What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2020-11-04 compared with 2020-08-05 · 295 added, 195 removed, 425 unchanged (54% of the section changed)

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The novel coronavirus (“COVID-19”) pandemic continues to evolve and is currently impacting most countries, communities, and markets.

In June 2020, the National Bureau of Economic Research officially declared that the United States economy had fallen into a recession.

Global recessionary conditions are currently expected for the remainder of 2020 as a direct result of the COVID-19 pandemic, although the actual impact and duration are unknown.

Much of the United States economy is now in the process of re-opening, but at the same time, the COVID-19 pandemic is intensifying in many areas of the country.

The extent to which the COVID-19 pandemic may impact our business, financial condition, liquidity, results of operations, or prospects will depend on numerous evolving factors that are out of our control and that we are not able to predict at this time, including, but not limited to:

Much of the United States economy continues to slowly re-open, but at the same time, the COVID-19 pandemic is intensifying in many areas of the country.

As a result, some jurisdictions have rolled back reopening plans, and more widespread reinstatement of directives and mandates requiring businesses to again curtail or cease normal operations remains a possibility.

The extent to which the COVID-19 pandemic may impact and may further impact our business, financial condition, liquidity, results of operations, or prospects depends on numerous evolving factors that are out of our control and that we are not able to predict at this time, including, but not limited to:

(i) the nature, duration, and scope of the pandemic;

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Most of our farmers initially experienced increased sales volumes and higher-than-average prices because the pandemic led the public to stockpile food and other necessities.

However, such volumes and prices have recently returned to more normalized levels.

In July 2020, we granted extensions of up to 123 days to two tenants who owed semi-annual rental payments totaling approximately $343,000 (approximately 0.7% of annual portfolio cash rents).

These payments were originally scheduled to be paid on July 1, 2020, and the rent deferrals we granted to these tenants extend the new due dates to be on or before November 1, 2020, with all other terms of the existing lease agreements remaining unchanged.

However, such volumes and prices have recently returned to more normalized levels, though overall demand and pricing remains above that of the prior year.

In July 2020, we granted extensions of up to 123 days to two tenants who owed semi-annual rental payments totaling approximately $343,000.

These payments were originally scheduled to be paid on July 1, 2020, and the rent deferrals we granted to these tenants extended the new due dates to be on or before November 1, 2020, with all other terms of the existing lease agreements remaining unchanged.

Additional time was granted to these tenants due to delays in payments owed to them from their respective processors, which were primarily caused by the strict government-mandated lockdowns in the state of Michigan in response to COVID-19.

In addition, we are currently awaiting payment from one other tenant who owed an annual rental payment of approximately $53,000 (approximately 0.1% of annual portfolio cash rents) in July 2020.

The delay in this payment is primarily due to a delay in our farmer’s receipt of certain insurance payouts, which are expected to be settled during August 2020, at which time we would expect to collect the rent owed to us.

Based on the payment histories and current operational statuses of each of the respective tenants, we currently anticipate being able to collect these rental payments in full within the aforementioned timeframes.

We have not received any further requests from tenants seeking relief as a result of COVID-19, and all other tenants are current in their rental payments to us.

While we do not currently anticipate any additional requests from tenants for rent deferrals, if we do receive additional rent relief requests in the future from tenants that have directly been materially and adversely impacted by the ongoing COVID-19 pandemic, as assessed by us, in exchange for granting any such relief, we intend to seek certain favorable lease modification terms in exchange for granting such relief, if any, including, but not limited to, extended lease terms, increased rent, and near-term rent deferral repayments.

These rental payments were collected in full in October 2020, and we have not received any further requests from tenants seeking relief as a result of COVID-19.

While we do not currently anticipate any additional requests from tenants for rent deferrals, if we do receive additional rent relief requests in the future from tenants that have directly been materially and adversely impacted by the ongoing COVID-19 pandemic, as assessed by us, in exchange for granting any such relief, we intend to seek certain terms in exchange for granting such relief, if any, including, but not limited to, extended lease terms, increased rent, and near-term rent deferral repayments.

In addition, if we were to grant any rent deferrals or modifications, we anticipate that any such agreements would include partial payments in exchange for rent deferrals of varying terms, with all deferred amounts to be paid back to us over a specified, short-term period.

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

The following table summarizes the different geographic locations (by state) of our farms owned and with leases in place as of and for the six months ended June 30, 2020 and 2019 (dollars in thousands):

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

As of and For the six months ended June 30, 2019

The following table summarizes the different geographic locations (by state) of our farms owned and with leases in place as of and for the nine months ended September 30, 2020 and 2019 (dollars in thousands):

As of and For the nine months ended September 30, 2020 As of and For the nine months ended September 30, 2019

Revenue % of Total

Revenue Number

Revenue % of Total

California (1)

46 17,954 19.4% $ 22,153 52.9% 41 13,731 16.8% $ 13,872 51.0%

Florida 23 20,770 22.4% 10,006 23.9% 23 20,770 25.5% 7,785 28.6%

Arizona 6 6,280 6.8% 4,272 10.2% 6 6,280 7.7% 1,609 5.9%

Colorado 12 32,773 35.4% 2,501 6.0% 10 31,448 38.5% 2,126 7.8%

Nebraska 9 7,782 8.4% 1,159 2.7% 3 3,254 4.0% 264 1.0%

Michigan 15 962 1.0% 554 1.3% 15 962 1.2% 259 1.0%

Oregon 3 418 0.5% 395 0.9% 3 418 0.5% 386 1.4%

Washington 1 746 0.8% 368 0.9% 1 746 0.9% 383 1.4%

Texas 1 3,667 4.0% 337 0.8% 1 3,667 4.5% 394 1.4%

North Carolina 2 310 0.3% 120 0.3% 2 310 0.4% 125 0.5%

Maryland 4 759 0.8% 35 0.1% — — —% $ — —%

Delaware 1 180 0.2% 7 —% — — —% $ — —%

TOTALS 123 92,601 100.0% $ 41,907 100.0% 105 81,586 100.0% $ 27,203 100.0%

(1) According to the California Chapter of the American Society of Farm Managers and Rural Appraisers, there are eight distinct growing regions within California;

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Rent is generally payable to us in advance on either an annual or semi-annual basis, with such rent typically subject to periodic escalation clauses included within the lease.

Currently, 89 of our farms are leased on a pure, triple-net basis and 26 farms are leased on a partial-net basis (with us, as landlord, responsible for all or a portion of the related property taxes).

In the past, certain of our leases had been on a single-net basis, with us, as landlord, responsible for the related property taxes, as well as certain maintenance, repairs, and insurance costs.

Additionally, 29 of our farms are leased under agreements that include a participation rent component based on the gross revenues earned on the respective farms.

Currently, 94 of our farms are leased on a pure, triple-net basis, 30 farms are leased on a partial-net basis (with us, as landlord, responsible for all or a portion of the related property taxes), and 3 farms are leased on a single-net basis (with us, as landlord, responsible for the related property taxes, as well as certain maintenance, repairs, and insurance costs).

Additionally, 33 of our farms are leased under agreements that include a variable rent component, called “participation rents,” that are based on the gross revenues earned on the respective farms.

Lease Expirations

Agricultural leases are often shorter term in nature (relative to leases of other types of real estate assets), so in any given year, we may have multiple leases up for extension or renewal.

The following table summarizes the lease expirations by year for the farms owned and with leases in place as of June 30, 2020 (dollars in thousands):

Lease Revenues for the

Six Months Ended

June 30, 2020

The following table summarizes the lease expirations by year for the farms owned and with leases in place as of September 30, 2020 (dollars in thousands):

Year Number of

Acreage % of Total

Acreage Lease Revenues for the

Nine Months Ended

September 30, 2020 % of Total

2020 2 23,978 25.9% $ 826 2.0%

2021 9 8,935 9.6% 1,911 4.6%

2022 4 550 0.6% 1,081 2.6%

2023 11 6,266 6.8% 4,492 10.7%

2024 5 6,243 6.7% 1,716 4.1%

Thereafter 46 46,629 50.4% 29,018 69.2%

6 — —% 2,863 6.8%

Totals 83 92,601 100.0% $ 41,907 100.0%

(1) Certain lease agreements encompass multiple farms.

Includes two leases that were renewed for an additional two years subsequent to June 30, 2020 (see “ Recent Developments—Portfolio Activity—Existing Properties—Leasing Activity ” below for a summary of this and other recent leasing activities).

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

In addition, includes a net amount of approximately $2.8 million of lease revenue recorded as a result of an early lease termination on one of our properties (see below, under “ Recent Developments—Portfolio Activity—Existing Properties—Leasing Activity—Lease Termination ” for additional information).

We currently have four agricultural leases scheduled to expire within the next six months (two on farms located in California and two on farms located in Colorado).

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

Compared to the respective existing leases, we currently anticipate an increase in rental rates on the California lease renewals, while the Colorado leases are expected to be renewed at lower rental rates.

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

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

Overall, we currently anticipate the rental rates on these lease renewals to remain relatively flat compared to the respective existing leases.

Regarding all upcoming lease expirations, there can be no assurance that we will be able to renew the existing leases or execute new leases at rental rates favorable to us, if at all, or be able to find replacement tenants, if necessary.

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Property Acquisitions

Since April 1, 2020, through the date of this filing, we have acquired two farms, which are summarized in the table below (dollars in thousands, except for footnotes):

Since July 1, 2020, through the date of this filing, we have acquired 12 farms, which are summarized in the table below (dollars in thousands, except for footnotes):

Name Property

Location Acquisition

Farms Primary

Crop(s) Lease

Options Total

Price Acquisition

Straight-line

Potatoes, edible beans, & corn

Driver Road (3)

Hermon Wicomico & Caroline, MD, and Sussex, DE 8/31/2020 939 5 Sod & vegetables 10.0 years 2 (5 years) $ 7,346 $ 211 $ 432

Firestone Avenue (3)(4)(5)

Fresno, CA 9/3/2020 2,534 3 Pistachios and misc.

organic & conventional vegetables 1.2 years 2 (5 years) 31,833 74 1,734

West Lost Hills Road (3)(6)(7)

Fresno, CA 10/1/2020 801 1 Pistachios 1.1 years 4 (3 years) 31,828 52 1,560

Tractor Road Bamberg & Orangeburg, SC 10/23/2020 597 3 Sod 9.5 years None 3,765 48 244

4,871 12 $ 74,772 $ 385 $ 3,970

(1) Includes approximately $38,000 of aggregate external legal fees associated with negotiating and originating the leases associated with these acquisitions, which costs were expensed in the period incurred.

The figures above represent only costs paid or accrued for as of the date of this filing.

(2) Annualized straight-line rent is based on the minimum cash rental payments guaranteed under the applicable leases, as required under GAAP, and excludes contingent rental payments, such as participation rents.

The lease provides for an initial term of 14.7 years and includes six tenant termination options throughout the initial term.

The lease term stated above represents the term through the first available termination option, and the annualized straight-line rent amount represents the rent guaranteed through the noncancelable term of the lease.

(3) Lease provides for a participation rent component based on the gross crop revenues earned on the farm.

The rent figure above represents only the minimum cash guaranteed under the lease.

(4) Lease provides for an initial term of 8.2 years but also includes an annual tenant termination option, effective as of the end of the then-current lease year (as defined within the lease).

(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 a pipeline conveying water to this and other neighboring properties.

Our acquired ownership, which equated to a 12.5% interest in the LLC, was valued at approximately $280,000 at the time of acquisition and is included within Other assets, net on the accompanying Condensed 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 further information on our aggregate ownership interest in this LLC.

(6) Lease provides for an initial term of 3.1 years but also includes an annual tenant termination option, effective as of the end of the then-current lease year (as defined within the lease).

(7) In connection with the acquisition of this property, we also acquired a 12.5% ownership interest in a related LLC, the sole purpose of which is to own and maintain a pipeline conveying water to this and other neighboring properties.

Existing Properties

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In April 2020, we received notification from the County of Napa informing us that it had approved of additional vineyard plantings on 38.7 acres of the property.

As such, in May 2020, we paid additional compensation related to this acquisition of approximately $3.2 million.

As such, in May 2020, we paid additional compensation related to this acquisition of

approximately $3.2 million.

As a result, and pursuant to a lease amendment, we will earn additional straight-line rental income of approximately $335,000 per year throughout the remaining term of the lease, which expires on December 31, 2029.

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Leasing Activity

The following table summarizes certain leasing activity that has occurred on our existing properties since April 1, 2020, 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, 2020, through the date of this filing (dollars in thousands, except for footnotes):

PRIOR LEASES NEW LEASES

Locations Number

Straight-line

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Straight-line

(Years) # of Leases

Participation

/ NN / N) (2)

CA & FL 4 616 $ 1,759 — 2 / 2 / 0 $ 1,796 5.3 — 3 / 1 / 0

(1) Annualized straight-line rent is based on the minimum cash rental payments guaranteed under the applicable leases (presented on an annualized basis), as required under GAAP, and excludes contingent rental payments, such as participation rents.

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Debt Activity

Since April 1, 2020, through the date of this filing, we have incurred the following new, long-term borrowings (dollars in thousands, except for footnotes;

Since July 1, 2020, through the date of this filing, we have incurred the following new, long-term borrowings (dollars in thousands, except for footnotes;

for further discussion on certain defined terms used below, refer to Note 4, “ Borrowings ,” within the accompanying notes to our condensed consolidated financial statements):

Lender Date of

Issuance Principal

Amount Maturity

Date Principal

Amortization Stated

Rate Expected

Interest Rate Terms

Premier Farm Credit, FLCA

Fixed through December 31, 2029 (variable thereafter)

Fixed throughout term

Farm Credit West, FLCA

Fixed through July 31, 2026 (variable thereafter)

Farm Credit West, FLCA

Fixed through August 31, 2026 (variable thereafter)

Farm Credit West, FLCA

Fixed through June 30, 2030 (variable thereafter)

Farm Credit of the Virginias, ACA 8/31/2020 $ 4,481 9/1/2030 25.0 years 3.99% 3.24% Fixed throughout term

PGIM Real Estate Finance, LLC 10/1/2020 19.042 7/1/2028 25.0 years 2.47% 2.47% Fixed throughout term

PGIM Real Estate Finance, LLC 10/1/2020 19.096 7/1/2028 25.0 years 2.45% 2.45% Fixed throughout term

AgAmerica Lending, LLC 10/23/2020 2.259 1/1/2028 30.0 years 3.50% 3.50% Fixed throughout term

(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.

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See Note 6, “ Related-Party Transactions—Gladstone Securities—Series C 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, 2020, 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, 2020, through the date of this filing (dollars in thousands, except per-share amounts and footnotes):

Shares Sold (1)

Weighted-average

Sales Price per Share

Gross Proceeds

Net Proceeds (1)

Sales Price per Share Gross Proceeds Net Proceeds (2)

493,355 $ 24.86 $ 12,265 $ 11,224

(1) Excludes shares issued pursuant to the DRIP.

From July 1 through the date of this filing, we issued approximately 56 shares of the Series C Preferred Stock pursuant to the DRIP.

(2) Net of 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 $606,000 (of which approximately $584,000 was remitted by Gladstone Securities to unrelated third-parties involved in the offering, such as participating broker-dealers and wholesalers).

Aggregate selling commissions and dealer-manager fees paid to Gladstone Securities as a result of these sales was approximately $1.1 million (of which approximately $1.0 million was remitted by Gladstone Securities to unrelated third-parties involved in the offering, such as participating broker-dealers and wholesalers).

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.

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(each a “Sales Agent”), under which we may issue and sell, from time to time and through new Sales Agents, shares of our common stock having an aggregate offering price of up to $100.0 million (the “Current ATM Program,” and collectively with the Prior ATM Program, the “ATM Programs”).

The following table summarizes the activity under the Current ATM Program from April 1, 2020, through the date of this filing (dollars in thousands):

Weighted-average

Offering Price per Share

Gross Proceeds

Net Proceeds (1)

The following table summarizes the activity under the Current ATM Program from July 1, 2020, through the date of this filing (dollars in thousands):

Shares Sold Weighted-average

Offering Price per Share Gross Proceeds Net Proceeds (1)

526,016 $ 16.13 $ 8,483 $ 8,398

(1) Net of underwriter commissions and discounts.

Follow-on Offering

In October 2020, we completed a public offering of our common stock.

The following table summarizes the details of the offering, including the underwriters’ full exercise of the over-allotment option in connection of the offering (dollars in thousands, except per-share amounts):

Shares Sold Weighted-average

Offering Price per Share Gross Proceeds Net Proceeds (1)

1,897,500 $ 14.40 $ 27,324 $ 26,094

(1) Net of underwriter discounts and commissions.

We used the proceeds received from this offering to repay existing indebtedness, fund property acquisitions, and for other general corporate purposes.

LIBOR Transition

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The Administration Agreement and each of the Advisory Agreements were approved unanimously by our board of directors, including our independent directors.

A summary of the 2019 Advisory Agreement is provided in Note 6 to our consolidated financial statements included in our Form 10-K.

A summary of the compensation terms for each of the Prior Advisory Agreement, the 2020 Advisory Agreement, and the Administration Agreement is below.

A summary of the compensation terms for each of the Advisory Agreements and the Administration Agreement is below.

Advisory Agreements

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Pursuant to the Prior Advisory Agreement, a base management fee was paid quarterly and was calculated as 2.0% per annum (0.50% per quarter) of the calendar quarter’s total adjusted equity, which was defined as total equity plus total mezzanine equity, if any (each as reported on our balance sheet), adjusted to exclude unrealized gains and losses and certain other one-time events and non-cash items (“Total Adjusted Equity”).

Pursuant to the 2019 Advisory Agreement, a base management fee was paid quarterly and was calculated as 2.0% per annum (0.50% per quarter) of the prior calendar quarter’s total adjusted common equity, which was defined as common stockholders’ equity plus non-controlling common interests in the Operating Partnership, if any (each as reported on our balance sheet), adjusted to exclude unrealized gains and losses and certain other one-time events and non-cash items (“Total Adjusted Common Equity”).

Under the 2020 Advisory Agreement, a base management fee is paid quarterly and is calculated at an annual rate of 0.50% (0.125% per quarter) of the prior calendar quarter’s “Gross Tangible Real Estate,” defined as the gross cost of tangible real estate owned by us (including land and land improvements, irrigation and drainage systems, horticulture, farm-related facilities, and other tangible site improvements), prior to any accumulated depreciation, and as shown on our balance sheet or the notes thereto for the applicable quarter.

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For the Years Ended December 31,

2019 2018 2017

Actual gross base management fee (1)

$ 3,623 $ 2,837 $ 2,041

Hypothetical gross base management fee (2)

3,150 2,433 2,010

Hypothetical increase (decrease) in base management fee $ (473) $ (404) $ (31)

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(2) Calculated as if the 2020 Advisory Agreement had been in place as of January 1, 2017.

In addition, had the 2019 Advisory Agreement been in place during the three and six months ended June 30, 2020 , the hypothetical base management fee would have been approximately $884,000 and $1.8 million, respectively, as compared to the actual base management fee calculated under the 2020 Advisory Agreement of approximately $1.0 million and $2.1 million , respectively.

In addition, had the 2019 Advisory Agreement been in place during the three and nine months ended September 30, 2020, the hypothetical base management fee would have been approximately $862,000 and $2.6 million, respectively, as compared to the

actual base management fee calculated under the 2020 Advisory Agreement of approximately $1.1 million and $3.2 million, respectively.

We are unable to project the impact of the 2020 Advisory Agreement on the base management fee going forward and how it might compare to that of the 2019 Advisory Agreement or the Prior Advisory Agreement, as we are unable to estimate the amount of equity to be issued or new tangible assets to be acquired in future periods.

During the three and six months ended June 30, 2019 , our Adviser granted us certain non-contractual, unconditional, and irrevocable waivers (as discussed further below, under “ —Results of Operations—Operating Expenses—Related-Party Fees ”), which were applied as credits against the base management fee for the period.

We did not have any such waivers for the three or six months ended June 30, 2020 .

During the three and nine months ended September 30, 2019, our Adviser granted us certain non-contractual, unconditional, and irrevocable waivers (as discussed further below, under “ —Results of Operations—Operating Expenses—Related-Party Fees ”), which were applied as credits against the base management fee for the period.

We did not have any such waivers for the three or nine months ended September 30, 2020.

Incentive Fee

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

Under the 2020 Advisory Agreement, an incentive fee is calculated and payable quarterly in arrears if the Pre-Incentive Fee FFO for a particular quarter exceeds a hurdle rate of 1.75% (7.0% annualized) of the prior calendar quarter’s “Total Adjusted Common Equity,” defined as common stockholders’ equity plus non-controlling common interests in the Operating Partnership, if any (each as reported on our balance sheet), adjusted to exclude unrealized gains and losses and certain other one-time events and non-cash items.

Under each of the 2019 Advisory Agreement and the 2020 Advisory Agreement, an incentive fee was and is calculated and payable quarterly in arrears if the Pre-Incentive Fee FFO for a particular quarter exceeds a hurdle rate of 1.75% (7.0% annualized) of the prior calendar quarter’s Total Adjusted Common Equity.

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

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generally accepted accounting principles (“GAAP”) requires management to make judgments that are subjective in nature to make certain estimates and assumptions.

of these accounting policies involves the exercise of judgment regarding the use of assumptions as to future uncertainties, and, as a result, actual results could materially differ from these estimates.

Application of these accounting policies involves the exercise of judgment regarding the use of assumptions as to future uncertainties, and, as a result, actual results could materially differ from these estimates.

A summary of 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, 2020 .

There were no material changes to our critical accounting policies during the nine months ended September 30, 2020.

Smaller Reporting Company Status

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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, 2020 versus 2019 :

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

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

From April 1, 2019, through June 30, 2020 , we acquired 29 new farms and did not have any farm dispositions;

Vacant or self-operated properties represent farms that were either vacant (either wholly or partially) at any point during either period presented or operated by a wholly-owned subsidiary of ours.

We did not have any vacant farms during either of the three months ended June 30, 2020 or 2019.

With regard to the comparison between the six months ended June 30, 2020 versus 2019 :

• With regard to the comparison between the three months ended September 30, 2020 versus 2019:

◦ Same-property basis represents farms owned as of June 30, 2019, and were not vacant at any point during either period presented;

◦ Properties acquired or disposed of are farms that were either acquired or disposed of at any point subsequent to June 30, 2019.

From July 1, 2019, through September 30, 2020, we acquired 37 new farms and did not have any farm dispositions;

◦ Vacant or self-operated properties represent farms that were either vacant (either wholly or partially) or operated by a wholly-owned subsidiary of ours at any point during either period presented.

We did not have any vacant farms during either of the three months ended September 30, 2020 or 2019.

• With regard to the comparison between the nine months ended September 30, 2020 versus 2019:

◦ Same-property basis represents farms owned as of December 31, 2018, 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, 2018.

From January 1, 2019, through June 30, 2020 , we acquired 30 new farms and did not have any farm dispositions;

Vacant or self-operated properties represent farms that were either vacant (either wholly or partially) at any point during either period presented or operated by a wholly-owned subsidiary of ours.

We had two farms that were vacant for a portion of the six months ended June 30, 2019 .

A comparison of our operating results for the three and six months ended June 30, 2020 and 2019 is below (dollars in thousands):

For the Three Months Ended June 30,

From January 1, 2019, through September 30, 2020, we acquired 38 new farms and did not have any farm dispositions;

We had two farms that were vacant for a portion of the nine months ended September 30, 2019.

A comparison of our operating results for the three and nine months ended September 30, 2020 and 2019 is below (dollars in thousands):

For the Three Months Ended September 30,

2020 2019 $ Change % Change

Operating revenues:

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Other income (expense):

Other income 323 62 261 421.0%

Interest expense (5,202) (4,401) (801) 18.2%

Dividends declared on Series A Term Preferred Stock (458) (458) — —%

(Loss) gain on dispositions of real estate assets, net

Property and casualty loss, net

Loss from investments in unconsolidated entities

Loss on dispositions of real estate assets, net (195) (134) (61) 45.5%

Property and casualty recovery, net 1 17 (16) (94.1)%

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

Total other expense, net (5,550) (4,914) (636) 12.9%

Net loss (income) attributable to non-controlling interests

Net income 1,581 523 1,058 202.3%

Net income attributable to non-controlling interests (13) (6) (7) 116.7%

Net income attributable to the Company 1,568 517 1,051 203.3%

Aggregate dividends declared on Series B and Series C Preferred Stock

Aggregate dividends declared on and charges related to

Series B and Series C Preferred Stock

(2,405) (1,161) (1,244) 107.1%

Net loss attributable to common stockholders $ (837) $ (644) $ (193) 30.0%

NM = Not Meaningful

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

2020 2019 $ Change % Change

Operating revenues:

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Variable lease payments – tenant reimbursements 441 93 348 374.2%

Lease termination income, net

Lease termination income, net 2,810 — 2,810 NM

Total operating revenues 41,907 27,203 14,704 54.1%

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Other income (expense):

Other income 1,668 937 731 78.0%

Interest expense (15,155) (11,396) (3,759) 33.0%

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Loss on dispositions of real estate assets, net (861) (154) (707) 459.1%

Property and casualty recovery (loss), net

Income from investments in unconsolidated entities

Property and casualty recovery, net 68 10 58 580.0%

Income from investments in unconsolidated entities 7 — 7 NM

Total other expense, net (15,648) (11,978) (3,670) 30.6%

Net income 4,864 804 4,060 505.0%

Net income attributable to non-controlling interests (52) (9) (43) 477.8%

Net income attributable to the Company 4,812 795 4,017 505.3%

Aggregate dividends declared on Series B and Series C Preferred Stock

Aggregate dividends declared on and charges related to

Series B and Series C Preferred Stock

(6,793) (2,655) (4,138) 155.9%

Net loss attributable to common stockholders $ (1,981) $ (1,860) $ (121) 6.5%

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Lease Revenue

The following table provides a summary of our lease revenues during the three and six months ended June 30, 2020 and 2019 (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, 2020 and 2019 (dollars in thousands):

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

2020 2019 $ Change % Change 2020 2019 $ Change % Change

Same-property basis:

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Tenant reimbursements (1)

19 33 (14) (42.4)% 441 93 348 374.2%

Total Lease revenue $ 13,989 $ 11,012 $ 2,977 27.0% $ 41,907 $ 27,203 $ 14,704 54.1%

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Same-property Basis – 2020 compared to 2019

Lease revenue from fixed lease payments increased for each of the three and six months ended June 30, 2020 , primarily due to recent lease renewals and amendments at net higher rental rates, as well as additional rents earned on recent capital improvements completed on certain of our farms.

Lease revenue from fixed lease payments increased for each of the three and nine months ended September 30, 2020, primarily due to recent lease renewals and amendments at net higher rental rates, as well as additional rents earned on recent capital improvements completed on certain of our farms.

These increases were partially offset by the renewals of certain other leases, in which we decreased the fixed base rent component in exchange for adding a participation rent component into the lease structure.

Lease revenue from participation rents increased for each of the three and six months ended June 30, 2020 , primarily due to the first crop share payment received from a farm on which we recently amended the lease to include a participation rent component.

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

Lease revenue from participation rents increased for each of the three and nine months ended September 30, 2020.

During the three months ended September 30, 2020, we recognized participation rents from three farms totaling 1,286 farm acres, as compared to six farms totaling 3,701 farm acres in the prior-year period.

During the nine months ended September 30, 2020, we recognized participation rents on eight farms totaling 3,865 farm acres, as compared to eight farms totaling 3,996 acres in the prior-year period.

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

For further discussion on this lease termination, see above, under “ Overview—Recent Developments—Portfolio Activity—Existing Properties—Leasing Activity—Lease Termination .”

Other – 2020 compared to 2019

Lease revenue from properties acquired or disposed of increased for each of the three and six months ended June 30, 2020 , primarily due to additional revenues earned on new farms acquired subsequent to December 31, 2018 .

Lease revenue for vacant or self-operated properties increased for the six months ended June 30, 2020 , primarily due to additional revenues earned during 2020 on farms that were vacant for a portion of 2019.

The increase in tenant reimbursements for each of the three and six months ended June 30, 2020 , was due to additional contractual reimbursements of property taxes and other operating costs.

Tenant reimbursements during the three and six months ended June 30, 2020 , also included payments made by a tenant on our behalf (pursuant to the lease agreement) to an unconsolidated entity of ours that conveys water to the respective property.

Lease revenue from properties acquired or disposed of increased for each of the three and nine months ended September 30, 2020, primarily due to additional revenues earned on new farms acquired subsequent to December 31, 2018.

Lease revenue for vacant or self-operated properties increased for the nine months ended September 30, 2020, primarily due to additional revenues earned during 2020 on farms that were vacant for a portion of 2019.

As compared to the respective prior-year periods, tenant reimbursement income decreased slightly for the three months ended September 30, 2020, and increased for the nine months ended September 30, 2020.

The increase for the nine months ended September 30, 2020, was due to additional contractual reimbursements of property taxes and other operating costs.

Tenant reimbursements during the nine months ended September 30, 2020, also included payments made by a tenant on our behalf (pursuant to the lease agreement) to an unconsolidated entity of ours that conveys water to the respective property.

Operating Expenses

Depreciation and Amortization

The following table provides a summary of the depreciation and amortization expense recorded during the three and six months ended June 30, 2020 and 2019 (dollars in thousands):

For the Three Months Ended June 30,

For the Six Months Ended June 30,

The following table provides a summary of the depreciation and amortization expense recorded during the three and nine months ended September 30, 2020 and 2019 (dollars in thousands):

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

2020 2019 $ Change % Change 2020 2019 $ Change % Change

Same-property basis $ 2,996 $ 3,029 $ (33) (1.1)% $ 8,281 $ 7,867 $ 414 5.3%

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Total depreciation and amortization $ 3,909 $ 3,419 $ 490 14.3% $ 12,010 $ 8,952 $ 3,058 34.2%

Depreciation and amortization expense on a same-property basis decreased for the three months ended June 30, 2020 , as compared to the prior-year period, primarily due to the expiration of certain lease intangible amortization periods or tangible depreciation periods subsequent to March 31, 2019, partially offset by additional depreciation on site improvements completed on certain properties subsequent to March 31, 2019.

Depreciation and amortization expense on a same-property basis increased for the six months ended June 30, 2020 , as compared to the prior-year period, primarily due to accelerated amortization expense recognized due to an early lease termination (see above, under “ Overview—Recent Developments—Portfolio Activity—Existing Properties—Leasing Activity—Lease Termination ”), as well as additional depreciation on site improvements completed on certain properties subsequent to December 31, 2018 , and partially offset by the expiration of certain lease intangible amortization periods subsequent to December 31, 2018 .

Depreciation and amortization expense on properties acquired or disposed of increased for each of the three and six months ended June 30, 2020 , as compared to the respective prior-year periods, primarily due to the additional depreciation and amortization expense incurred on the new farms acquired subsequent to December 31, 2018 .

Depreciation and amortization expense on vacant or self-operated properties for each of the three and six months ended June 30, 2020 , remained flat when compared to the respective prior-year periods.

Depreciation and amortization expense on a same-property basis decreased for the three months ended September 30, 2020, as compared to the prior-year period, primarily due to the expiration of certain lease intangible amortization periods or tangible depreciation periods subsequent to June 30, 2019, partially offset by additional depreciation on site improvements completed on certain properties subsequent to June 30, 2019.

Depreciation and amortization expense on a same-property basis increased for the nine months ended September 30, 2020, as compared to the prior-year period, primarily due to accelerated amortization expense recognized due to an early lease termination (see above, under “ Overview—Recent Developments—Portfolio Activity—Existing Properties—Leasing Activity—Lease Termination ”), as well as additional depreciation on site improvements completed on certain properties subsequent to December 31, 2018, and partially offset by the expiration of certain lease intangible amortization periods subsequent to December 31, 2018.

Depreciation and amortization expense on properties acquired or disposed of increased for each of the three and nine months ended September 30, 2020, as compared to the respective prior-year periods, primarily due to the additional depreciation and amortization expense incurred on the new farms acquired subsequent to December 31, 2018.

Depreciation and amortization expense on vacant or self-operated properties for the nine months ended September 30, 2020, remained flat when compared to the prior-year period.

Property-operating Expenses

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During the second half of 2019, these wells were connected to permanent power sources, and the generators were no longer needed.

The following table provides a summary of the property-operating expenses recorded during the three and six months ended June 30, 2020 and 2019 (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, 2020 and 2019 (dollars in thousands):

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

2020 2019 $ Change % Change 2020 2019 $ Change % Change

Same-property basis $ 244 $ 444 $ (200) (45.0)% $ 981 $ 1,751 $ (770) (44.0)%

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Tenant-reimbursed property operating expenses (1)

19 33 (14) (42.4)% 441 93 348 374.2%

Total Property operating expenses $ 287 $ 536 $ (249) (46.5)% $ 1,525 $ 1,939 $ (414) (21.4)%

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Same-property Basis – 2020 compared to 2019

Property operating expenses decreased for each of the three and six months ended June 30, 2020 .

For the three months ended June 30, 2020 , the decrease was primarily due to the change in lease structure on four of our farms from a single-net basis to a partial-net basis, thus reducing landlord responsibility for certain property operating expenses (specifically, repairs and maintenance expense).

For the six months ended June 30, 2020 , the decrease was further due to additional costs incurred during the prior-year period for the above-referenced generator rentals and for obtaining certain permits on one of our California properties.

Property operating expenses decreased for each of the three and nine months ended September 30, 2020, primarily due to additional costs incurred during the prior-year period for the above-referenced generator rentals and for obtaining certain permits on one of our California properties.

Other – 2020 compared to 2019

Property operating expenses on properties acquired or disposed of increased for each of the three and six months ended June 30, 2020 , primarily due to additional miscellaneous property operating expenses incurred on certain of the new farms we acquired subsequent to December 31, 2018.

Property operating expenses on vacant or self-operated properties remained flat for the six months ended June 30, 2020 , as compared to the prior-year period.

The increase in tenant-reimbursed property operating expenses for each of the three and six months ended June 30, 2020 , was due to additional property taxes paid by us on certain of our properties and miscellaneous operating costs incurred by us in connection with our ownership interest in an unconsolidated entity.

In both of these situations, the respective tenants are contractually obligated to reimburse us per the respective leases.

Property operating expenses on properties acquired or disposed of decreased for the three months ended September 30, 2020, and remained relatively flat for the nine months ended September 30, 2020.

The decrease for the three months ended September 30, 2020, was primarily due to additional legal fees incurred during the prior-year period related to negotiating and originating leases on new acquisitions.

Property operating expenses on vacant or self-operated properties remained flat for the nine months ended September 30, 2020, as compared to the prior-year period.

As compared to the respective prior-year periods, tenant reimbursement expense decreased slightly for the three months ended September 30, 2020, and increased for the nine months ended September 30, 2020.

The increase for the nine months ended September 30, 2020, was due to additional property taxes paid by us on certain of our properties and miscellaneous operating

costs incurred by us in connection with our ownership interest in an unconsolidated entity.

In both situations, the respective tenants are contractually obligated to reimburse us under the terms of the respective leases.

Related-Party Fees

Certain fee calculations changed pursuant to amendments to the agreements with our Adviser that were approved on July 9, 2019, and January 14, 2020.

due to our Adviser, in each case, as applicable, net of the respective credits, for the three and six months ended June 30, 2020 and 2019 (dollars in thousands):

For the Three Months Ended June 30,

For the Six Months Ended June 30,

For a discussion of the changes to these fees, see above, under “ Overview—Our Adviser and Administrator—Advisory Agreements .” The following table summarizes the base management, incentive, and capital gains fees due to our Adviser, in each case, as applicable, net of the respective credits, for the three and nine months ended September 30, 2020 and 2019 (dollars in thousands):

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

2020 2019 $ Change % Change 2020 2019 $ Change % Change

Base management fee, gross (1)

$ 1,078 $ 862 $ 216 25.1% $ 3,159 $ 2,741 $ 418 15.2%

Credits granted by Adviser’s board of directors applied against the base management fee (2)

— — — —% — (1,542) 1,542 (100.0)%

Base management fee, net 1,078 862 216 25.1% 3,159 1,199 1,960 163.5%

Incentive fee, gross (1)

821 — 821 —% 2,155 — 2,155 —%

Credits granted by Adviser’s board of directors applied against the incentive fee (2)

— — — —% — — — —%

Incentive fee, net 821 — 821 —% 2,155 — 2,155 —%

Capital gains fee, gross (1)

— — — —% — — — —%

Credits granted by Adviser’s board of directors applied against the capital gains fee (2)

— — — —% — — — —%

Capital gains fee, net — — — —% — — — —%

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Total credits granted by Adviser’s board of directors (1)

— — — —% — (1,542) 1,542 (100.0)%

Total fees to Adviser, net $ 1,899 $ 862 $ 1,037 120.3% $ 5,314 $ 1,199 $ 4,115 343.2%

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(2) Represent non-contractual, unconditional, and irrevocable waivers granted to us by our Adviser.

The base management fee increased during each of the three and six months ended June 30, 2020 , as compared to the respective prior-year periods, primarily due to a change in the calculation of the base management fee.

For each of the three and six months ended June 30, 2020 , the base management fee was calculated as 0.125% (0.5% per annum) of the respective prior calendar quarter’s Gross Tangible Real Estate, which base was increased due to a large volume of acquisitions during 2019, whereas the base management fee for each of the three and six months ended June 30, 2019 , was calculated as 0.5% (2.0% per annum) of the Total Adjusted Equity as of the end of the respective prior calendar quarters.

The base management fee increased during each of the three and nine months ended September 30, 2020, as compared to the respective prior-year periods, primarily due to a change in the calculation of the base management fee.

For each of the three and nine months ended September 30, 2020, the base management fee was calculated as 0.125% (0.5% per annum) of the respective prior calendar quarter’s Gross Tangible Real Estate, which base was increased due to a large volume of acquisitions during 2019, whereas the base management fee for each of the three and nine months ended September 30, 2019, was calculated as 0.5% (2.0% per annum) of the Total Adjusted Equity as of the end of the respective prior calendar quarters.

See above, under “ Overview—Our Adviser and Administrator—Advisory Agreements—Base Management Fee ,” for further discussion on the calculation of the base management fee for each period.

In addition, our Adviser granted us a non-contractual, unconditional, and irrevocable waiver to be applied against the base management fee during each of the three and six months ended June 30, 2019 .

Our Adviser earned an incentive fee during the six months ended June 30, 2020 , due to our Pre-Incentive Fee FFO (as defined in the respective agreement with our Adviser) exceeding the required hurdle rate of the applicable base during the three months ended March 31, 2020.

No incentive fee was earned by our Adviser during the six months ended June 30, 2019 .

Our Adviser did not earn a capital gains fee during either of the three or six months ended June 30, 2020 or 2019, as we did not sell any of our properties during any period presented.

The administration fee paid to our Administrator increased for each of the three and six months ended June 30, 2020 , as compared to the respective prior-year periods, primarily due to hiring additional personnel and us using a higher overall share of our Administrator’s resources in relation to those used by other funds and affiliated companies serviced by our Administrator.

In addition, our Adviser granted us a non-contractual, unconditional, and irrevocable waiver to be applied against the base management fee during the nine months ended September 30, 2019.

Our Adviser earned an incentive fee during each of the three and nine months ended September 30, 2020, due to our Pre-Incentive Fee FFO (as defined in the respective agreement with our Adviser) exceeding the required hurdle rate of the applicable base during each of the first and third quarters of fiscal year 2020.

No incentive fee was earned by our Adviser during either of the three or nine months ended months ended September 30, 2019.

Our Adviser did not earn a capital gains fee during either of the three or nine months ended September 30, 2020 or 2019, as we did not sell any of our properties during any period presented.

The administration fee paid to our Administrator increased for each of the three and nine months ended September 30, 2020, as compared to the respective prior-year periods, primarily due to hiring additional personnel and us using a higher overall share of our Administrator’s resources in relation to those used by other funds and affiliated companies serviced by our Administrator.

Other Operating Expenses

General and administrative expenses consist primarily of professional fees, director fees, stockholder-related expenses, overhead insurance, acquisition-related costs for investments no longer being pursued, and other miscellaneous expenses.

General and administrative expenses increased for each of the three and six months ended June 30, 2020 , as compared to the respective prior-year periods, primarily due to increased stockholder-related expenses.

Compared to the respective prior-year periods, general and administrative expenses decreased for the three months ended September 30, 2020, and remained relatively flat for the nine months ended September 30, 2020.

The decrease for the three

months ended September 30, 2020, was primarily due to lower professional fees, partially offset by increased stockholder-related expenses.

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 for each of the three and six months ended June 30, 2020 , as compared to the respective prior-year periods, primarily driven by additional interest patronage received from Farm Credit (due to increased borrowings from Farm Credit).

During the six months ended June 30, 2020 , we recorded approximately $1.3 million of interest patronage from Farm Credit related to

interest accrued during 2019, compared to approximately $700,000 of interest patronage recorded during the prior-year period.

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 for each of the three and nine months ended September 30, 2020, as compared to the respective prior-year periods, primarily driven by additional interest patronage received from Farm Credit (due to increased borrowings from Farm Credit).

During the three months ended March 31, 2020, we recorded approximately $1.3 million of interest patronage from Farm Credit related to interest accrued during 2019, compared to approximately $700,000 of interest patronage recorded during the three months ended March 31, 2019.

The receipt of interest patronage received from Farm Credit during 2020 resulted in a 20.4% decrease (approximately 98 basis points) to our effective interest rate on our aggregate borrowings from Farm Credit during the year ended December 31, 2019.

In addition, during the three and six months ended June 30, 2019 , we recognized $45,000 and $155,000 of income as a result of accumulated deferred revenue related to a sale agreement for one of our farms that was terminated.

Interest expense increased for each of the three and six months ended June 30, 2020 , as compared to the respective prior-year periods, primarily due to increased overall borrowings.

The weighted-average principal balance of our aggregate borrowings (excluding our Series A Term Preferred Stock) outstanding for the three and six months ended June 30, 2020 , was approximately $483.1 million and $482.2 million , respectively, as compared to approximately $345.0 million and $340.6 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 was 3.98% for each of the three and six months ended June 30, 2020 , respectively, as compared to 3.93% for each of the respective prior-year periods.

During each of the three and six months ended June 30, 2020 and 2019, we paid aggregate distributions on our Series A Term Preferred Stock (which distributions are treated similar to interest expense) of approximately $458,000 .

During the three and six months ended June 30, 2020 , we recorded a net loss of approximately $567,000 and $666,000 , respectively, primarily due to the disposal of certain irrigation improvements on certain of our farms, partially offset by net gains recognized on the sale of irrigation pivots on one of our farms that were replaced.

During the prior-year periods, we recorded a net gain on the sale of unused irrigation pivots, which was offset by a net loss recorded due to the disposal of certain irrigation improvements on one of our farms.

The net property and casualty recovery recorded during the six months ended June 30, 2020 , related to insurance recoveries received for certain irrigation improvements that were damaged due to natural disasters during 2019.

During the three and six months ended June 30, 2020 , we recognized (loss) income in an unconsolidated entity of approximately $(8,000) and $26,000 , respectively.

We acquired an interest in this entity during the three months ended September 30, 2019.

During the three and six months ended June 30, 2020 , the aggregate dividends paid on our Series B Preferred Stock and Series C Preferred Stock increased due to additional shares issued and outstanding during each of the periods.

During the three months ended September 30, 2020, we also received approximately $306,000 of interest patronage from Farm Credit, as certain Farm Credit associations paid a portion of the 2021 interest patronage (which relates to interest accrued during 2020) early.

In addition, during the three and nine months ended September 30, 2019, we recognized approximately $53,000 and $208,000, respectively, of additional income as a result of accumulated deferred revenue related to a sale agreement for one of our farms that was terminated and a commission rebate received in connection with a property acquired during the period.

Interest expense increased for each of the three and nine months ended September 30, 2020, as compared to the respective prior-year periods, primarily due to increased overall borrowings.

The weighted-average principal balance of our aggregate borrowings (excluding our Series A Term Preferred Stock) outstanding for the three and nine months ended September 30, 2020, was approximately $496.9 million and $487.2 million, respectively, as compared to approximately $420.9 million and $367.7 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 was 4.03% and 3.99% for the three and nine months ended September 30, 2020, respectively, as compared to 4.03% and 3.97% for the respective prior-year periods.

During each of the three and nine months ended September 30, 2020, we paid aggregate distributions on our Series A Term Preferred Stock (which distributions are treated similar to interest expense) of approximately $458,000 and $1.4 million, respectively.

The same amounts were paid in each of the respective prior-year periods.

During each of the three and nine months ended September 30, 2020 and 2019, we recorded net losses on dispositions of real estate assets primarily due to the disposal of certain irrigation improvements on certain of our farms, partially offset by net gains recognized on the sale of irrigation pivots on two of our farms that were replaced.

The net property and casualty recovery recorded during the nine months ended September 30, 2020, and each of the three and nine months ended September 30, 2019, related to insurance recoveries received for certain irrigation improvements that were damaged due to natural disasters during 2019.

During the three and nine months ended September 30, 2020, we recognized (loss) income in an unconsolidated entity of approximately $(19,000) and $7,000, respectively.

We acquired an interest in this entity during the three months ended September 30, 2019, during which period no income or loss was recognized.

During the three and nine months ended September 30, 2020, the aggregate dividends paid on our Series B Preferred Stock and Series C Preferred Stock increased over that of the respective prior-year periods due to additional shares issued and outstanding during each of the current-year periods.

In addition, during the three and nine months ended September 30, 2020, we also wrote off approximately $44,000 of offering costs related to redemptions of our Series B Preferred Stock.

LIQUIDITY AND CAPITAL RESOURCES

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Cash Flow Resources

The following table summarizes total net cash flows from operating, investing, and financing activities for the six months ended June 30, 2020 and 2019 (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, 2020 and 2019 (dollars in thousands):

For the Nine Months Ended September 30,

2020 2019 $ Change % Change

Net change in cash from:

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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 for the six months ended June 30, 2020 , as compared to the prior-year period, primarily due to an early lease termination payment of approximately $3.0 million received from the outgoing tenant on four of our farms in Arizona and additional rental payments received from recent acquisitions, partially offset by increases in the amounts of fees paid to our Adviser and interest payments made during the six months ended June 30, 2020 .

As of the date of this filing, with the exception of approximately $396,000 of rental payments owed by three tenants that we expect to collect within the next 90 days (which payments were originally due on July 1, 2020;

see above under “ —Overview—Impact of COVID-19 on our Business and Operations ” for further discussion on these rent deferrals and late payments), all of our tenants are current in their rental payments to us, and we have not received any additional requests from tenants seeking rent relief as a result of COVID-19.

Further, the aforementioned delayed collections notwithstanding, we currently expect rental payments to continue to be paid on time for at least the foreseeable future.

Cash provided by operating activities decreased for the nine months ended September 30, 2020, as compared to the prior-year period, primarily due to increases in the amounts of fees paid to our Adviser and interest payments made, partially offset by an early lease termination payment of approximately $3.0 million received from the outgoing tenant on four of our farms in Arizona and additional rental payments received from recent acquisitions during the nine months ended September 30, 2020.

As of the date of this filing, with the exception of the aforementioned requests for short-term rent deferrals (both of which have since been paid), we have not received any additional requests from tenants seeking rent relief as a result of COVID-19.

Further, we currently expect rental payments to generally continue to be paid on time for at least the foreseeable future.

However, there can be no assurance that our business and financial and operational results will not be impacted by the COVID-19 pandemic or that we will be able to pay distributions to our stockholders in the future at the same rate, or at all.

Investing Activities

The decrease in cash used in investing activities during the six months ended June 30, 2020 , as compared to the prior-year period, was primarily due to a decrease in aggregate cash paid for acquisitions of new farms and capital improvements on existing farms during the six months ended June 30, 2020 , which was approximately $19.0 million less than the prior-year period.

The decrease in cash used in investing activities during the nine months ended September 30, 2020, as compared to the prior-year period, was primarily due to a decrease in aggregate cash paid for acquisitions of new farms and capital improvements on

existing farms during the nine months ended September 30, 2020, which was approximately $134.3 million less than the prior-year period.

Financing Activities

The decrease in cash provided by financing activities during the six months ended June 30, 2020 , as compared to the prior-year period, was primarily due to less net cash proceeds from equity issuances (including the Series B Preferred Stock, the Series C Preferred Stock, and our common stock) of approximately $20.2 million and a decrease in net borrowings of approximately $4.1 million for the six months ended June 30, 2020 , as compared to that of the prior-year period.

The decrease in cash provided by financing activities during the nine months ended September 30, 2020, as compared to the prior-year period, was primarily due to a decrease in net borrowings of approximately $95.0 million and less net cash proceeds from equity issuances (including the Series B Preferred Stock, the Series C Preferred Stock, and our common stock) of approximately $27.9 million for the nine months ended September 30, 2020, as compared to that of the prior-year period.

New MetLife Facility

As amended on February 20, 2020, the New MetLife Facility currently consists of the $75.0 million New MetLife Term Note and the $75.0 million MetLife Lines of Credit.

We currently have no outstanding balance on the New MetLife Term Note and

$100,000 outstanding under the MetLife Lines of Credit.

We currently have no outstanding balance on the New MetLife Term Note and $100,000 outstanding under the MetLife Lines of Credit.

While $149.9 million of the full commitment amount under the New MetLife Facility remains undrawn, based on the current level of collateral pledged, we currently have approximately $24.2 million of availability under the New MetLife Facility.

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Since September 2014, we have closed on 39 separate loans with 11 different Farm Credit associations (for additional information on these associations, see Note 4, “ Borrowings ,” within the accompanying notes to our condensed consolidated financial statements).

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

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

While we do not have any additional availability under any of these programs based on the properties currently pledged as collateral, we expect to enter into additional borrowing agreements with existing and new lenders in connection with certain potential new acquisitions in the future.

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The following table provides information on equity sales that have occurred since January 1, 2020 (dollars in thousands, except per-share amounts):

Type of Issuance

Weighted-average

Type of Issuance Number of

Shares Sold Weighted-average

Offering Price

Gross Proceeds

Net Proceeds (1)

Per Share Gross Proceeds Net Proceeds (1)

Series B Preferred Stock (2)

1,229,531 $ 24.52 $ 30,148 $ 27,664

Series C Preferred Stock 624,057 24.88 15,525 14,197

Common Stock – Follow-on Offering (3)

1,897,500 14.40 27,324 26,094

Common Stock – ATM Program 979,945 14.94 14,638 14,491

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

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

(2) Excludes share redemptions during the applicable time period.

(3) Includes the underwriters’ exercise of the full over-allotment option in connection with the offering.

Our 2020 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.

To date, we have issued approximately $6.9 million of Series C Preferred Stock and approximately $6.3 million of common stock under the 2020 Registration Statement.

To date, we have issued approximately $15.5 million of Series C Preferred Stock and approximately $40.9 million of common stock (including common stock issued to redeem OP Units) under the 2020 Registration Statement.

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

Off-Balance Sheet Arrangements

As of June 30, 2020 , we did not have any material off-balance sheet arrangements.

As of September 30, 2020, we did not have any material off-balance sheet arrangements.

NON-GAAP FINANCIAL INFORMATION

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We will adjust for certain non-recurring charges and receipts and will explain such adjustments accordingly.

We believe the exclusion of such non-recurring amounts improves comparability of our operating results on a period-to-period basis and will apply consistent definitions of CFFO and AFFO for all prior-year periods presented to provide consistency and better comparability.

We believe the exclusion of such non-recurring amounts improves comparability of our operating results

on a period-to-period basis and will apply consistent definitions of CFFO for all prior-year periods presented to provide consistency and better comparability.

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

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

• Other adjustments .

We will adjust for certain non-cash charges and receipts and will explain such adjustments accordingly.

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

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

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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, 2020 and 2019 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, 2020 and 2019 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,

2020 2019 2020 2019

Net income $ 1,581 $ 523 $ 4,864 $ 804

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

Net income (loss) available to common stockholders and non-controlling OP Unitholders

(2,405) (1,161) (6,793) (2,655)

Net loss available to common stockholders and non-controlling OP

(824) (638) (1,929) (1,851)

Real estate and intangible depreciation and amortization 3,909 3,419 12,010 8,952

Losses (gains) on dispositions of real estate assets, net

Losses on dispositions of real estate assets, net 195 134 861 154

Adjustments for unconsolidated entities (2)

FFO available to common stockholders and non-controlling OP Unitholders

FFO available to common stockholders and non-controlling OP

3,285 2,915 10,955 7,255

Acquisition- and disposition-related expenses 43 119 110 272

Other charges, net (2)

CFFO available to common stockholders and non-controlling OP Unitholders

Other receipts, net (3)

— (11) (37) (2)

CFFO available to common stockholders and non-controlling OP

3,328 3,023 11,028 7,525

Net rent adjustment (437) (226) (852) (265)

Amortization of debt issuance costs 194 161 559 461

AFFO available to common stockholders and non-controlling OP Unitholders

Other noncash charges (4)

AFFO available to common stockholders and non-controlling OP

3,148 2,958 10,773 7,721

Weighted-average common stock outstanding—basic and diluted 21,991,291 20,763,615 21,558,859 19,154,744

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Diluted AFFO per weighted-average total common share $ 0.14 $ 0.14 $ 0.50 $ 0.40

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

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

Consists primarily of net property and casualty recoveries recorded and the cost of related repairs expensed during each period as a result of the damage to certain irrigation improvements and, for the three and six months ended June 30, 2020 , only, our pro-rata share of (loss) income recorded from investments in unconsolidated entities during the period.

(3) Consists primarily of 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.

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

Net Asset Value

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Sources of this data may come from market inputs from recent acquisitions of our own portfolio of real estate, recent appraisals of properties we own that are similar in nature and in the same region (as applicable) as the property being valued, market conditions and trends we observe in our due diligence process, and conversations with appraisers, brokers, and farmers.

A breakdown of the methodologies used to value our properties and the aggregate value as of June 30, 2020 , determined by each method is shown in the table below (dollars in thousands, except in footnotes):

Valuation Method

A breakdown of the methodologies used to value our properties and the aggregate value as of September 30, 2020, determined by each method is shown in the table below (dollars in thousands, except in footnotes):

Valuation Method Number of

Acres Net Cost

Fair Value % of Total

Purchase Price 17 9,916 9,257 $ 79,337 $ 79,038 8.1%

Third-party Appraisal (2)

106 82,685 66,323 781,453 891,843 91.9%

Total 123 92,601 75,580 $ 860,790 $ 970,881 100.0%

(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.

Appraisals performed between September 2019 and June 2020 .

Some of the significant assumptions used by appraisers and the Valuation Team in valuing our portfolio as of June 30, 2020 , include land values per farmable acre, market rental rates per farmable acre and the resulting net operating income (“NOI”) at the property level, and capitalization rates, among others.

(2) Appraisals performed between December 2019 and October 2020.

Some of the significant assumptions used by appraisers and the Valuation Team in valuing our portfolio as of September 30, 2020, include land values per farmable acre, market rental rates per farmable acre and the resulting net operating income (“NOI”) at the property level, and capitalization rates, among others.

These assumptions were applied on a farm-by-farm basis and were selected based on several factors, including comparable land sales, surveys of both existing and current market rates, discussions with other brokers and farmers, soil quality, size, location, and other factors deemed appropriate.

A summary of these significant assumptions is provided in the following table:

Land Value (per farmable acre)

$678 – $87,280

Market NOI (per farmable acre)

$421 – $3,759

Land Value (per farm acre) $678 – $127,436 $ 36,461

Market NOI (per farm acre) $421 – $3,759 $ 1,993

Market Capitalization Rate 3.68% – 10.06% 4.70%

3.68% – 10.06%

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, 2020 , 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, 2020 , from the prior value basis as of June 30, 2019, is provided in the table below (dollars in thousands):

Total portfolio fair value as of March 31, 2020

Acquisition of two new farms during the three months ended June 30, 2020 (1)

Plus net value depreciation during the three months ended June 30, 2020:

44 farms valued via third-party appraisals

Total net depreciation for the three months ended June 30, 2020

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, 2020, 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, 2020, from the prior value basis as of June 30, 2020, is provided in the table below (dollars in thousands):

Total portfolio fair value as of June 30, 2020 $ 911,770

Includes a $3.2 million add-on to our Withers Road property.

Acquisition of eight new farms during the three months ended September 30, 2020 39,179

Plus net value depreciation during the three months ended September 30, 2020:

28 farms valued via third-party appraisals $ 19,932

Total net appreciation for the three months ended September 30, 2020 19,932

Total portfolio fair value as of September 30, 2020 $ 970,881

Management also determined fair values of all 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, 2020 , was approximately $496.5 million , as compared to a carrying value (excluding unamortized related debt issuance costs) of approximately $494.7 million .

In addition, using the closing stock price as of June 30, 2020 , the fair value of the Series A Term Preferred Stock was determined to be approximately $30.2 million , as compared to a carrying value (excluding unamortized related issuance costs) of approximately $28.8 million .

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 B Preferred Stock and Series C Preferred Stock to each be $25.00 per share as of June 30, 2020 (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, 2020, was approximately $497.4 million, as compared to a carrying value (excluding unamortized related debt issuance costs) of approximately $495.1 million.

In addition, due to the short-term maturity of our Series A Term Preferred Stock (which has a mandatory redemption date of September 30, 2021), its carrying value (exclusive of unamortized offering costs) of approximately $28.8 million was deemed to approximate its fair value as of September 30, 2020.

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 B Preferred Stock and Series C Preferred Stock to each be $25.00 per share as of September 30, 2020 (see Exhibits 99.1 and 99.2 to this Form 10-Q).

Calculation of Estimated Net Asset Value

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

As of June 30, 2020 , we estimate the NAV per common share to be $11.06 .

As of September 30, 2020, we estimate the NAV per common share to be $11.97.

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 A Term Preferred Stock was valued based on its closing stock price as of June 30, 2020 .

The Series A Term Preferred Stock was valued based on its closing stock price as of September 30, 2020.

(5) Valued at the securities’ respective liquidation values, as discussed above.

Includes 21,534,739 shares of common stock and 144,151 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, 2020 , is provided below:

Estimated NAV per common share and non-controlling OP Unit as of March 31, 2020

(6) Includes 22,204,906 shares of common stock and zero OP Units held by non-controlling OP Unitholders.

A quarterly roll-forward in the estimated NAV per common share for the three months ended September 30, 2020, is provided below:

Estimated NAV per common share and non-controlling OP Unit as of June 30, 2020 $ 11.06

Less net loss available to common stockholders and non-controlling OP Unitholders (0.04)

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Less distributions on common stock and non-controlling OP Units (0.13)

Less net dilutive effect of equity issuances

Estimated NAV per common share and non-controlling OP Unit as of June 30, 2020

Plus net accretive effect of equity issuances 0.09

Estimated NAV per common share and non-controlling OP Unit as of September 30, 2020 $ 11.97

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

(i) a decrease of $0.03 per share due to the net depreciation in value of the farms that were valued during the three months ended June 30, 2020 , (ii) an increase of $0.18 per share due to the aggregate depreciation and amortization expense recorded during the three months ended June 30, 2020 , and (iii) a decrease of $0.19 per share due to 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 $0.91 per share due to the net appreciation in value of the farms that were valued during the three months ended September 30, 2020, (ii) an increase of $0.18 per share due to the aggregate depreciation and amortization expense recorded during the three months ended September 30, 2020, and (iii) a decrease of $0.14 per share due to 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 $11.06 as of June 30, 2020 , based on the calculation above, the closing price of our common stock on June 30, 2020 , was $15.86 per share.

For example, while we estimated our NAV per common share to be $11.97 as of September 30, 2020, based on the calculation above, the closing price of our common stock on September 30, 2020, was $15.02 per share.

The determination of estimated NAV is subjective and involves a number of assumptions, judgments, and estimates, and minor adjustments to these assumptions, judgments, or estimates may have a material impact on our overall portfolio valuation.

In addition, many of the assumptions used are sensitive to market conditions and can change frequently.

Changes in the market

environment and other events that may occur during our ownership of these properties may cause the values reported above to vary from the actual fair value that may be obtained in the open market.

Changes in the market environment and other events that may occur during our ownership of these properties may cause the values reported above to vary from the actual fair value that may be obtained in the open market.

Further, while management believes the values presented reflect current market conditions, the ultimate amount realized on any asset will be based on the timing of such dispositions and the then-current market conditions.

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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