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Risks Relating to Our Business and Operations
−Removed: Our real estate portfolio is concentrated across a limited number of states, which subjects us to an increased risk of significant loss if adverse weather, economic, or regulatory changes or developments in the markets in which our properties are located.
+Added: Our real estate portfolio is concentrated across a limited number of states, which subjects us to an increased risk of significant loss if adverse weather, economic, or regulatory changes or developments in the markets in which our properties are located occur.
Since our current real estate profile is concentrated across a limited number of states, we are currently subject to adverse changes in the political or regulatory climate in those states or specific counties where our properties are located that could adversely affect our real estate portfolio and our ability to lease properties.
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As a result, we will rely on our Adviser to perform due diligence investigations of these tenants, their operations, and their prospects.
−Removed: We may not learn all of the material information we need to know regarding these
−Removed: businesses through our investigations.
+Added: We may not learn all of the material information we need to know regarding these businesses through our investigations.
As a result, it is possible that we could lease properties to tenants that ultimately are unable to pay rent to us, which could adversely impact the amount available for distributions.
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In addition to the risks associated with real estate investments in general, as described elsewhere in this Form 10-K, the risks associated with our development farms include, among other things:
−Removed: • significant time lag between commencement of development and commercial productivity for permanent crop development farms subjects us to greater risks due to fluctuations in the general economy and adverse weather conditions;
+Added: • significant time lag between commencement of development and commercial productivity for permanent crop development farms subjects us to greater risks due to fluctuations in the general economy, crop prices, and adverse weather conditions;
• expenditure of money and time on development that may not be completed;
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We expect that single tenants will continue to occupy most of our farms, and, therefore, the success of our investments will continue to be materially dependent on the financial stability of these tenants.
−Removed: Some of our tenants may have been recently restructured using leverage acquired in a leveraged transaction, may otherwise be subject to significant debt obligations, or may have been adversely impacted by the COVID-19 pandemic.
+Added: Some of our tenants may have been recently restructured using leverage acquired in a leveraged transaction, may otherwise be subject to significant debt obligations, or may have been adversely impacted by public health emergencies, including the COVID-19 pandemic.
Tenants that are subject to significant debt obligations may be unable to make their rent payments if there are adverse changes in their businesses or in general economic conditions.
−Removed: Tenants that have been impacted adversely by COVID-19 pandemic may not be able to make timely rental payments due to labor shortages, supply chain issues, or due to government-mandated lockdowns or other measures taken to address the pandemic.
+Added: Tenants that have been impacted adversely by public health emergencies, including the COVID-19 pandemic, may not be able to make timely rental payments due to labor shortages, supply chain issues, or due to government-mandated lockdowns or other measures taken to address such public health emergencies.
Tenants that have experienced leveraged restructurings or acquisitions will generally have substantially greater debt and substantially lower net worth than they had prior to the leveraged transaction.
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As a result, any decreases in the prevailing market rental rates in the geographic areas in which we own properties could have a material adverse effect on our results of operations and cash available for distribution to stockholders.
−Removed: Our investments in properties with longer-term leases (e.g., five years or more), could expose us to various risks, including interest rate risk and the risk of being unable to take advantage of prevailing market rates, which could have a material adverse effect on our results of operations and cash available for distribution to stockholders.
+Added: Our investments in properties with longer-term leases (i.e., five years or more), could expose us to various risks, including interest rate risk and the risk of being unable to take advantage of prevailing market rates, which could have a material adverse effect on our results of operations and cash available for distribution to stockholders.
When entering into longer-term leases in which the rental rate is generally fixed, we intend to incorporate at least one of a variety of forms of rent escalators into the lease, including annual rent escalations or market reset periods.
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We own several farms subject to leases that include a participation rent component based on the annual gross revenues earned on the respective farm;
−Removed: however, the majority of these leases also includes a guarantee of a minimum amount of rental income that generally satisfies our investment return criteria.
+Added: however, the majority of these leases also include a guarantee of a minimum amount of rental income that generally satisfies our investment return criteria.
While we do not expect participation rents to make up a significant portion of our overall leased portfolio, we intend to enter into additional leases with participation rent components.
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Since our IPO, we have expanded our investment focus to include farms used for permanent crops, and we intend to continue to add to our investments in farmland used for permanent crops in the future.
−Removed: Permanent crops have plant structures (such as trees, vines, or bushes) that produce yearly crops without being replanted.
+Added: Permanent crops have plant structures (such as
+Added: trees, vines, or bushes) that produce yearly crops without being replanted.
Examples include almonds, apples, blueberries, figs, pistachios, oranges, and table and wine grapes.
−Removed: Permanent crops generally involve more risk than annual row crops because permanent crops require more time and capital to plant.
+Added: Permanent crops generally involve more risk than annual row crops because permanent crops require more time and capital to plant and cultivate.
As a result, permanent crops are generally more expensive to replace and more susceptible to disease and poor weather.
−Removed: If a farmer loses a permanent crop to any natural disaster, such as drought, flooding, fire, or disease, there would generally be significant time and capital needed to return the land to production because a tree or vine may take years to grow before bearing fruit.
−Removed: Permanent crop farmland also prevents the farmer from being able to rotate crop types to keep up with changing market conditions or changes to the weather or soil.
−Removed: If demand for one type of permanent crop decreases, the permanent crop farmer cannot easily convert the farm to another type of crop because permanent crop farmland is dedicated to one crop during the lifespan of the trees or vines and therefore cannot easily be rotated to adapt to changing environmental or market conditions.
+Added: If a farmer loses a permanent crop to any natural disaster, such as drought, flooding, fire, or disease, there would generally be significant time and capital needed to return the land to commercial production because a tree, bush, or vine may take years to grow before bearing fruit.
+Added: Permanent crop farmland also prevents the farmer from being able to rotate crop types to keep up with changing market conditions or changes in the weather or soil.
+Added: If demand for one type of permanent crop decreases, the permanent crop farmer cannot easily convert the farm to another type of crop because permanent crop farmland is dedicated to one crop during the lifespan of the trees, bushes, or vines and therefore cannot easily be rotated to adapt to changing environmental or market conditions.
In addition, permanent crops, which can generally endure long periods of time from harvest to consumption, allow for global shipment and trade.
−Removed: As a result, permanent crops are usually less insulated from the global market volatility than annual row crops.
+Added: As a result, permanent crops are usually less insulated from the global produce market volatility than annual row crops.
This will generally provide for less price stability of the harvested crop and therefore less stability of the underlying land value for cropland producing permanent crops.
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Fresh produce, including produce used in canning and other packaged food operations, is vulnerable to adverse weather conditions, including windstorms, floods, drought and temperature extremes, which are quite common but difficult to predict.
−Removed: Because fresh produce is highly perishable and generally must be brought to market and sold soon after harvest, unfavorable growing conditions can reduce both crop size and crop quality.
+Added: Because fresh produce is highly perishable and generally must be brought to market and sold soon after harvest, unfavorable
+Added: growing conditions can reduce both crop size and crop quality.
Seasonal factors, including supply and consumer demand, may also have an effect on the crops grown by our tenants.
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Fresh produce is also vulnerable to crop disease, pests and other contaminants.
−Removed: Damages to tenants’ crops from crop disease and pests may vary in severity and effect, depending on the stage of production at the time of infection or infestation, the type of treatment applied and climatic conditions.
+Added: Damages to tenants’ crops from crop disease and pests may vary in severity and effect, depending on the stage of production at the time of infection or infestation, the type of treatment applied and environmental conditions.
The costs to control these infestations vary depending on the severity of the damage and the extent of the plantings affected.
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As permanent crops produce yearly crops without being replanted, they are more expensive to replace and more susceptible to disease and poor weather than annual row crops.
−Removed: If a farmer loses a permanent crop to any natural disaster, such as drought, flooding, fire or disease, there would generally be significant time and capital needed to return the land to production because a
−Removed: tree or vine may take years to grow before bearing fruit.
+Added: If a farmer loses a permanent crop to any natural disaster, such as drought, flooding, fire or disease, there would generally be significant time and capital needed to return the land to production because a tree or vine may take years to grow before bearing fruit.
Permanent crop farmland also prevents the farmer from being able to rotate crop types to keep up with changing market conditions or changes to the weather or soil.
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Because of this distribution requirement, it is not likely that we will be able to fund a significant portion of our future capital needs, including property acquisitions, from retained earnings.
−Removed: Therefore, we may acquire additional capital from the issuance of securities senior to our common shares, including borrowings or other indebtedness, preferred shares (such as our Series B Preferred Stock, Series C Preferred Stock, or Series D Term Preferred Stock), or the issuance of other securities.
+Added: Therefore, we may acquire additional capital from the issuance of securities senior to our common shares, including borrowings or other indebtedness, preferred shares (such as our Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, or Series E Preferred Stock), or the issuance of other securities.
This capital may not be available on favorable terms or at all.
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To the extent we issue debt securities, other instruments of indebtedness, or additional preferred stock or borrow additional money from banks or other financial institutions, we will be additionally exposed to risks associated with leverage, including increased risk of loss.
−Removed: If we issue additional preferred securities that rank senior to our common shares in our capital structure, the holders of such preferred securities may have separate voting rights and other rights, preferences, or privileges, economic and otherwise, more favorable than those of our common shares and our currently-designated preferred securities (including our Series B Preferred Stock, Series C Preferred Stock, and Series D Term Preferred Stock), and the issuance of such preferred securities could have the effect of delaying, deferring, or preventing a transaction or a change of control that might involve a premium price for common stockholders.
+Added: If we issue additional preferred securities that rank senior to our common shares in our capital structure, the holders of such preferred securities may have separate voting rights and other rights, preferences, or privileges, economic and otherwise, more favorable than those of our common shares and our currently-designated preferred securities (including our Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, and Series E Preferred Stock), and the issuance of such preferred securities could have the effect of delaying, deferring, or preventing a transaction or a change of control that might involve a premium price for common stockholders.
Any inability to access additional financing on terms that are favorable to us may adversely affect our ability to grow and our business generally.
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Accordingly, we may be unable to obtain the degree of leverage that we believe to be optimal, which may cause us to have less cash for distributions to stockholders.
−Removed: Our use of leverage could also
−Removed: make us more vulnerable to a downturn in our business or the economy generally and a significant increase in the ratio of our indebtedness to our assets may have an adverse effect on the market price of our common stock.
+Added: Our use of leverage could also make us more vulnerable to a downturn in our business or the economy generally and a significant increase in the ratio of our indebtedness to our assets may have an adverse effect on the market price of our common stock.
Our income from operations may not be enough to cover our debt service obligations, which may affect distributions to stockholders or cause us to incur losses.
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We have secured borrowings, which would have a risk of loss of the property securing such loan upon foreclosure.
−Removed: We currently have various borrowing facilities in place that are secured by certain of our farms.
−Removed: As of December 31, 2021, our total borrowings were secured by the majority of the farms we owned as of that date.
+Added: We have multiple borrowing facilities in place, and our total borrowings are secured by the majority of the farms we own.
If we are unable to make our debt payments as required, either under our current credit facilities or any future facilities, a lender could foreclose on certain of the properties securing its loan.
−Removed: This could cause us to lose part or all of our investment in the property, which in turn could cause the value of our common stock, Series B Preferred Stock, Series C Preferred Stock, or Series D Term Preferred Stock or the distributions to our stockholders to be reduced or delayed.
+Added: This could cause us to lose part or all of our investment in the property, which in turn could cause the value of our common stock, Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, or Series E Preferred Stock or the distributions to our stockholders to be reduced or delayed.
As we consider additional debt financing from third-party lenders, our assets may become highly leveraged, which may result in losses.
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We face a risk from the fact that certain of our properties are cross-collateralized.
−Removed: As of December 31, 2021, the mortgages on certain of our properties were cross-collateralized.
+Added: The mortgages on certain of our properties are cross-collateralized.
To the extent that any of the properties in which we have an interest are cross-collateralized, any default by the property owner subsidiary under the mortgage note relating to the one property will result in a default under the financing arrangements relating to any other property that also provides security for that mortgage note or is cross-collateralized or cross-defaulted with such mortgage note.
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These uncertainties are particularly pronounced in light of the current economic environment, in which the pace of future development is unclear.
−Removed: Although the current development market contains uncertainties, these uncertainties may be more acute over time, since we do not intend to acquire properties that are expected to be converted to urban or suburban uses in the near term.
+Added: Although the current development market contains uncertainties, these uncertainties may be more acute over time, since we do
+Added: not intend to acquire properties that are expected to be converted to urban or suburban uses in the near term.
As a result, there can be no guarantee that increased development will actually occur and that we will be able to sell any of the properties that we own or acquire in the future for such conversion.
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We will also be required to set aside a reasonable portion of the surface area of our properties to accommodate these oil and gas operations.
−Removed: The devotion of a portion of our properties to these oil and gas operations would reduce the amount of the surface available for farming or farm-related uses, which could adversely impact the rents that we receive from leasing these properties.
+Added: The devotion of a portion of our properties to these oil and gas
+Added: operations would reduce the amount of the surface available for farming or farm-related uses, which could adversely impact the rents that we receive from leasing these properties.
Interest rate fluctuations may adversely affect our results of operations.
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Additionally, increases in interest rates, or reduced access to credit markets due, among other things, to more stringent lending requirements or a high level of leverage, may make it difficult for us to refinance our mortgage debt as it matures or limit the availability of mortgage debt, thereby limiting our acquisition and/or refinancing activities.
−Removed: Even in the event that we are able to secure mortgage debt on, or otherwise finance our mortgage debt, due to increased costs associated with securing financing
−Removed: and other factors beyond our control, we may be unable to refinance the entire mortgage debt as it matures or be subject to unfavorable terms (such as higher loan fees, interest rates, and periodic payments) if we do refinance the mortgage debt.
+Added: Even in the event that we are able to secure mortgage debt on, or otherwise finance our mortgage debt, due to increased costs associated with securing financing and other factors beyond our control, we may be unable to refinance the entire mortgage debt as it matures or be subject to unfavorable terms (such as higher loan fees, interest rates, and periodic payments) if we do refinance the mortgage debt.
A significant change in interest rates could have an adverse impact on our results of operations.
−Removed: In the years prior to the current COVID-19 pandemic, the Federal Reserve had made gradual increases in the federal funds rate.
−Removed: It is expected that the Federal Reserve may resume increasing the federal funds rate due to other key economic indicators, such as the unemployment rate or rising inflation, and any such increases may cause interest rates and borrowing costs to rise, which may negatively impact our ability to access the debt markets on favorable terms.
+Added: The Federal Reserve has increased the federal funds rate significantly over the past 12 months and may continue to do so, depending on certain key economic indicators, such as rising inflation or the unemployment rate.
+Added: Any such future increases may cause interest rates and borrowing costs to rise even further, which may negatively impact our ability to access the debt markets on favorable terms.
Any prolonged adverse economic conditions could have a material adverse effect on our business, financial condition, and results of operations.
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As our reliance on technology has increased, so have the risks posed to our information systems, both internal and those provided to us by third-party service providers.
+Added: In addition, cybersecurity risks such as those above have increased in recent years in part due to increasingly numerous and sophisticated malicious cyber actors.
We have implemented or plan on implementing additional processes, procedures, and internal controls to help prevent, detect, and mitigate cybersecurity risks and cyber intrusions, but these measures, as well as our increased awareness of the nature and extent of a risk of a cyber-incident, do not guarantee that a cyber-incident will not occur and/or that our financial results, operations, or confidential information will not be negatively impacted by such an incident.
−Removed: Our business may be adversely affected by the ongoing COVID-19 pandemic or other public health emergencies..
−Removed: As of the date of this filing, the outbreak of COVID-19, which the World Health Organization has declared a Public Health Emergency of International Concern, is continuing.
−Removed: The outbreak of COVID-19 has resulted in numerous deaths, adversely impacted global commercial activity, and contributed to significant volatility in certain equity and debt markets.
−Removed: The global impact of the outbreak, and COVID-19 variants, continues to evolve, and many countries continue to react by instituting quarantines, prohibitions on travel, and the closure of offices, businesses, schools, retail stores, and other public venues.
−Removed: Businesses have also implemented similar precautionary measures over the course of the pandemic.
−Removed: While the United States economy has reopened, the widespread impact of the pandemic continues to be felt throughout the country.
−Removed: As such, more widespread reinstatement of directives and mandates requiring businesses to again curtail or cease normal operations remains a possibility.
−Removed: Such measures, as well as the general uncertainty surrounding the dangers and impact of COVID-19, continue to create significant disruption in labor force availability, supply chains, and economic activity and have had and are likely to continue to have a particularly adverse impact on transportation, hospitality, tourism, entertainment, and other industries.
−Removed: Even though COVID-19 vaccines are widely available, there can be no assurance that the vaccines will be accepted by all or ultimately be successful in limiting or stopping the spread of COVID-19.
−Removed: As COVID-19 and COVID-19 variants continue to spread, the potential impacts are increasingly uncertain and difficult to assess.
−Removed: Any public health emergency, including any outbreak of COVID-19, SARS, H1N1/09 flu, avian flu, other coronavirus, Ebola or other existing or new epidemic diseases, or the threat thereof, could have a significant adverse impact on the Company and could adversely affect the Company’s ability to fulfill its investment objectives.
+Added: Our business may be adversely affected by public health emergencies, including the ongoing effects of the COVID-19 pandemic.
+Added: Although the macroeconomic impact of the pandemic has decreased in comparison to earlier in the pandemic, the COVID-19 pandemic caused, both in the U.S.
+Added: and globally, significant disruptions to financial markets, labor and supply disruptions and shortages, and inflationary economic conditions.
+Added: All of these adverse macroeconomic effects have led to global economic volatility and could adversely impact our business.
+Added: Further, any public health emergency, including any outbreak of COVID-19, SARS, H1N1/09 flu, avian flu, other coronavirus, Ebola or other existing or new epidemic diseases, or the threat thereof, could have a significant adverse impact on the Company and could adversely affect the Company’s ability to fulfill its investment objectives.
The extent of the impact of any public health emergency on the Company’s operational and financial performance will depend on many factors, including the duration and scope of such public health emergency, the extent of any related travel advisories and restrictions implemented, the impact of such public health emergencies on overall supply and demand, goods and services, investor liquidity, consumer confidence and levels of economic activity, and the extent of its disruption to important global, regional, and local supply chains and economic markets, all of which are highly uncertain and cannot be predicted.
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Risks Associated With Our Use of an Adviser to Manage Our Business
−Removed: We are dependent upon our key management personnel for our future success, particularly David Gladstone, Terry Lee Brubaker, Bill Reiman, Bill Frisbie, and Lewis Parrish.
+Added: We are dependent upon our key management personnel for our future success, particularly David Gladstone, Terry Lee Brubaker, Bill Reiman, Bill Frisbie, Lewis Parrish, and Jay Beckhorn.
We are dependent on our senior management and other key management members to carry out our business and investment strategies.
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Each of our executive officers, other than Mr.
−Removed: Parrish, is also an executive officer of Gladstone Commercial, which actively makes real estate investments, and Gladstone Capital and Gladstone Investment, which actively make loans to and invest in small- and medium-sized companies;
−Removed: and each of our directors and executive officers, other than Mr.
−Removed: Parrish and Jennifer Smith, our chief valuation officer, are also executive officers and directors, as applicable, of Gladstone Acquisition, a special purpose acquisition company.
−Removed: As a result, we may, from time to time, have conflicts of interest with our Adviser in its management of our business and that of Gladstone Commercial, Gladstone Investment, Gladstone Capital, or Gladstone Acquisition, which may arise
−Removed: primarily from the involvement of our Adviser, Gladstone Commercial, Gladstone Capital, Gladstone Investment, Gladstone Acquisition, and their affiliates in other activities that may conflict with our business.
+Added: Parrish, is also an executive officer of Gladstone Commercial, which actively makes real
+Added: estate investments, and Gladstone Capital and Gladstone Investment, which actively make loans to and invest in small- and medium-sized companies.
+Added: As a result, we may, from time to time, have conflicts of interest with our Adviser in its management of our business and that of Gladstone Commercial, Gladstone Investment, or Gladstone Capital, which may arise primarily from the involvement of our Adviser, Gladstone Commercial, Gladstone Capital, Gladstone Investment, and their affiliates in other activities that may conflict with our business.
Examples of these potential conflicts include:
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• we may experience competition with our affiliates for potential financing transactions;
−Removed: • our Adviser and other affiliates, such as Gladstone Commercial, Gladstone Capital, Gladstone Investment, and Gladstone Acquisition could compete for the time and services of our officers and directors and reduce the amount of time they are able to devote to management of our business.
+Added: • our Adviser and other affiliates, such as Gladstone Commercial, Gladstone Capital, and Gladstone Investment could compete for the time and services of our officers and directors and reduce the amount of time they are able to devote to management of our business.
These and other conflicts of interest between us and our Adviser could have a material adverse effect on the operation of our business and the selection or management of our real estate investments.
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• Our articles of incorporation prohibit ownership of more than 3.3% of the outstanding shares of our capital stock by one person, except for certain qualified institutional investors, which are limited to holding 9.8% of our common stock.
−Removed: As of February 18, 2022, David Gladstone, our chairman, chief executive officer, and president, and pursuant to an exception approved by our Board of Directors and in compliance with our charter, owned, directly or indirectly, including through certain foundations and trusts, approximately 7.3% of our common stock, and the Gladstone Future Trust, for the benefit of Mr.
+Added: As of December 31, 2022, David Gladstone, our chairman, chief executive officer, and president, and pursuant to an exception approved by our Board of Directors and in compliance with our charter, owned, directly or indirectly, including through certain foundations and trusts, approximately 7.2% of our common stock, and the Gladstone Future Trust, for the benefit of Mr.
Gladstone’s children, owned approximately 1.9% of our common stock.
−Removed: The ownership restriction may discourage a change of control and may deter individuals or entities from making tender offers for our capital stock, which offers might otherwise be financially attractive to our stockholders or which might cause a change in our management.
+Added: The ownership restriction may discourage a change of control and may deter individuals or entities from making tender offers for our
+Added: capital stock, which offers might otherwise be financially attractive to our stockholders or which might cause a change in our management.
• Our Board is divided into three classes, with the term of the directors in each class expiring every third year.
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Our charter grants our Board of Directors the right to classify or reclassify any unissued shares of capital stock, increase or decrease the authorized number of shares and establish the preference and rights of any preferred stock without stockholder approval.
−Removed: Under our charter, we currently have authority to issue shares of both common stock and preferred stock (inclusive of our Series B Preferred Stock, Series C Preferred Stock, and Series D Term Preferred Stock).
+Added: Under our charter, we currently have authority to issue shares of both common stock and preferred stock (inclusive of our Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, and Series E Preferred Stock).
Our Board of Directors has the authority, without a stockholders’ vote, to classify or reclassify any unissued shares of stock, including common stock, into preferred stock (or vice versa), to increase or decrease the authorized number of shares of common stock and preferred stock and to establish the preferences and rights of any preferred stock or other class or series of shares to be issued.
Because our Board of Directors has the power to establish the preferences and rights of additional classes or series of stock without a stockholders’ vote, our Board of Directors may give the holders of any class or series of stock preferences, powers and rights, including voting rights, senior to the rights of holders of existing stock.
−Removed: Holders of our Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, and future holders of any securities ranking senior to our common stock have dividend and/or liquidation rights that are senior to the rights of the holders of our common stock.
+Added: Holders of our Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, Series E Preferred Stock and future holders of any securities ranking senior to our common stock have dividend and/or liquidation rights that are senior to the rights of the holders of our common stock.
Additional issuances of securities senior to our common stock may negatively impact the value of our common stock and further restrict the ability of holders of our common stock to receive dividends and/or liquidation rights.
−Removed: In addition to our outstanding borrowings and common stock, our capital structure also includes our Series B Preferred Stock, Series C Preferred Stock, and Series D Term Preferred Stock.
−Removed: In the future, we may attempt to increase our capital resources by completing additional offerings of our Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, or other equity securities or by issuing debt securities.
−Removed: In the event of a liquidation, lenders with respect to any outstanding borrowings (including our lines of credit), holders of any debt securities, and holders of any preferred stock issuances (including our Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, and any other preferred stock with parity ranking we may issue in the future) would receive a distribution of our available assets in full prior to the holders of our common stock.
+Added: In addition to our outstanding borrowings and common stock, our capital structure also includes our Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, and Series E Preferred Stock.
+Added: In the future, we may attempt to increase our capital resources by completing additional offerings of our Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, Series E Preferred Stock or other equity securities or by issuing debt securities.
+Added: In the event of a liquidation, lenders with respect to any outstanding borrowings (including our lines of credit), holders of any debt securities, and holders of any preferred stock issuances (including our Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, Series E Preferred Stock, and any other preferred stock with parity ranking we may issue in the future) would receive a distribution of our available assets in full prior to the holders of our common stock.
Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings.
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As such, our common stockholders bear the risk of our future offerings reducing the per-share trading price of our common stock and diluting their interest in us.
−Removed: Further, holders of our Series B Preferred Stock, Series C Preferred Stock, and Series D Term Preferred Stock rank senior in priority of dividend payments, which may restrict our ability to declare and pay dividends to our common stockholders at the current rate, or at all.
−Removed: We may not have sufficient earnings and profits to pay distributions on the Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, or common stock to be treated as dividends.
−Removed: The distributions payable by us on the Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, or common stock may exceed our current and accumulated earnings and profits, as calculated for U.S.
+Added: Further, holders of our Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, and Series E Preferred Stock rank senior in priority of dividend payments, which may restrict our ability to declare and pay dividends to our common stockholders at the current rate, or at all.
+Added: We may not have sufficient earnings and profits to pay distributions on the Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, Series E Preferred Stock, or common stock to be treated as dividends.
+Added: The distributions payable by us on the Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, Series E Preferred Stock, or common stock may exceed our current and accumulated earnings and profits, as calculated for U.S.
federal income tax purposes, at the time of payment.
−Removed: If that were to occur, it would result in the amount of distributions that exceed our current and accumulated earnings and profits being treated first as a return of capital to the extent of the holder’s adjusted tax basis in the Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, or common stock and then, to the extent of any excess over such adjusted tax basis, as capital gain.
+Added: If that were to occur, it would result in the amount of distributions that exceed our current and accumulated earnings and profits being treated first as a return of capital to the extent of the holder’s adjusted tax basis in the Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, Series E Preferred Stock, or common stock and then, to the extent of any excess over such adjusted tax basis, as capital gain.
We may not be able to maintain our qualification as a REIT for federal income tax purposes, which would subject us to federal income tax on our taxable income at regular corporate rates, thereby reducing the amount of funds available for paying distributions to stockholders.
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We intend to pay out our income to our stockholders in a manner intended to satisfy the distribution requirement applicable to REITs and to avoid corporate income tax and the 4% excise tax.
−Removed: Differences in timing between the recognition of income and
−Removed: the related cash receipts or the effect of required debt amortization payments could require us to borrow money or sell assets to pay out enough of our taxable income to satisfy the distribution requirement and to avoid corporate income tax and the 4% excise tax in a particular year.
+Added: Differences in timing between the recognition of income and the related cash receipts or the effect of required debt amortization payments could require us to borrow money or sell assets to pay out enough of our taxable income to satisfy the distribution requirement and to avoid corporate income tax and the 4% excise tax in a particular year.
Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends.
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To facilitate compliance with this requirement, our charter prohibits any individual from owning more than 3.3% in value of our outstanding stock.
−Removed: Pursuant to an exception from this limit contained in our charter, as of February 18, 2022, David Gladstone owned, directly or indirectly, including through certain trusts, aggregate beneficial ownership of approximately 8.7% of our outstanding common stock.
+Added: Pursuant to an exception from this limit contained in our charter, as of December 31, 2022, David Gladstone owned, directly or indirectly, including through certain trusts, aggregate beneficial ownership of approximately 8.5% of our outstanding common stock.
In addition, the David and Lorna Gladstone Foundation, a private charitable foundation, owned approximately 0.6% of our outstanding common stock.
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However, if our assets were considered to be plan assets, our assets would be subject to ERISA and/or Section 4975 of the Code, and some of the transactions we have entered into with our Adviser and its affiliates could be considered “prohibited transactions” which could cause us, our Adviser and its affiliates to be subject to liabilities and excise taxes.
−Removed: In addition, our officers and directors, our Adviser and its affiliates could be deemed to be fiduciaries under ERISA and subject to other conditions, restrictions and prohibitions under Part 4 of Title I of ERISA.
+Added: In addition, our officers and directors, our Adviser and its affiliates could be deemed to be fiduciaries under ERISA and subject to
+Added: other conditions, restrictions and prohibitions under Part 4 of Title I of ERISA.
Even if our assets are not considered to be plan assets, a prohibited transaction could occur if we or any of our affiliates is a fiduciary within the meaning of ERISA with respect to a purchase by a benefit plan.
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federal tax laws could adversely affect an investment in our common stock.
−Removed: Risks Relating to the Market for our Common Stock, Series B Preferred Stock, Series C Preferred Stock, and Series D Term Preferred Stock
−Removed: Future issuances and sales of shares of our common stock, Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, or other series of preferred securities, or the perception that such issuances will occur, may have adverse effects on the trading prices of our shares.
−Removed: We cannot predict the effect, if any, of future issuances and sales of our common stock, Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, possible other series of preferred securities, or the availability of shares for future sales, on the market price of our common stock, Series B Preferred Stock, or Series D Term Preferred Stock, each of which is publicly traded.
−Removed: Sales of substantial amounts of our common stock (including shares of our common stock issuable upon the conversion of OP Units that we may issue from time to time), Series B Preferred Stock, Series C Preferred Stock, or Series D Term Preferred Stock or the perception that these sales could occur may adversely affect prevailing market prices for our common stock, Series B Preferred Stock, Series C Preferred Stock (if and when listed on a national securities exchange), or Series D Term Preferred Stock.
+Added: Risks Relating to the Market for our Common Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, and Series E Preferred Stock
+Added: Future issuances and sales of shares of our common stock, Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, Series E Preferred Stock, or other series of preferred securities, or the perception that such issuances will occur, may have adverse effects on the trading prices of our shares.
+Added: We cannot predict the effect, if any, of future issuances and sales of our common stock, Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, Series E Preferred Stock, possible other series of preferred securities, or the availability of shares for future sales, on the market price of our common stock, Series B Preferred Stock, or Series D Term Preferred Stock, each of which is publicly traded.
+Added: Sales of substantial amounts of our common stock (including shares of our common stock issuable upon the conversion of OP Units that we may issue from time to time), Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, or Series E Preferred Stock or the perception that these sales could occur may adversely affect prevailing market prices for our common stock, Series B Preferred Stock, or Series D Term Preferred Stock (each of which is publicly traded), or, if and when listed on a national securities exchange, our Series C Preferred Stock or Series E Preferred Stock.
An increase in market interest rates may have an adverse effect on the market price of our common stock.
One of the factors that investors may consider in deciding whether to buy or sell our common stock is our distribution yield, which is our distribution rate as a percentage of our share price, relative to market interest rates.
−Removed: If market interest rates increase, prospective investors may desire a higher distribution yield on our common stock or may seek securities paying higher
−Removed: dividends or interest.
+Added: If market interest rates increase, prospective investors may desire a higher distribution yield on our common stock or may seek securities paying higher dividends or interest.
The market price of our common stock likely will be based primarily on the earnings that we derive from rental income with respect to our properties and our related distributions to stockholders, and not from the underlying appraised value of the properties themselves.
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For instance, if interest rates rise without an increase in our distribution rate, the market price of our common stock could decrease because potential investors may require a higher distribution yield on our common stock as market rates on interest-bearing securities, such as bonds, rise.
−Removed: Shares of the Series B Preferred Stock, Series C Preferred Stock, and Series D Term Preferred Stock are subordinated to existing and future debt, and your interests could be diluted by the issuance of additional preferred stock or by other transactions.
−Removed: Payment of accrued dividends on the Series B Preferred Stock, Series C Preferred Stock, and Series D Term Preferred Stock will be subordinated to all of our existing and future debt and will be structurally subordinate to the obligations of our subsidiaries.
−Removed: In addition, we may issue additional shares of another class or series of preferred stock ranking on parity with the Series B Preferred Stock, Series C Preferred Stock, or Series D Term Preferred Stock with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up.
−Removed: None of the provisions relating to the Series B Preferred Stock, Series C Preferred Stock, or Series D Term Preferred Stock relate to or limit our indebtedness or afford the holders of the Series B Preferred Stock, Series C Preferred Stock, or Series D Term Preferred Stock protection in the event of a highly-leveraged or other transaction, including a merger or the sale, lease or conveyance of all or substantially all our assets or business, that might adversely affect the holders of the Series B Preferred Stock, Series C Preferred Stock, or Series D Term Preferred Stock, other than in connection with a Change of Control Triggering Event (as defined by the Certificate of Designations).
−Removed: These factors may affect the trading price of the Series B Preferred Stock, Series C Preferred Stock (if and when listed on a national securities exchange), or Series D Term Preferred Stock.
−Removed: We operate as a holding company dependent upon the assets and operations of our subsidiaries, and because of our structure, we may not be able to generate the funds necessary to make distributions on the Series B Preferred Stock, Series C Preferred Stock, or Series D Term Preferred Stock.
+Added: Shares of the Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, and Series E Preferred Stock are subordinated to existing and future debt, and your interests could be diluted by the issuance of additional preferred stock or by other transactions.
+Added: Payment of accrued dividends on the Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, and Series E Preferred Stock will be subordinated to all of our existing and future debt and will be structurally subordinate to the obligations of our subsidiaries.
+Added: In addition, we may issue additional shares of another class or series of preferred stock ranking on parity with the Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, or Series E Preferred Stock with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up.
+Added: None of the provisions relating to the Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, or Series E Preferred Stock relate to or limit our indebtedness or afford the holders of the Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, or Series E Preferred Stock protection in the event of a highly-leveraged or other transaction, including a merger or the sale, lease or conveyance of all or substantially all our assets or business, that might adversely affect the holders of the Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, or Series E Preferred Stock, other than in connection with a Change of Control Triggering Event (as defined by the Certificate of Designations).
+Added: These factors may affect the trading price of the Series B Preferred Stock or Series D Term Preferred Stock (each of which is publicly traded), or, if and when listed on a national securities exchange, our Series C Preferred Stock or Series E Preferred Stock.
+Added: We operate as a holding company dependent upon the assets and operations of our subsidiaries, and because of our structure, we may not be able to generate the funds necessary to make distributions on the Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, or Series E Preferred Stock.
We generally operate as a holding company that conducts its businesses primarily through the Operating Partnership, which, in turn, is a holding company conducting its business through its subsidiaries.
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Accordingly, we are dependent on cash flows and payments of funds to us by our subsidiaries as distributions, loans, advances, leases, or other payments from our subsidiaries to generate the funds necessary to make distributions or dividends on our securities.
−Removed: Our subsidiaries’ ability to pay such distributions and/or make such loans, advances, leases, or other payments may be restricted by, among other things, applicable laws and regulations, current and future debt agreements, and management agreements into which our subsidiaries may enter, which may impair our ability to make cash payments on our securities, including the Series B Preferred Stock, Series C Preferred Stock, and Series D Term Preferred Stock.
+Added: Our subsidiaries’ ability to pay such distributions and/or make such loans, advances, leases, or other payments may be restricted by, among other things, applicable laws and regulations, current and future debt agreements, and management agreements into which our subsidiaries may enter, which may impair our ability to make cash payments on our securities, including the Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, and Series E Preferred Stock.
In addition, such agreements may prohibit or limit the ability of our subsidiaries to transfer any of their property or assets to us, any of our other subsidiaries, or to third parties.
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In addition, because we are a holding company, stockholders’ claims will be structurally subordinated to all existing and future liabilities and obligations (whether or not for borrowed money) of the Operating Partnership and its subsidiaries.
−Removed: Therefore, in the event of our bankruptcy, liquidation, or reorganization, claims of holders of the Series B Preferred Stock, Series C Preferred Stock, and Series D Term Preferred Stock will be satisfied only after all of our and the Operating Partnership’s and its subsidiaries’ liabilities and obligations have been paid in full.
−Removed: There is currently no public market for the Series C Preferred Stock, and we do not intend to apply for quotation on Nasdaq until after the Series C Termination Date (as defined elsewhere in this Form 10-K).
−Removed: Even after listing, if achieved, a liquid secondary trading market may not develop, and the features of the Series C Preferred Stock may not provide you with favorable liquidity options.
−Removed: There is currently no public market for the Series C Preferred Stock, and we do not intend to apply to list the Series C Preferred Stock on Nasdaq or another national securities exchange or to include these shares for quotation on any national securities market until sometime within 12 months following the offering’s termination date.
−Removed: Until shares of the Series C Preferred Stock are listed on Nasdaq or another national securities exchange, if ever, holders of such shares may be unable to sell them at all or, if they are able to, only at substantial discounts from the liquidation preference.
−Removed: Even if the Series C Preferred Stock is listed on Nasdaq or another national securities exchange within one calendar year of the offering’s termination date, as anticipated, there is a risk that such shares may be thinly traded, and the market for such shares may be relatively illiquid compared to the market for other types of securities, with the spread between the bid and asked prices considerably greater than the spreads of other securities with comparable terms and features.
−Removed: Additionally, our charter contains restrictions on the ownership and transfer of our securities, including the Series C Preferred Stock, and these restrictions may inhibit your ability to sell the Series
−Removed: C Preferred Stock promptly, or at all.
−Removed: Also, since the Series C Preferred Stock does not have a stated maturity date, you may be forced to hold your Series C Preferred Stock and receive stated dividends on the shares of Series C Preferred Stock when, as, and if authorized by our Board of Directors and declared by us with no assurance as to ever receiving the liquidation preference.
−Removed: We will be required to terminate the Series C Offering (as defined elsewhere in this Form 10-K) if our common stock, Series B Preferred Stock, and the Series D Term Preferred Stock are all no longer listed on Nasdaq or another national securities exchange.
−Removed: The Series C Preferred Stock is a “covered security” and therefore is not subject to registration under the state securities, or “Blue Sky,” regulations in the various states in which it may be sold due to its seniority to our common stock, which is listed on Nasdaq.
−Removed: In the event that our common stock, Series B Preferred Stock, and Series D Term Preferred Stock are all no longer listed on Nasdaq or another national securities exchange, we will be required to register this offering in any state in which we offer shares of the Series C Preferred Stock.
−Removed: This would require the termination of this offering and could result in our raising an amount of gross proceeds that is substantially less than the amount of the gross proceeds we expect to raise if the maximum amount of the Series C Offering is sold.
+Added: Therefore, in the event of our bankruptcy, liquidation, or reorganization, claims of holders of the Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, and Series E Preferred Stock will be satisfied only after all of our and the Operating Partnership’s and its subsidiaries’ liabilities and obligations have been paid in full.
+Added: We intend to apply for quotation on Nasdaq for each of the Series C Preferred Stock and the Series E Preferred Stock in the future;
+Added: however, there is currently no public market for either security.
+Added: Even after listing, if achieved, a liquid secondary trading market may not develop, and the features of the Series C Preferred Stock and Series E Preferred Stock may not provide you with favorable liquidity options.
+Added: There is currently no public market for either the Series C Preferred Stock or the Series E Preferred Stock.
+Added: We intend to apply to list the Series C Preferred Stock on Nasdaq or another national securities exchange by December 31, 2023, and we intend to apply to list the Series E Preferred Stock on Nasdaq or another national securities exchange or to include these shares for quotation on a national securities market sometime within 12 months following the Series E Preferred Stock offering’s
+Added: termination date.
+Added: Until shares of the Series C Preferred Stock or Series E Preferred Stock are listed on Nasdaq or another national securities exchange, if ever, holders of such shares may be unable to sell them at all or, if they are able to, only at substantial discounts from the liquidation preference.
+Added: Even if the Series C Preferred Stock or Series E Preferred Stock is listed on Nasdaq or another national securities exchange within one calendar year of the respective offerings’ termination date, as anticipated, there is a risk that such shares may be thinly traded, and the market for such shares may be relatively illiquid compared to the market for other types of securities, with the spread between the bid and asked prices considerably greater than the spreads of other securities with comparable terms and features.
+Added: Additionally, our charter contains restrictions on the ownership and transfer of our securities, including the Series C Preferred Stock and Series E Preferred Stock, and these restrictions may inhibit your ability to sell the Series C Preferred Stock or Series E Preferred Stock promptly, or at all.
+Added: Also, since neither the Series C Preferred Stock nor the Series E Preferred Stock has a stated maturity date, you may be forced to hold your Series C Preferred Stock or Series E Preferred Stock and receive stated dividends on the shares when, as, and if authorized by our Board of Directors and declared by us with no assurance as to ever receiving the liquidation preference.
+Added: We will be required to terminate the Series E Offering (as defined elsewhere in this Form 10-K) if our common stock, Series B Preferred Stock, and the Series D Term Preferred Stock are all no longer listed on Nasdaq or another national securities exchange.
+Added: The Series E Preferred Stock is a “covered security” and therefore is not subject to registration under the state securities, or “Blue Sky,” regulations in the various states in which it may be sold due to its seniority to our common stock, which is listed on Nasdaq.
+Added: In the event that our common stock, Series B Preferred Stock, and Series D Term Preferred Stock are all no longer listed on Nasdaq or another national securities exchange, we will be required to register this offering in any state in which we offer shares of the Series E Preferred Stock.
+Added: This would require the termination of this offering and could result in our raising an amount of gross proceeds that is substantially less than the amount of the gross proceeds we expect to raise if the maximum amount of the Series E Offering is sold.
This would reduce our ability to make additional investments and limit the further diversification of our portfolio.
−Removed: The Series B Preferred Stock, Series C Preferred Stock, and Series D Term Preferred Stock will bear a risk of redemption by us.
−Removed: We may voluntarily redeem some or all of the Series B Preferred Stock at any time on or after June 1, 2022.
−Removed: In addition, we may voluntarily redeem some or all of the Series C Preferred Stock on or after the first anniversary of the offering’s termination date.
+Added: The Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, and Series E Preferred Stock will bear a risk of redemption by us.
+Added: We may voluntarily redeem some or all of the Series B Preferred Stock at any time, and we may voluntarily redeem some or all of the Series C Preferred Stock on or after June 1, 2024.
+Added: In addition, we may voluntarily redeem some or all of the Series E Preferred Stock on or after the first anniversary of the offering’s termination date.
Any such redemptions may occur at a time that is unfavorable to shareholders.
−Removed: On and after January 31, 2023, and before January 31, 2026, we may, at our option, redeem the Series D Term Preferred Stock, in whole or in part, at any time or from time to time.
+Added: Before January 31, 2026, we may, at our option, redeem the Series D Term Preferred Stock, in whole or in part, at any time or from time to time.
We may have an incentive to redeem any of our series of preferred stock voluntarily if market conditions allow us to issue common stock, other preferred stock, or debt securities at a dividend or interest rate that is lower than the dividend rate on such series of preferred stock.
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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.