What changed in this filing

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Item 1. Business

2022-02-22 compared with 2021-02-24 · 38 added, 52 removed, 248 unchanged (27% of the section changed)

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We currently own 164 farms comprised of 112,542 acres across 15 states in the U.S., as well as several farm-related facilities.

We were re-incorporated in Maryland on March 24, 2011, having been originally incorporated in California on June 14, 1997.

At the time of our original incorporation in 1997, our primary purpose was the operation of strawberry farms through our former subsidiary, Coastal Berry Company, LLC (“Coastal Berry”), an entity that provided contract growing, packaging, marketing, and distribution of fresh berries and other agricultural products, including commission selling and contract cooling services to independent berry growers.

We operated Coastal Berry as our primary business until 2004, when it was sold to Dole Food Company.

Since 2004, our operations have consisted primarily of leasing our farms to unrelated third-party tenants.

Upon the pricing of our initial public offering (the “IPO”), on January 29, 2013, our shares of common stock began trading on the Nasdaq Global Market (“Nasdaq”) under the symbol “LAND.” Our shares of 6.00% Series B Cumulative Redeemable Preferred Stock, par value $0.001 per share (the “Series B Preferred Stock”) are traded on Nasdaq under the symbol “LANDO.” In addition, we have registered our 6.00% Series C Cumulative Redeemable Preferred Stock, par value $0.001 per share (the “Series C Preferred Stock”).

The Series C Preferred Stock is not listed on a national securities exchange, and there is currently no public market for shares of the Series C Preferred Stock.

Our newly-designated 5.00% Series D Cumulative Term Preferred Stock (the “Series D Term Preferred Stock”) trades on Nasdaq under the symbol “LANDM.”

Historically, our farmland has predominantly been concentrated in locations where tenants are able to grow fresh produce annual row crops (e.g., certain berries and vegetables), which are typically planted and harvested annually.

However, since our IPO, we have diversified the variety of crops grown on our farms, and we now also own farms that grow permanent crops (e.g., almonds, blueberries, pistachios, and wine grapes) and, to a much lesser extent, farms that grow commodity crops (e.g., corn and beans).

We also own several farm-related facilities that are necessary to the farming operations on the underlying farmland, such as cooling facilities, packinghouses, processing facilities, and various storage facilities.

While our focus will continue to be on farmland growing either fresh produce annual row crops or permanent crops, in the future, we expect to acquire more farmland that grows commodity crops on a selective basis, as well as more farm-related facilities.

Our farmland is predominantly concentrated in locations where farmers are able to grow either fresh produce annual row crops (e.g., certain berries and vegetables), which are typically planted and harvested annually, or certain permanent crops (e.g., almonds, blueberries, pistachios, and wine grapes).

To a much lesser extent, we also own farms that grow certain commodity crops (e.g., corn and beans).

In addition, we own several farm-related facilities that are necessary to the farming operations on the underlying farmland, such as cooling facilities, packinghouses, processing facilities, and various storage facilities.

While our focus will continue to be on farmland growing either fresh produce annual row crops or certain permanent crops, in the future, we expect to acquire more farmland that grows commodity crops on a selective basis, as well as more farm-related facilities.

We conduct substantially all of our business activities through an Umbrella Partnership Real Estate Investment Trust (“UPREIT”) structure, by which all of our properties are held, directly or indirectly, by Gladstone Land Limited Partnership (the “Operating Partnership”).

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Both our Adviser and our Administrator are affiliates of ours and each other.

Upon the pricing of our initial public offering (the “IPO”), on January 29, 2013, our shares of common stock began trading on the Nasdaq Global Market (“Nasdaq”) under the symbol “LAND.” Our shares of 6.00% Series B Cumulative Redeemable Preferred Stock, par value $0.001 per share (the “Series B Preferred Stock”) are traded on Nasdaq under the symbol “LANDO,” and our shares of 5.00% Series D Cumulative Term Preferred Stock (the “Series D Term Preferred Stock”) trades on Nasdaq under the symbol “LANDM.” In addition, we have registered our 6.00% Series C Cumulative Redeemable Preferred Stock, par value $0.001 per share (the “Series C Preferred Stock”).

The Series C Preferred Stock is not listed on a national securities exchange, and there is currently no public market for shares of the Series C Preferred Stock.

Our Investment Objectives and Our Strategy

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We own and intend to primarily acquire additional farms and farm-related properties and lease them to independent and corporate farming operations, including sellers who desire to continue farming the land after we acquire the property from them.

We may also acquire commercial properties used by businesses that support farming

communities, including those businesses that obtain financing under the U.S.

We may also acquire commercial properties used by businesses that support farming communities, including those businesses that obtain financing under the U.S.

Farm Credit System.

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We intend to lease acquired properties over the long term.

However, from time to time, we may sell one or more properties if we believe it to be in the best interests of our stockholders and best to maintain the overall value of our portfolio.

However, from time to time, we may sell one or more properties if we believe it to be in the best interests of our stockholders and best to maintain the overall

value of our portfolio.

Potential purchasers may include real estate developers desiring to develop the property, financial purchasers seeking to acquire property for investment purposes, or farmers who have operated or seek to operate the land.

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• Continue Expanding our Crop Varieties.

Currently, the majority of tenants who farm our properties grow either annual row crops dedicated to fresh produce, such as berries (e.g., strawberries and raspberries) and fresh vegetables (e.g., tomatoes, lettuce, and bell peppers) or certain permanent crops (e.g., almonds, pistachios, blueberries, and wine grapes).

Currently, the majority of tenants who farm our properties grow either annual row crops dedicated to fresh produce, such as berries (e.g., strawberries and raspberries) and fresh vegetables (e.g., tomatoes, lettuce, and bell peppers), or certain permanent crops (e.g., almonds, blueberries, pistachios, and wine grapes).

To a lesser extent, we also own farms growing certain commodity crops (e.g., corn and beans).

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These transactions will provide the tenants with an alternative to other financing sources, such as borrowing, mortgaging real property, or selling securities.

anticipate that some of our transactions will be in conjunction with acquisitions, recapitalizations, or other corporate transactions affecting our tenants.

We anticipate that some of our transactions will be in conjunction with acquisitions, recapitalizations, or other corporate transactions affecting our tenants.

We also expect that many of the farms and farm-related facilities we acquire will be purchased from owners who do not farm the property but rather lease the property to other tenant-farmers.

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One of the criteria that we look for is whether mineral rights to such property, which constitute a separate estate from the surface rights to the property, have been sold to a third party.

generally seek to invest in properties where mineral rights have not been sold to third parties;

We generally seek to invest in properties where mineral rights have not been sold to third parties;

however, in cases where access to mineral rights would not affect the surface farming operations, we may enter into a lease agreement for the extraction of minerals or other subterranean resources, as we have done in the past on a few of our properties.

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• Credit Enhancement.

To mitigate risk and enhance the likelihood of tenants satisfying their lease obligations, our Adviser may also seek cross-default provisions if a tenant has multiple obligations to us or seek a letter of credit or a

guaranty of lease obligations from each tenant’s corporate affiliates, if any.

We believe that these types of credit enhancements, if obtained, provide us with additional financial security.

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By diversifying our portfolio, our Adviser intends to reduce the adverse effect on our portfolio of a single underperforming investment or a downturn in any particular geographic region.

Many of the areas in which we purchase or finance properties are likely to have their own microclimates and, although they appear to be in close proximity to one another, generally will not be similarly affected by weather or other natural occurrences at the same time.

other natural occurrences at the same time.

We currently own properties in 15 different states across the U.S., and over time, we expect to expand our geographic focus to other areas of the Southeast, Pacific Northwest, Midwest, and Mid-Atlantic.

We will also attempt to continue diversifying our portfolio of properties by seeking additional farmland that grows permanent crops and commodity crops, while maintaining our current focus of owning and leasing farmland that grows fresh produce annual row crops.

Refer to Note 3, “ Real Estate and Intangibles Assets ,” in the accompanying notes to our consolidated financial statements for a summary of our portfolio diversification and concentrations.

We will also attempt to continue diversifying our portfolio of properties by seeking additional farmland that grows a variety of different crop types, while maintaining our current focus of owning and leasing farmland that grows fresh produce annual row crops and certain permanent crops.

Refer to Item 7, “ Management’s Discussion and Analysis of Financial Condition and Results of Operation—Overview—Portfolio Diversification ,” for a summary of our portfolio diversification and concentrations.

While our Adviser seeks tenants it believes to be creditworthy, tenants are not required to meet any minimum rating established by an independent credit rating agency.

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We monitor our tenants’ credit quality on an ongoing basis by, among other things, periodically conducting site visits to the properties to ensure farming operations are taking place and to assess the general maintenance of the properties.

To date, no changes to credit quality of our tenants have been identified, and all tenants continue to pay pursuant to the terms of their respective leases.

To date, no significant changes to credit quality of our tenants have been identified, and our tenants generally continue to pay pursuant to the terms of their respective leases.

Use of Leverage

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The officers, directors, and employees of our Adviser have significant experience in making investments in and lending to businesses of all sizes, including investing in real estate and making mortgage loans.

We have entered into an investment advisory agreement with our Adviser, which was most recently amended and restated on January 14, 2020 (the “2020 Advisory Agreement”), under which our Adviser is responsible for managing our assets and liabilities, for operating our business on a day-to-day basis, and for identifying, evaluating, negotiating, and consummating investment transactions consistent with our investment policies as determined by our Board of Directors from time to time.

We have entered into an investment advisory agreement with our Adviser, which was most recently amended and restated effective July 1, 2021 (the “Current Advisory Agreement”), under which our Adviser is responsible for managing our assets and liabilities, for operating our business on a day-to-day basis, and for identifying, evaluating, negotiating, and consummating investment transactions consistent with our investment policies as determined by our Board of Directors from time to time.

Our Administrator employs our chief financial officer, treasurer, chief compliance officer, general counsel and secretary (who also serves as our Administrator’s president, general counsel, and secretary), and their respective staffs and provides administrative services to us under the amended and restated Administration Agreement entered into on February 1, 2013 (the “Administration Agreement”).

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This investment committee is currently comprised of Messrs.

Gladstone and Brubaker.

Gladstone and Brubaker, Mr.

John Sateri, and Ms.

Laura Gladstone, who is a managing director with Gladstone Capital.

We believe that the review process of our Adviser’s investment committee gives us a unique competitive advantage over other agricultural real estate companies because of the substantial experience that the members possess and their unique perspective in evaluating the blend of corporate credit, real estate, and lease terms that collectively combine to provide an acceptable risk for our investments.

Our Adviser’s board of directors has empowered the investment committee to authorize and approve our investments, subject to the terms of the 2020 Advisory Agreement.

Our Adviser’s board of directors has empowered the investment committee to authorize and approve our investments, subject to the terms of the Current Advisory Agreement.

Before we acquire any property, the proposed transaction is be reviewed by the investment committee to ensure that, in its view, the transaction satisfies our investment criteria and is within our investment policies.

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Our Adviser and Administrator are headquartered in McLean, Virginia, a suburb of Washington D.C., and our Adviser also has offices in several other states.

Refer to Item 7, “ Management Discussion and Analysis of Financial Condition and Results of Operations—Our Adviser and Administrator ,” for a detailed discussion on the fee structure of each of the Adviser and Administrator.

Adviser Duties and Authority under the 2020 Advisory Agreement

Under the terms of the 2020 Advisory Agreement, our Adviser is required to present to us investment opportunities consistent with our investment policies and objectives as adopted by our Board of Directors.

Refer to Item 7, “ Management Discussion and Analysis of Financial Condition and Results of Operations—Overview—Our Adviser and Administrator ,” for a detailed discussion on the fee structure of each of the Adviser and Administrator.

Adviser Duties and Authority under the Current Advisory Agreement

Under the terms of the Current Advisory Agreement, our Adviser is required to present to us investment opportunities consistent with our investment policies and objectives as adopted by our Board of Directors.

In performing its duties, our Adviser, either directly or indirectly by engaging an affiliate:

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• any acquisition which at the time of investment would have a cost exceeding 50% of our total assets;

• transactions that involve conflicts of interest with our Adviser (other than reimbursement of expenses in accordance with the 2020 Advisory Agreement).

• transactions that involve conflicts of interest with our Adviser (other than reimbursement of expenses in accordance with the Current Advisory Agreement).

Our Adviser and Administrator also engage in other business ventures and, as a result, certain (but not all) of their resources are not dedicated exclusively to our business.

For example, our Adviser and Administrator also serve as the external adviser and administrator, respectively, to Gladstone Capital and Gladstone Investment, both publicly-traded business development companies affiliated with us, and Gladstone Commercial, a publicly-traded REIT, also affiliated with us.

However, under the 2020 Advisory Agreement, our Adviser is required to devote sufficient resources to the administration of our affairs to discharge its obligations under the agreement.

The 2020 Advisory Agreement is not assignable or transferable by either us or our Adviser without the consent of the other party, except that our Adviser may assign the 2020 Advisory Agreement to an affiliate for whom our Adviser agrees to guarantee its obligations to us.

For example, our Adviser and Administrator also serve as the external adviser and administrator, respectively, to Gladstone Capital Corporation (“Gladstone Capital”) and Gladstone Investment Corporation (“Gladstone Investment”), both publicly-traded business development companies affiliated with us, Gladstone Commercial Corporation (“Gladstone Commercial”), a publicly-traded REIT affiliated with us, and Gladstone Acquisition Corporation (“Gladstone Acquisition”), a special purpose acquisition company affiliated with us.

However, under the Current Advisory Agreement, our Adviser is required to devote sufficient resources to the administration of our affairs to discharge its obligations under the agreement.

The Current Advisory Agreement is not assignable or transferable by either us or our Adviser without the consent of the other party, except that our Adviser may assign the Current Advisory Agreement to an affiliate for whom our Adviser agrees to guarantee its obligations to us.

Gladstone Securities

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Gladstone also serves on the board of managers of Gladstone Securities.

In addition, Michael LiCalsi, our General Counsel and Secretary, serves in several capacities for Gladstone Securities, serving as Chief Legal Officer, Secretary, and a member of its board of managers since 2010 and a managing principal since 2011.

In addition, Michael LiCalsi, our General Counsel and

Secretary, serves in several capacities for Gladstone Securities, serving as Chief Legal Officer, Secretary, and a member of its board of managers since 2010 and a managing principal since 2011.

Financing Arrangement Agreement

On April 11, 2017, we entered into an agreement with Gladstone Securities, effective beginning with the three months ended June 30, 2017, for it to act as our non-exclusive agent to assist us with arranging financing for our properties (the “Financing Arrangement Agreement”).

On April 11, 2017, we entered into an agreement with Gladstone Securities for it to act as our non-exclusive agent to assist us with arranging financing for our properties (the “Financing Arrangement Agreement”).

Pursuant to the agreement, we pay Gladstone Securities a financing fee in connection with the services it provides to us for securing financing on our properties.

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We do not currently have any employees and do not expect to have any employees in the foreseeable future.

Currently, services necessary for our business are provided by individuals who are employees of our Adviser and our Administrator pursuant to the terms of the 2020 Advisory Agreement and the Administration Agreement, respectively.

Currently, services necessary for our business are provided by individuals who are employees of our Adviser and our Administrator pursuant to the terms of the Current Advisory Agreement and the Administration Agreement, respectively.

Each of our executive officers is an employee or executive officer, or both, of each our Adviser and our Administrator.

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20 Administration, Accounting, Compliance, Human Resources, Legal, and Treasury

The Adviser and the Administrator aim to attract and retain capable advisory and administrative personnel, respectively, by offering competitive base salaries and bonus structure and by providing employees with appropriate opportunities for professional development and growth.

The Adviser and the Administrator aim to attract and retain capable advisory and administrative personnel, respectively, by offering competitive base salaries, benefits, and bonus structure and by providing employees with appropriate opportunities for professional development and growth.

We face competition for farmland acreage from many different entities, including, but not limited to, developers, municipalities, individual farmers, agriculture corporations, institutional investors, and others.

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These firms engage in the acquisition, asset management, valuation, and disposition of farmland properties.

Further competition may also come from other agricultural REITs, both publicly-traded (e.g., Farmland Partners, Inc.) and privately-held (e.g., Iroquois Valley Farms), and other agricultural-focused privately-held funds, such as AgIS Capital, LLC, and Homestead Capital.

The extent to which the COVID-19 pandemic may impact our business, financial condition, liquidity, results of operations, funds from operations, or prospects will depend on numerous evolving factors that we are not be able to predict at this time, including the duration and long-term scope of the pandemic;

the adequate production and distribution of vaccinations;

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

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

the effect on our tenants and their farming operations;

the ability of our tenants to make their rental payments;

any closures of our tenants’ operations;

and our ability to secure debt financing, service future debt obligations, or pay distributions to our stockholders.

Any of these events could materially adversely impact our business, financial condition, liquidity, results of operations, funds from operations, or prospects.

During 2020, we granted short-term rent extensions to two tenants who owed semi-annual rental payments totaling approximately $340,000.

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.

These rental payments were collected in full during the year ended December 31, 2020, and we have not received any further requests from tenants seeking relief as a result of COVID-19;

however, no assurances can be made that we will not receive additional rent deferral or modification requests in the future.

Further competition may also come from other agricultural REITs, both publicly-traded (e.g., Farmland Partners, Inc.) and privately-held (e.g., Iroquois Valley Farmland REIT, PBC), and other agricultural-focused privately-held funds, such as AgIS Capital, LLC, and Homestead Capital.

Government Regulations

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In response to the COVID-19 pandemic, federal governmental authorities, as well as state and local governmental authorities in jurisdictions where our properties are located, may implement laws and regulations which impact our ability to operate our business, or those of our tenants, in the ordinary course.

Such regulations, along with the COVID-19 pandemic in general, may materially affect our results of operations for the year ending December 31, 2021.

Such regulations, along with the COVID-19 pandemic in

general, may materially affect our results of operations for the year ending December 31, 2022.

Otherwise, we do not expect that compliance with the various laws and regulations we are subject to will have a material effect on our capital expenditures, results of operations and competitive position for the year ending December 31, 2022, as compared to prior periods.

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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-K

Item 1. Business