What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-11-08 compared with 2022-08-09 · 164 added, 151 removed, 528 unchanged (37% 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 as of and for the six months ended June 30, 2022 and 2021 (dollars in thousands):

As of and For the six months ended June 30, 2022 As of and For the six months ended June 30, 2021

The following table summarizes the different geographic locations (by state) of our farms owned as of and for the nine months ended September 30, 2022 and 2021 (dollars in thousands):

As of and For the nine months ended September 30, 2022 As of and For the nine months ended September 30, 2021

Revenue % of Total

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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, 2022 (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, 2022 (dollars in thousands):

Year Number of

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Acreage Lease Revenues for the

Six Months Ended

June 30, 2022 % of Total

Nine Months Ended

September 30, 2022 % of Total

1 801 0.7% $ 2,447 3.8%

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(1) Certain lease agreements encompass multiple farms.

(2) Includes one lease that was renewed subsequent to June 30, 2022 (see “ Recent Development—Portfolio Activity—Existing Properties—Leasing Activity ” below for a summary of this and certain other recent leasing activities), one lease in which the tenant termination option expired subsequent to June 30, 2022, without such option being exercised, resulting in the minimum lease term being extended through 2028, and one lease with a tenant termination option that we do not currently expect to be exercised.

(2) Represents a lease with a tenant termination option that we do not currently expect to be exercised.

(3) Includes one lease that was renewed subsequent to September 30, 2022 (see “ Recent Development—Portfolio Activity—Existing Properties—Leasing Activity ” below for a summary of this and certain other recent leasing activities).

(4) Consists of ancillary leases (e.g., renewable energy leases;

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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.

Aside from an early termination option available to the tenant on one of our farms in California (which we do not currently expect to be exercised), we currently have one agricultural lease scheduled to expire within the next six months on a farm in Nebraska.

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.

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Property Acquisitions

Since April 1, 2022, through the date of this filing, we acquired five new farms, which are summarized in the table below (dollars in thousands, except for footnotes):

Since July 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):

Name Property

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Price Acquisition

Costs Annualized

Straight-line

Farm Road (2)

Charlotte, FL 5/20/2022 15 0 Adjacent parcel N/A N/A $ 54 $ 15 $ —

County Road 35 Glenn, CA 6/16/2022 1,374 1 Olives for Olive Oil 14.5 years 1 (5 years)

24,500 54 1,714

Reagan Road (3)

Cochise, AZ 7/13/2022 40 0 Corn 12.5 years None 120 17 39

North Columbia River Road and Prunedale Road (4)

Franklin & Grant, WA, and Umatilla, OR 7/21/2022 1,317 4 Wine Grapes 8.6 years None 37,250 94 2,569

North Columbia River Road (4)(6)

Franklin & Grant, WA 7/21/2022 1,145 3 Wine Grapes 8.4 years None 30,320 146 2,296

Prunedale Road (5)(6)

Umatilla, OR 7/21/2022 172 1 Wine Grapes 10.4 years None 7,008 35 286

1,357 4 $ 37,448 $ 198 $ 2,621

(1) Includes approximately $20,000 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.

(2) 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.

(3) Represents the acquisition of a parcel of farmable land adjacent to an existing farm.

(4) Upon acquisition, we executed four 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 four leases.

Subsequent to acquisition, we spent approximately $153,000 to install certain improvements on this property.

(4) 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.

(5) 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 condensed consolidated financial statements for additional information on our aggregate ownership interest in this and other LLCs.

(6) 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.

Existing Properties

Leasing Activity

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

PRIOR LEASES (1)

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/ NN / N) (4)

CA & CO 2 11,905 $ 631 1 1 / 1 / 0 $ 853 6.5 0 0 / 2 / 0

(1) Prior leases include certain leases that were terminated early during the six months ended June 30, 2022.

In connection with these early terminations, during the six months ended June 30, 2022, we wrote off aggregate deferred rent and rent receivable balances of approximately $20,000 against lease revenue.

Upon termination of these leases, we entered into new leases with new tenants, effective immediately, which are included in the above table.

AZ, CA, & FL 6 4,082 $ 3,084 0 0 / 6 / 0 $ 3,378 4.4 0 1 / 5 / 0

(1) Prior leases include one lease that was terminated early during the three months ended September 30, 2022.

In connection with this early termination, during the three months ended September 30, 2022, we wrote off aggregate deferred rent and rent receivable balances of approximately $24,000 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.

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(4) “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 .”

In addition to the above renewals, we also entered into a renewable energy lease to allow for the development of both wind and solar energy facilities on 16,595 acres in Colorado.

During the development period, which runs through June 2026, the lease is expected to provide for annual rental payments of approximately $332,000.

Financing Activity

Debt Activity

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

Issuer Date of

Issuance Amount Maturity

Date Principal

Amortization Stated Interest Rate Expected Effective Interest Rate (1)

Interest Rate Terms

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

(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, LLC (“Gladstone Securities”), an affiliate of ours, earned total financing fees of approximately $7,000.

In addition, subsequent to June 30, 2022, we repaid approximately $16.9 million of maturing loans.

Since July 1, 2022, we repaid approximately $17.3 million of maturing loans.

On a weighted-average basis, these borrowings bore interest at a stated rate of 4.47% and an effective interest rate (after interest patronage) of 2.93%.

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Series C Preferred Stock

On April 3, 2020, we filed a prospectus supplement (which superseded and replaced a previously-filed prospectus supplement) with the SEC for a continuous public offering (the “Series C Offering”) of up to 26,000,000 shares of our newly-designated 6.00% Series C Cumulative Redeemable Preferred Stock (the “Series C Preferred Stock”).

Under the Series C Offering, we may 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”) to those holders of the Series C Preferred Stock who do not elect to opt-out of such plan.

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 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 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 are 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 and (2) the listing of the Series C Preferred Stock on the Nasdaq Global Market or another national securities exchange.

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, 2022, 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, 2022, 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, 2022, through the date of this filing, we redeemed 8,034 shares and issued approximately 13,853 shares of the Series C Preferred Stock pursuant to the DRIP.

From July 1, 2022, through the date of this filing, we redeemed 33,955 shares and issued approximately 17,562 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 $6.6 million.

The Primary Series C Offering will terminate on the date (the “Series C Termination Date”) that is the earlier of either June 1, 2025 (unless terminated earlier or extended by our Board of Directors), or the date on which all 20,000,000 shares in the Primary Series C Offering are sold.

As amended, the Series C Offering will terminate on the date (the “Series C Termination Date”) that is the earlier of either December 31, 2022 (unless terminated earlier or extended by our Board of Directors), or the date on which all 10,200,000 shares in the Primary Series C Offering are sold.

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 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.

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.

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

Number of Shares Sold Weighted-average

Offering Price

Per Share Gross Proceeds Net Proceeds (1)

183,937 $ 25.21 $ 4,637 $ 4,565

(1) Net of underwriting commissions.

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 8.2% through September 2022, as inflation continues to hover near the highest rates seen in over four decades.

However, food prices have continued to outpace the rate of inflation, with the overall food segment increasing by 11.2% over that same period, and the food at home segment (which encompasses over 90% of the crops grown on our farms) growing by 13.0%.

In addition, according to the NCREIF Farmland Index, which, as of September 30, 2022, consisted of approximately $14.9 billion of farms across the U.S., the total return on U.S.

farmland (including appreciation and income) was 10.2% for the 12 months ended September 30, 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.

Interest rates remain volatile in response to competing concerns about inflationary pressures and the spread and effect of coronavirus (“COVID-19”) variants, coupled with the threat of a near-term recession.

The yield on the 10-year U.S.

Treasury Note has increased substantially since the beginning of 2022 and has 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 ongoing COVID-19 pandemic, and geopolitical conditions, although the actual timeline, impact, and duration are unknown.

Over 99% 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 five-plus 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.

LIBOR Transition

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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 five term loans with Rabo AgriFinance, LLC, (which are effectively fixed through our entry into interest swap agreements) are currently based upon LIBOR.

As such, we expect we will need to

renegotiate these agreements in the future.

We continue to monitor the transition and currently expect SOFR to become the standard rate for all of our variable-rate debt.

Our lines of credit with MetLife and five term loans with Rabo AgriFinance, LLC (which are effectively fixed through our entry into interest swap agreements), are currently based upon LIBOR and include fallback language providing a mechanism for the parties to negotiate a new reference interest rate in the event that LIBOR ceases to exist.

As such, we anticipate we will need to renegotiate these agreements in the near-term future and expect such discussions with the respective lenders to commence soon.

Assuming that SOFR replaces LIBOR and is appropriately adjusted, we currently expect the transition to result in a minimal impact to our overall operations.

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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.

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.

Smaller Reporting Company Status

As of December 31, 2018, and through June 30, 2022, 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 the last business day of our previous second fiscal quarter.

As of December 31, 2018, and through September 30, 2022, 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 the last business day of our previous second fiscal quarter.

As a smaller reporting company, we are permitted to take advantage of reduced disclosure requirements for our public filings.

We currently anticipate that we will no longer qualify as a smaller reporting company beginning with the year ending December 31, 2022, due to our public float as of the last business day of our current second fiscal quarter exceeding the $700 million threshold.

We will no longer qualify as a smaller reporting company beginning with the year ending December 31, 2022, due to our public float as of the last business day of our current second fiscal quarter exceeding the $700 million threshold.

Critical Accounting Policies

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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, 2022.

There were no material changes to our critical accounting policies during the nine months ended September 30, 2022.

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, 2022 versus 2021:

◦ Same-property basis represents farms owned as of March 31, 2021, 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, 2021.

From April 1, 2021, through June 30, 2022, we acquired 26 new farms and did not have any farm dispositions.

• With regard to the comparison between the six months ended June 30, 2022 versus 2021:

• With regard to the comparison between the three months ended September 30, 2022 versus 2021:

◦ Same-property basis represents farms owned as of June 30, 2021, 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, 2021.

From July 1, 2021, through September 30, 2022, we acquired 17 new farms and did not have any farm dispositions.

• With regard to the comparison between the nine months ended September 30, 2022 versus 2021:

◦ Same-property basis represents farms owned as of December 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 December 31, 2020.

From January 1, 2021, through June 30, 2022, we acquired 28 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, 2022 or 2021.

A comparison of results of components comprising our operating income for the three and six months ended June 30, 2022 and 2021 is below (dollars in thousands):

For the Three Months Ended June 30,

From January 1, 2021, through September 30, 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 three and nine months ended September 30, 2022 or 2021.

A comparison of results of components comprising our operating income for the three and nine months ended September 30, 2022 and 2021 is below (dollars in thousands):

For the Three Months Ended September 30,

2022 2021 $ Change % Change

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General and administrative expenses 729 462 267 57.8%

Write-off of costs associated with Series C cumulative redeemable preferred stock 851 — 851 100.0%

Total operating expenses 14,566 11,207 3,359 30.0%

Operating income $ 9,643 $ 8,384 $ 1,259 15.0%

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

2022 2021 $ Change % Change

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General and administrative expenses 1,983 1,582 401 25.3%

Write-off of costs associated with Series C cumulative redeemable preferred stock 851 — 851 100.0%

Total operating expenses 40,091 30,609 9,482 31.0%

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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, 2022 and 2021 (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, 2022 and 2021 (dollars in thousands):

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

2022 2021 $ Change % Change 2022 2021 $ Change % Change

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Same-property Basis – 2022 compared to 2021

Lease revenues from fixed lease payments increased primarily due to certain new leases, amendments, and renewals executed at higher rental rates.

The increase in fixed lease payments as a result of these leases was partially offset by a decrease due 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 for.

Participation rents related to certain lease renewals and amendments, if any, are expected to be recorded during the second half of 2022.

Lease revenues from fixed lease payments increased primarily due to 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 fixed lease payments was partially offset by a decrease due 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.

Participation rents related to these leases, if any, are expected to be recorded during the three months ending December 31, 2022.

Lease revenues from participation rents increased primarily due to more farms having scheduled participation rent payments due during 2022 compared to 2021.

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.

Tenant reimbursements decreased primarily due to additional payments made during the prior-year period by certain tenants on our behalf (pursuant to the lease agreements) to unconsolidated entities of ours that convey water to the respective properties.

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 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 expenditure on certain of our farms.

This increase was partially offset by a decrease attributable to the expiration of certain lease intangible amortization periods.

This 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 three and six months ended June 30, 2022 and 2021 (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, 2022 and 2021 (dollars in thousands):

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

2022 2021 $ Change % Change 2022 2021 $ Change % Change

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Same-property Basis – 2022 compared to 2021

Property operating expenses decreased for the three months ended June 30, 2022, primarily due to 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.

We were not obligated to reimburse the tenant for such costs subsequent to December 31, 2021.

This decrease was partially offset by additional miscellaneous property operating costs incurred on certain properties and higher

property tax expenses due to certain lease renewals recently executed converting the leases from a triple-net structure to a partial-net structure, with us, as landlord, now responsible for the property taxes on these properties.

Property operating expenses increased for the six months ended June 30, 2022, 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 and higher miscellaneous property operating expenses on certain properties.

Property operating expenses increased for the nine months ended September 30, 2022, 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

Tenant reimbursement expense decreased primarily due to a decrease in miscellaneous property operating costs incurred by us in connection with our ownership interests in an unconsolidated entity, for which our tenants are contractually obligated to reimburse us under the terms of the respective leases.

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 cost incurred by the underlying entities.

Related-Party Fees

The following table provides 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 six months ended June 30, 2022 and 2021 (dollars in thousands;

The following table provides 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, 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):

Quarter Ended Year to Date

March 31 June 30

March 31 June 30 September 30

FY 2022 Fee Calculations:

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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 three months ended March 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 periods.

No incentive fee was earned by our Advisor during either of the three months ended June 30, 2022 or 2021.

Our Adviser earned incentive fees during each of the three and nine months ended September 30, 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 and third 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.

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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 the six months ended June 30, 2022, as compared to the prior-year period, primarily due to increased professional fees (driven by higher audit fees and appraisal costs) and additional director fees expensed during the period.

This increase was partially offset by a decrease in acquisition-related costs for investments no longer being pursued.

A comparison of results of other components contributing to net loss attributable to common stockholders for the three and six months ended June 30, 2022 and 2021 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, 2022, as compared to the respective prior-year periods, primarily due to an increase in professional fees (driven by higher audit fees and appraisal costs) and, for the three months ended September 30, 2022, an increase in acquisition-related costs for investments no longer being pursued.

During each of the three and nine months ended September 30, 2022, we wrote off approximately $851,000 of costs (including approximately $798,000 of unamortized deferred offering costs) related to the Series C Offering due to an amendment that reduced the amount 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 three and nine months ended September 30, 2022 and 2021 is below (dollars in thousands):

For the Three Months Ended September 30,

2022 2021 $ Change % Change

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Total other expense, net (7,837) (6,881) (956) 13.9%

Net income (loss) 613 (531) 1,144 (215.4)%

Net loss attributable to non-controlling interests 3 1 2 200.0%

Net income (loss) attributable to the Company 616 (530) 1,146 (216.2)%

Net income 1,806 1,503 303 20.2%

Net income attributable to non-controlling interests (2) (8) 6 (75.0)%

Net income attributable to the Company 1,804 1,495 309 20.7%

Dividends declared on and charges related to Series B and Series C cumulative redeemable preferred stock (5,398) (3,134) (2,264) 72.2%

Net loss attributable to common stockholders $ (3,594) $ (1,639) $ (1,955) 119.3%

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

2022 2021 $ Change % Change

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Loss on dispositions of real estate assets, net (2,100) (1,841) (259) 14.1%

Property and casualty recovery, net 49 — 49 NM

Property and casualty recovery, net 49 — 49 100.0%

Loss from investments in unconsolidated entities (54) (42) (12) 28.6%

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Net income 3,606 1,526 2,080 136.3%

Net income attributable to non-controlling interests (6) — (6) NM

Net income attributable to non-controlling interests (9) (8) (1) 12.5%

Net income attributable to the Company 3,597 1,518 2,079 137.0%

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Net loss attributable to common stockholders $ (10,204) $ (7,319) $ (2,885) 39.4%

NM = Not Meaningful

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, 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, compared to approximately $2.2 million of interest patronage recorded during the prior-year period.

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 2023 interest patronage (which relates to interest accrued during 2022) early.

In the aggregate, we recorded approximately $2.9 million of interest patronage from Farm Credit during the three months ended September 30, 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 three and six months ended June 30, 2022, was approximately $666.9 million and $665.6 million, respectively, as compared to approximately $631.5 million and $629.8 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, 2022, was 3.75% and 3.73%, respectively, as compared to 3.73% and 3.71% for the respective prior-year periods.

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, 2022, was approximately $649.2 million and $660.1 million, respectively, as compared to approximately $627.6 million and $629.2 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, 2022, was 3.82% and 3.76%, respectively, as compared to 3.74% and 3.72% for the respective prior-year periods.

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

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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 credit facility with Metropolitan Life Insurance Company “MetLife”)), and issuances of additional equity securities.

Our current available liquidity is approximately $133.3 million, consisting of approximately $21.0 million in cash on hand and, based on the current level of collateral pledged, approximately $112.3 million of availability under our credit facility with MetLife (subject to compliance with covenants) and other undrawn notes or bonds.

Our current available liquidity is approximately $176.2 million, consisting of approximately $48.9 million in cash on hand and, based on the current level of collateral pledged, approximately $127.3 million of availability under our credit facility with MetLife (subject to compliance with covenants) and other undrawn

notes or bonds.

In addition, we currently have certain properties valued at a total of approximately $105.9 million that are unencumbered and eligible to be pledged as collateral.

Over 99% 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 five-plus years.

So with respect to our current borrowings, we have experienced minimal

impact from the recent increases in interest rates, and we believe we are well-protected against any future interest rate increases.

In addition, the weighted-average remaining term of our notes and bonds payable is approximately 9.5 years.

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-term debt obligations and operating expenses.

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

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We believe that our current and short-term cash resources will be sufficient to fund our distributions to stockholders (including non-controlling OP Unitholders, if any), service our debt, pay dividends on our Series B Preferred Stock, Series C Preferred Stock, and Series D Term Preferred Stock, and fund our current operating costs in the near term.

We expect to meet our long-term liquidity requirements through various sources of capital, including future equity issuances (including, but not limited to, shares of common stock through our “at-the-market program” (the “ATM Program”), OP Units through our Operating Partnership as consideration for future acquisitions, and shares of our Series C Preferred Stock), long-term mortgage indebtedness and bond issuances, and other secured and unsecured borrowings.

We expect to meet our long-term liquidity requirements through various sources of capital, including future equity issuances (including, but not limited to, shares of common stock through our ATM Program, OP Units through our Operating Partnership as consideration for future acquisitions, and shares of our Series C Preferred Stock), long-term mortgage indebtedness and bond issuances, 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.

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In connection with the execution of certain lease agreements, we have committed to provide capital improvements on certain of our farms.

Below is a summary of certain of those projects for which we have incurred or accrued costs as June 30, 2022 (dollars in thousands):

Below is a summary of certain of those projects for which we have incurred or accrued costs as September 30, 2022 (dollars in thousands):

Location(s) Farm

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or Accrued as of

June 30, 2022

Lucie, FL 549 $ 230 Q3 2022 $ 148

September 30, 2022

Hillsborough, FL 55 $ 2,250 (2)

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Q4 2022 2,841

Napa, CA 270 1,548 (2)

Q3 2023 1,019

Lucie, FL 549 230 Q3 2023 148

Umatilla, OR 135 2,750 (2)

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Q3 2024 1,146

Monterey, CA 304 950 (2)

Napa, CA 270 1,635 (2)

Wicomico & Caroline, MD, and Sussex, DE 833 115 Q3 2030 49

Franklin & Grant, WA, and Umatilla, OR 1,126 2,169 (2)

(1) Our obligation to provide capital to fund these improvements does not extend beyond these respective dates.

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In connection with certain farms acquired through a leasehold interest, we assumed certain ground lease arrangements under which we are the lessee.

Future minimum lease payments due under the remaining non-cancelable terms of these leases as of June 30, 2022, is as follows (dollars in thousands):

Future minimum lease payments due under the remaining non-cancelable terms of these leases as of September 30, 2022, is as follows (dollars in thousands):

Period Future Lease Payments (1)

For the remaining six months ending December 31:

For the remaining three months ending December 31:

For the fiscal years ending December 31:

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The amounts shown above represent estimated amounts based on the lease rates currently in place.

As a result of these ground leases, we recorded lease expense (included within Property operating expenses on the accompanying Condensed Consolidated Statement of Operations and Comprehensive Income) of approximately $23,000 and $46,000 during the three and six months ended June 30, 2022, respectively, and approximately $22,000 and $36,000 during the three and six months ended June 30, 2021, respectively.

As a result of these ground leases, we recorded lease expense (included within Property operating expenses on the accompanying Condensed Consolidated Statement of Operations and Comprehensive Income) of approximately $23,000 and $69,000 during the three and nine months ended September 30, 2022, respectively, and approximately $22,000 and $58,000 during the three and nine months ended September 30, 2021, respectively.

Cash Flow Resources

The following table summarizes total net cash flows from operating, investing, and financing activities for the three and six months ended June 30, 2022 and 2021 (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, 2022 and 2021 (dollars in thousands):

For the Nine Months Ended September 30,

2022 2021 $ Change % Change

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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 recent acquisitions and interest patronage received from Farm Credit, partially offset by an increase in fees paid to our Adviser and increases in the amount of interest payments made.

Cash provided by operating activities increased primarily due to additional fixed lease (from recent acquisitions) and participation rental payments (due to more farms having scheduled participation rents) and interest patronage received from Farm Credit, partially offset by an increase in fees paid to our Adviser and increases in the amount of interest payments made.

Investing Activities

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The decrease in cash provided by financing activities was primarily due to 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 $17.0 million, and a decrease in aggregate net borrowings of approximately $50.2 million.

In addition, during the six months ended June 30, 2022, we paid approximately $7.7 million to redeem 204,778 OP Units.

In addition, during the nine months ended September 30, 2022, we paid approximately $7.7 million to redeem 204,778 OP Units.

MetLife Facility

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(3) Excludes approximately 30,288 shares issued pursuant to the DRIP.

Our Registration Statement (as defined in Note 8, “ Equity—Registration Statement ,” within the accompanying notes to our condensed consolidated financial statements) permits us to issue up to an aggregate of $1.0 billion in securities (including up to $650.0 million reserved for issuance of shares of the Series C Preferred Stock), consisting of common stock, preferred stock, warrants, debt securities, depository shares, subscription rights, and units, including through separate, concurrent offerings of two or more of such securities.

Our Registration Statement (as defined in Note 8, “ Equity—Registration Statement ,” within the accompanying notes to our condensed consolidated financial statements) permits us to issue up to an aggregate of $1.0 billion in securities (including up to approximately $259.6 million reserved for issuance of shares of the Series C Preferred Stock), 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 $243.9 million of Series C Preferred Stock (including approximately $872,000 issued pursuant to the DRIP), $60.4 million of Series D Term Preferred Stock, and $260.6 million of common stock (including common stock issued to redeem OP Units) under the Registration Statement.

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Off-Balance Sheet Arrangements

As of June 30, 2022, we did not have any material off-balance sheet arrangements.

As of September 30, 2022, we did not have any material off-balance sheet arrangements.

NON-GAAP FINANCIAL INFORMATION

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

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

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

2022 2021 2022 2021

Net income $ 1,806 $ 1,503 $ 3,606 $ 1,526

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

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

(5,398) (3,134) (13,801) (8,837)

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FFO available to common stockholders and non-controlling OP Unitholders 6,387 5,323 17,826 13,838

Acquisition- and disposition-related (credits) expenses, net (88) 71 21 140

Other nonrecurring (receipts) charges, net (3)

Acquisition- and disposition-related expenses, net 150 44 169 185

Other nonrecurring charges, net (3)

CFFO available to common stockholders and non-controlling OP Unitholders 7,388 5,367 18,798 14,079

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(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, and (iii) certain one-time costs related to the early redemption of our Series A Term Preferred Stock.

(3) Consists primarily of (i) costs related to the reduction in size of the Series C Offering that were expensed during the three months ended September 30, 2022, (ii) 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, (iii) one-time listing fees related to our Series D Term Preferred Stock, 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), (ii) the pro-rata write-off of offering costs related to shares of 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.

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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, 2022, 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, 2022, determined by each method is shown in the table below (dollars in thousands, except in footnotes):

Valuation Method Number of

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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 June 2021 and June 2022.

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

(2) Appraisals performed between October 2021 and October 2022.

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

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Land Value (per farmable acre) $707 – $123,280 $ 35,294 $5,512 – $5,512 $ 5,512

Market NOI (per farmable acre) $25 – $4,215 $ 2,102 $214 – $214 $ 214

Market Capitalization Rate 3.75% – 10.50% 5.67% 4.00% – 4.00% 4.00%

Market NOI (per farmable acre) $25 – $4,215 $ 2,165 N/A N/A

Market Capitalization Rate 3.75% – 10.50% 5.66% N/A N/A

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.

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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, 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 June 30, 2022, from the prior value basis as of March 31, 2022, is provided in the table below (dollars in thousands):

Total portfolio fair value as of March 31, 2022 $ 1,476,836

Acquisition of new farms during the three months ended June 30, 2022 24,554

Plus net value appreciation during the three months ended June 30, 2022:

Farms valued via third-party appraisals $ 490

Total net appreciation for the three months ended June 30, 2022 490

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, 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 September 30, 2022, from the prior value basis as of June 30, 2022, is provided in the table below (dollars in thousands):

Total portfolio fair value as of June 30, 2022 $ 1,501,880

Acquisition of new farms during the three months ended September 30, 2022 37,448

Plus net value appreciation during the three months ended September 30, 2022:

Farms valued via third-party appraisals $ 16,700

Total net appreciation for the three months ended September 30, 2022 16,700

Total portfolio fair value as of September 30, 2022 $ 1,556,028

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, 2022, was approximately $621.9 million, as compared to a carrying value (excluding unamortized related debt issuance costs) of approximately $665.6 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, 2022, of $26.30 per share and $24.90 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, 2022 (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, 2022, was approximately $581.8 million, as compared to a carrying value (excluding unamortized related debt issuance costs) of approximately $643.2 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, 2022, of $26.13 per share and $24.42 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, 2022 (see Exhibit 99.1 to this Form 10-Q).

Calculation of Estimated Net Asset Value

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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.

The fair values presented above and their usage in the calculation of net asset value per share presented below have been prepared by and are 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 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, 2022, we estimate the NAV per common share to be $15.60.

As of September 30, 2022, we estimate the NAV per common share to be $16.56.

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, 2022.

(5) The Series B Preferred Stock was valued based on its closing stock price as of June 30, 2022, while the Series C Preferred Stock was valued at its liquidation value, as discussed above.

(6) Includes 34,520,068 shares of common stock and 0 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, 2022, is provided below:

Estimated NAV per common share and non-controlling OP Unit as of March 31, 2022 $ 15.54

The Series D Term Preferred Stock was valued based on its closing stock price as of September 30, 2022.

(5) The Series B Preferred Stock was valued based on its closing stock price as of September 30, 2022, while the Series C Preferred Stock was valued at its liquidation value, as discussed above.

A quarterly roll-forward in the estimated NAV per common share for the three months ended September 30, 2022, is provided below:

Estimated NAV per common share and non-controlling OP Unit as of June 30, 2022 $ 15.60

Less net loss attributable to common stockholders and non-controlling OP Unitholders (0.10)

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Less distributions on common stock and non-controlling OP Units (0.14)

Less net dilutive effect of equity issuances (0.22)

Estimated NAV per common share and non-controlling OP Unit as of June 30, 2022 $ 15.60

Plus accretive effect of equity issuances and redemptions, net —

Estimated NAV per common share and non-controlling OP Unit as of September 30, 2022 $ 16.56

(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, 2022, (ii) an increase of $0.24 per share due to the aggregate depreciation and amortization expense recorded during the three months ended June 30, 2022, and (iii) a decrease of $0.15 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 $0.48 per share due to the net appreciation in value of the farms that were valued during the three months ended September 30, 2022, (ii) an increase of $0.26 per share due to the aggregate depreciation and amortization expense recorded during the three months ended September 30, 2022, and (iii) a decrease of $0.09 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 $15.60 as of June 30, 2022, based on the calculation above, the closing price of our common stock on June 30, 2022, was $22.16 per share.

For example, while we estimated our NAV per common share to be $16.56 as of September 30, 2022, based on the calculation above, the closing price of our common stock on September 30, 2022, was $18.10 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