# GLADSTONE LAND Corp (LAND) FY 2022 MD&A

Verbatim Item 7 Management's Discussion and Analysis from GLADSTONE LAND Corp's 10-K for fiscal year 2022.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1495240/000149524023000005/land-20221231.htm
Accession: 0001495240-23-000005
Filing date: 2023-02-21
Report date: 2022-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/LAND/
All MD&A years: /company/LAND/mda/
Previous year: /company/LAND/mda/fy2021/ (FY 2021)
Next year: /company/LAND/mda/fy2023/ (FY 2023)

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the notes thereto contained elsewhere in this Form 10-K.

OVERVIEW

General

We are an externally-managed, agricultural real estate investment trust (“REIT”) that is engaged in the business of owning and leasing farmland. We are not a grower of crops, nor do we typically farm the properties we own. We currently own 169 farms comprised of 115,731 acres across 15 states in the U.S. We also own several farm-related facilities, such as cooling facilities, packinghouses, processing facilities, and various storage facilities.

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We conduct substantially all of our activities through, and all of our properties are held, directly or indirectly, by, Gladstone Land Limited Partnership (the “Operating Partnership”). Gladstone Land Corporation controls the sole general partner of the Operating Partnership and currently owns, directly or indirectly, 100.0% of the units of limited partnership interest in the Operating Partnership (“OP Units”). In addition, we have elected for Gladstone Land Advisers, Inc. (“Land Advisers”), a wholly-owned subsidiary of ours, to be treated as a taxable REIT subsidiary (“TRS”).

Gladstone Management Corporation (our “Adviser”) manages our real estate portfolio pursuant to an advisory agreement, and Gladstone Administration, LLC (our “Administrator”), provides administrative services to us pursuant to an administration agreement.  Our Adviser and our Administrator collectively employ all of our personnel and pay directly their salaries, benefits, and general expenses.

As of February 20, 2023:

•we owned 169 farms comprised of 115,731 total acres across 15 states in the U.S.;

•our occupancy rate (based on gross acreage) was 100.0%, and our farms were leased to 89 different, unrelated third-party tenants growing over 60 different types of crops;

•the weighted-average remaining lease term across our agricultural real estate holdings was 6.2 years; and

•the weighted-average term to maturity of our notes and bonds payable was 9.4 years, and over 99.8% of our notes and bonds payable bore interest at fixed rates; on a weighted-average basis, the remaining fixed-price term of our borrowings was 4.9 years, with an expected weighted-average effective interest rate (after interest patronage, as described below) of 3.26% over that term.

Business Environment

Impact of Inflation and Rising Interest Rates

According to the U.S. Bureau of Labor Statistics, the consumer price index (“CPI”) grew at an annual rate of 6.5% through December 2022, as overall inflation continued to ease from levels earlier in 2022, when it reached the highest rates seen in over 40 years. However, food prices have continued to outpace the rate of inflation, with the overall food segment increasing at an annual rate of 10.4% through December 2022, and the food at home segment (which encompasses over 90% of the crops grown on our farms) growing by 11.8%. In addition, according to the NCREIF Farmland Index, which, as of December 31, 2022, consisted of approximately $15.3 billion of farms across the U.S., the total return on U.S. farmland (including appreciation and income) was 9.6% for the 12 months ended December 31, 2022. If the increases in food prices continue to outpace inflation, we believe this will help mitigate the increase in input costs currently experienced by our farm operators.

While showing signs of slowing from its peak levels, overall inflation remains significantly above the Federal Reserve’s target long-term rate of 2.0%, leading the Federal Reserve to raise its benchmark funds rate eight times since March 2022. As such, interest rates remain volatile in response to competing concerns regarding inflationary pressures, coupled with the threat of a near-term recession. The yield on the 10-year U.S. Treasury Note has increased substantially over the past 12 months and recently surpassed 4% for the first time since 2008, which adversely affects interest rates on long-term financing. In addition, global recessionary conditions appear likely to occur within the next 12 months, caused in part by inflation, the potential emergence of new COVID-19 variants, and geopolitical conditions, although the actual timeline, impact, and duration are unknown.

Over 99.8% of our borrowings are currently at fixed rates, and on a weighted-average basis, these rates are fixed at an effective interest rate of 3.26% for another 4.9 years. As such, with respect to our current borrowings, we have experienced minimal impact from the recent increases in interest rates, and we believe we are well-protected against further interest rate increases, which seem likely to continue in the near term.

California Floods and Impact on Drought

Recent storms have brought tremendous amounts of rain and snow to California, increasing the state’s snowpack and water resources and bringing some much-needed relief to a region that, as of now, remains in a prolonged drought. As a result of the heavy rain and snowfall, drought conditions throughout California have been significantly improved, as the state no longer has any areas under “extreme drought” or “exceptional drought” conditions, the two most severe drought categories, thus marking a vast improvement from three months earlier when approximately 58% of the state fell under these two categories. On a statewide basis, snowpack levels are more than twice their 20-year historical averages for this time of year and have already surpassed their historical average April 1st benchmark levels (April 1st has been used as a benchmark since 1941 by the California Department of Water Resources, as it is when the snowpack in California is generally the deepest). In addition,

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reservoirs across California have seen their water levels rise significantly. The state’s three largest reservoirs are currently at approximately 86% of their historical average, compared to just 53% just a few months ago.

However, despite the storms reducing the intensity of the drought, approximately one-third of California is still considered to be under “severe drought” conditions. In addition, most underground aquifers remain depleted, as the state does not have the infrastructure in place to allow the aquifers to fully benefit from such a massive rainfall to recharge. As such, groundwater pumping continues to be strained, due to both aquifers’ receding water lines and pumping restrictions pursuant to regulations under the Sustainable Groundwater Management Act (“SGMA”).

To date, none of our farms have suffered water shortages due to our wells not being able to reach the aquifers. We continue to seek out opportunities to provide additional sources of water to our farms, such as acquiring supplemental water banked at local water districts or by entering into separate agreements directly with water districts for surface water deliveries. In addition, we are also currently looking into capital improvements on certain of our farms, such as building pipelines to allow for surface water deliveries and building recharge basins on unplanted acres to capture stormwater and allow it to recharge the aquifers below.

Factors Impacting Agricultural Land Values in our Regions of Focus

Western U.S.

The agricultural real estate market in the western U.S. is largely driven by water availability, which is impacted by both environmental and regulatory conditions. Going into the winter of 2021-2022, the current drought caused major shortages of surface water deliveries, and the persistence of below-normal rainfall and snowpack levels in California into 2022 led to groundwater levels dropping so far as to significantly reduce groundwater well production in a number of areas throughout the state. From a regulatory perspective, while the winter of 2022-2023 is off to a very strong start, the capture of runoff from the storms has been extremely limited due to restrictions imposed by current management guidelines over potentially endangered species in the California water system. In addition, the impact of SGMA is affecting grower operations, as sustainable pumping levels are being identified, thus allowing operators to calculate or estimate their future groundwater access and plan (or scale back) accordingly.

From a land value perspective, a growing divide is occurring between farms that have adequate water and farms that are short on water. We are seeing land values in areas with strong water sources increase significantly, while values of farms in areas with more limited water sources are decreasing to price levels not seen in decades. Farmland with infrastructure in place to allow it to bring in more water or to store water is also generally experiencing increases in value. Expectations of future water availability are also causing a change in crop economics throughout the state.

The profitability of crops being grown is also driving agricultural land values. Most almond growers have had difficulties due to operating costs at all-time highs and almond prices dropping to levels not seen since the 1990s. As a result, the pace of new almond plantings has slowed dramatically, and older orchards are being removed at a quicker pace. Farmland growing pistachios have maintained their high values but have generally plateaued since last year’s run-up in land value. Crop yields for the 2022 harvest were mostly lower, which led to increased pricing for the 2022 marketing window, which runs through late 2023. In coastal California, strawberry production was down on a per-acre basis, and leafy greens experienced unprecedented crop failures due to disease. This lower production led to historically high crop prices, which more than offset the lower yields. As a result, growers were generally willing to pay slightly higher rents, causing land prices to trend slightly higher.

Southeastern U.S.

Values of farmland growing strawberries in Florida have been steadily increasing for the past several years, with several out-of-state growers expanding their operations to the central area of the state. Values of vegetable farms in Florida, which are often impacted by production from Mexico, continue to be stable. Overall, land values throughout the Southeastern U.S. continue to benefit from upward pricing pressure caused, in part, by the large influx of new people moving to the region, each year, particularly Florida and the Carolinas.

Portfolio Diversification

Since our initial public offering in January 2013 (the “IPO”), we have expanded our portfolio from 12 farms leased to 7 different, unrelated tenants to a current portfolio of 169 farms leased to 89 different, unrelated third-party tenants who grow over 60 different types of crops on our farms. Our investment focus is in farmland suitable for growing either fresh produce

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annual row crops (e.g., certain berries and vegetables) or certain permanent crops (e.g., almonds, blueberries, pistachios, and wine grapes), with an ancillary focus on farmland growing certain commodity crops (e.g., beans and corn).

The acquisition of additional farms since our IPO has also allowed us to further diversify our portfolio geographically. The following table summarizes the geographic locations (by state) of our farms owned and with leases in place as of December 31, 2022, 2021, and 2020 (dollars in thousands):

[[GREPCENT_TABLE]]
[["","","As of and For the Year Ended December 31, 2022","","As of and For the Year Ended December 31, 2021","","As of and For the Year Ended December 31, 2020"],["State","","No. of Farms","Total Acres","% of Total Acres","Lease Revenue","% of Total Lease Revenue","","No. of Farms","Total Acres","% of Total Acres","Lease Revenue","% of Total Lease Revenue","","No. of Farms","Total Acres","% of Total Acres","Lease Revenue","% of Total Lease Revenue"],["California(1)","","63","34,844","30.1%","$","61,118","","68.5%","","62","33,027","29.3%","$","49,644","","65.9%","","55","25,197","24.9%","$","31,536","","55.3%"],["Florida","","26","22,606","19.5%","14,537","","16.3%","","26","22,591","20.1%","13,675","","18.2%","","23","20,770","20.5%","13,342","","23.4%"],["Washington","","6","2,529","2.2%","3,401","","3.8%","","3","1,384","1.2%","2,384","","3.2%","","3","1,384","1.4%","531","","1.0%"],["Colorado","","12","32,773","28.3%","2,153","","2.4%","","12","32,773","29.1%","2,675","","3.6%","","12","32,773","32.4%","3,264","","5.7%"],["Arizona","","6","6,320","5.5%","2,100","","2.4%","","6","6,280","5.6%","1,951","","2.6%","","6","6,280","6.2%","4,739","","8.3%"],["Nebraska","","9","7,782","6.7%","1,712","","1.9%","","9","7,782","6.9%","1,588","","2.1%","","9","7,782","7.7%","1,556","","2.7%"],["Oregon","","6","898","0.8%","1,710","","1.9%","","5","726","0.6%","854","","1.1%","","3","418","0.4%","528","","0.9%"],["Michigan","","23","1,892","1.6%","786","","0.9%","","23","1,892","1.7%","1,040","","1.4%","","15","962","1.0%","723","","1.3%"],["Maryland","","6","987","0.8%","453","","0.5%","","6","987","0.9%","476","","0.6%","","4","759","0.8%","135","","0.2%"],["Texas","","1","3,667","3.2%","450","","0.5%","","1","3,667","3.3%","450","","0.6%","","1","3,667","3.6%","450","","0.8%"],["South Carolina","","3","597","0.5%","244","","0.3%","","3","597","0.5%","244","","0.3%","","3","597","0.6%","47","","0.1%"],["Georgia","","2","230","0.2%","224","","0.3%","","2","230","0.2%","31","","\u2014%","","\u2014","\u2014","\u2014%","\u2014","","\u2014%"],["New Jersey","","2","310","0.3%","145","","0.2%","","2","310","0.3%","150","","0.2%","","\u2014","\u2014","\u2014%","\u2014","","\u2014%"],["North Carolina","","3","116","0.1%","129","","0.1%","","3","116","0.1%","75","","0.1%","","2","310","0.3%","153","","0.3%"],["Delaware","","1","180","0.2%","74","","\u2014%","","1","180","0.2%","81","","0.1%","","1","180","0.2%","27","","\u2014%"],["TOTALS","","169","115,731","100.0%","$","89,236","","100.0%","","164","112,542","100.0%","$","75,318","","100.0%","","137","101,079","100.0%","$","57,031","","100.0%"]]
[[/GREPCENT_TABLE]]

(1)According to the California Chapter of the American Society of Farm Managers and Rural Appraisers, there are eight distinct growing regions within California; our farms are spread across six of these growing regions.

Leases

General

Most of our leases are on a triple-net basis, an arrangement under which, in addition to rent, the tenant is required to directly pay the related taxes, insurance costs, maintenance, and other operating costs. Our leases generally have original terms ranging from 3 to 10 years for farms growing row crops and 7 to 15 years for farms growing permanent crops (in each case, often with options to extend the lease further). Rent is generally payable to us in advance on either an annual or semi-annual basis, with such rent typically subject to periodic escalation clauses provided for within the lease. Currently, 123 of our farms are leased on a pure, triple-net basis, 43 farms are leased on a partial-net basis (with us, as landlord, responsible for all or a portion of the related property taxes), and 3 farms are leased on a single-net basis (with us, as landlord, responsible for the related property taxes, as well as certain maintenance, repairs, and insurance costs). Additionally, 35 of our farms are leased under agreements that include a variable rent component, called “participation rents,” that are based on the gross revenues earned on the respective farms.

Lease Expirations

Agricultural leases are often shorter term in nature (relative to leases of other types of real estate assets), so in any given year, we may have multiple leases up for extension or renewal. The following table summarizes the lease expirations by year for the farms owned and with leases in place as of December 31, 2022 (dollars in thousands):

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[[GREPCENT_TABLE]]
[["Year","","Number ofExpiringLeases(1)","","Expiring Leased Acreage","","% of Total Acreage","","Lease Revenues for the Year Ended December 31, 2022","","% of Total Lease Revenues"],["2023","","8","","12,110","","10.5%","","$","8,954","","","10.0%"],["2024","","9","","10,384","","9.0%","","7,187","","","8.1%"],["2025","","12","","14,450","","12.5%","","8,079","","","9.1%"],["2026","","13","","12,061","","10.4%","","5,304","","","5.9%"],["2027","","5","","6,755","","5.8%","","10,752","","","12.0%"],["Thereafter","","57","","59,252","","51.2%","","48,595","","","54.5%"],["Other(2)","","9","","719","","0.6%","","365","","","0.4%"],["Totals","","113","","115,731","","100.0%","","$","89,236","","","100.0%"]]
[[/GREPCENT_TABLE]]

(1)Certain lease agreements encompass multiple farms.

(2)Consists of ancillary leases (e.g., renewable energy leases; oil, gas, and mineral leases; telecommunications leases; etc.) with varying expirations on certain of our farms.

We currently have one agricultural lease scheduled to expire within the next six months on a farm in California. We are currently in negotiations with the existing tenant on the farm, as well as other potential tenants, and we anticipate being able to renew the lease at its current market rental rate without incurring any downtime on the farm. We currently anticipate the rental rates on this lease renewal to be flat to slightly higher compared to that of the existing lease. Regarding all upcoming lease expirations, there can be no assurance that we will be able to renew the existing leases or execute new leases at rental rates favorable to us, if at all, or be able to find replacement tenants, if necessary.

Recent Developments

Portfolio Activity

Property Acquisitions

Since January 1, 2022, through the date of this filing, we completed the following acquisitions, which are summarized in the table below (dollars in thousands, except for footnotes):

[[GREPCENT_TABLE]]
[["Property Name","","Property Location","","Acquisition Date","","Total Acres","","No. of Farms","","Primary Crop(s) / Use","","Lease Term","","Renewal Options","","Total Purchase Price","","Acquisition Costs(1)","","Annualized Straight-line Rent(2)"],["Farm Road(3)","","Charlotte, FL","","5/20/2022","","15","","0","","Adjacent parcel","","N/A","","None","","$","54","","","$","15","","","$","\u2014"],["County Road 35","","Glenn, CA","","6/16/2022","","1,374","","1","","Olives for Olive Oil","","14.5 years","","1 (5 years)","","24,500","","","55","","","1,714"],["Reagan Road(4)","","Cochise, AZ","","7/13/2022","","40","","0","","Corn","","12.5 years","","None","","120","","","17","","","39"],["North Columbia River Road(5)(7)","","Franklin & Grant, WA","","7/21/2022","","1,145","","3","","Wine Grapes","","8.4 years","","None","","30,320","","","146","","","2,296"],["Prunedale Road(6)(7)","","Umatilla, OR","","7/21/2022","","172","","1","","Wine Grapes","","10.4 years","","None","","7,008","","","36","","","286"],["Phelps Avenue(8)","","Fresno, CA","","12/29/2022","","443","","0","","Open ground and water credits","","5.0 years","","1 (5 years)","","3,100","","","72","","","25"],["","","","","","","3,189","","5","","","","","","","","$","65,102","","","$","341","","","$","4,360"]]
[[/GREPCENT_TABLE]]

(1)Includes approximately $27,000 of external legal fees associated with negotiating and originating the leases associated with these acquisitions, which were expensed in the period incurred.

(2)Based on the minimum cash rental payments guaranteed under the respective leases, as required under GAAP, and excludes contingent rental payments, such as participation rents.

(3)Represents the acquisition of a parcel of land adjacent to an existing farm, providing additional road access to such farm. No new lease was executed related to this acquisition.

(4)Represents the acquisition of a parcel of farmable land adjacent to an existing farm. Subsequent to acquisition, we spent approximately $153,000 to install certain improvements on this property.

(5)Upon acquisition, we executed three new leases with the existing tenants on these farms. The lease terms above represent the weighted-average lease term and aggregate annualized straight-line rent of these three leases.

(6)In connection with the acquisition of this property, we also acquired an ownership interest in a related LLC, the sole purpose of which is to own and maintain an irrigation system providing water to this and other neighboring properties. Our acquired ownership, which equated to an 11.3% interest in the LLC, was valued at approximately $2.7 million at the time of acquisition and is included within Other assets, net on the accompanying Consolidated Balance Sheets. See Note 3, “Real Estate and Intangible Assets—Investments in Unconsolidated Entities,” within the accompanying notes to our consolidated financial statements for additional information on our aggregate ownership interest in this and other LLCs.

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(7)These two properties were acquired as part of a single transaction. In connection with the acquisition of these vineyards, we committed to provide up to an aggregate amount of $2.2 million for certain irrigation and vineyard improvements on these farms, for which we will earn additional rent as the funds are disbursed by us.

(8)Represents the acquisition of three parcels of land adjacent to an existing farm that will initially be utilized for its water rights (including additional surface water rights and groundwater pumping rights) to be used on nearby farms. In addition, a portion of this acquisition was leased back to the seller.

Existing Properties

Leasing Activity

The following table summarizes certain leasing activity that has occurred on our existing properties since January 1, 2022, through the date of this filing (dollars in thousands, except for footnotes):

[[GREPCENT_TABLE]]
[["","","","","PRIOR LEASES","","NEW LEASES(1)"],["Farm Locations","Number of Leases","Total Farm Acres","","TotalAnnualizedStraight-lineRent(2)","# of Leases with Participation Rents","LeaseStructures(# of NNN/ NN / N)(3)","","Total Annualized Straight-line Rent(2)(4)","Wtd. Avg. Term (Years)","# of Leases with Participation Rents","Lease Structures (# of NNN / NN / N)(3)"],["AZ, CA, CO, FL, MI, & NE","23","31,317","","$","9,446","","8","14 / 8 / 1","","$","9,094","","5.4","5","11 / 12 / 0"]]
[[/GREPCENT_TABLE]]

(1)In connection with certain of these leases, we committed to provide capital for certain improvements on these farms. See Note 7, “Commitments and Contingencies—Operating Obligations,” within the accompanying notes to our consolidated financial statements for additional information on these and other commitments.

(2)Based on the minimum cash rental payments guaranteed under the applicable leases (presented on an annualized basis), as required under GAAP, and generally excludes contingent rental payments, such as participation rents.

(3)“NNN” refers to leases under triple-net lease arrangements, “NN” refers to leases under partial-net lease arrangements, and “N” refers to leases under single-net lease arrangements, in each case, as described above under “Leases—General.”

(4)Total annualized straight-line rent for new leases is net of aggregate one-time fixed payments of approximately $3.4 million we agreed to pay in connection with two leases to cover the majority of the operating expenses on the farms in exchange for adding a significant participation rent component into the leases.

Additionally, as of December 31, 2022, due to credit issues with two of our tenants, we determined that the full collectability of the remaining rental payments under the respective leases with these two tenants was not deemed to be probable. As such, during the three months ended December 31, 2022, we began recognizing lease revenues from the six leases with these two tenants (three on farms in California and three on farms in Michigan) on a cash basis. We are continuing to work with the current tenants and will seek to come to an agreement for the remaining rental payments, if possible. Such agreement, if one can be reached, may include placing these tenants on payment plans, deferring a portion of the rent owed to us, or agreeing to terminate the respective leases. In the event of a termination, we estimate that we would be able to find new tenants to lease each of these properties to at market rental rates within 1 to 12 months.

During the year ended December 31, 2022, we recorded aggregate lease revenues from these six leases of approximately $258,000 (including approximately $31,000 of participation rents), as compared to approximately $1.7 million (including approximately $121,000 of participation rents) and approximately $1.5 million (including approximately $221,000 of participation rents) during the years ended December 31, 2021 and 2020, respectively.

Financing Activity

Debt Activity

From January 1, 2022, through the date of this filing, we entered into the following loan agreements (dollars in thousands):

[[GREPCENT_TABLE]]
[["Lender","","Date of Issuance","","Amount","","Maturity Date","","Principal Amortization","","Stated Interest Rate","","ExpectedEffectiveInterestRate(1)","","Interest Rate Terms"],["Farmer Mac(2)","","1/11/2022","","$","1,980","","","12/30/2030","","20.0 years","","3.31%","","3.31%","","Fixed throughout term"],["Northwest Farm Credit Services, FLCA","","1/31/2022","","1,442","","","2/1/2032","","20.1 years","","4.65%","","3.40%","","Fixed throughout term"],["Farmer Mac(2)","","2/25/2022","","1,710","","","12/30/2030","","25.0 years","","3.68%","","3.68%","","Fixed throughout term"],["Farm Credit of Central Florida, ACA","","4/5/2022","","4,800","","","2/1/2046","","23.8 years","","4.36%","","2.89%","","Fixed through 2/28/2027; variable thereafter"],["Total / Weighted-average","","$","9,932","","","","","","","4.08%","","3.19%"]]
[[/GREPCENT_TABLE]]

(1)On borrowings from the various Farm Credit associations, we receive interest patronage, or refunded interest, which is typically received in the calendar year following the year in which the related interest expense was accrued. The expected effective interest rates reflected in the table above are the interest rates net of expected interest patronage, which is based on either historical patronage actually received (for pre-existing lenders whom we have received interest patronage from) or indications from the respective lenders of estimated patronage to be paid (for new lenders). See Note 4, “Borrowings—Farm

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Credit Notes Payable—Interest Patronage,” in the accompanying notes to our consolidated financial statements for additional information on interest patronage.

(2)Bond issued under our facility with Federal Agricultural Mortgage Corporation (“Farmer Mac”).

In connection with securing the above borrowings, Gladstone Securities LLC (“Gladstone Securities”), an affiliate of ours, earned total financing fees of approximately $15,000.

In addition, from January 1, 2022, through the date of this filing, we repaid approximately $44.7 million of maturing loans. On a weighted-average basis, these borrowings bore interest at a stated rate of 4.14% and an effective interest rate (after interest patronage) of 3.09%.

MetLife Facility

On February 3, 2022, we amended our credit facility with Metropolitan Life Insurance Company (“MetLife”), which previously consisted of a $75.0 million long-term note payable (the “2020 MetLife Term Note”) and $75.0 million of revolving equity lines of credit (the “MetLife Lines of Credit,” and together with the 2020 MetLife Term Note, the “Prior MetLife Facility”). Pursuant to the amendment, our credit facility with MetLife now consists of the 2020 MetLife Term Note, the MetLife Lines of Credit, and a new $100.0 million long-term note payable (the “2022 MetLife Term Note,” and together with the 2020 MetLife Term Note and the MetLife Lines of Credit, the “Current MetLife Facility”).

The 2022 MetLife Term Note is scheduled to mature on January 5, 2032, and the interest rates on future disbursements under the 2022 MetLife Term Note will be based on the 10-year U.S. Treasury at the time of such disbursements, with the initial disbursement priced based on the 10-year U.S. Treasury plus a spread to be determined by the lender. In addition, through December 31, 2024, the 2022 MetLife Term Note is also subject to an unused fee ranging from 0.10% to 0.20% on undrawn amounts (based on the balance drawn under the 2022 MetLife Term Note). If the full commitment of $100.0 million is not utilized by December 31, 2024, MetLife has no obligation to disburse the remaining funds under the 2022 MetLife Term Note. All other material items of the Prior MetLife Facility remained unchanged.

As part of this amendment, we paid an origination fee of $250,000 to MetLife and a financing fee of $80,000 to Gladstone Securities. For information on the pertinent terms of the issuances under the Current MetLife Facility, refer to Note 4, “Borrowings—MetLife Facility,” within the accompanying notes to our condensed consolidated financial statements.

Farm Credit Notes Payable—Interest Patronage

From time to time since September 2014, we, through certain subsidiaries of our Operating Partnership, have entered into various loan agreements (collectively, the “Farm Credit Notes Payable”) with 13 different Farm Credit associations (collectively, “Farm Credit”). During the three months ended March 31, 2022, we recorded interest patronage of approximately $2.8 million related to interest accrued on the Farm Credit Notes Payable during the year ended December 31, 2021, and during the three months ended September 30, 2022, we received approximately $113,000 of interest patronage, as certain Farm Credit associations paid a portion of the 2022 interest patronage (which relates to interest accrued during 2022 but is typically paid during the first half of 2023) early. 2021 interest patronage (which was recorded during the three months ended March 31, 2022) resulted in a 29.9% reduction (approximately 137 basis points) to the interest rates on such borrowings. For further discussion on interest patronage, refer to Note 4, “Borrowings—Farm Credit Notes Payable—Interest Patronage,” in the accompanying notes to our consolidated financial statements.

Equity Activity

Series C Preferred Stock

On April 3, 2020, we filed a prospectus supplement with the SEC for a continuous public offering (the “Series C Offering”) of up to 26,000,000 shares of our 6.00% Series C Cumulative Redeemable Preferred Stock (the “Series C Preferred Stock”). Under the Series C Offering, we were permitted to sell up to 20,000,000 shares of our Series C Preferred Stock on a “reasonable best efforts” basis through Gladstone Securities at an offering price of $25.00 per share (the “Primary Series C Offering”) and up to 6,000,000 additional shares of our Series C Preferred Stock pursuant to our dividend reinvestment plan (the “DRIP”) at a price of $22.75 per share.

On August 24, 2022, we amended the Series C Offering to (i) reduce the amount of shares of the Series C Preferred Stock offered through the Primary Series C Offering to 10,200,000, (ii) reduce the amount of shares of the Series C Preferred Stock offered pursuant to the DRIP to 200,000, and (iii) reduce the duration of the period during which shares of the Series C Preferred Stock may be offered for sale through the Primary Series C Offering to the earlier of (a) December 31, 2022 (unless earlier terminated or extended by our Board of Directors) or (b) the date on which all 10,200,000 shares of the Series C Preferred Stock offered in the Primary Series C Offering were sold. The offering period for the DRIP will terminate on the earlier of (1) the issuance of all 200,000 shares of Series C Preferred Stock under the DRIP or (2) the listing of the Series C Preferred Stock on Nasdaq or another national securities exchange.

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See Note 6, “Related-Party Transactions—Gladstone Securities—Dealer-Manager Agreements,” within the accompanying notes to our consolidated financial statements for more details on the dealer-manager agreement entered into with Gladstone Securities in connection with the Series C Offering.

The following table summarizes the sales of our Series C Preferred Stock that occurred since January 1, 2022, through the date of this filing (dollars in thousands, except per-share amounts and footnotes):

[[GREPCENT_TABLE]]
[["Number ofShares Sold(1)","","Weighted-average Offering Price Per Share","","Gross Proceeds","","Net Proceeds(2)"],["6,701,987","","$","24.76","","","$","165,941","","","$","152,470"]]
[[/GREPCENT_TABLE]]

(1)Excludes share redemptions and shares issued pursuant to the DRIP. From January 1, 2022, through the date of this filing, we redeemed 38,995 shares and issued approximately 43,600 shares of the Series C Preferred Stock pursuant to the DRIP.

(2)Net of underwriting discounts and selling commissions and dealer-manager fees borne by us. Aggregate selling commissions and dealer-manager fees paid to Gladstone Securities as a result of these sales was approximately $13.5 million.

The Primary Series C Offering terminated on December 31, 2022, with substantially all of the allotted 10,200,000 shares being sold. Exclusive of redemptions, the Primary Series C Offering resulted in total gross proceeds of approximately $252.6 million and net proceeds, after deducting Series C Selling Commissions, Series C Dealer-Manager Fees, and offering expenses payable by us, of approximately $230.5 million. In conjunction with the amendment of the Series C Offering, which reduced the number of shares of Series C Preferred Stock to be offered, during the year ended December 31, 2022, we expensed approximately $798,000 of unamortized deferred offering costs. These costs were recorded to Write-off of costs associated with the offering of Series C cumulative redeemable preferred stock on the accompanying Consolidated Statements of Operations and Comprehensive Income during the year ended December 31, 2022. See Note 6, “Related-Party Transactions—Gladstone Securities—Dealer-Manager Agreements,” for a discussion of the commissions and fees paid to Gladstone Securities in connection with the Series C Offering.

There is currently no public market for shares of the Series C Preferred Stock; however, we intend to apply to list the Series C Preferred Stock on Nasdaq or another national securities exchange by December 31, 2023, though there can be no assurance that a listing will be achieved in such timeframe, or at all.

Series E Preferred Stock

On November 9, 2022, we filed a prospectus supplement with the SEC for a continuous public offering (the “Series E Offering”) of up to 8,000,000 shares of our newly-designated 5.00% Series E Cumulative Redeemable Preferred Stock, par value $0.001 per share (the “Series E Preferred Stock”), on a “reasonable best efforts” basis through Gladstone Securities at an offering price of $25.00 per share. See Note 6, “Related-Party Transactions—Gladstone Securities—Dealer-Manager Agreements,” for a discussion of the commissions and fees to be paid to Gladstone Securities in connection with the Series E Offering.

No sales of the Series E Preferred Stock occurred during the year ended December 31, 2022. The following table summarizes the sales of our Series E Preferred Stock that occurred subsequent to December 31, 2022, through the date of this filing (dollars in thousands, except per-share amounts and footnotes):

[[GREPCENT_TABLE]]
[["Number of Shares Sold","","Weighted-average Offering Price Per Share","","Gross Proceeds","","Net Proceeds(1)"],["34,600","","$","24.96","","","$","864","","","$","779"]]
[[/GREPCENT_TABLE]]

(1)Net of underwriting discounts and selling commissions and dealer-manager fees borne by us. Aggregate selling commissions and dealer-manager fees paid to Gladstone Securities as a result of these sales was approximately $85,000.

The Series E Offering will terminate on the date (the “Series E Termination Date”) that is the earlier of (i) December 31, 2025 (unless terminated or extended by our Board of Directors) and (ii) the date on which all 8,000,000 shares of Series E Preferred Stock offering in the Series E Offering are sold. There is currently no public market for shares of Series E Preferred Stock. The Company intends to apply to list the Series E Preferred Stock on Nasdaq or another national securities exchange within one calendar year of the Series E Termination Date; however, there can be no assurance that a listing will be achieved in such timeframe, or at all.

Common Stock—At-the-Market Program

On May 12, 2020, we entered into new equity distribution agreements with Virtu Americas, LLC, and Ladenburg Thalmann & Co., Inc. (each a “Sales Agent”), under which we may issue and sell, from time to time and through the Sales Agents, shares of our common stock having an aggregate offering price of up to $100.0 million (the “ATM Program”). On May 18, 2021, we entered into separate amendments to the existing equity distribution agreements to allow us to sell up to $160.0 million of additional shares of our common stock, expanding the aggregate offering price to up to $260.0 million.

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The following table summarizes the activity under the ATM Programs from January 1, 2022, through the date of this filing (dollars in thousands):

[[GREPCENT_TABLE]]
[["Number of Shares Sold","","Weighted-average Offering Price Per Share","","Gross Proceeds","","Net Proceeds(1)"],["1,503,969","","$","23.49","","","$","35,325","","","$","34,946"]]
[[/GREPCENT_TABLE]]

(1)Net of underwriter commissions.

LIBOR Transition

The majority of our debt is at fixed rates, and we currently have very limited exposure to variable-rate debt based upon the London Interbank Offered Rate (“LIBOR”), which is currently being phased out and is anticipated to be completely phased out by June 2023. LIBOR is currently expected to transition to a new standard rate, the Secured Overnight Financing Rate (“SOFR”), which will incorporate certain overnight repo market data collected from multiple data sets. SOFR was formally adopted by the Alternative Reference Rates Committee in July 2021. The current intent is to adjust the SOFR to minimize the differences between the interest that a borrower would be paying using LIBOR versus what it will be paying SOFR. We are currently monitoring the transition and cannot yet assess whether SOFR will become the standard rate for all of our variable-rate debt. Our lines of credit with MetLife and four term loans with Rabo AgriFinance LLC (which are effectively fixed through our entry into interest swap agreements) are currently indexed based on LIBOR, and we have begun discussions with the respective lenders to negotiate these agreements prior to the phase-out of LIBOR. Assuming that SOFR replaces LIBOR and is appropriately adjusted, we currently expect the transition to result in a minimal impact to our overall operations.

Our Adviser and Administrator

We are externally managed pursuant to contractual arrangements with our Adviser and our Administrator (both affiliates of ours), which collectively employ all of our personnel and pay their salaries, benefits, and general expenses directly. The investment advisory agreement with our Adviser that was in effect from January 1, 2020, through June 30, 2021 (the “Prior Advisory Agreement”), was amended and restated effective July 1, 2021 (as amended, the “Current Advisory Agreement,” and together with the Prior Advisory Agreement, the “Advisory Agreements”). The Current Advisory Agreement revised the calculation of the base management fee beginning with the three months ended September 30, 2021, while all other terms of the Prior Advisory Agreement remained the same. Each of the Advisory Agreements and the current administration agreement with our Administrator (the “Administration Agreement”) were approved unanimously by our Board of Directors, including, specifically, our independent directors.

A summary of certain compensation terms within the Advisory Agreements and a summary of the Administration Agreement is below.

Advisory Agreements

Pursuant to each of the Advisory Agreements, our Adviser is compensated in the form of a base management fee, an incentive fee, a capital gains fee, and a termination fee. Our Adviser does not charge acquisition or disposition fees when we acquire or dispose of properties, as is common in other externally-managed REITs. The base management and incentive fees are described below. For information on the capital gains and termination fees, refer to Note 6, “Related-Party Transactions—Our Adviser and Administrator—Advisory Agreements,” within the accompanying notes to our consolidated financial statements.

Base Management Fee

Pursuant to the Prior Advisory Agreement, through June 30, 2021, a base management fee was paid quarterly and was calculated at an annual rate of 0.50% (0.125% per quarter), of the prior calendar quarter’s “Gross Tangible Real Estate,” defined as the gross cost of tangible real estate owned by us (including land and land improvements, permanent plantings, irrigation and drainage systems, farm-related facilities, and other tangible site improvements), prior to any accumulated depreciation, and as shown on our balance sheet or the notes thereto for the applicable quarter.

Pursuant to the Current Advisory Agreement, beginning with the three months ended September 30, 2021, a base management fee is paid quarterly and is calculated at an annual rate of 0.60% (0.15% per quarter) of the prior calendar quarter’s Gross Tangible Real Estate.

Incentive Fee

Pursuant to each of the Advisory Agreements, an incentive fee is calculated and payable quarterly in arrears if the Pre-Incentive Fee FFO for a particular quarter exceeds a hurdle rate of 1.75% (7.0% annualized) of the prior calendar quarter’s Total Adjusted Common Equity.

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For purposes of this calculation, Pre-Incentive Fee FFO is defined in each of the Advisory Agreements as FFO (also as defined in each of the Advisory Agreements) accrued by the Company during the current calendar quarter (prior to any incentive fee calculation for the current calendar quarter), less any dividends paid on preferred stock securities that are not treated as a liability for GAAP purposes. In addition, Total Adjusted Common Equity is defined as common stockholders’ equity plus non-controlling common interests in our Operating Partnership, if any (each as reported on our balance sheet), adjusted to exclude unrealized gains and losses and certain other one-time events and non-cash items.

We pay our Adviser an incentive fee with respect to our Pre-Incentive Fee FFO quarterly, as follows:

•no Incentive Fee in any calendar quarter in which our Pre-Incentive Fee FFO does not exceed the hurdle rate of 1.75% (7.0% annualized);

•100% of the amount of our Pre-Incentive Fee FFO with respect to that portion of such Pre-Incentive Fee FFO, if any, that exceeds the hurdle rate but is less than 2.1875% in any calendar quarter (8.75% annualized); and

•20% of the amount of our Pre-Incentive fee FFO, if any, that exceeds 2.1875% in any calendar quarter (8.75% annualized).

Quarterly Incentive Fee Based on Pre-Incentive Fee FFO

Pre-Incentive Fee FFO

(expressed as a percentage of Total Adjusted Common Equity)

Percentage of Pre-Incentive Fee FFO allocated to Incentive Fee

Administration Agreement

Pursuant to the Administration Agreement, we pay for our allocable portion of the Administrator’s expenses incurred while performing its obligations to us, including, but not limited to, rent and the salaries and benefits expenses of our Administrator’s employees, including our chief financial officer, treasurer, chief compliance officer, general counsel and secretary (who also serves as our Administrator’s president, general counsel, and secretary), and their respective staffs. Our allocable portion of the Administrator’s expenses is generally derived by multiplying our Administrator’s total expenses by the approximate percentage of time the Administrator’s employees perform services for us in relation to their time spent performing services for all companies serviced by our Administrator under similar contractual agreements.

Critical Accounting Policies

The preparation of our financial statements in accordance with GAAP requires management to make judgments that are subjective in nature to make certain estimates and assumptions. Application of these accounting policies involves the exercise of judgment regarding the use of assumptions as to future uncertainties, and, as a result, actual results could materially differ from these estimates. A summary of all of our significant accounting policies are provided in Note 2, “Summary of Significant Accounting Policies,” in the accompanying notes to our consolidated financial statements, located elsewhere in this Form 10-K, and a summary of our critical accounting policies is below. We consider these policies to be critical because they involve estimates and assumptions that require complex, subjective or significant judgments in their application and that materially affect our results of operations. There were no material changes in our critical accounting policies during the year ended December 31, 2022.

Purchase Price Allocation

When we acquire real estate, we allocate the purchase price to: (i) the tangible assets acquired and liabilities assumed, consisting primarily of land, improvements (including irrigation and drainage systems), permanent plantings, and farm-related facilities and, if applicable, (ii) any identifiable intangible assets and liabilities, which primarily consist of the values of above- and below-market leases, in-place lease values, lease origination costs, and tenant relationships, based in each case on their fair values.

Certain of our acquisitions involve sale-leaseback transactions with newly-originated leases, and other of our acquisitions involve the acquisition of farmland that is already being operated as rental property, in which case we will typically assume the lease in place at the time of acquisition. We generally consider both types of acquisitions to be asset acquisitions under ASC 360, “Property Plant and Equipment,” which requires us to capitalize the transaction costs incurred in connection with the acquisition. ASC 360 further requires that the purchase price of real estate be allocated to (i) the tangible assets acquired and

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liabilities assumed, and, if applicable, (ii) any identifiable intangible assets and liabilities, by valuing the property as if it was vacant, based on management’s determination of the relative fair values of such assets and liabilities as of the date of acquisition.

For a more detailed discussion on this accounting policy, see Note 2, “Summary of Significant Accounting Policies—Real Estate and Lease Intangibles,” in the accompanying notes to our consolidated financial statements.

Recently-Issued Accounting Pronouncements

See Note 2, “Summary of Significant Accounting Policies—Recently-Issued Accounting Pronouncements,” in the accompanying notes to our consolidated financial statements for a description of recently-issued accounting pronouncements.

RESULTS OF OPERATIONS

For the purposes of the following discussions on certain operating revenues and expenses with regard to the comparison between the years ended December 31, 2022 and 2021:

▪Same-property basis represents farms owned as of December 31, 2020, and were not vacant at any point during either period presented; and

▪Properties acquired or disposed of are farms that were either acquired or disposed of at any point subsequent to December 31, 2020. From January 1, 2021, through December 31, 2022, we acquired 32 new farms and did not have any farm dispositions.

We did not have any vacant or self-operated farms during either of the years ended December 31, 2022 or 2021.

A comparison of results of components comprising our operating income for the years ended December 31, 2022 and 2021 is below (dollars in thousands):

[[GREPCENT_TABLE]]
[["","For the Years Ended December 31,"],["","2022","","2021","","$ Change","","% Change"],["Operating revenues:"],["Lease revenues:"],["Fixed lease payments","$","81,423","","","$","69,998","","","$","11,425","","","16.3%"],["Variable lease payments \u2013 participation rents","7,703","","","5,219","","","2,484","","","47.6%"],["Variable lease payments \u2013 tenant reimbursements","110","","","101","","","9","","","8.9%"],["Total operating revenues","89,236","","","75,318","","","13,918","","","18.5%"],["Operating expenses:"],["Depreciation and amortization","35,366","","","27,183","","","8,183","","","30.1%"],["Property operating expenses","2,819","","","2,536","","","283","","","11.2%"],["Base management and incentive fees","11,532","","","10,230","","","1,302","","","12.7%"],["Administration fee","2,005","","","1,526","","","479","","","31.4%"],["General and administrative expenses","2,740","","","2,139","","","601","","","28.1%"],["Write-off of costs associated with offering of Series C cumulative redeemable preferred stock","853","","","\u2014","","","853","","","NM"],["Total operating expenses","55,315","","","43,614","","","11,701","","","26.8%"],["Operating income","$","33,921","","","$","31,704","","","$","2,217","","","7.0%"]]
[[/GREPCENT_TABLE]]

NM = Not Meaningful

Operating Revenues

Lease Revenues

The following table provides a summary of our lease revenues during the years ended December 31, 2022 and 2021 (dollars in thousands):

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[[GREPCENT_TABLE]]
[["","For the Years Ended December 31,"],["","2022","","2021","","$ Change","","% Change"],["Same-property basis:"],["Fixed lease payments","$","62,868","","","$","64,212","","","$","(1,344)","","","(2.1)%"],["Participation rents","6,351","","","4,589","","","1,762","","","38.4%"],["Total \u2013 Same-property basis","69,219","","","68,801","","","418","","","0.6%"],["Properties acquired or disposed of:"],["Fixed lease payments","18,555","","","5,786","","","12,769","","","220.7%"],["Participation rents","1,352","","","630","","","722","","","114.6%"],["Total \u2013 Properties acquired or disposed of","19,907","","","6,416","","","13,491","","","210.3%"],["Tenant reimbursements(1)","110","","","101","","","9","","","8.9%"],["Total Lease revenues","$","89,236","","","$","75,318","","","$","13,918","","","18.5%"]]
[[/GREPCENT_TABLE]]

(1)Tenant reimbursements generally represent tenant-reimbursed property operating expenses on certain of our farms, including property taxes, insurance premiums, and other property-related expenses. Similar amounts were also recorded as property operating expenses during the respective periods.

Same-property Basis – 2022 compared to 2021

Lease revenues from fixed lease payments decreased primarily due to revenue from six leases (collectively leased to two separate tenants) being recognized on a cash basis during the year ended December 31, 2022, rather than a straight-line basis (as prescribed under GAAP) due to full collectability of future rental payments under the respective leases deemed not to be probable as a result of tenant credit issues. During the year ended December 31, 2022, we recognized aggregate fixed lease payments from these six leases of approximately $227,000, as compared to approximately $1.6 million during the prior year. See above under “—Recent Developments—Portfolio Activity—Existing Properties—Leasing Activity” for further discussion on these leases. The decrease in lease revenues from fixed lease payments was also attributable to certain lease amendments and renewals executed, through which we decreased the fixed base rent component in exchange for either adding a participation rent component to the lease structure or reducing certain operating expenses for which the landlord was previously responsible. These decreases in fixed lease payments were partially offset by certain new leases, amendments, and renewals executed at higher rental rates and additional rents earned on capital improvements completed on certain of our farms.

The increase in participation rents was primarily driven by strong production (i.e., pounds per acre) on many of our pistachio farms coupled with continued strong demand for the crop, partially offset by weaker almond prices, as the almond market continued to be hampered with oversupply exacerbated by supply chain disruptions that occurred during the height of the COVID-19 pandemic.

Other – 2022 compared to 2021

Lease revenue from properties acquired or disposed of increased primarily due to additional revenues earned on new farms acquired subsequent to December 31, 2020.

The fluctuations in tenant reimbursement revenue are primarily driven by payments made by certain tenants on our behalf (pursuant to the lease agreements) to unconsolidated entities of ours that convey water to the respective properties. As such, the timing of tenant reimbursement revenue fluctuates as payments are made by our tenants.

Operating Expenses

Depreciation and Amortization

Depreciation and amortization expense increased primarily due to additional depreciation and amortization expense incurred on new farms acquired subsequent to December 31, 2020, as well as an increase in depreciation associated with additional capital expenditures on certain of our farms. The increase was partially offset by a decrease attributable to asset dispositions on certain of our farms and the expiration of certain lease intangible amortization periods.

Property-operating Expenses

Property operating expenses consist primarily of real estate taxes, repair and maintenance expense, insurance premiums, and other miscellaneous operating expenses paid for certain of our properties. The following table provides a summary of the property-operating expenses recorded during the years ended December 31, 2022 and 2021 (dollars in thousands):

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[[GREPCENT_TABLE]]
[["","For the Years Ended December 31,"],["","2022","","2021","","$ Change","","% Change"],["Same-property basis","$","2,502","","","$","2,352","","","$","150","","","6.4%"],["Properties acquired or disposed of","209","","","84","","","125","","","148.8%"],["Tenant-reimbursed property operating expenses(1)","108","","","100","","","8","","","8.0%"],["Total Property operating expenses","$","2,819","","","$","2,536","","","$","283","","","11.2%"]]
[[/GREPCENT_TABLE]]

(1)Represents certain operating expenses (property taxes, insurance premiums, and other property-related expenses) paid by us that, per the respective leases, are required to be reimbursed to us by the tenant. Similar amounts are also recorded as lease revenue when earned in accordance with the lease.

Same-property Basis – 2022 compared to 2021

Property operating expenses increased primarily due to higher property tax expenses, as well as additional legal fees incurred in connection with protecting water rights on certain farms in California. This increase was partially offset by a decrease in costs associated with our limited obligation to reimburse one of our tenants for certain water usage in accordance with the lease terms during the prior-year period, which obligation expired on December 31, 2021.

Other – 2022 compared to 2021

Property operating expenses on properties acquired or disposed of increased primarily due to additional miscellaneous property-operating expenses incurred on certain of the new farms we acquired subsequent to December 31, 2020.

The fluctuations in tenant-reimbursed property operating expenses are primarily driven by miscellaneous property operating costs incurred by us in connection with our ownership interests in certain unconsolidated entities, for which our tenants are contractually obligated to reimburse us under the terms of the respective leases. Such expenses will fluctuate commensurate with the timing and amount of miscellaneous operating costs incurred by the underlying entities.

Related-Party Fees

The following table provides the calculations of the base management and incentive fees due to our Advisor pursuant to the Prior Advisory Agreement (which was in effect from January 1, 2020, through June 30, 2021) and the Current Advisory Agreement (which has been in effect since July 1, 2021) for the years ended December 31, 2022 and 2021 (dollars in thousands; for further discussion on certain defined terms used below, refer to Note 6, “Related-Party Transactions,” within the accompanying notes to our condensed consolidated financial statements):

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[[GREPCENT_TABLE]]
[["","Quarters Ended","","Year to Date"],["","March 31","","June 30","","September 30","","December 31"],["FY 2022 Fee Calculations:"],["Base Management Fee:"],["Gross Tangible Real Estate(1)(2)","$","1,357,800","","","$","1,361,757","","","$","1,390,646","","","$1,427,482"],["Quarterly rate","0.150","%","","0.150","%","","0.150","%","","0.150","%"],["Base management fee(3)","$","2,037","","","$","2,043","","","$","2,086","","","$","2,141","","","$","8,307"],["Incentive Fee:"],["Total Adjusted Common Equity(1)(2)","$","378,299","","","$","381,201","","","$","364,955","","","$","361,186"],["First hurdle quarterly rate","1.750","%","","1.750","%","","1.750","%","","1.750","%"],["First hurdle threshold","$","6,620","","","$","6,671","","","$","6,387","","","$","6,321"],["Second hurdle quarterly rate","2.1875","%","","2.1875","%","","2.1875","%","","2.1875","%"],["Second hurdle threshold","$","8,275","","","$","8,339","","","$","7,983","","","$","7,901"],["Pre-Incentive Fee FFO(1)","$","7,751","","","$","4,819","","","$","6,892","","","$","7,944"],["100% of Pre-Incentive Fee FFO in excess of first hurdle threshold, up to second hurdle threshold","$","1,131","","","$","\u2014","","","$","505","","","$","1,580"],["20% of Pre-Incentive Fee FFO in excess of second hurdle threshold","\u2014","","","\u2014","","","\u2014","","","9"],["Total Incentive fee(3)","$","1,131","","","$","\u2014","","","$","505","","","$","1,589","","","$","3,225"],["Total fees due to Adviser, net","$","3,168","","","$","2,043","","","$","2,591","","","$","3,730","","","$","11,532"],["FY 2021 Fee Calculations:"],["Base Management Fee:"],["Gross Tangible Real Estate(1)(2)","$","1,095,439","","","$","1,101,071","","","$","1,165,366","","","$","1,223,935"],["Quarterly rate","0.125","%","","0.125","%","","0.150","%","","0.150","%"],["Base management fee(3)","$","1,370","","","$","1,376","","","$","1,748","","","$","1,835","","","$","6,329"],["Incentive Fee:"],["Total Adjusted Common Equity(1)(2)","$","228,161","","","$","248,501","","","$","304,164","","","$","334,912"],["First hurdle quarterly rate","1.750","%","","1.750","%","","1.750","%","","1.750","%"],["First hurdle threshold","$","3,993","","","$","4,349","","","$","5,323","","","$","5,861"],["Second hurdle quarterly rate","2.1875","%","","2.1875","%","","2.1875","%","","2.1875","%"],["Second hurdle threshold","$","4,991","","","$","5,436","","","$","6,654","","","$","7,326"],["Pre-Incentive Fee FFO(1)","$","5,810","","","$","3,867","","","$","6,268","","","$","8,968"],["100% of Pre-Incentive Fee FFO in excess of first hurdle threshold, up to second hurdle threshold","$","998","","","$","\u2014","","","$","945","","","$","1,466"],["20% of Pre-Incentive Fee FFO in excess of second hurdle threshold","164","","","\u2014","","","\u2014","","","328"],["Total Incentive fee(3)","$","1,162","","","$","\u2014","","","$","945","","","$","1,794","","","$","3,901"],["Total fees due to Adviser, net","$","2,532","","","$","1,376","","","$","2,693","","","$","3,629","","","$","10,230"]]
[[/GREPCENT_TABLE]]

(1)As defined in the Advisory Agreements.

(2)As of the end of the respective prior quarters.

(3)Reflected as a line item on our accompanying Consolidated Statements of Operations and Comprehensive Income.

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The base management fee increased primarily due to additional assets acquired since December 31, 2020, and an increase in the annual rate applied to the prior calendar quarter’s Gross Tangible Real Estate Assets (from 0.50% pursuant to the Prior Advisory Agreement to 0.60% pursuant to the Current Advisory Agreement), effective July 1, 2021.

Our Adviser earned incentive fees during each of the years ended December 31, 2022 and 2021 due to our Pre-Incentive Fee FFO (as defined in the Advisory Agreements) exceeding the required hurdle rate of the applicable equity base during each of the first, third, and fourth quarters of fiscal years 2022 and 2021.

The administration fee paid to our Administrator increased primarily due to hiring additional personnel and us using a higher overall share of our Administrator’s resources in relation to those used by other funds and affiliated companies serviced by our Administrator.

Other Operating Expenses

General and administrative expenses consist primarily of professional fees, director fees, stockholder-related expenses, overhead insurance, acquisition-related costs for investments no longer being pursued, and other miscellaneous expenses. General and administrative expenses increased during the year ended December 31, 2022, primarily due to an increase in professional fees (driven by higher audit fees and appraisal costs) and an increase in acquisition-related costs for investments no longer being pursued.

During the year ended December 31, 2022, we wrote off approximately $853,000 of costs (including approximately $798,000 of unamortized deferred offering costs) related to the Series C Offering due to an amendment that reduced the number of shares of Series C Preferred Stock to be offered. See Note 8, “Equity - Equity Issuances - Series C Preferred Stock,” in the accompanying notes to our condensed consolidated financial statements for additional discussion of the amendment of the Series C Offering.

A comparison of results of other components contributing to net loss attributable to common stockholders for the years ended December 31, 2022 and 2021 is below (dollars in thousands):

[[GREPCENT_TABLE]]
[["","For the Years Ended December 31,"],["","2022","","2021","","$ Change","","% Change"],["Operating income","$33,921","","$31,704","","$2,217","","7.0%"],["Other income (expense)"],["Other income","3,441","","","2,291","","","1,150","","","50.2%"],["Interest expense","(25,738)","","","(24,883)","","","(855)","","","3.4%"],["Dividends declared on Series A and Series D Term Preferred Stock","(3,019)","","","(3,068)","","","49","","","(1.6)%"],["Loss on dispositions of real estate assets, net","(3,760)","","","(2,537)","","","(1,223)","","","48.2%"],["Property and casualty (loss) recovery, net","(56)","","","68","","","(124)","","","(182.4)%"],["Loss from investments in unconsolidated entities","(73)","","","(61)","","","(12)","","","19.7%"],["Total other expense, net","(29,205)","","","(28,190)","","","(1,015)","","","3.6%"],["Net income","4,716","","","3,514","","","1,202","","","34.2%"],["Net income attributable to non-controlling interests","(8)","","","(19)","","","11","","","(57.9)%"],["Net income attributable to the Company","4,708","","","3,495","","","1,213","","","34.7%"],["Aggregate dividends declared on and charges related to extinguishment of Series B and Series C cumulative redeemable preferred stock","(19,718)","","","(12,258)","","","(7,460)","","","60.9%"],["Net loss attributable to common stockholders","$","(15,010)","","","$","(8,763)","","","$","(6,247)","","","71.3%"]]
[[/GREPCENT_TABLE]]

Other Income (Expense)

Other income, which generally consists of interest patronage received from Farm Credit (as defined in Note 4, “Borrowings,” in the accompanying notes to our consolidated financial statements) and interest earned on short-term investments, increased primarily driven by additional interest patronage received from Farm Credit (primarily due to increased borrowings from Farm Credit) and higher interest rates earned on short-term investments.

During the three months ended March 31, 2022, we recorded approximately $2.8 million of interest patronage from Farm Credit related to interest accrued during 2021, and during the three months ended September 30, 2022, we received approximately $113,000 of interest patronage, as certain Farm Credit associations paid a portion of the 2022 interest patronage (which relates to interest accrued during 2022 but is typically paid during the first half of 2023) early. In the aggregate, we

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recorded approximately $2.9 million of interest patronage from Farm Credit during the year ended December 31, 2022, as compared to approximately $2.2 million of interest patronage recorded during the prior-year period. 2021 interest patronage (which was recorded during the three months ended March 31, 2022), resulted in a 29.9% reduction (approximately 137 basis points) to the interest rate of such borrowings.

Interest expense increased primarily due to increased overall borrowings. The weighted- average principal balance of our aggregate borrowings (excluding our Series A Term Preferred Stock and Series D Term Preferred Stock) outstanding for the year ended December 31, 2022, was approximately $654.7 million, as compared to approximately $637.6 million for the prior-year period. Excluding interest patronage received on certain of our Farm Credit borrowings and the impact of debt issuance costs, the overall effective interest rate charged on our aggregate borrowings was 3.77% and 3.72% for the years ended December 31, 2022 and 2021, respectively.

Losses on dispositions of real estate assets related to the disposals of certain irrigation and other improvements on certain of our farms.

The net property and casualty (loss) recovery related to net expenses incurred and insurance recoveries received for certain improvements that were damaged due to natural disasters.

The aggregate dividends paid on our Series B Preferred Stock and Series C Preferred Stock increased due to additional shares issued and outstanding during the current year.

Comparison of Results of Operations for the Years Ended December 31, 2021 and 2020

A comparison of our operating results for the years ended December 31, 2021 and 2020 was included in our Annual Report on Form 10-K for the year ended December 31, 2021, beginning on page 43 under Part II, Item 7, “Management’s Discussion and Analysis of Financial Position and Results of Operations,” which was filed with the Securities and Exchange Commission, or SEC, on February 22, 2022.

LIQUIDITY AND CAPITAL RESOURCES

Overview

Our current short- and long-term sources of funds include cash and cash equivalents, cash flows from operations, borrowings (including the undrawn commitments available under the Current MetLife Facility), and issuances of additional equity securities. Our current available liquidity is approximately $206.4 million, consisting of approximately $56.7 million in cash on hand and, based on the current level of collateral pledged, approximately $149.7 million of availability under the Current MetLife Facility (subject to compliance with covenants) and other undrawn notes or bonds. In addition, we currently have certain properties valued at a total of approximately $92.1 million that are unencumbered and eligible to be pledged as collateral.

Over 99.8% of our borrowings are currently at fixed rates, and on a weighted-average basis, these rates are fixed at an effective interest rate (after interest patronage) of 3.26% for another 4.9 years. In addition, the weighted-average remaining term of our notes and bonds payable is approximately 9.4 years. As such, with respect to our current borrowings, we have experienced minimal impact from the recent increases in interest rates, and we believe we are well-protected against any future interest rate increases. Despite ongoing volatility in the markets, based on discussions with our lenders, we do not believe there will be a credit freeze on agricultural lending in the near term. We are in compliance with all of our debt covenants under our respective credit facilities and borrowings, and we believe we currently have adequate liquidity to cover all near- and long-term debt obligations and operating expenses.

Future Capital Needs

Our short- and long-term liquidity requirements consist primarily of making principal and interest payments on outstanding borrowings; funding our general operating costs; making dividend payments on our Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, and Series E Preferred Stock; making distributions to stockholders (including non-controlling OP Unitholders, if any) to maintain our qualification as a REIT; and, as capital is available, funding capital improvements on existing farms and new farmland and farm-related acquisitions consistent with our investment strategy.

In the near term, we believe that our current and short-term cash resources will be sufficient to service our debt; fund our current operating costs; pay dividends on our Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, and Series E Preferred Stock; and fund our distributions to stockholders (including non-controlling OP Unitholders). We expect to meet our long-term liquidity requirements through various sources of capital, including long-term mortgage indebtedness and bond issuances, future equity issuances (including, but not limited to, shares of our Series E Preferred Stock,

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OP Units through our Operating Partnership as consideration for future acquisitions, and shares of common stock through our ATM Program), and other secured and unsecured borrowings.

We intend to use a significant portion of any current and future available liquidity to purchase additional farms and farm-related facilities. We continue to actively seek and evaluate acquisitions of additional farms and farm-related facilities that satisfy our investment criteria, and we have several properties that are in various stages of our due diligence process. However, all potential acquisitions will be subject to our due diligence investigation of such properties, and there can be no assurance that we will be successful in identifying or acquiring any properties in the future.

Operating Commitments and Obligations

See Note 7, “Commitments and Contingencies,” in the accompanying notes to our consolidated financial statements for additional discussion around certain operating and ground lease obligations.

Cash Flow Resources

The following table summarizes total net cash flows for operating, investing, and financing activities for the years ended December 31, 2022 and 2021 (dollars in thousands):

[[GREPCENT_TABLE]]
[["","For the Years Ended December 31,"],["","2022","","2021","","","","$ Change","","% Change"],["Net change in cash from:"],["Operating activities","$","43,788","","","$","32,377","","","","","$","11,411","","","35.2%"],["Investing activities","(85,484)","","","(295,001)","","","","","209,517","","","71.0%"],["Financing activities","86,129","","","270,114","","","","","(183,985)","","","(68.1)%"],["Net change in Cash and cash equivalents","$","44,433","","","$","7,490","","","","","$","36,943","","","493.2%"]]
[[/GREPCENT_TABLE]]

Operating Activities

The majority of cash from operating activities is generated from the rental payments we receive from our tenants, which is first used to fund our property-level operating expenses, with any excess cash being primarily used for principal and interest payments on our borrowings, management fees to our Adviser, administrative fees to our Administrator, and other corporate-level expenses. Cash provided by operating activities increased primarily due to additional rental payments received from tenants and interest patronage received from Farm Credit, partially offset by an increase in fees paid to our Advisor and increases in the amount of interest payments made.

Investing Activities

The decrease in cash used in investing activities was primarily due to a decrease in aggregate cash paid for acquisitions of new farms, partially offset by an increase in the amount of cash paid for capital improvements on existing farms during the current year.

Financing Activities

The decrease in cash provided by financing activities was primarily due to a decrease in aggregate net borrowings of approximately $85.7 million, the issuance of our Series D Term Preferred Stock in the first quarter of 2021 (which, after voluntarily redeeming our Series A Term Preferred Stock in full, resulted in net cash proceeds of approximately $31.6 million), a decrease in aggregate net cash proceeds received from equity offerings (including our common stock and the Series C Preferred Stock) of approximately $52.4 million, and an increase in aggregate distributions paid on our preferred stock (including our Series B Preferred Stock and our Series C Preferred Stock) and common stock of approximately $7.7 million. In addition, during the year ended December 31, 2022, we paid approximately $7.7 million to redeem 204,778 OP Units.

Debt Capital

MetLife Facility

The Current MetLife Facility currently consists of an aggregate of $75.0 million of revolving equity lines of credit and an aggregate of $175.0 million of term notes. We currently have $100,000 outstanding under the lines of credit and $36.9 million outstanding on the term notes. While $213.0 million of the full commitment amount under the Current MetLife Facility remains undrawn, based on the current level of collateral pledged, we currently have approximately $110.3 million of

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availability under the Current MetLife Facility. The draw period for both term notes expires on December 31, 2024, after which MetLife has no obligation to disburse any additional undrawn funds under the term notes.

Farmer Mac Facility

Our agreement with Farmer Mac provides for bond issuances up to an aggregate amount of $225.0 million (the “Farmer Mac Facility”) by May 31, 2023, after which, Farmer Mac has no obligation to purchase additional bonds under this facility. To date, we have issued aggregate bonds of approximately $100.1 million under the Farmer Mac Facility.

Farm Credit and Other Lenders

Since September 2014, we have closed on multiple loans with various different Farm Credit associations (for additional information on these associations, see Note 4, “Borrowings,” within the accompanying notes to our consolidated financial statements). We also have borrowing relationships with several other agricultural lenders and are continuously reaching out to other lenders to establish prospective new relationships. In addition, we expect to enter into additional borrowing agreements with existing and new lenders in connection with certain potential new acquisitions in the future.

Equity Capital

The following table provides information on equity sales that have occurred since January 1, 2022 (dollars in thousands, except per-share amounts):

[[GREPCENT_TABLE]]
[["Type of Issuance","","Number of Shares Sold","","Weighted-average Offering Price Per Share","","Gross Proceeds","","Net Proceeds(1)"],["Series C Preferred Stock(2)","","6,701,987","","$","24.76","","","$","165,941","","","$","152,470"],["Series E Preferred Stock","","34,600","","24.96","","","864","","","779"],["Common Stock \u2013 ATM Program","","1,503,969","","23.49","","","35,325","","","34,946"]]
[[/GREPCENT_TABLE]]

(1)Net of selling commissions and dealer-manager fees or underwriting discounts and commissions (in each case, as applicable).

(2)Excludes share redemptions and shares issued pursuant to the DRIP.

Our Registration Statement (as defined in Note 8, “Equity—Registration Statement,” within the accompanying notes to our consolidated financial statements) permits us to issue up to an aggregate of $1.0 billion in securities, consisting of common stock, preferred stock, warrants, debt securities, depository shares, subscription rights, and units, including through separate, concurrent offerings of two or more of such securities. To date, we have issued approximately $253.8 million of Series C Preferred Stock (including $1.2 million issued pursuant to the DRIP), $60.4 million of Series D Term Preferred Stock, $864,000 of Series E Preferred Stock, and $280.9 million of common stock (including common stock issued to redeem OP Units) under the Registration Statement.

In addition, we have the ability to, and expect to in the future, issue additional OP Units to third parties as consideration in future property acquisitions.

Off-Balance Sheet Arrangements

As of December 31, 2022 , we did not have any off-balance sheet arrangements.

NON-GAAP FINANCIAL INFORMATION

Funds from Operations, Core Funds from Operations, and Adjusted Funds from Operations

The National Association of Real Estate Investment Trusts (“NAREIT”) developed funds from operations (“FFO”) as a relative non-GAAP supplemental measure of operating performance of an equity REIT to recognize that income-producing real estate historically has not depreciated on the same basis as determined under GAAP. FFO, as defined by NAREIT, is net income (computed in accordance with GAAP), excluding gains or losses from sales of property and impairment losses on property, plus depreciation and amortization of real estate assets, and after adjustments for unconsolidated partnerships and joint ventures. We further present core FFO (“CFFO”) and adjusted FFO (“AFFO”) as additional non-GAAP financial measures of our operational performance, as we believe both CFFO and AFFO improve comparability on a period-over-period basis and are more useful supplemental metrics for investors to use in assessing our operational performance on a more sustainable basis than FFO. We believe that these additional performance metrics, along with the most directly-comparable GAAP measure, provide investors with helpful insight regarding how management measures our ongoing performance, as each of CFFO and AFFO (and their respective per-share amounts) are used by management and our board of directors, as appropriate, in assessing overall performance, as well as in certain decision-making analysis, including, but not limited to, the timing of acquisitions and

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potential equity raises (and the type of securities to offer in any such equity raises), the determination of any fee credits, and declarations of distributions on our common stock. The non-GAAP financial measures presented herein have limitations as analytical tools and should not be considered in isolation or as a substitute for an analysis of our results calculated in accordance with GAAP. We believe that net income is the most directly-comparable GAAP measure to each of FFO, CFFO, and AFFO.

Specifically, we believe that FFO is helpful to investors in better understanding our operating performance, primarily because its calculation excludes depreciation and amortization expense on real estate assets, as we believe that GAAP historical cost depreciation of real estate assets is generally not correlated with changes in the value of those assets, particularly with farmland real estate, the value of which does not diminish in a predictable manner over time, as historical cost depreciation implies. Further, we believe that CFFO and AFFO are helpful in understanding our operating performance in that it removes certain items that, by their nature, are not comparable on a period-over-period basis and therefore tend to obscure actual operating performance. In addition, we believe that providing CFFO and AFFO as additional performance metrics allows investors to gauge our overall performance in a manner that is more similar to how our performance is measured by management (including their respective per-share amounts), as well as by analysts and the overall investment community.

We calculate CFFO by adjusting FFO for the following items:

•Acquisition- and disposition-related expenses. Acquisition- and disposition-related expenses (including due diligence costs on acquisitions not consummated and certain auditing and accounting fees incurred that were directly related to completed acquisitions or dispositions) are incurred for investment purposes and do not correlate with the ongoing operations of our existing portfolio. Further, certain auditing and accounting fees incurred vary depending on the number and complexity of acquisitions or dispositions completed during the period. Due to the inconsistency in which these costs are incurred and how they have historically been treated for accounting purposes, we believe the exclusion of these expenses improves comparability of our operating results on a period-to-period basis.

•Other adjustments. We will adjust for certain non-recurring charges and receipts and will explain such adjustments accordingly. We believe the exclusion of these amounts improves comparability of our operating results on a period-to-period basis and will apply consistent definitions of CFFO for all prior-year periods presented to provide consistency and better comparability.

Further, we calculate AFFO by adjusting CFFO for the following items:

•Rent adjustments. This adjustment removes the effects of straight-lining rental income, as well as the amortization related to above-market lease values and lease incentives and accretion related to below-market lease values, other deferred revenue, and tenant improvements, resulting in rental income reflected on a modified accrual cash basis. In addition to these adjustments, we also modify the calculation of cash rents within our definition of AFFO to provide greater consistency and comparability due to the period-to-period volatility in which cash rents are received. To coincide with our tenants’ harvest seasons, our leases typically provide for cash rents to be paid at various points throughout the lease year, usually annually or semi-annually. As a result, cash rents received during a particular period may not necessarily be comparable to other periods or represent the cash rents indicative of a given lease year. Therefore, we further adjust AFFO to normalize the cash rent received pertaining to a lease year over that respective lease year on a straight-line basis, resulting in cash rent being recognized ratably over the period in which the cash rent is earned.

•Amortization of debt issuance costs. The amortization of costs incurred to obtain financing is excluded from AFFO, as it is a non-cash expense item that is not directly related to the operating performance of our properties.

•Other adjustments. We will adjust for certain non-cash charges and receipts and will explain such adjustments accordingly. We believe the exclusion of such non-cash amounts improves comparability of our operating results on a period-to-period basis and will apply consistent definitions of AFFO for all prior-year periods presented to provide consistency and better comparability.

We believe the foregoing adjustments aid our investors’ understanding of our ongoing operational performance.

FFO, CFFO and AFFO do not represent cash flows from operating activities in accordance with GAAP, which, unlike FFO, CFFO, and AFFO, generally reflects all cash effects of transactions and other events in the determination of net income, and should not be considered an alternative to net income as an indication of our performance or to cash flows from operations as a measure of liquidity or ability to make distributions. Comparisons of FFO, CFFO, and AFFO, using the NAREIT definition for FFO and the definitions above for CFFO and AFFO, to similarly-titled measures for other REITs may not necessarily be meaningful due to possible differences in the definitions used by such REITs.

Diluted funds from operations (“Diluted FFO”), diluted core funds from operations (“Diluted CFFO”), and diluted adjusted funds from operations (“Diluted AFFO”) per share are FFO, CFFO, and AFFO, respectively, divided by the weighted-average

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number of total shares (including shares of our common stock and OP Units held by non-controlling limited partners) outstanding on a fully-diluted basis during a period. We believe that diluted earnings per share is the most directly-comparable GAAP measure to each of Diluted FFO, CFFO, and AFFO per share. Because many REITs provide Diluted FFO, CFFO, and AFFO per share information to the investment community, we believe these are useful supplemental measures when comparing us to other REITs.

We believe that FFO, CFFO, and AFFO and Diluted FFO, CFFO, and AFFO per share are useful to investors because they provide investors with a further context for evaluating our FFO, CFFO, and AFFO results in the same manner that investors use net income and EPS in evaluating net income.

The following table provides a reconciliation of our FFO, CFFO, and AFFO for the years ended December 31, 2022, 2021, and 2020 to the most directly-comparable GAAP measure, net income, and a computation of diluted FFO, CFFO, and AFFO per share, using the weighted-average number of total shares (including shares of our common stock and OP Units held by non-controlling OP Unitholders) outstanding during the respective periods (dollars in thousands, except per-share amounts):

[[GREPCENT_TABLE]]
[["","","","For the Years Ended December 31,"],["","","","","","2022","","2021","","2020"],["Net income","","","","","$","4,716","","","$","3,514","","","$","4,955"],["Less: Aggregate dividends declared on and charges related to extinguishment of Series B Preferred Stock and Series C Preferred Stock(1)","","","","","(19,718)","","","(12,258)","","","(9,322)"],["Net loss attributable to common stockholders and non-controlling OP Unitholders","","","","","(15,002)","","","(8,744)","","","(4,367)"],["Plus: Real estate and intangible depreciation and amortization","","","","","35,366","","","27,183","","","16,655"],["Plus: Losses on dispositions of real estate assets, net","","","","","3,760","","","2,537","","","2,180"],["Adjustments for unconsolidated entities(2)","","","","","57","","","36","","","18"],["FFO available to common stockholders and non-controlling OP Unitholders","","","","","24,181","","","21,012","","","14,486"],["Plus: Acquisition- and disposition-related expenses","","","","","438","","","355","","","210"],["Plus (less): Other nonrecurring charges (receipts), net(3)","","","","","1,023","","","(12)","","","159"],["CFFO available to common stockholders and non-controlling OP Unitholders","","","","","25,642","","","21,355","","","14,855"],["Net rent adjustments","","","","","(2,835)","","","(2,371)","","","(1,305)"],["Plus: Amortization of debt issuance costs","","","","","1,085","","","1,172","","","756"],["Plus: Other non-cash charges, net(4)","","","","","907","","","246","","","40"],["AFFO available to common stockholders and non-controlling OP Unitholders","","","","","$","24,799","","","$","20,402","","","$","14,346"],["Weighted-average common stock outstanding\u2014basic and diluted","","","","","34,563,460","","","30,357,268","","","22,258,121"],["Weighted-average common non-controlling OP Units outstanding","","","","","61,714","","","166,067","","","131,745"],["Weighted-average total common shares outstanding","","","","","34,625,174","","","30,523,335","","","22,389,866"],["Diluted FFO per weighted-average total common share","","","","","$","0.70","","","$","0.69","","","$","0.65"],["Diluted CFFO per weighted-average total common share","","","","","$","0.74","","","$","0.70","","","$","0.66"],["Diluted AFFO per weighted-average total common share","","","","","$","0.72","","","$","0.67","","","$","0.64"],["Distributions declared per total common share","","","","","$","0.55","","","$","0.54","","","$","0.54"]]
[[/GREPCENT_TABLE]]

(1)Includes (i) cash dividends paid on our Series B Preferred Stock and Series C Preferred Stock, (ii) the value of additional shares of Series C Preferred Stock issued pursuant to the DRIP, and (iii) the pro-rata write-off of offering costs related to shares of Series B Preferred Stock and Series C Preferred Stock that were redeemed during the respective periods.

(2)Represents our pro-rata share of depreciation expense recorded in unconsolidated entities during the respective periods.

(3)Consists primarily of (i) costs related to the reduction in size of the Series C Offering that were expensed during the year ended December 31, 2022, (ii) net property and casualty losses (recoveries) recorded and the cost of related repairs expensed as a result of damage caused to certain improvements by natural disasters on certain of our farms, (iii) one-time listing fees related to our Series D Term Preferred Stock, (iv) certain one-time costs related to the early redemption of our Series A Term Preferred Stock, and (v) for 2020 only, the write-off of certain unallocated costs related to a prior universal registration statement and costs expensed during the year related to an aborted offering.

(4)Consists of (i) the amount of dividends on the Series C Preferred Stock paid via issuing new shares (pursuant to the DRIP), (ii) the pro-rata write-off of offering costs related to shares of the Series B Preferred Stock and Series C Preferred Stock that were redeemed, which were noncash charges, and (iii) our remaining pro-rata share of (income) loss recorded from investments in unconsolidated entities during the respective periods.

Net Asset Value

Real estate companies are required to record real estate using the historical cost basis of the real estate, adjusted for accumulated depreciation and amortization, and, as a result, the carrying value of the real estate does not typically change as the

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fair value of the assets change. Thus, one challenge is determining the fair value of the real estate in order to allow stockholders to see the value of the real estate increase or decrease over time, which we believe is useful to our investors.

Determination of Fair Value

Our Board of Directors reviews and approves the valuations of our properties pursuant to a valuation policy approved by our Board of Directors (the “Valuation Policy”). Such review and approval occurs in three phases: (i) prior to its quarterly meetings, the Board of Directors receives written valuation recommendations and supporting materials that are provided by professionals of the Adviser and Administrator, with oversight and direction from the chief valuation officer, who is also employed by the Administrator (collectively, the “Valuation Team”); (ii) the valuation committee of the Board of Directors (the “Valuation Committee”), which is comprised entirely of independent directors, meets to review the valuation recommendations and supporting materials; and (iii) after the Valuation Committee concludes its meeting, it and the chief valuation officer present the Valuation Committee’s findings to the entire Board of Directors so that the full Board of Directors may review and approve the fair values of our properties in accordance with the Valuation Policy. Further, on a quarterly basis, the Board of Directors reviews the Valuation Policy to determine if changes thereto are advisable and also reviews whether the Valuation Team has applied the Valuation Policy consistently.

Per the Valuation Policy, our valuations are generally derived based on the following:

•For properties acquired within 12 months prior to the date of valuation, the purchase price of the property will generally be used as the current fair value unless overriding factors apply. In situations where OP Units are issued as partial or whole consideration in connection with the acquisition of a property, the fair value of the property will generally be the lower of: (i) the agreed-upon purchase price between the seller and the buyer (as shown in the purchase and sale agreement or contribution agreement and using the agreed-upon pricing of the OP Units, if applicable), or (ii) the value as determined by an independent, third-party appraiser.

•For real estate we acquired more than one year prior to the date of valuation, we determine the fair value either by relying on estimates provided by independent, third-party appraisers or through an internal valuation process. In addition, if significant capital improvements take place on a property, we will typically have those properties reappraised upon completion of the project by an independent, third-party appraiser. In any case, we intend to have each property valued by an independent, third-party appraiser via a full appraisal at least once every three years, with interim values generally being determined by either: (i) a restricted appraisal (a “desk appraisal”) performed by an independent, third-party appraiser, or (ii) our internal valuation process.

Various methodologies were used, both by the appraisers and in our internal valuations, to determine the fair value of our real estate, including the sales comparison, income capitalization (or a discounted cash flow analysis), and cost approaches of valuation. In performing their analyses, the appraisers typically (i) conducted site visits to the properties (where full appraisals were performed), (ii) discussed each property with our Adviser and reviewed property-level information, including, but not limited to, property operating data, prior appraisals (as available), existing lease agreements, farm acreage, location, access to water and water rights, potential for future development, and other property-level information, and (iii) reviewed information from a variety of sources about regional market conditions applicable to each of our properties, including, but not limited to, recent sale prices of comparable farmland, market rents for similar farmland, estimated marketing and exposure time, market capitalization rates, and the current economic environment, among others. In performing our internal valuations, we will consider the most recent appraisal available and use similar methodologies in determining an updated fair value. We will also obtain updated market data related to the property, such as updated sales and market rent comparisons and market capitalization rates, and perform an updated assessment of the tenants’ credit risk profiles, among others. Sources of this data may come from market inputs from recent acquisitions of our own portfolio of real estate, recent appraisals of properties we own that are similar in nature and in the same region (as applicable) as the property being valued, market conditions and trends we observe in our due diligence process, and conversations with appraisers, brokers, and farmers.

A breakdown of the methodologies used to value our properties and the aggregate value as of December 31, 2022, determined by each method is shown in the table below (dollars in thousands, except in footnotes):

[[GREPCENT_TABLE]]
[["Valuation Method","","Number of Farms","","Total Acres","","Farm Acres","","Acre-feet of Water","","Net CostBasis(1)","","Current Fair Value","","% of Total Fair Value"],["Purchase Price","","5","","3,134","","2,707","","\u2014","","$","64,026","","","$","64,928","","","4.1%"],["Internal Valuation","","3","","6,189","","4,730","","\u2014","","20,438","","","36,000","","","2.3%"],["Third-party Appraisal(2)","","161","","106,408","","88,701","","45,000","","1,286,100","","","1,467,344","","","93.6%"],["Total","","169","","115,731","","96,138","","45,000","","$","1,370,564","","","$","1,568,272","","","100.0%"]]
[[/GREPCENT_TABLE]]

(1)Consists of the initial acquisition price (including the costs allocated to both tangible and intangible assets acquired and liabilities assumed), plus subsequent improvements and other capitalized costs paid for by us that were associated with the properties, and adjusted for accumulated depreciation and amortization.

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(2)Appraisals performed between March 2022 and December 2022.

Some of the significant assumptions used by appraisers and the Valuation Team in valuing our portfolio as of December 31, 2022, include land values per farmable acre, market rental rates per farmable acre and the resulting net operating income (“NOI”) at the property level, and capitalization rates, among others. These assumptions were applied on a farm-by-farm basis and were selected based on several factors, including comparable land sales, surveys of both existing and current market rates, discussions with other brokers and farmers, soil quality, size, location, and other factors deemed appropriate. A summary of these significant assumptions is provided in the following table:

[[GREPCENT_TABLE]]
[["","Appraisal Assumptions","","Internal Valuation Assumptions"],["","Range (Low - High)","","Weighted Average","","Range (Low - High)","","Weighted Average"],["Land Value (per farmable acre)","$707 \u2013 $123,280","","$34,921","","$5,512 \u2013 $5,512","","$5,512"],["Market NOI (per farmable acre)","$25 \u2013 $4,215","","$2,078","","N/A","","N/A"],["Market Capitalization Rate","3.75% \u2013 10.50%","","5.40%","","N/A","","N/A"]]
[[/GREPCENT_TABLE]]

Note:        Figures in the table above apply only to the farmland portion of our portfolio and exclude assumptions made relating to farm-related facilities (e.g., cooling facilities), and other structures on our properties (e.g., residential housing), as their aggregate value was considered to be insignificant in relation to that of the farmland.

Our Valuation Team reviews the appraisals, including the significant assumptions and inputs used in determining the appraised values, and considers any developments that may have occurred since the time the appraisals were performed. Developments considered that may have an impact on the fair value of our real estate include, but are not limited to, changes in tenant credit profiles, changes in lease terms (such as expirations and notices of non-renewals or to vacate), and potential asset sales (particularly those at prices different from the appraised values of our properties).

Management believes that the purchase prices of the farms acquired during the previous 12 months and the most recent appraisals available for the farms acquired prior to the previous 12 months fairly represent the current market values of the properties as of December 31, 2022, and, accordingly, did not make any adjustment to these values.

A quarterly roll-forward of the change in our portfolio value for the three months ended December 31, 2022, from the prior value basis as of September 30, 2022, is provided in the table below (dollars in thousands):

[[GREPCENT_TABLE]]
[["Total portfolio fair value as of September 30, 2022","","","$","1,556,028"],["Plus: Acquisitions of new farms during the three months ended December 31, 2022","","","3,100"],["Plus net value appreciation during the three months ended December 31, 2022:"],["Farms valued via third-party appraisals","$","9,144"],["Total net appreciation for the three months ended December 31, 2022","","","9,144"],["Total portfolio fair value as of December 31, 2022","","","$","1,568,272"]]
[[/GREPCENT_TABLE]]

Management also determined fair values of all of its long-term borrowings and preferred stock. Using a discounted cash flow analysis, management determined that the fair value of all long-term encumbrances on our properties as of December 31, 2022, was approximately $569.1 million, as compared to a carrying value (excluding unamortized related debt issuance costs) of approximately $629.9 million. The fair values of our Series B Preferred Stock and Series D Term Preferred Stock were determined using the closing stock prices as of December 31, 2022, of $23.51 per share and $23.41 per share, respectively. Finally, pursuant to Financial Industry Regulatory Authority Rule 2310(b)(5), with the assistance of a third-party valuation expert, we determined the estimated value of our Series C Preferred Stock to be $25.00 per share as of December 31, 2022 (see Exhibit 99.1 to this Form 10-K).

Calculation of Estimated Net Asset Value

To provide our stockholders with an estimate of the fair value of our real estate assets, we intend to estimate the fair value of our farms and farm-related properties and provide an estimated net asset value (“NAV”) on a quarterly basis. NAV is a non-GAAP, supplemental measure of financial position of an equity REIT and is calculated as total equity, adjusted for the increase or decrease in fair value of our real estate assets and long-term borrowings (including any preferred stock required to be treated as debt for GAAP purposes) relative to their respective cost bases. Further, we calculate NAV per common share by dividing NAV by our total common shares outstanding (consisting of our common stock and OP Units held by non-controlling limited partners).

The fair values presented above and their usage in the calculation of net asset value per share presented below have been prepared by and is the responsibility of management. PricewaterhouseCoopers LLP has neither examined, compiled, nor performed any procedures with respect to the fair values or the calculation of net asset value per common share, which utilizes

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information that is not disclosed within the financial statements, and, accordingly, does not express an opinion or any other form of assurance with respect thereto.

As of December 31, 2022, we estimate the NAV per common share to be $17.08. A reconciliation of NAV to total equity, which we believe is the most directly-comparable GAAP measure, is provided below (dollars in thousands, except per-share data):

[[GREPCENT_TABLE]]
[["Total equity per balance sheet","","","$","731,362"],["Fair value adjustment for long-term assets:"],["Less: net cost basis of tangible and intangible real estate holdings(1)","$","(1,370,564)"],["Plus: estimated fair value of real estate holdings(2)","1,568,272"],["Net fair value adjustment for real estate holdings","","","197,708"],["Fair value adjustment for long-term liabilities:"],["Plus: book value of aggregate long-term indebtedness(3)","690,229"],["Less: fair value of aggregate long-term indebtedness(3)(4)","(625,675)"],["Net fair value adjustment for long-term indebtedness","","","64,554"],["Estimated NAV","","","$","993,624"],["Less: aggregate fair value of Series B Preferred Stock and Series C Preferred Stock(5)","","","(394,811)"],["Estimated NAV available to common stockholders and non-controlling OP Unitholders","","","$","598,813"],["Total common shares and non-controlling OP Units outstanding","","","35,050,397"],["Estimated NAV per common share and non-controlling OP Unit","","","$","17.08"]]
[[/GREPCENT_TABLE]]

(1)Per Net Cost Basis as presented in the table above.

(2)Per Current Fair Value as presented in the table above.

(3)Includes the principal balances outstanding of all long-term borrowings (consisting of notes and bonds payable) and the Series D Term Preferred Stock.

(4)Long-term notes and bonds payable were valued using a discounted cash flow model. The Series D Term Preferred Stock was valued based on its closing stock price as of December 31, 2022.

(5)The Series B Preferred Stock was valued based on its closing stock price as of December 31, 2022, while the Series C Preferred Stock was valued at its liquidation value, as discussed above.

A quarterly rollforward in the estimated NAV per common share and OP Unit for the three months ended December 31, 2022, is provided below:

[[GREPCENT_TABLE]]
[["Estimated NAV per common share and non-controlling OP Unit as of September 30, 2022","","","$","16.56"],["Less net loss attributable to common stockholders and non-controlling OP Unitholders","","","(0.14)"],["Adjustments for net change in valuations:"],["Net change in unrealized fair value of farmland portfolio(1)","$","0.36"],["Net change in unrealized fair value of long-term indebtedness","0.05"],["Net change in valuations","","","0.41"],["Less distributions on common stock and non-controlling OP Units","","","(0.14)"],["Plus net accretive effect of equity issuances","","","0.39"],["Estimated NAV per common share and non-controlling OP Unit as of December 31, 2022","","","$","17.08"]]
[[/GREPCENT_TABLE]]

(1)The net change in unrealized fair value of our farmland portfolio consists of three components: (i) an increase of $0.26 per share due to the net appreciation in value of the farms that were valued during the three months ended December 31, 2022, (ii) an increase of $0.27 per share due to the aggregate depreciation and amortization expense recorded during the three months ended December 31, 2022, and (iii) a decrease of $0.17 per share due to net asset dispositions or capital improvements made on certain farms that have not yet been considered in the determination of the respective farms’ estimated fair values.

Comparison of estimated NAV and estimated NAV per common share, using the definitions above, to similarly-titled measures for other REITs may not necessarily be meaningful due to possible differences in the calculation or application of the definition of NAV used by such REITs. In addition, the trading price of our common shares may differ significantly from our most recent estimated NAV per common share calculation. For example, while we estimated our NAV per common share to be $17.08 as of December 31, 2022, based on the calculation above, the closing price of our common stock on December 31, 2022, was $18.35 per share.

The determination of estimated NAV is subjective and involves a number of assumptions, judgments, and estimates, and minor adjustments to these assumptions, judgments, or estimates may have a material impact on our overall portfolio valuation. In addition, many of the assumptions used are sensitive to market conditions and can change frequently. Changes in the market environment and other events that may occur during our ownership of these properties may cause the values reported above to

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vary from the actual fair value that may be obtained in the open market. Further, while management believes the values presented reflect current market conditions, the ultimate amount realized on any asset will be based on the timing of such dispositions and the then-current market conditions. There can be no assurance that the ultimate realized value upon disposition of an asset will approximate the estimated fair value above.