What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-11-09 compared with 2021-08-10 · 166 added, 146 removed, 503 unchanged (38% of the section changed)

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The acquisition of additional farms since our IPO has also allowed us to further diversify our portfolio geographically.

The following table summarizes the different geographic locations (by state) of our farms owned and with leases in place as of and for the six months ended June 30, 2021 and 2020 (dollars in thousands):

As of and For the six months ended June 30, 2021 As of and For the six months ended June 30, 2020

The following table summarizes the different geographic locations (by state) of our farms owned and with leases in place as of and for the nine months ended September 30, 2021 and 2020 (dollars in thousands):

As of and For the nine months ended September 30, 2021 As of and For the nine months ended September 30, 2020

Revenue % of Total

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Nebraska 9 7,782 7.3% 1,191 2.3% 9 7,782 8.4% 1,159 2.7%

Oregon 3 418 0.4% 268 0.8% 3 418 0.5% 263 0.9%

Michigan 23 1,892 1.8% 619 1.2% 15 962 1.0% 554 1.3%

Oregon 4 561 0.5% 512 1.0% 3 418 0.5% 395 0.9%

Maryland 6 987 0.9% 354 0.7% 4 759 0.8% 35 0.1%

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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 June 30, 2021 (dollars in thousands):

The following table summarizes the lease expirations by year for the farms owned and with leases in place as of September 30, 2021 (dollars in thousands):

Year Number of

Acreage % of Total

Acreage Lease Revenues for the

Six Months Ended

June 30, 2021 % of Total

Acreage Lease Revenues for the Nine Months Ended September 30, 2021 % of Total

10,804 10.1% $ 3,660 7.0%

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(1) Certain lease agreements encompass multiple farms.

(2) Includes one lease that was extended subsequent to June 30, 2021 (see “ Recent Developments—Portfolio Activity—Existing Properties—Leasing Activity ” below for a summary of this and other recent leasing activity).

(3) Includes two leases that were extended subsequent to June 30, 2021 (see “ Recent Developments—Portfolio Activity—Existing Properties—Leasing Activity ” below for a summary of this and other recent leasing activity).

(2) Includes one lease that was extended subsequent to September 30, 2021 (see “ Recent Developments—Portfolio Activity—Existing Properties—Leasing Activity ” below for a summary of this and other recent leasing activity).

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

We currently have five agricultural leases scheduled to expire within the next six months (in California, Colorado, and Michigan).

We currently have three agricultural leases scheduled to expire within the next six months (in California and Colorado).

Two of these potential lease expirations are the result of tenant termination options that we currently do not expect the tenants to exercise.

Regarding the remaining three lease expirations, we are currently in negotiations with the existing tenants on each of these farms, as well as other potential tenants, and we anticipate being able to renew each of the leases at their respective current market rental rates without incurring any downtime on any of the farms.

Regarding the remaining lease expiration, 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.

Overall, we currently anticipate the rental rates on these lease renewals to be relatively flat compared to that of the existing leases.

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Property Acquisitions

Since April 1, 2021, through the date of this filing, we have acquired 13 farms, which are summarized in the table below (dollars in thousands, except for footnotes):

Since July 1, 2021, through the date of this filing, we have acquired seven farms, which are summarized in the table below (dollars in thousands, except for footnotes):

Name Property

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Farms Primary

Crop(s) Lease

Crop(s) / Use Lease

Options Total

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Straight-line

South Avenue Tehama, CA 4/5/2021 2,285 1 Olives for Olive Oil 14.7 years 1 (5 years) $ 37,800 $ 149 $ 2,555

Richards Avenue Atlantic, NJ 6/3/2021 116 3 Blueberries 14.9 years 2 (5 years) 2,150 57 129

Lerdo Highway (3)(4)

Maricopa Highway Kern, CA 8/11/2021 277 1 Organic blueberries 14.9 years 3 (5 years) $ 30,000 $ 63 $ 2,262

Wallace Road Yamhill, OR 8/11/2021 143 1 Organic blueberries 10.1 years 3 (5 years) 12,320 39 768

West Orange St.

Lucie, FL 8/18/2021 617 2 Lemons and oranges 12.0 years None 5,241 180 367

Lerdo Highway (Phase II) (3)(4)

Kern, CA 8/20/2021 479 1 Conventional & organic almonds and banked water 10.2 years 3 (10 years) 14,772 53 735

Almena Drive Van Buren

& Eaton, MI 6/9/2021 930 8 Blueberries 14.7 years 2 (5 years) 13,300 49 785

Lerdo Highway (Phase III) (3)(5)

Kern, CA 10/8/2021 1,284 1 Conventional & organic almonds, conventional & organic pistachios, and banked water 10.1 years 3 (10 years) 42,959 77 1,981

Raymond Road (3)

Madera, CA 10/21/2021 219 1 Almonds 10.4 years 1 (5 years) 3,300 50 183

3,019 7 $ 108,592 $ 462 $ 6,296

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(4) As part of the acquisition of this property, we acquired a contract to purchase 5,000 acre-feet of water stored with Semitropic Water Storage District, located in Kern County, California, at a fixed price.

We executed this contract on June 25, 2021, at an additional cost of approximately $1.2 million, which is included in the total purchase price for this property in the table above.

We executed this contract on June 25, 2021, at an additional cost of approximately $306,000, which is included in the total purchase price for this property in the table above.

Rent is not currently being earned on the value attributable to the water.

See Note 3, “ Real Estate and Intangible Assets—Investments in Water Assets ,” within the accompanying notes to our condensed consolidated financial statements for additional information on this water.

(5) As part of the acquisition of this property, we acquired a contract to purchase 19,670 acre-feet of water stored with Semitropic Water Storage District, located in Kern County, California, at a fixed price.

We executed this contract on October 11, 2021, at an additional cost of approximately $1.2 million, which is included in the total purchase price for this property in the table above.

Rent is not currently being earned on the value attributable to the water.

Existing Properties

Leasing Activity

The following table summarizes certain leasing activity that has occurred on our existing properties since April 1, 2021, through the date of this filing (dollars in thousands, except for footnotes):

The following table summarizes certain leasing activity that has occurred on our existing properties since July 1, 2021, through the date of this filing (dollars in thousands, except for footnotes):

PRIOR LEASES (1)

NEW LEASES (2)

Locations Number

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/ NN / N) (4)

CA, FL, & MI 5 983 $ 1,845 1 3 / 2 / 0 $ 2,041 4.3 0 3 / 2 / 0

CA, CO, FL, & MI 10 2,978 $ 3,026 2 7 / 3 / 0 $ 3,295 6.3 0 8 / 2 / 0

(1) Prior leases includes one lease that was terminated early in July 2021.

We recorded lease revenues of approximately $0 and $6,000 related to this lease during the three and six months ended June 30, 2021, respectively.

In addition, in connection with this early termination, during the three months ended June 30, 2021, we wrote off aggregate deferred rent and rent receivable balances of approximately $43,000 against lease revenue.

In connection with this early termination, during the nine months ended September 30, 2021, we wrote off aggregate deferred rent and rent receivable balances of approximately $43,000 against lease revenue.

Upon termination of this lease, we entered into a new lease with a new tenant, effective immediately, which is included in the above table.

(2) 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 condensed consolidated financial statements for additional information on these and other commitments.

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

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Debt Activity

On June 30, 2021, we entered into two loan agreements with Golden State Farm Credit to provide for total future loan proceeds of $22.8 million on a delayed funding basis.

Disbursement of these loans must occur by October 1, 2021, and once disbursed, the loans will bear interest at a fixed rate (before patronage) of 3.75%, which will be fixed for ten years.

Gladstone Securities, an affiliate of ours, earned total financing fees of approximately $35,000 in connection with securing these financings.

From July 1, 2021, through the date of this filing, we entered into the following loan agreements with Farm Credit (dollars in thousands):

Issuer Date of

Issuance Amount Maturity

Date Principal

Amortization Stated Interest Rate Expected Effective Interest Rate (1)

Interest Rate Terms

GreenStone Farm Credit Services, FLCA 8/17/2021 $ 7,980 8/1/2046 25.5 years 4.00% 2.74% Fixed through 7/31/2031 (variable thereafter)

Golden State Farm Credit, FLCA 9/28/2021 15,960 7/1/2051 30.0 years 3.75% 2.75% Fixed through 9/30/2031 (variable thereafter)

Golden State Farm Credit, FLCA 9/28/2021 6,840 7/1/2046 25.0 years 3.75% 2.75% Fixed through 9/30/2031 (variable thereafter)

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

In connection with securing the above borrowings, Gladstone Securities, an affiliate of ours, earned total financing fees of $47,000.

Equity Activity

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See Note 6, “ Related-Party Transactions—Gladstone Securities—Dealer-Manager Agreement ,” within the accompanying notes to our condensed 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 April 1, 2021, through the date of this filing (dollars in thousands, except per-share amounts and footnotes):

The following table summarizes the sales of our Series C Preferred Stock that occurred since July 1, 2021, through the date of this filing (dollars in thousands, except per-share amounts and footnotes):

Shares Sold (1)

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

From April 1, 2021, through the date of this filing, we issued approximately 2,699 shares of the Series C Preferred Stock pursuant to the DRIP.

(2) Net of selling commissions and dealer-manager fees borne by us.

From July 1, 2021, through the date of this filing, we issued approximately 4,536 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 $2.1 million.

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however, we intend to apply to list the Series C Preferred Stock on Nasdaq or another national securities exchange within one calendar year after the Series C Termination Date, though there can be no assurance that a listing will be achieved in such timeframe, or at all.

At-the-Market Program

Common Stock—At-the-Market Program

On May 12, 2020, we entered into new equity distribution agreements with Virtu Americas, LLC, and Ladenburg & Co., Inc.

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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.

The following table summarizes the activity under the ATM Program from April 1, 2021, through the date of this filing (dollars in thousands):

The following table summarizes the activity under the ATM Program from July 1, 2021, through the date of this filing (dollars in thousands):

Shares Sold Weighted-average

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3,731,949 $ 23.32 $ 87,023 $ 86,152

(1) Net of underwriter commissions and discounts.

(1) Net of underwriter commissions.

While we have not been materially adversely impacted by the novel coronavirus (“COVID-19”) to date, the extent to which the ongoing COVID-19 pandemic may, in the future, impact our business, financial condition, liquidity, results of operations, funds from operations, or prospects will depend on numerous evolving factors that we are not able to predict at this time, including the duration and long-term scope of the pandemic, the spread and effect of COVID-19 variants;

the adequate production, efficacy, and dissemination of vaccinations;

governmental, business, and individuals’ actions that have been and continue to be

taken in response to the pandemic;

the impact on economic activity from the pandemic and actions taken in response;

governmental, business, and individuals’ actions that have been and continue to be taken in response to the pandemic;

the impact on economic activity from the pandemic, including due constraints on global supply chains, and actions taken in response;

increased unemployment and underemployment levels and labor shortages in some industries;

the effect on our tenants and their farming operations;

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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 a standard rate for variable-rate debt.

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 Metropolitan Life Insurance Company (“MetLife”) and five term loans with Rabo AgriFinance, LLC, (which are effectively fixed through our entry into interest swap agreements) are currently based upon one-month LIBOR.

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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 through June 30, 2021 (the “Prior Advisory Agreement”), and the current administration agreement with our Administrator (the “Administration Agreement”) were approved unanimously by our board of directors, including our independent directors.

On July 13, 2021, we amended the Prior Advisory Agreement (as amended, the “Amended Advisory Agreement,” and together with the Prior Advisory Agreement, the “Advisory Agreement”), which was approved unanimously by our board of directors, including, specifically, our independent directors.

The Amended Advisory Agreement revised the calculation of the base management fee beginning with the three months ending September 30, 2021, while all other terms of the Prior Advisory Agreement remained the same.

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

Advisory Agreement

Pursuant to the Advisory Agreement, 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 investment advisory agreement with our Adviser that was in effect 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 Agreement ,” within the accompanying notes to our condensed consolidated financial statements.

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

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

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 exceeded a hurdle rate of 1.75% (7.0% annualized) of the prior calendar quarter’s Total Adjusted Common Equity.

For purposes of this calculation, Pre-Incentive Fee FFO is defined in the Advisory Agreement as FFO (also as defined in the Advisory Agreement) accrued by the Company during the current calendar quarter (prior to any incentive fee calculation for the current calendar quarter), less any dividends declared on preferred stock securities that were not treated as a liability for GAAP purposes.

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Smaller Reporting Company Status

As of December 31, 2018, and through June 30, 2021, we qualified as a “smaller reporting company” under Rule 12b-2 of the Exchange Act because we had annual revenues of less than $100 million for the previous year and a public float of less than $700 million.

As of December 31, 2018, and through September 30, 2021, we qualified as a “smaller reporting company” under Rule 12b-2 of the Exchange Act because we had annual revenues of less than $100 million for the previous year and a public float of less than $700 million.

As a smaller reporting company, we have reduced disclosure requirements for our public filings, including the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.

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A summary of our significant accounting policies is provided in Note 2 to our consolidated financial statements in our Form 10-K.

There were no material changes to our critical accounting policies during the six months ended June 30, 2021.

There were no material changes to our critical accounting policies during the nine months ended September 30, 2021.

RESULTS OF OPERATIONS

For the purposes of the following discussions on certain operating revenues and expenses:

• With regard to the comparison between the three months ended June 30, 2021 versus 2020:

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

◦ Properties acquired or disposed of are farms that were either acquired or disposed of at any point subsequent to March 31, 2020.

From April 1, 2020, through June 30, 2021, we acquired 40 new farms and did not have any farm dispositions.

• With regard to the comparison between the six months ended June 30, 2021 versus 2020:

• With regard to the comparison between the three months ended September 30, 2021 versus 2020:

◦ Same-property basis represents farms owned as of June 30, 2020, and were not vacant at any point during either period presented;

◦ Properties acquired or disposed of are farms that were either acquired or disposed of at any point subsequent to June 30, 2020.

From July 1, 2020, through September 30, 2021, we acquired 43 new farms and did not have any farm dispositions.

• With regard to the comparison between the nine months ended September 30, 2021 versus 2020:

◦ Same-property basis represents farms owned as of December 31, 2019, and were not vacant at any point during either period presented;

◦ Properties acquired or disposed of are farms that were either acquired or disposed of at any point subsequent to December 31, 2019.

From January 1, 2020, through June 30, 2021, we acquired 42 new farms and did not have any farm dispositions.

We did not have any vacant or self-operated farms during either of the three and six months ended June 30, 2021 or 2020.

A comparison of results of components comprising our operating income for the three and six months ended June 30, 2021 and 2020 is below (dollars in thousands):

For the Three Months Ended June 30,

From January 1, 2020, through September 30, 2021, we acquired 47 new farms and did not have any farm dispositions.

We did not have any vacant or self-operated farms during either of the three and nine months ended September 30, 2021 or 2020.

A comparison of results of components comprising our operating income for the three and nine months ended September 30, 2021 and 2020 is below (dollars in thousands):

For the Three Months Ended September 30,

2021 2020 $ Change % Change

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Operating income $ 8,384 $ 7,131 $ 1,253 17.6%

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

2021 2020 $ Change % Change

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Lease Revenues

The following table provides a summary of our lease revenues during the three and six months ended June 30, 2021 and 2020 (dollars in thousands):

For the Three Months Ended June 30, For the Six Months Ended June 30,

The following table provides a summary of our lease revenues during the three and nine months ended September 30, 2021 and 2020 (dollars in thousands):

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2021 2020 $ Change % Change 2021 2020 $ Change % Change

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Properties acquired or disposed of 5,193 177 5,016 2,833.9% 13,952 808 13,144 1,626.7%

Vacant or self-operated properties — — — —% — — — —%

Tenant reimbursements (1)

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Same-property Basis – 2021 compared to 2020

Lease revenues from fixed lease payments increased slightly for each of the three and six months ended June 30, 2021, primarily attributable to lease renewals and amendments executed at net higher rental rates and additional rents earned on capital improvements completed on certain of our farms, partially offset by the renewals of certain other leases, in which we decreased the fixed base rent component in exchange for adding in a participation rent component to the lease structure.

Participation rents related to these leases, if any, are expected to be recorded during the second half of the year ending December 31, 2021.

Lease revenues from participation rents decreased for each of the three and six months ended June 30, 2021, primarily due to fewer farms having scheduled participation rent payments due during the first half 2021 versus that of 2020.

During the three months ended March 31, 2020, we received an early lease termination payment of approximately $3.0 million from an outgoing tenant on a property, which we recognized as additional lease revenue upon receipt, less a net balance of approximately $165,000 of aggregate prepaid rent and deferred rent assets balances that were written off against this amount.

Lease revenues from fixed lease payments decreased by approximately $63,000 during the three months ended September 30, 2021, primarily due to certain lease renewals and amendments executed, in which we decreased the fixed base rent component in exchange for adding a participation rent component to the lease structure.

Lease revenues from fixed lease payments increased slightly during the nine months ended September 30, 2021, primarily due to additional rents earned on capital improvements completed on certain of our farms, largely offset by certain lease renewals and amendments executed, in which we decreased the fixed base rent component in exchange for adding a participation rent component to the lease structure.

Participation rents related to these leases, if any, are expected to be recorded during the three months ending December 31, 2021.

Lease revenues from participation rents increased for each of the three and nine months ended September 30, 2021, primarily due to more farms having scheduled participation rent payments due during 2021 compared to 2020.

During the nine months ended September 30, 2020, we received an early lease termination payment of approximately $3.0 million from an outgoing tenant on a property, which we recognized as additional lease revenue upon receipt, less a net balance of approximately $165,000 of aggregate prepaid rent and deferred rent assets balances that were written off against this amount.

Other – 2021 compared to 2020

Lease revenue from properties acquired or disposed of increased for each of the three and six months ended June 30, 2021, primarily due to additional revenues earned on new farms acquired subsequent to December 31, 2019.

Tenant reimbursements decreased for each of the three and six months ended June 30, 2021, primarily due to additional payments made during the prior-year periods by certain tenants on our behalf (pursuant to the lease agreements) to an unconsolidated entity of ours that conveys water to the respective properties.

Lease revenue from properties acquired or disposed of increased for each of the three and nine months ended September 30, 2021, primarily due to additional revenues earned on new farms acquired subsequent to December 31, 2019.

Tenant reimbursements decreased for each of the three and nine months ended September 30, 2021, primarily due to additional payments made during the prior-year periods by certain tenants on our behalf (pursuant to the lease agreements) to an unconsolidated entity of ours that conveys water to the respective properties.

Operating Expenses

Depreciation and Amortization

The following table provides a summary of the depreciation and amortization expense recorded during the three and six months ended June 30, 2021 and 2020 (dollars in thousands):

For the Three Months Ended June 30, For the Six Months Ended June 30,

The following table provides a summary of the depreciation and amortization expense recorded during the three and nine months ended September 30, 2021 and 2020 (dollars in thousands):

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2021 2020 $ Change % Change 2021 2020 $ Change % Change

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Total depreciation and amortization $ 6,944 $ 3,909 $ 3,035 77.6% $ 19,280 $ 12,010 $ 7,270 60.5%

Depreciation and amortization expense on a same-property basis decreased for each of the three and six months ended June 30, 2021, as compared to the respective prior-year periods, primarily due to the expiration of certain lease intangible amortization periods subsequent to December 31, 2019.

Depreciation and amortization expense on properties acquired or disposed of increased for each of the three and six months ended June 30, 2021, as compared to the same respective prior-year periods, primarily due to the additional depreciation and amortization expense incurred on the new farms acquired subsequent to December 31, 2019.

Depreciation and amortization expense on a same-property basis decreased for each of the three and nine months ended September 30, 2021, as compared to the respective prior-year periods, primarily due to the expiration of certain lease intangible amortization periods subsequent to December 31, 2019, partially offset by an increase in depreciation associated with additional capital expenditure on certain of our farms.

Depreciation and amortization expense on properties acquired or disposed of increased for each of the three and nine months ended September 30, 2021, as compared to the same respective prior-year periods, primarily due to the additional depreciation and amortization expense incurred on the new farms acquired subsequent to December 31, 2019.

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 three and six months ended June 30, 2021 and 2020 (dollars in thousands):

For the Three Months Ended June 30, For the Six Months Ended June 30,

The following table provides a summary of the property-operating expenses recorded during the three and nine months ended September 30, 2021 and 2020 (dollars in thousands):

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2021 2020 $ Change % Change 2021 2020 $ Change % Change

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Same-property Basis – 2021 compared to 2020

Property-operating expenses increased for each of the three and six months ended June 30, 2021, primarily due to an increase in our obligation to reimburse one of our tenants for water usage over a specific cost threshold in accordance with the lease.

Property-operating expenses increased for each of the three and nine months ended September 30, 2021, primarily due to an increase in our obligation to reimburse one of our tenants for water usage over a specific cost threshold in accordance with the lease.

We currently anticipate incurring similar costs for water usage on this particular farm throughout the remainder of 2021 but do not currently expect such elevated costs to continue beyond 2021.

Other – 2021 compared to 2020

Property operating expenses on properties acquired or disposed of increased for each of the three and six months ended June 30, 2021, primarily due to additional miscellaneous property-operating expenses incurred on certain of the new farms we acquired subsequent to December 31, 2019.

Tenant reimbursement expense decreased for each of the three and six months ended June 30, 2021, primarily due to a decrease in miscellaneous property-operating costs incurred by us in connection with our ownership interest in an unconsolidated entity.

Property operating expenses on properties acquired or disposed of increased for each of the three and nine months ended September 30, 2021, primarily due to additional miscellaneous property-operating expenses incurred on certain of the new farms we acquired subsequent to December 31, 2019.

Tenant reimbursement expense decreased for each of the three and nine months ended September 30, 2021, primarily due to a decrease in miscellaneous property-operating costs incurred by us in connection with our ownership interest in an unconsolidated entity.

Our tenants are contractually obligated to reimburse us for these costs under the terms of the respective leases.

Related-Party Fees

The following tables provide the calculations of the base management and incentive fees due to our Adviser pursuant to the Advisory Agreement for each of the three and six months ended June 30, 2021 and 2020 (dollars in thousands;

The following tables provide the calculations of the base management and incentive fees due to our Adviser 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 each of the three and nine months ended September 30, 2021 and 2020 (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):

Quarters Ended Year to Date

March 31 June 30

March 31 June 30 September 30

FY 2021 Fee Calculations:

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Total fees due to Adviser, net $ 2,368 $ 1,047 $ 1,899 $ 5,314

(1) As defined in the Advisory Agreement.

(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.

The base management fee increased during each of the three and six months ended June 30, 2021, as compared to each of the respective prior-year periods, primarily due to additional assets acquired since December 31, 2019.

Our Advisor earned incentive fees during each of the three months ended March 31, 2021 and 2020 due to our Pre-Incentive Fee FFO (as defined in

the Advisory Agreement) exceeding the required hurdle rate of the applicable equity base.

No incentive fees were earned by our Advisor during either of the three months ended June 30, 2021 or 2020.

The administration fee paid to our Administrator decreased for each of the three and six months ended June 30, 2021, as compared to the respective prior-year periods, primarily due to us using a lower overall share of our Administrator’s resources in relation to those used by other funds and affiliated companies serviced by our Administrator.

The base management fee increased during each of the three and nine months ended September 30, 2021, as compared to each of the respective prior-year periods, primarily due to additional assets acquired since December 31, 2019 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 three and nine months ended September 30, 2021 and 2020 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 and third quarters of fiscal years 2021 and 2020.

The administration fee paid to our Administrator increased for each of the three and nine months ended September 30, 2021, as compared to the respective prior-year periods, 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 for each of the three and six months ended June 30, 2021, as compared to the respective prior-year periods, primarily due to increased stockholder-related expenses related to the annual stockholders’ meeting and higher professional fees related to additional appraisal costs.

A comparison of results of other components contributing to net loss attributable to common stockholders expense) for the three and six months ended June 30, 2021 and 2020 is below (dollars in thousands):

For the Three Months Ended June 30,

General and administrative expenses increased for each of the three and nine months ended September 30, 2021, as compared to the respective prior-year periods, primarily due to increased stockholder-related expenses related to the annual stockholders’ meeting and higher professional fees related to additional appraisal costs.

A comparison of results of other components contributing to net loss attributable to common stockholders for the three and nine months ended September 30, 2021 and 2020 is below (dollars in thousands):

For the Three Months Ended September 30,

2021 2020 $ Change % Change

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Loss on dispositions of real estate assets, net (1) (195) 194 (99.5)%

Property and casualty recovery, net — 1 (1) —%

Loss from investments in unconsolidated entities (19) (19) — —%

Total other expense, net (6,881) (5,550) (1,331) 24.0%

Net (loss) income (531) 182 (713) (391.8)%

Net income 1,503 1,581 (78) (4.9)%

Net income attributable to non-controlling interests (8) (13) 5 (38.5)%

Net (loss) income attributable to the Company (530) 184 (714) (388.0)%

Net income attributable to the Company 1,495 1,568 (73) (4.7)%

Aggregate dividends declared on Series B and Series C Preferred Stock (3,134) (2,405) (729) 30.3%

Net loss attributable to common stockholders $ (1,639) $ (837) $ (802) 95.8%

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

2021 2020 $ Change % Change

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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 condensed consolidated financial statements) and interest earned on short-term investments, remained relatively flat for the three months ended June 30, 2021, as compared to the prior-year period, and increased for the six months ended June 30, 2021, as compared to the prior-year period, primarily driven by additional interest patronage received from Farm Credit (partially due to increased borrowings from Farm Credit).

Other income, which generally consists of interest patronage received from Farm Credit (as defined in Note 4, “ Borrowings ,” in the accompanying notes to our condensed consolidated financial statements) and interest earned on short-term investments, decreased for the three months ended September 30, 2021, as compared to the prior-year period, and increased for the nine months ended September 30, 2021, as compared to the prior-year period, primarily driven by additional interest patronage received from Farm Credit during each of the respective periods (primarily due to increased borrowings from Farm Credit).

During the three months ended March 31, 2021, we recorded approximately $2.2 million of interest patronage from Farm Credit related to interest accrued during 2020, compared to approximately $1.3 million of interest patronage recorded during the prior-year period.

Coupled with approximately $306,000 of 2020 interest patronage that was received during the three months ended September 30, 2020, we recorded a total of approximately $2.5 million of 2020 interest patronage from Farm Credit, which resulted in a 28.7% reduction (approximately 135 basis points) to the interest rates on such borrowings.

Interest expense increased for each of the three and six months ended June 30, 2021, as compared to the respective prior-year periods, 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 three and six months ended June 30, 2021, was approximately $631.5 million and $629.8 million, respectively, as compared to approximately $483.1 million and $482.2 million for the respective prior-year periods.

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 for the three and six months ended June 30, 2021, was 3.73% and 3.71%, respectively, as compared to 3.98% for each of the respective prior-year periods.

During the three and six months ended June 30, 2021, we paid aggregate distributions on our Series A Term Preferred Stock and Series D Term Preferred Stock of approximately $755,000 and $1.6 million, respectively.

Interest expense increased for each of the three and nine months ended September 30, 2021, as compared to the respective prior-year periods, 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 three and nine months ended September 30, 2021, was approximately $627.6 million and $629.2 million, respectively, as compared to approximately $496.9 million and $487.2 million for the respective prior-year periods.

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 for the three and nine months ended September 30, 2021, was 3.74% and 3.72%, respectively, as compared to 4.03% and 3.99% for the respective prior-year periods.

During the three and nine months ended September 30, 2021, we paid aggregate distributions on our Series A Term Preferred Stock and Series D Term Preferred Stock of approximately $755,000 and $2.3 million, respectively.

The Series D Term Preferred Stock was issued in January 2021, and the Series A Term Preferred Stock was voluntarily redeemed in full in February 2021.

During the three and six months ended June 30, 2020, we paid distributions on our Series A Term Preferred Stock of approximately $458,000 and $916,000, respectively.

During each of the three and six months ended June 30, 2021 and 2020, we recorded net losses on dispositions of real estate assets primarily due to the disposal of certain irrigation improvements on certain of our farms, partially offset during the six months ended June 30, 2021, by net gains recognized on the sale of irrigation pivots on two of our farms that were replaced.

The net property and casualty recovery recorded during the six months ended June 30, 2020, related to insurance recoveries received for certain irrigation improvements that were damaged due to natural disasters.

During the three and six months ended June 30, 2021, we recognized a loss from investments in an unconsolidated entity of approximately $11,000 and $24,000, respectively, as compared to a (loss) income of approximately $(8,000) and $26,000 for the respective prior-year periods.

During the three and six months ended June 30, 2021, the aggregate dividends paid on our Series B Preferred Stock and Series C Preferred Stock increased over that of the respective prior-year periods due to additional shares issued and outstanding during the current-year periods.

During the three and nine months ended September 30, 2020, we paid distributions on our Series A Term Preferred Stock of approximately $458,000 and $1.4 million, respectively.

During each of the three and nine months ended September 30, 2021 and 2020, we recorded net losses on dispositions of real estate assets primarily due to the disposal of certain irrigation improvements on certain of our farms, partially offset during the nine months ended September 30, 2021, by net gains recognized on the sale of irrigation pivots on two of our farms that were replaced.

The net property and casualty recovery recorded during the three and nine months ended September 30, 2020, related to insurance recoveries received for certain irrigation improvements that were damaged due to natural disasters.

During the three and nine months ended September 30, 2021, we recognized a loss from investments in an unconsolidated entity of approximately $19,000 and $42,000, respectively, as compared to a loss of approximately $19,000 and income of $7,000 for the respective prior-year periods.

During the three and nine months ended September 30, 2021, the aggregate dividends paid on our Series B Preferred Stock and Series C Preferred Stock increased over that of the respective prior-year periods due to additional shares issued and outstanding during the current-year periods.

In addition, during the three and nine months ended September 30, 2021, we also recognized a loss of approximately $23,000 related to the early optional redemption of 9,920 shares of our Series C Preferred Stock.

LIQUIDITY AND CAPITAL RESOURCES

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 our facility with MetLife), and issuances of additional equity securities.

Our current available liquidity is approximately $131.3 million, consisting of approximately $84.3 million in cash on hand and, based on the current level of collateral pledged, approximately $47.0 million of availability under our facility with MetLife (subject to compliance with covenants) and other undrawn notes.

In addition, we currently have four properties valued at approximately $43.6 million that are unencumbered and eligible to be pledged as collateral.

Our current available liquidity is approximately $135.7 million, consisting of approximately $85.7 million in cash on hand and, based on the current level of collateral pledged, approximately $50.0 million of availability under our facility with MetLife (subject to compliance with covenants) and other undrawn notes or bonds.

In addition, we currently have six properties valued at approximately $105.5 million that are unencumbered and eligible to be pledged as collateral.

Future Capital Needs

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Cash Flow Resources

The following table summarizes total net cash flows from operating, investing, and financing activities for the six months ended June 30, 2021 and 2020 (dollars in thousands):

For the Six Months Ended June 30,

The following table summarizes total net cash flows from operating, investing, and financing activities for the nine months ended September 30, 2021 and 2020 (dollars in thousands):

For the Nine Months Ended September 30,

2021 2020 $ Change % Change

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Operating Activities

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 for the six months ended June 30, 2021, as compared to the prior-year period, primarily due to additional rental payments received from recent acquisitions and interest patronage received from Farm Credit, partially offset by increases in the amount of interest payments made.

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 for the nine months ended September 30, 2021, as compared to the prior-year period, primarily due to additional rental payments received from recent acquisitions and interest patronage received from Farm Credit, partially offset by increases in the amount of interest payments made.

Investing Activities

The increase in cash used in investing activities during the six months ended June 30, 2021, as compared to the prior-year period, was primarily due to an increase in cash paid for acquisitions of new farms, partially offset by a decrease in the amount of cash paid for capital improvements on existing farms during the six months ended June 30, 2021.

The increase in cash used in investing activities during the nine months ended September 30, 2021, as compared to the prior-year period, was primarily due to an increase in cash paid for acquisitions of new farms, partially offset by a decrease in the amount of cash paid for capital improvements on existing farms during the nine months ended September 30, 2021.

Financing Activities

The increase in cash provided by financing activities during the six months ended June 30, 2021, as compared to the prior-year period, was primarily due to an increase in aggregate net cash proceeds from equity issuances (including our common stock and the Series C Preferred Stock) of approximately $70.2 million and the issuance of our Series D Term Preferred Stock (which after voluntarily redeeming our Series A Term Preferred Stock in full, resulted in net cash proceeds of approximately $31.6 million), partially offset by a decrease in net borrowings and an increase in total distributions.

The increase in cash provided by financing activities during the nine months ended September 30, 2021, as compared to the prior-year period, was primarily due to an increase in aggregate net cash proceeds from equity issuances (including our common stock and the Series C Preferred Stock) of approximately $105.4 million and the issuance of our Series D Term Preferred Stock (which after voluntarily redeeming our Series A Term Preferred Stock in full, resulted in net cash proceeds of approximately $31.6 million), partially offset by an increase in total distributions.

MetLife Facility

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The draw period for the MetLife Term Note expires on December 31, 2022, after which time MetLife has the option to be relieved of its obligation to disburse any additional undrawn funds under the MetLife Term Note.

We are currently in discussions with MetLife to further expand the size of the MetLife Facility and extend the draw period under the MetLife Term Note;

however, there is no guarantee that we will be able to reach terms favorable to us, if at all.

Farmer Mac Facility

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We also currently have borrowing relationships with several other agricultural lenders and are continuously reaching out to other lenders to establish prospective new relationships.

Based on the properties currently pledged as collateral, we currently have $22.8 million of undrawn funds available to us from a Farm Credit association.

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.

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Off-Balance Sheet Arrangements

As of June 30, 2021, we did not have any material off-balance sheet arrangements.

As of September 30, 2021, we did not have any material off-balance sheet arrangements.

NON-GAAP FINANCIAL INFORMATION

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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.

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.

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

Certain information in the table below for the three and six months ended June 30, 2020, has been reclassified to conform to the current period’s presentation.

The reclassifications had no impact on previously-reported Net (loss) income, FFO, or AFFO.

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.

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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 three and six months ended June 30, 2021 and 2020 to the most directly-comparable GAAP measure, net income, and a computation of diluted FFO, CFFO, and AFFO per share, using the weighted-average number of total shares (including shares of our common stock and OP Units held by non-controlling OP Unitholders) outstanding during the respective periods (dollars in thousands, except per-share amounts):

For the Three Months Ended June 30, For the Six Months Ended June 30,

The following table provides a reconciliation of our FFO, CFFO, and AFFO for the three and nine months ended September 30, 2021 and 2020 to the most directly-comparable GAAP measure, net income, and a computation of diluted FFO, CFFO, and AFFO per share, using the weighted-average number of total shares (including shares of our common stock and OP Units held by non-controlling OP Unitholders) outstanding during the respective periods (dollars in thousands, except per-share amounts):

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2021 2020 2021 2020

Net (loss) income $ (531) $ 182 $ 23 $ 3,283

Net income $ 1,503 $ 1,581 $ 1,526 $ 4,864

Aggregate dividends declared on Series B Preferred Stock and Series C Preferred Stock (1)

(3,134) (2,405) (8,837) (6,793)

Net loss available to common stockholders and non-controlling OP Unitholders (3,470) (2,080) (5,679) (1,105)

Net loss attributable to common stockholders and non-controlling OP Unitholders (1,631) (824) (7,311) (1,929)

Real estate and intangible depreciation and amortization 6,944 3,909 19,280 12,010

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Diluted AFFO per weighted-average total common share $ 0.17 $ 0.14 $ 0.47 $ 0.50

(1) Includes (i) cash dividends paid on our Series B Preferred Stock and Series C Preferred Stock and (ii) the value of additional shares of Series C Preferred Stock issued pursuant to the DRIP.

(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) net property and casualty recoveries recorded, net of the cost of related repairs expensed, as a result of the damage caused to certain irrigation improvements by natural disasters on certain of our properties, (ii) one-time listing fees related to our Series D Term Preferred Stock, (iii) the write-off of certain unallocated costs related to a prior universal registration statement, and (iv) certain one-time costs related to the early redemption of our Series A Term Preferred Stock.

(4) Consists of (i) the amount of dividends on the Series C Preferred Stock paid via issuing new shares (pursuant to the DRIP) and (ii) our remaining pro-rata share of income (loss) recorded from investments in unconsolidated entities during the period.

(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 period.

Net Asset Value

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• 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:

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.

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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 June 30, 2021, determined by each method is shown in the table below (dollars in thousands, except in footnotes):

A breakdown of the methodologies used to value our properties and the aggregate value as of September 30, 2021, determined by each method is shown in the table below (dollars in thousands, except in footnotes):

Valuation Method Number of

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Purchase Price 35 14,197 12,620 $ 333,040 $ 339,295 25.8%

Internal Valuation 3 6,189 4,730 21,443 36,000 2.7%

Third-party Appraisal (2)

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(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.

(2) Appraisals performed between September 2020 and June 2021.

Some of the significant assumptions used by appraisers and the Valuation Team in valuing our portfolio as of June 30, 2021, 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.

(2) Appraisals performed between December 2020 and September 2021.

Some of the significant assumptions used by appraisers and the Valuation Team in valuing our portfolio as of September 30, 2021, 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:

Appraisal Assumptions Internal Valuation Assumptions

Average Range

Land Value (per farmable acre) $678 – $128,781 $ 34,627 $5,504 – $5,504 $ 5,504

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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 June 30, 2021, 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 June 30, 2021, from the prior value basis as of March 31, 2021, is provided in the table below (dollars in thousands):

Total portfolio fair value as of March 31, 2021 $ 1,170,292

Acquisition of 13 new farms during the three months ended June 30, 2021 79,742 (1)

Plus net value appreciation during the three months ended June 30, 2021:

46 farms valued via third-party appraisals $ 337

Total net appreciation for the three months ended June 30, 2021 337

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 September 30, 2021, 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 September 30, 2021, from the prior value basis as of June 30, 2021, is provided in the table below (dollars in thousands):

Total portfolio fair value as of June 30, 2021 $ 1,250,371

(1) Includes approximately $1.2 million paid to exercise a water purchase option that was acquired in connection with one of the farms that was acquired during the three months ended June 30, 2021.

Acquisition of five new farms during the three months ended September 30, 2021 62,333 (1)

Plus net value appreciation during the three months ended September 30, 2021:

Three farms valued internally $ (1,650)

46 farms valued via third-party appraisals 3,616

Total net appreciation for the three months ended September 30, 2021 1,966

Total portfolio fair value as of September 30, 2021 $ 1,314,670

(1) Includes approximately $306,000 paid to exercise a water purchase option that was acquired in connection with one of the farms that was acquired during the three months ended September 30, 2021.

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 June 30, 2021, was approximately $628.6 million, as compared to a carrying value (excluding unamortized related debt issuance costs) of approximately $630.9 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 June 30, 2021, of $25.98 per share and $26.03 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 June 30, 2021 (see Exhibit 99.1 to this Form 10-Q).

Using a discounted cash flow analysis, management determined that the fair value of all long-term encumbrances on our properties as of September 30, 2021, was approximately $644.7 million, as compared to a carrying value (excluding unamortized related debt issuance costs) of approximately $649.5 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 September 30, 2021, of $25.80 per share and $26.03 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 September 30, 2021 (see Exhibit 99.1 to this Form 10-Q).

Calculation of Estimated Net Asset Value

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PricewaterhouseCoopers LLP has neither examined, compiled, nor performed any procedures with respect to the fair values or the calculation of net asset value per common share, which utilizes information that is not disclosed within the financial statements, and, accordingly, does not express an opinion or any other form of assurance with respect thereto.

As of June 30, 2021, we estimate the NAV per common share to be $13.16.

As of September 30, 2021, we estimate the NAV per common share to be $13.80.

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) :

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(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 June 30, 2021.

(5) The Series B Preferred Stock was valued based on its closing stock price as of June 30, 2021, while the Series C Preferred Stock was valued at its liquidation value, as discussed above.

The Series D Term Preferred Stock was valued based on its closing stock price as of September 30, 2021.

(5) The Series B Preferred Stock was valued based on its closing stock price as of September 30, 2021, while the Series C Preferred Stock was valued at its liquidation value, as discussed above.

(6) Includes 32,043,989 shares of common stock and 204,778 OP Units held by non-controlling OP Unitholders.

A quarterly roll-forward in the estimated NAV per common share for the three months ended June 30, 2021, is provided below:

Estimated NAV per common share and non-controlling OP Unit as of March 31, 2021 $ 12.69

A quarterly roll-forward in the estimated NAV per common share for the three months ended September 30, 2021, is provided below:

Estimated NAV per common share and non-controlling OP Unit as of June 30, 2021 $ 13.16

Less net loss attributable to common stockholders and non-controlling OP Unitholders (0.05)

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Plus net accretive effect of equity issuances 0.50

Estimated NAV per common share and non-controlling OP Unit as of June 30, 2021 $ 13.16

Estimated NAV per common share and non-controlling OP Unit as of September 30, 2021 $ 13.80

(1) The net change in unrealized fair value of our farmland portfolio consists of three components:

(i) an increase of $0.01 per share due to the net appreciation in value of the farms that were valued during the three months ended June 30, 2021, (ii) an increase of $0.21 per share due to the aggregate depreciation and amortization expense recorded during the three months ended June 30, 2021, and (iii) a decrease of $0.02 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.

(i) an increase of $0.06 per share due to the net appreciation in value of the farms that were valued during the three months ended September 30, 2021, (ii) an increase of $0.22 per share due to the aggregate depreciation and amortization expense recorded during the three months ended September 30, 2021, and (iii) a decrease of $0.03 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 $13.16 as of June 30, 2021, based on the calculation above, the closing price of our common stock on June 30, 2021, was $24.06 per share.

For example, while we estimated our NAV per common share to be $13.80 as of September 30, 2021, based on the calculation above, the closing price of our common stock on September 30, 2021, was $22.77 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.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis