 Interest expense ​ ​ 22,657 ​ 16,143 Income tax (benefit) expense ​ ​ (166) ​ 227 Depreciation, depletion and amortization ​ ​ 7,499 ​ 6,960 Impairment of assets ​ ​ 5,840 ​ — (Gain) on disposition of assets, net ​ ​ (36,133) ​ ​ (2,641) EBITDAre ​ $ 31,378 ​ $ 32,649 ​ ​ ​ ​ ​ ​ ​ Stock-based compensation and incentive ​ ​ 2,008 ​ ​ 1,999 Real estate related acquisition and due diligence costs ​ ​ 17 ​ ​ 111 Adjusted EBITDAre ​ $ 33,403 ​ $ 34,759 ​ Seasonality ​ We recognize rental revenue from fixed-rate farmland leases on a pro rata basis over the non-cancellable term of the lease in accordance with accounting principles generally accepted in the United States (“GAAP”).
We intend to continue to utilize the ATM Program when the market price of our common stock remains at levels which are deemed appropriate by our Board of Directors. The Company may increase the size of the ATM Program in the future.
The ATM Program is intended to provide cost-effective financing alternatives in the capital markets. We intend to continue to utilize the ATM Program when the market price of our common stock remains at levels which are deemed appropriate by our Board of Directors. We may increase the size of the ATM Program in the future.
These increases affect all borrowing rates, and for variable rate debt and debt with rates that reset periodically, such increases have a direct and relatively immediate impact. ​ As of December 31, 2022, $262.0 million of our outstanding indebtedness was subject to interest rates that reset from time to time (excluding our floating rate debt), of which $174.1 million was subject to interest rates that will be reset in 2023.
These increases affect all borrowing rates, and for variable rate debt and debt with rates that reset periodically, such increases have a direct and relatively immediate impact. ​ 49 Table of Contents As of December 31, 2023, $136.0 million of our outstanding indebtedness was subject to interest rates that reset before maturity (excluding our floating rate debt), of which $43.9 million was subject to interest rates that will be reset in 2024.
Crop-yield trends in corn and soybeans have been steadily increasing over the last thirty years. After yields for the 2021/2022 marketing year (September 2021 to August 2022) increased for both corn and soybeans compared to the previous year, the U.S.
Crop yield trends in corn and soybeans have been steadily increasing over the last thirty years. After yields for the 2022/2023 marketing year (September 2022 to August 2023) decreased slightly for both corn and soybeans compared to the previous year, the U.S. Department of Agriculture projects yields to increase slightly for the 2023/2024 marketing year (September 2023 to August 2024).
They also have a limited impact on our rental revenue, as most of our leases provide for fixed farm rents, a common approach in agricultural markets, especially with respect to row crops.
Short-term crop price changes have had little effect historically on farmland values. They also have a limited impact on our rental revenue, as most of our leases provide for fixed farm rents, a common approach in agricultural markets, especially with respect to row crops.
We expect to meet our liquidity needs through cash on hand, undrawn availability under lines of credit, operating cash flows, borrowings, proceeds from equity issuances and selective asset dispositions where such dispositions are deemed to be in the best interests of the Company. ​ We entered into equity distribution agreements on October 29, 2021 in connection with the ATM Program, under which we were authorized to issue and sell from time to time, through the sales agents, shares of our common stock having an aggregate gross sales price of up to $75.0 million (the “$75.0 million ATM Program”).
We expect to meet our liquidity needs through cash on hand, undrawn availability under our lines of credit ($201.1 million in availability as of December 31, 2023), operating cash flows, borrowings, proceeds from equity issuances and selective asset dispositions where such dispositions are deemed to be in the best interests of the Company. ​ On May 6, 2022, we entered into equity distribution agreements under which we may issue and sell from time to time, through sales agents, shares of our common stock having an aggregate gross sales price of up to $100.0 million (the “ATM Program”).
As of December 31, 2022, we owned farms with an aggregate of approximately 165,200 acres in Alabama, Arkansas, California, Colorado, Florida, Georgia, Illinois, Indiana, Kansas, Louisiana, Michigan, Mississippi, Missouri, Nebraska, North Carolina, South Carolina, Texas, and Virginia.
As of December 31, 2023, we owned farms with an aggregate of approximately 132,800 acres in Arkansas, California, Colorado, Florida, Illinois, Indiana, Kansas, Louisiana, Mississippi, Missouri, Nebraska, North Carolina, Oklahoma, South Carolina and Texas.
Acquisition (including audit fees associated with these acquisitions) and due diligence costs are incurred for investment purposes and, therefore, do not correlate with the ongoing operations of our portfolio.
Acquisition (including audit fees associated with these acquisitions) and due diligence costs are incurred for investment purposes and, therefore, do not correlate with the ongoing operations of our portfolio. The Company incurred an immaterial amount of acquisition and due diligence costs during the years ended December 31, 2023 and 2022.
Under certain market conditions, as in 2021 and 2022, with strong commodity prices and farmer profitability, there are periods of accelerating appreciation in farmland values.
Under certain market conditions, as in 2021, 2022 and 2023, with strong commodity prices and farmer profitability, there are periods of accelerating appreciation in farmland values. Leases renegotiated under the robust market conditions experienced in 2021, 2022, and 2023 reflected significant rent increases.
Historically, productivity gains (measured by average crop yields) have been driven by advances in seed technology, farm equipment, irrigation techniques, and improvements in soil health, chemical nutrients and pest control.
The global supply of food is also impacted by the productivity per acre of arable land. Historically, productivity gains (measured by average crop yields) have been driven by advances in seed technology, farm equipment, irrigation techniques, and improvements in soil health, chemical nutrients and pest control.
If interest rates decreased by 1.0%, our cash flow would increase approximately $1.2 million per year. 48 Table of Contents ​ We expect that future changes in interest rates will impact our overall operating performance by, among other things, affecting our borrowing costs and borrowing costs of our tenants.
Assuming no increase in the level of our variable rate debt spreads, if SOFR increased by 1.0%, our cash flow would decrease by approximately $0.5 million per year, and if SOFR decreased by 1.0%, our cash flow would increase approximately $0.5 million per year. ​ We expect that future changes in interest rates will impact our overall operating performance by, among other things, affecting our borrowing costs and borrowing costs of our tenants.
FFO should not be used as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends or service indebtedness.
FFO should not be used as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends or service indebtedness. FFO also should not be used as a supplement to or substitute for cash flow from operating activities computed in accordance with GAAP.
After a 35% increase in exports of soybeans for the 2020/2021 marketing year (September 2020 to August 2021), the USDA estimates soybean exports will be down 5% for the 2021/2022 marketing year (September 2021 to August 2022) and a further 8% for the 2022/2023 marketing year (September 2022 to August 2023), based on lower supplies. ​ According to the USDA Outlook for Agricultural Trade, the top three export countries from the United States are China, Canada, and Mexico.
After a 7% decrease in exports of soybeans for the 2022/2023 marketing year, the USDA estimates soybean exports will be down 12% for the 2023/2024 marketing year, due to lower production. ​ According to the USDA Outlook for Agricultural Trade, the top three export countries from the United States are China, Mexico, and Canada.
We have conducted no negotiations yet with respect to the $64.7 million of remaining loans subject to rate resets in 2023. ​ At December 31, 2022, $152.5 million, or 34.7%, of our debt had variable interest rates, however, as stated in “Note 10—Hedge Accounting” to the accompanying consolidated financial statements, the Company has an interest rate swap with Rabobank for $33.2 million, which reduces floating rate exposure.
As of December 31, 2023, the weighted average interest rate of the indebtedness subject to interest rate resets in 2024 was 3.07%. ​ At December 31, 2023, $80.5 million, or 22.2%, of our debt had variable interest rates, however, as stated in “Note 10—Hedge Accounting” to the accompanying consolidated financial statements, the Company has an interest rate swap with Rabobank for $33.2 million, which reduces floating rate exposure to $47.3 million.
There have been no impairments recognized on real estate assets in the accompanying financial statements. ​ Results of Operations ​ This section of this Form 10-K generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021.
There have been no goodwill or intangible asset impairments recognized in the accompanying financial statements during the years ended December 31, 2023 and 2022. ​ Results of Operations ​ This section of this Annual Report on Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
Changes in government regulations and policy, fluctuations in global prosperity, fluctuations in foreign trade and export markets and eruptions of military conflicts, as we are seeing in Ukraine, or civil unrest also impact crop prices. ​ Since late 2020, prices rebounded to, or near, prior highs, driven by increased demand expectations from China and modest adverse weather conditions around the world. ​ Interest Rates ​ The Federal Reserve has engaged in a series of significant increases in the discount rate, which is the rate the Federal Reserve charges member banks for overnight funds.
Changes in government regulations and policy, fluctuations in global prosperity, fluctuations in foreign trade and export markets and eruptions of military conflicts, such as the war in Ukraine, or civil unrest also impact crop prices. ​ Interest Rates ​ The Federal Reserve has engaged in a series of significant increases in the discount rate, which is the rate the Federal Reserve charges member banks for overnight funds.
We have an effective shelf registration statement with approximately $100 million of capacity whereby we could issue additional equity or debt securities, which we have done successfully in the past as mentioned above. ​ During the year ended December 31, 2022, the Company repurchased no shares of its common stock.
We have an effective shelf registration statement with approximately $100 million of capacity (approximately $150 million inclusive of the ATM Program availability mentioned above) whereby we could issue additional equity or debt securities, which we have done successfully in the past as mentioned above.
Furthermore, we believe that, as GDP per capita grows, a significant portion of additional household income is allocated to food and that once individuals increase consumption of, and spending on, higher quality food, they will strongly resist returning to their former dietary habits, resulting in greater inelasticity in the demand for food.
We believe that once individuals increase consumption of higher quality food, they will strongly resist returning to their former dietary habits, resulting in greater inelasticity in the demand for food.
Furthermore, we expect the shortage of water in many irrigated growing regions in the United States and around the globe, often as a result of new water restrictions imposed by laws or regulations, to lead to decreased productivity growth and, in some cases, cause yields to decline on those acres.
On the other hand, we expect the shortage of water in many irrigated growing regions in the United States and around the globe, often as a result of new water restrictions imposed by laws or regulations, to lead to decreased productivity on those acres. ​ Conditions in Our Existing Markets ​ Our portfolio is broadly diversified across numerous farmland markets and crop types.
According to a study published in 2017 in the Proceedings of the National Academy of Sciences, urban expansion is expected to take place on cropland that is 1.77 times more productive than the global average. The global supply of food is also impacted by the productivity per acre of tillable land.
Typically, additions to cropland are in areas of marginal productivity, while cropland loss, driven by urban development, tends to affect primarily highly productive areas. According to a study published in 2017 in the Proceedings of the National Academy of Sciences, urban expansion is expected to take place on cropland that is 1.77 times more productive than the global average.
This decrease is a result of asset dispositions and more assets becoming fully depreciated partially offset by depreciable assets being placed into service. ​ Property operating expenses increased $0.9 million, or 11.7%, for the year ended December 31, 2022 compared to the year ended December 31, 2021, resulting from higher tax and insurance expenses, partially offset by lower repairs. ​ Cost of goods sold totaled $6.0 million for the year ended December 31, 2022 compared to $1.5 million for the year ended December 31, 2021.
This increase was driven by non-recurring adjustments in the second and third quarters of 2023 and more depreciable assets placed into service, partially offset by asset dispositions and more assets becoming fully depreciated. ​ Property operating expenses increased $0.5 million, or 5.7%, for the year ended December 31, 2023 compared to the year ended December 31, 2022, resulting from higher tax, insurance, and cost sharing on a West Coast farm, partially offset by lower utilities expense. ​ Cost of goods sold decreased $1.2 million, or 20.3%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
The success of our long-term business strategy is not dependent on growth in demand for biofuels, primarily because we believe that growth in global population and GDP per capita will be more significant drivers of global demand for primary crops over the long term. ​ Despite advances in income, according to “The State of Food Security and Nutrition in the World 2022,” a report by the UN FAO, almost 3.1 billion people were unable to afford a healthy diet, reflecting the rising consumer food prices coming out of the pandemic.
However, we believe that growth in GDP per capita and global population will be more significant drivers of global demand for primary crops over the long term. ​ Despite advances in income, according to “The State of Food Security and Nutrition in the World 2023,” a report by the UN FAO, 2.4 billion people were facing moderate to severe food insecurity in 2022.
This increase is the result of an increase in interest rates on our variable rate debt, significantly offset by a lower outstanding balance of debt. ​ Liquidity and Capital Resources ​ Overview ​ Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments to repay any outstanding borrowings, fund and maintain our assets and operations, acquire new properties, make distributions to our stockholders and unitholders, and fund other general business needs.
This change is due to tax adjustments of prior period estimates. 53 Table of Contents ​ Liquidity and Capital Resources ​ Overview ​ Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments to repay any outstanding borrowings, fund and maintain our assets and operations, acquire new properties, make distributions to our stockholders and unitholders, and fund other general business needs. ​ High levels of inflation have prompted the Federal Reserve to increase interest rates which has resulted in, and may continue to result in, increased interest expense.
Global demand for corn and soybeans as inputs in the production of biofuels such as ethanol and soy diesel also could impact the prices of corn and soybeans, which, in the long term, could impact our rental revenues and our results of operations.
We anticipate these factors will lead to either higher crop prices and/or higher yields and, therefore, higher rental rates on our farmland, as well as sustained growth in farmland values over the long term. ​ In addition, global demand for corn and soybeans as inputs in the production of biofuels such as ethanol and soy-based diesel also could impact the prices of corn and soybeans, which, in the long term, could impact our rental revenues and our results of operations.
The disruption in farming operations in Ukraine, and trade from the Black Sea region has stressed the food supply for many countries that depend on imports of agricultural products from the region, such as Egypt (wheat for food products) and China (corn for livestock). ​ In July 2022, Ukraine and Russia reached an agreement to allow exports of grain and other agricultural products from Ukrainian Black Sea ports to resume after months of Russian blockade.
The disruption in farming operations in Ukraine, and trade from the Black Sea region has stressed the food supply for many countries that depend on imports of agricultural products from the region, such as Egypt (wheat for food products) and China (corn for livestock). ​ The Russian Federation is also a major exporter of fertilizers and trade restrictions have hampered the flow of fertilizers to countries dependent on imports from the Black Sea region.
This increase was primarily due to increased auction and brokerage income, crop insurance proceeds from farms under direct operations, management fees, and interest income on loans and financing receivables, partially offset by lower revenue from litigation-related proceeds. ​ Depreciation, depletion and amortization decreased $0.7 million, or 8.8%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
This decrease was primarily due to a decrease of $1.6 million in auction and brokerage income, and a decrease of $0.3 million in crop insurance proceeds, partially offset by an increase of $1.0 million in management fees and interest income. ​ 52 Table of Contents Depreciation, depletion and amortization increased $0.5 million, or 7.7%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Year-to-year comparisons between 2021 and 2020 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. ​ Comparison of the year ended December 31, 2022 to the year ended December 31, 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, ​ ​ ​ ​ ​ ($ in thousands) 2022 2021 $ Change % Change ​ OPERATING REVENUES: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Rental income ​ $ 45,615 ​ $ 45,251 ​ $ 364 0.8 % Tenant reimbursements ​ 3,264 ​ 3,450 ​ (186) (5.4) % Crop sales ​ ​ 5,372 ​ ​ 880 ​ ​ 4,492 ​ 510.5 % Other revenue ​ 6,959 ​ 2,158 ​ 4,801 222.5 % Total operating revenues ​ 61,210 ​ 51,739 ​ 9,471 18.3 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ OPERATING EXPENSES ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation, depletion and amortization ​ 6,960 ​ 7,629 ​ (669) (8.8) % Property operating expenses ​ 8,190 ​ 7,331 ​ 859 11.7 % Cost of goods sold ​ ​ 5,966 ​ ​ 1,525 ​ ​ 4,441 ​ 291.2 % Acquisition and due diligence costs ​ 111 ​ 55 ​ 56 101.8 % General and administrative expenses ​ 12,005 ​ 8,208 ​ 3,797 46.3 % Legal and accounting ​ 2,874 ​ 10,147 ​ (7,273) (71.7) % Other operating expenses ​ ​ 130 ​ ​ 31 ​ ​ 99 ​ 319.4 % Total operating expenses ​ 36,236 ​ 34,926 ​ 1,310 3.8 % OPERATING INCOME ​ 24,974 ​ 16,813 ​ 8,161 48.5 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ OTHER (INCOME) EXPENSE: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other (income) ​ ​ (663) ​ ​ (66) ​ ​ (597) ​ 904.5 % (Income) from equity method investment ​ ​ (52) ​ ​ (19) ​ ​ (33) ​ 173.7 % (Gain) on disposition of assets ​ ​ (2,641) ​ ​ (9,290) ​ ​ 6,649 ​ (71.6) % Interest expense ​ 16,143 ​ 15,929 ​ 214 1.3 % Total other expense ​ 12,787 ​ 6,554 ​ 6,233 95.1 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income before income tax expense ​ ​ 12,187 ​ ​ 10,259 ​ ​ 1,928 ​ 18.8 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income tax expense ​ ​ 227 ​ ​ — ​ ​ 227 ​ NM ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NET INCOME ​ $ 11,960 ​ $ 10,259 ​ $ 1,701 16.6 % NM = Not Meaningful ​ Our net income for 2022 was affected partially by acquisition of 20 properties and five dispositions that took place in 2022, as well as substantially lower legal and accounting expense and additional revenue from auction and brokerage activities. ​ Rental income increased $0.4 million, or 0.8%, for the year ended December 31, 2022 compared to the year ended December 31, 2021, resulting primarily from an increase in fixed farm rent of $2.1 million, solar rent of $1.3 million and recreation rent of $0.1 million partially offset by a decrease in variable rent of $3.1 million in part due to certain farms in the West Coast region converting to direct operations in the second half of 2021. 50 Table of Contents ​ Revenues recognized from tenant reimbursement of property taxes decreased $0.2 million, or 5.4%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. ​ 51 Table of Contents Comparison of the year ended December 31, 2023 to the year ended December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, ​ ​ ​ ​ ​ ($ in thousands) 2023 2022 $ Change % Change ​ OPERATING REVENUES: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Rental income ​ $ 49,185 ​ $ 48,879 ​ $ 306 0.6 % Crop sales ​ ​ 2,257 ​ ​ 5,372 ​ ​ (3,115) ​ (58.0) % Other revenue ​ 6,024 ​ 6,959 ​ (935) (13.4) % Total operating revenues ​ 57,466 ​ 61,210 ​ (3,744) (6.1) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ OPERATING EXPENSES ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation, depletion and amortization ​ 7,499 ​ 6,960 ​ 539 7.7 % Property operating expenses ​ 8,660 ​ 8,190 ​ 470 5.7 % Cost of goods sold ​ ​ 4,754 ​ ​ 5,966 ​ ​ (1,212) ​ (20.3) % Acquisition and due diligence costs ​ 17 ​ 111 ​ (94) (84.7) % General and administrative expenses ​ 11,274 ​ 12,005 ​ (731) (6.1) % Legal and accounting ​ 1,279 ​ 2,874 ​ (1,595) (55.5) % Impairment of assets ​ 5,840 ​ — ​ 5,840 NM ​ Other operating expenses ​ ​ 144 ​ ​ 130 ​ ​ 14 ​ 10.8 % Total operating expenses ​ 39,467 ​ 36,236 ​ 3,231 8.9 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ OTHER (INCOME) EXPENSE: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other (income) ​ ​ (39) ​ ​ (663) ​ ​ 624 ​ (94.1) % (Income) from equity method investment ​ ​ (1) ​ ​ (52) ​ ​ 51 ​ (98.1) % (Gain) on disposition of assets, net ​ ​ (36,133) ​ ​ (2,641) ​ ​ (33,492) ​ NM ​ Interest expense ​ 22,657 ​ 16,143 ​ 6,514 40.4 % Total other expense ​ (13,516) ​ 12,787 ​ (26,303) NM ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income before income tax (benefit) expense ​ ​ 31,515 ​ ​ 12,187 ​ ​ 19,328 ​ 158.6 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income tax (benefit) expense ​ ​ (166) ​ ​ 227 ​ ​ (393) ​ NM ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NET INCOME ​ $ 31,681 ​ $ 11,960 ​ $ 19,721 164.9 % NM = Not Meaningful ​ Our net income for the year ended December 31, 2023 was affected partially by acquisitions and dispositions that occurred since December 31, 2022, as well as lower crop sales, cost of goods sold, auction and brokerage revenue, legal and accounting expense, higher interest expense and the impairment of certain properties. ​ Rental income increased $0.3 million, or 0.6%, for the year ended December 31, 2023 compared to the year ended December 31, 2022, resulting primarily from increased fixed farm rent, solar rent and revenue recognized from tenant reimbursements, partially offset by lower variable rent. ​ Crop sales decreased $3.1 million, or 58.0%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
We believe this improves the comparability of the Company with other real estate operators. ​ 55 Table of Contents ● Common shares fully diluted. In accordance with GAAP, common shares used to calculate earnings per share are presented on a weighted average basis.
In accordance with GAAP, common shares used to calculate earnings per share are presented on a weighted average basis.
As a result, in our experience, many farm operators will aggressively pursue rental opportunities in their operable geographic area, even when the farmer anticipates lower profits returns or even short-term losses. ​ We renewed approximately 95% of row crop fixed farm rent leases expiring in 2022 (representing approximately 13% of 2022 total revenue) at average rent increases of approximately 16%.
As a result, in our experience, many farm operators will aggressively pursue rental opportunities in their operable geographic area, even when the farmer anticipates lower profits returns or even short-term losses. ​ Lease Expirations ​ Farm leases are generally one to three years in duration.
This increase is primarily due to proceeds from a property insurance claim due to weather-related damage and increased interest income on cash and our swap position, partially offset by a loss on early extinguishment of debt as the Company reduced its leverage during the year. ​ Income from equity method investment remained relatively flat at $0.1 million and $0.0 million for the years ended December 31, 2022 and 2021, respectively. ​ Gain on disposition of assets decreased $6.6 million, or 71.6%, for the year ended December 31, 2022 compared to the year ended December 31, 2021, primarily due to fewer property dispositions in 2022 as compared to 2021, as well as the Company incurring $1.3 million in losses on grape vine and citrus tree removal as part of redevelopment projects on certain properties during the year ended December 31, 2022. ​ 51 Table of Contents Interest expense increased $0.2 million, or 1.3%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
This decrease is primarily due to proceeds from a property insurance claim received during the year ended December 31, 2022, due to weather-related damage, partially offset by loss on early extinguishment of debt during the year ended December 31, 2022. ​ Income from equity method investment remained relatively flat at $0.0 million and $0.1 million for the year ended December 31, 2023 and 2022, respectively. ​ Gain on disposition of assets, net increased $33.5 million for the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due the appreciation of farmland value on properties sold relative to book value as well as a greater number of property dispositions during the year ended December 31, 2023 as compared to the year ended December 31, 2022.
Exports to China for fiscal year 2022 (October 2021 to September 2022) were a record of $36.4 billion, up 9% from 2021. Exports to Canada were $28.4 billion, up 17% from 2021. Exports to Mexico were $28.0 billion, up 17% from 2021.
Exports to China for fiscal year 2023 (October 2022 to September 2023) were $33.7 billion, down 7% from 2022. Exports to Canada were $27.9 billion, down 3% from 2022. Exports to Mexico were $28.2 billion, up 1% from 2022.
As of December 31, 2022, our portfolio had the following lease expirations as a percentage of approximate acres leased and annual minimum fixed rents: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in thousands) ​ ​ ​ ​ ​ ​ ​ ​ Year Ending December 31, Approximate Acres % of Approximate Acres Annual Fixed Rents % of Annual Fixed Rents 2023 ​ 48,372 ​ 29.3 % $ 9,236 27.5 % 2024 37,852 ​ 22.9 % ​ 10,687 31.8 % 2025 31,221 ​ 18.9 % ​ 6,828 20.3 % 2026 ​ 7,118 ​ 4.3 % ​ 1,788 ​ 5.3 % 2027 ​ 17,606 ​ 10.7 % ​ 1,700 ​ 5.1 % Thereafter ​ 23,003 ​ 13.9 % ​ 3,361 ​ 10.0 % ​ 165,172 ​ 100.0 % $ 33,600 ​ 100.0 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Rental Revenues ​ Our revenues are primarily generated from renting farmland to operators of farming businesses.
As of December 31, 2023, our portfolio had the following lease expirations as a percentage of approximate acres leased and annual minimum fixed rents: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in thousands) ​ ​ ​ ​ ​ ​ ​ ​ Year Ending December 31, Approximate Acres % of Approximate Acres Annual Fixed Rents % of Annual Fixed Rents 2024 ​ 38,961 ​ 29.3 % $ 12,017 36.1 % 2025 28,066 ​ 21.1 % ​ 7,124 21.4 % 2026 32,625 ​ 24.6 % ​ 6,432 19.3 % 2027 ​ 19,519 ​ 14.7 % ​ 4,751 14.3 % 2028 ​ 143 ​ 0.1 % ​ 59 ​ 0.2 % Thereafter ​ 13,485 ​ 10.2 % ​ 2,888 ​ 8.7 % ​ 132,799 ​ 100.0 % $ 33,271 ​ 100.0 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Rental Revenues ​ Our revenues are primarily generated from renting farmland to operators of farming businesses.
For more information on the ATM Program please see “Item 7.
For more information on our deleveraging efforts and liquidity please see “Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources”. ​ Deleveraging and Enhanced Liquidity Position ​ During the year ended December 31, 2022, we reduced our overall indebtedness by $73.9 million, largely with proceeds from the sale of shares of common stock under the ATM Program. ​ In addition, in 2022, we entered into credit agreements with Federal Agricultural Mortgage Corporation and its wholly owned subsidiary, Farmer Mac Mortgage Securities Corporation, (collectively, “Farmer Mac”), Metropolitan Life Insurance Company (“MetLife”), and Rutledge Investment Company (“Rutledge”) for revolving credit facilities in an aggregate principal amount of $262.0 million.
In addition, the Company redeemed 34,000 Common units in exchange for cash of approximately $0.4 million. ​ 45 Table of Contents Deleveraging and Maintained Liquidity Position ​ During the year ended December 31, 2023, we reduced our overall indebtedness by $76.4 million, largely with proceeds from the asset dispositions described above, resulting in an increase in liquidity. ​ As of December 31, 2023, we had access to liquidity of $206.6 million, consisting of $5.5 million in cash and $201.1 million in undrawn availability under our credit facilities with Federal Agricultural Mortgage Corporation and its wholly owned subsidiary, Farmer Mac Mortgage Securities Corporation (collectively, “Farmer Mac”), Metropolitan Life Insurance Company (“MetLife”), and Rutledge Investment Company (“Rutledge”) compared to cash of $7.7 million and $169.0 million in undrawn availability under our credit facilities as of December 31, 2022.
Over the past 12 months, we have resumed 47 Table of Contents our growth strategy, and our continued growth is likely to result in increases in certain general and administrative expenses. Inflation in personnel costs, which is impacting many United States businesses, is also likely to contribute to this increase. ​ We also incur costs associated with managing our farmland.
Inflation in personnel costs, which is impacting many United States businesses, is also likely to impact our expenses. ​ We also incur costs associated with managing farmland assets.
The ongoing war in Ukraine has disrupted supply chains and affected the prices of grain, fertilizer, and energy, further stressing food supplies for developing countries that are dependent on food imports. ​ Supply ​ Global supply of agricultural commodities is driven by two primary factors, the number of arable acres available for crop production and the productivity of the acres being farmed.
The ongoing war in Ukraine has disrupted supply chains and affected the prices of grain, fertilizer, and energy, further stressing food supplies for developing countries that are dependent on food imports. ​ Farmland Supply ​ According to the World Bank Group arable land per capita has decreased by approximately 50% from 1961 to 2021, further exacerbated by international conflicts, such as the ongoing war in Ukraine.
When material debt repayments are due within the following 12 months, we work with current and new lenders and other potential sources of capital sufficiently in advance of the debt maturity to ensure that all of our obligations are satisfied in a timely manner.
During the year ended December 31, 2023, we sold no shares under the ATM Program and had $50.5 million in shares of common stock available for issuance under the ATM Program. ​ Our ability to incur additional debt will depend on a number of factors, including our degree of leverage, the value of our unencumbered assets, compliance with the covenants under our existing debt agreements, borrowing restrictions that may be imposed by lenders and the conditions of debt markets. ​ When material debt repayments are due within the following 12 months, we work with current and new lenders and other potential sources of capital sufficiently in advance of the debt maturity to ensure that all of our obligations are satisfied in a timely manner.
This decrease is the result of asset dispositions and the conversion of certain farms to direct operations. ​ Crop sales increased $4.5 million for the year ended December 31, 2022 compared to the year ended December 31, 2021.
This decrease was the result of a lower volume of crop sold on citrus farms and the conversion of blueberry farms from direct operations to third party leases. ​ Other revenue decreased $0.9 million, or 13.4%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
This increase is the result of a higher volume of crop sold as the Company directly operated more farms in the year ended December 31, 2022 compared to the year ended December 31, 2021. ​ Acquisition and due diligence costs increased $0.1 million for the year ended December 31, 2022 compared to the year ended December 31, 2021, This increase was primarily due to an increase in property acquisitions and related costs including travel and due diligence. ​ General and administrative expenses increased $3.8 million, or 46.3%, for the year ended December 31, 2022 compared to the year ended December 31, 2021, $2.7 million of this increase was related to the November 2021 acquisition of MWA.
This decrease was the result of a lower volume of crop sold on citrus farms and the conversion of blueberry farms from direct operations to third party leases, partially offset by an increase in walnuts in the year ended December 31, 2023 compared to the year ended December 31, 2022. ​ Acquisition and due diligence costs remained relatively flat at $0.0 million and $0.1 million for the years ended December 31, 2023 and 2022, respectively. ​ General and administrative expenses decreased $0.7 million, or 6.1%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Leases being renegotiated under the robust market conditions experienced in 2021 and 2022, the first leasing cycles since the farm economy improved, reflected significant rent increases. ​ We believe quality farmland in the United States has a near-zero vacancy rate as a result of the supply and demand fundamentals discussed above.
While the pace of appreciation and transaction volume slowed in 2023, these metrics remain strong relative to long-term trends. ​ We believe quality farmland in the United States has a near-zero vacancy rate as a result of the supply and demand fundamentals discussed above.
As a result, we believe that the effect on us of inflationary increases in 44 Table of Contents operating expenses may be offset in part by the operating expenses that are passed through to our tenants and by contractual rent increases because many of our leases will be renegotiated every one to five years.
As a result, we believe that the effect on us of inflationary increases in operating expenses are borne largely by our tenants under the terms of their leases. We believe that inflationary increases in farmer profitability will continue to impact lease renegotiations upon renewals, as we have seen in the most recent renewal cycle in late 2023.
Removed
Aggregate cash consideration for these acquisitions totaled $54.4 million for real estate purchases accounted for as asset acquisitions plus $17.3 million for the purchase of land and buildings for four agriculture equipment dealerships in Ohio leased to Ag Pro under the John Deere brand which are accounted for as financing receivables. No intangible assets were acquired through these acquisitions.
Added
We received $195.5 million in aggregate consideration, including $11.8 million in seller financing, and recognized an aggregate gain on sale of $36.1 million. In connection with the foregoing seller-financed transactions, we deferred an additional net gain on sale of $2.1 million.
Removed
We also completed five dispositions consisting of five properties in the Corn Belt, High Plains and Southeast regions.
Added
The deferred gain will be recognized at such time as we consider collection of the seller-financed portion of the sale price to be probable under applicable accounting standards. ​ Share Repurchases ​ During the year ended December 31, 2023, we repurchased 6,551,087 shares of our common stock at a weighted average price of $11.00 per share.
Removed
The Company received cash consideration for these dispositions totaling $17.0 million in cash consideration and recognized an aggregate gain on sale of $2.6 million. ​ ATM Sales ​ During the year ended December 31, 2022, we sold 8,594,940 shares of common stock and generated $122.7 million and $121.3 million in gross and net proceeds, respectively, under our at-the-market equity offering program (“ATM Program”). $50.5 million remains available under the $100.0 million ATM Program as of December 31, 2022 and we have an effective shelf registration statement with approximately $100 million of capacity whereby we could issue additional 43 Table of Contents equity or debt securities.
Added
As of December 31, 2023, the Company had approximately $83.3 million of capacity remaining under the stock repurchase plan.
Removed
As of December 31, 2022, $169.0 million remains available under these facilities. For more information on our deleveraging efforts and liquidity please see “Item 7.
Added
Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources”. ​ Lease Renewals ​ During the year ended December 31, 2023, we renewed fixed cash farm leases expiring in 2023 at average rent increases of approximately 20%. ​ Impact of the War in Ukraine ​ Food prices were near record highs even before the invasion of Ukraine.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+1 added−0 removed2 unchanged
Biggest changeAssuming no increase in the level of our variable rate debt spreads, if interest rates increased by 1.0%, our cash flow would decrease by approximately $1.2 million per year. If interest rates decreased by 1.0%, our cash flow would increase approximately $1.2 million per year. ​ Item 8.
Biggest changeAssuming no increase in the level of our variable rate debt spreads, if SOFR increased by 1.0%, our cash flow would decrease by approximately $0.5 million per year, and if SOFR decreased by 1.0%, our cash flow would increase approximately $0.5 million per year. ​ Item 8.
Our primary interest rate exposure will be LIBOR and SOFR. We may use fixed interest rate financing to manage our exposure to fluctuations in interest rates. On a limited basis, we also use derivative financial instruments to manage interest rate risk.
Our primary interest rate exposure will be SOFR. We may use fixed interest rate financing to manage our exposure to fluctuations in interest rates. On a limited basis, we also use derivative financial instruments to manage interest rate risk.
We do not use such derivatives for trading or other speculative purposes. ​ At December 31, 2022, $152.5 million, or 34.7%, of our debt had variable interest rates, however, as stated in “Note 10—Hedge Accounting” to the accompanying consolidated financial statements, the Company has an interest rate swap with Rabobank for $33.2 million, which reduces floating rate exposure.
We do not use such derivatives for trading or other speculative purposes. ​ At December 31, 2023, $80.5 million, or 22.2%, of our debt had variable interest rates, however, as stated in “Note 10—Hedge Accounting” to the accompanying consolidated financial statements, the Company has an interest rate swap with Rabobank for $33.2 million, which reduces floating rate exposure to $47.3 million.
Added
After adjusting the $33.2 million of swapped Rabobank debt as fixed rate debt, the ratio of floating rate debt to total debt decreased from 22.2% to 13.0%.

Other FPI 10-K year-over-year comparisons