GLADSTONE LAND Corp 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Index to Consolidated Financial Statements PAGE Report of Management on Internal Controls over Financial Reporting 59 Report of Independent Registered Public Accounting Firm (PCAOB ID 238 ) 60 Consolidated Balance Sheets as of December 31, 202 1 and 20 20 62 Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 202 1 and 20 20 63 Consolidated Statements of Equity for the years ended December 31, 202 1 and 20 20 64 Consolidated Statements of Cash Flows for the years ended December 31, 202 1 and 20 20 65 Notes to Consolidated Financial Statements 66 Schedule III – Real Estate and Accumulated Depreciation as of December 31, 202 1 94 58 Table of Contents Report of Management on Internal Controls over Financial Reporting To the Stockholders and Board of Directors of Gladstone Land Corporation: Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and include those policies and procedures that pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and the dispositions of our assets, provide reasonable assurance that our transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with appropriate authorizations; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Under the supervision and with the participation of our management, we assessed the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations (COSO). Based on our assessment, management concluded that our internal control over financial reporting was effective as of December 31, 2021. February 22, 2022 59 Table of Contents Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Gladstone Land Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Gladstone Land Corporation and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of operations and comprehensive income, of equity and of cash flows for the years then ended, including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Purchase Price Allocations for Real Estate Acquisitions – Land Valued Using a Sales Comparison Approach As described in Notes 2 and 3 to the consolidated financial statements, during 2021 the Company completed 16 real estate acquisitions consisting of 27 farms for a total purchase price of $294 million, which consisted of $98 million of land. Management allocates the purchase price of real estate to (i) the tangible assets acquired and liabilities assumed (typically consisting of land, buildings, improvements, permanent plantings, and long-term debt) and, if applicable, (ii) any identifiable intangible assets and liabilities (typically consisting of in-place lease values, lease origination costs, the values of above- and below-market leases, and tenant relationships), based in each case on their relative fair values. Management’s estimates of fair value are made using methods such as a sales comparison approach, a cost approach, and either an income capitalization approach or discounted cash flow analysis. The principal considerations for our determination that performing procedures relating to the purchase price allocations for real estate acquisitions – land valued using a sales comparison approach is a critical audit matter are the significant judgment by management when developing the estimated fair value of the land, which in turn led to significant auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence relating to the comparable sales used in the sales comparison approach used to value the land. 60 Table of Contents Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included, among others (i) reading the purchase agreements; (ii) testing management’s process for developing the estimated fair value of the land; (iii) testing the completeness and accuracy of data used by management in estimating the fair value of the land; (iv) evaluating the appropriateness of the sales comparison approach; and (v) evaluating the reasonableness of the comparable sales used in the sales comparison approach. Evaluating the reasonableness of the comparable sales involved evaluating whether the comparable sales used by management were reasonable considering the consistency with (i) external market and industry data, (ii) previous real estate acquisitions, and (iii) evidence obtained in other areas of the audit. /s/ PricewaterhouseCoopers LLP Washington, DC February 22, 2022 We have served as the Company’s auditor since 2005. 61 Table of Contents GLADSTONE LAND CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share and per-share data) December 31, 2021 December 31, 2020 ASSETS Real estate, at cost $ 1,357,800 $ 1,095,439 Less: accumulated depreciation ( 74,002 ) ( 49,236 ) Total real estate, net 1,283,798 1,046,203 Lease intangibles, net 4,456 3,732 Cash and cash equivalents 16,708 9,218 Other assets, net 46,588 8,136 TOTAL ASSETS $ 1,351,550 $ 1,067,289 LIABILITIES AND EQUITY LIABILITIES: Borrowings under lines of credit $ 100 $ 100 Notes and bonds payable, net 667,882 623,961 Series A mandatorily-redeemable preferred stock, $ 0.001 par value, $ 25.00 per share liquidation preference; 0 shares authorized, issued, or outstanding as of December 31, 2021; 2,000,000 shares authorized, 1,150,000 shares issued and outstanding as of December 31, 2020; net — 28,594 Series D mandatorily-redeemable preferred stock, $ 0.001 par value, $ 25.00 per share liquidation preference; 3,600,000 shares authorized, 2,415,000 shares issued and outstanding as of December 31, 2021; 0 shares authorized, issued, or outstanding as of December 31, 2020; net 58,696 — Accounts payable and accrued expenses 10,874 9,081 Due to related parties, net 4,224 2,484 Other liabilities, net 20,708 19,279 Total liabilities 762,484 683,499 Commitments and contingencies (Note 7) EQUITY: Stockholders’ equity: Series B cumulative redeemable preferred stock, $ 0.001 par value; $ 25.00 per share liquidation preference; 6,456,065 shares authorized, 5,956,065 shares issued and outstanding as of December 31, 2021 and 2020 6 6 Series C cumulative redeemable preferred stock, $ 0.001 par value, $ 25.00 per share liquidation preference; 25,989,942 shares authorized, 3,493,333 shares issued and outstanding as of December 31, 2021; 25,999,862 shares authorized, 1,088,435 shares issued and outstanding as of December 31, 2020 3 1 Common stock, $ 0.001 par value; 63,953,993 shares authorized, 34,210,013 shares issued and outstanding as of December 31, 2021; 65,544,073 shares authorized, 26,219,019 shares issued and outstanding as of December 31, 2020 34 26 Additional paid-in capital 668,275 440,470 Distributions in excess of accumulated earnings ( 80,467 ) ( 55,213 ) Accumulated other comprehensive loss ( 1,036 ) ( 1,500 ) Total stockholders’ equity 586,815 383,790 Non-controlling interests in Operating Partnership 2,251 — Total equity 589,066 383,790 TOTAL LIABILITIES AND EQUITY $ 1,351,550 $ 1,067,289 The accompanying notes are an integral part of these consolidated financial statements. 62 Table of Contents GLADSTONE LAND CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (In thousands, except share and per-share data) For the Years Ended December 31, 2021 2020 OPERATING REVENUES: Lease revenue, net $ 75,318 $ 57,031 Total operating revenues 75,318 57,031 OPERATING EXPENSES: Depreciation and amortization 27,183 16,655 Property operating expenses 2,536 1,848 Base management fee 6,329 4,289 Incentive fee 3,901 3,038 Administration fee 1,526 1,448 General and administrative expenses 2,139 2,102 Total operating expenses 43,614 29,380 OTHER INCOME (EXPENSE): Other income 2,291 1,872 Interest expense ( 24,883 ) ( 20,621 ) Dividends declared on Series A and Series D mandatorily-redeemable preferred stock ( 3,068 ) ( 1,833 ) Loss on dispositions of real estate assets, net ( 2,537 ) ( 2,180 ) Property and casualty recovery, net 68 70 Loss from investments in unconsolidated entities ( 61 ) ( 4 ) Total other expense, net ( 28,190 ) ( 22,696 ) NET INCOME 3,514 4,955 Net income attributable to non-controlling interests ( 19 ) ( 29 ) NET INCOME ATTRIBUTABLE TO THE COMPANY 3,495 4,926 Dividends declared on Series B and Series C cumulative redeemable preferred stock ( 12,235 ) ( 9,278 ) Loss on extinguishment of Series B and Series C cumulative redeemable preferred stock ( 23 ) ( 44 ) NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS $ ( 8,763 ) $ ( 4,396 ) LOSS PER COMMON SHARE: Basic and diluted $ ( 0.29 ) $ ( 0.20 ) WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING Basic and diluted 30,357,268 22,258,121 COMPREHENSIVE INCOME: Net income attributable to the Company $ 3,495 $ 4,926 Change in fair value related to interest rate hedging instruments 464 ( 1,110 ) COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY $ 3,959 $ 3,816 The accompanying notes are an integral part of these consolidated financial statements. 63 Table of Contents GLADSTONE LAND CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EQUITY (In thousands, except share data) Series B Preferred Stock Series C Preferred Stock Common Stock Additional Paid-in Capital Distributions in Excess of Accumulated Earnings Accumulated Other Comprehensive Loss Total Stockholders’ Equity Non- Controlling Interest Total Equity Number of Shares Par Value Number of Shares Par Value Number of Shares Par Value Balance at December 31, 2019 4,755,869 $ 5 — $ — 20,936,658 $ 21 $ 315,770 $ ( 38,785 ) $ ( 390 ) $ 276,621 $ 2,349 $ 278,970 Issuance of Series B Preferred Stock, net 1,229,531 1 — — — — 27,049 — — 27,050 — 27,050 Redemptions of Series B Preferred Stock ( 29,335 ) — — — — — ( 637 ) ( 44 ) — ( 681 ) — ( 681 ) Issuance of Series C Preferred Stock, net — — 1,088,573 1 — — 24,715 — — 24,716 — 24,716 Redemptions of Series C Preferred Stock — — ( 138 ) — — — ( 3 ) — — ( 3 ) — ( 3 ) Redemptions of OP Units — — — — 288,304 — 4,383 — — 4,383 ( 4,383 ) — Issuance of common stock, net — — — — 4,994,057 5 71,267 — — 71,272 — 71,272 Net income — — — — — — — 4,926 — 4,926 29 4,955 Dividends—Series B Preferred Stock and Series C Preferred Stock — — — — — — — ( 9,278 ) — ( 9,278 ) — ( 9,278 ) Distributions—OP units and common stock — — — — — — — ( 12,032 ) — ( 12,032 ) ( 69 ) ( 12,101 ) Comprehensive loss attributable to the Company — — — — — — — — ( 1,110 ) ( 1,110 ) — ( 1,110 ) Adjustment to non-controlling interests resulting from changes in ownership of the Operating Partnership — — — — — — ( 2,074 ) — — ( 2,074 ) 2,074 — Balance at December 31, 2020 5,956,065 $ 6 1,088,435 $ 1 26,219,019 $ 26 $ 440,470 $ ( 55,213 ) $ ( 1,500 ) $ 383,790 $ — $ 383,790 Issuance of Series C Preferred Stock, net — — 2,414,818 2 — — 54,897 — — 54,899 — 54,899 Redemptions of Series C Preferred Stock — — ( 9,920 ) — — — ( 225 ) ( 23 ) — ( 248 ) — ( 248 ) Issuance of OP Units as consideration in real estate acquisitions, net — — — — — — — — — — 3,970 3,970 Issuance of common stock, net — — — — 7,990,994 8 171,487 — — 171,495 — 171,495 Net income — — — — — — — 3,495 — 3,495 19 3,514 Dividends—Series B Preferred Stock and Series C Preferred Stock — — — — — — — ( 12,235 ) — ( 12,235 ) — ( 12,235 ) Distributions—OP Units and common stock — — — — — — — ( 16,491 ) — ( 16,491 ) ( 92 ) ( 16,583 ) Comprehensive income attributable to the Company — — — — — — — — 464 464 — 464 Adjustment to non-controlling interests resulting from changes in ownership of the Operating Partnership — — — — — — 1,646 — — 1,646 ( 1,646 ) — Balance at December 31, 2021 5,956,065 $ 6 3,493,333 $ 3 34,210,013 $ 34 $ 668,275 $ ( 80,467 ) $ ( 1,036 ) $ 586,815 $ 2,251 $ 589,066 The accompanying notes are an integral part of these consolidated financial statements. 64 Table of Contents GLADSTONE LAND CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) For the Years Ended December 31, 2021 2020 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 3,514 $ 4,955 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 27,183 16,655 Amortization of debt issuance costs 1,172 756 Amortization of deferred rent assets and liabilities, net ( 581 ) ( 215 ) Amortization of right-of-use assets from operating leases and operating lease liabilities, net 122 47 Loss from investments in unconsolidated entities 61 4 Bad debt expense 13 17 Loss on dispositions of real estate assets, net 2,537 2,180 Property and casualty recovery, net ( 68 ) ( 70 ) Changes in operating assets and liabilities: Other assets, net ( 5,939 ) ( 1,779 ) Accounts payable and accrued expenses and Due to related parties, net 1,905 ( 744 ) Other liabilities, net 2,458 3,196 Net cash provided by operating activities 32,377 25,002 CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of new real estate assets ( 286,827 ) ( 255,948 ) Capital expenditures on existing real estate assets ( 6,120 ) ( 16,510 ) Contributions to unconsolidated real estate entities ( 2,054 ) ( 573 ) Proceeds from dispositions of real estate assets — 342 Insurance proceeds received capitalized as real estate additions — 68 Deposits on prospective real estate acquisitions and investments — ( 280 ) Net cash used in investing activities ( 295,001 ) ( 272,901 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of preferred and common equity 233,393 130,348 Offering costs ( 6,660 ) ( 6,620 ) Redemption of cumulative redeemable preferred stock (Series B and Series C) ( 248 ) ( 684 ) Proceeds from issuance of mandatorily-redeemable preferred stock (Series D) 60,375 — Redemption of mandatorily-redeemable preferred stock (Series A) ( 28,750 ) — Borrowings from lines of credit — 22,300 Repayments of lines of credit — ( 22,300 ) Borrowings from notes and bonds payable 67,907 156,053 Repayments of notes and bonds payable ( 23,924 ) ( 13,413 ) Payments of financing fees ( 2,717 ) ( 1,172 ) Dividends paid on cumulative redeemable preferred stock (Series B and Series C) ( 12,679 ) ( 8,982 ) Distributions paid to non-controlling common interests in Operating Partnership ( 92 ) ( 68 ) Distributions paid on common stock ( 16,491 ) ( 12,033 ) Net cash provided by financing activities 270,114 243,429 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 7,490 ( 4,470 ) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 9,218 13,688 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 16,708 $ 9,218 The accompanying notes are an integral part of these consolidated financial statements. GLADSTONE LAND CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (In thousands) SUPPLEMENTAL CASH FLOW INFORMATION: Interest paid (1) $ 26,395 $ 22,501 NON-CASH INVESTING, AND FINANCING INFORMATION: Issuance of non-controlling interests in Operating Partnership in conjunction with acquisitions 3,970 — Real estate additions included in Accounts payable and accrued expenses and Due to related parties, net 3,724 1,575 Stock offering and OP Unit issuance costs included in Accounts payable and accrued expenses and Due to related parties, net 3 74 Financing fees included in Accounts payable and accrued expenses and Due to related parties, net 116 135 Unrealized gain (loss) related to interest rate hedging instrument 1,036 ( 1,500 ) Dividends paid on Series C Preferred Stock via additional share issuances 185 6 (1) Includes distributions made on our Series D Term Preferred stock and Series A Term Preferred stock The accompanying notes are an integral part of these consolidated financial statements. 65 Table of Contents GLADSTONE LAND CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Only references to the number of farms/properties, acreage, and primary crop use are unaudited. NOTE 1. BUSINESS AND ORGANIZATION Business Gladstone Land Corporation (“we,” “us,” or the “Company”) is an agricultural real estate investment trust (“REIT”) that was re-incorporated in Maryland on March 24, 2011, having been originally incorporated in California on June 14, 1997. We are primarily in the business of owning and leasing farmland. Subject to certain restrictions and limitations, and pursuant to contractual agreements, our business is managed by Gladstone Management Corporation (the “Adviser”), a Delaware corporation, and administrative services are provided to us by Gladstone Administration, LLC (the “Administrator”), a Delaware limited liability company. Our Adviser and Administrator are both affiliates of ours (see Note 6, “ Related-Party Transactions ,” for additional discussion regarding our Adviser and Administrator). Organization We conduct substantially all of our operations through a subsidiary, Gladstone Land Limited Partnership (the “Operating Partnership”), a Delaware limited partnership. As we currently control the sole general partner of the Operating Partnership and own, directly or indirectly, a majority of the common units of limited partnership interest in the Operating Partnership (“OP Units”), the financial position and results of operations of the Operating Partnership are consolidated within our financial statements. As of December 31, 2021 and 2020, the Company owned approximately 99.4 % and 100.0 %, respectively, of the outstanding OP Units (see Note 8, “ Equity ,” for additional discussion regarding OP Units). Gladstone Land Partners, LLC (“Land Partners”), a Delaware limited liability company and a subsidiary of ours, was organized to engage in any lawful act or activity for which a limited liability company may be organized in Delaware. Land Partners is the general partner of the Operating Partnership and has the power to make and perform all contracts and to engage in all activities necessary in carrying out the purposes of the Company, as well as all other powers available to it as a limited liability company. As we currently own all of the membership interests of Land Partners, the financial position and results of operations of Land Partners are consolidated within our financial statements. Gladstone Land Advisers, Inc. (“Land Advisers”), a Delaware corporation and a subsidiary of ours, was created to collect any non-qualifying income related to our real estate portfolio and to perform certain small-scale farming business operations. We have elected for Land Advisers to be taxed as a taxable REIT subsidiary (“TRS”) of ours. Since we currently own 100 % of the voting securities of Land Advisers, its financial position and results of operations are consolidated within our financial statements. For the tax years ended December 31, 2021 and 2020, there was no taxable income or loss from Land Advisers, nor did we have any undistributed REIT taxable income. All further references herein to “we,” “us,” “our,” and the “Company” refer, collectively, to Gladstone Land Corporation and its consolidated subsidiaries, except where indicated otherwise. NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of financial statements in accordance with U.S. generally-accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, including the impact of extraordinary events, such as the novel coronavirus (“COVID-19”) pandemic, the results of which form the basis for making certain judgments. Actual results may materially differ from these estimates. Real Estate and Lease Intangibles Our investments in real estate consist of farmland, improvements made to the farmland (consisting primarily of irrigation and drainage systems and buildings), and permanent plantings acquired in connection with certain land purchases (consisting primarily of almond and pistachio trees, blueberry bushes, and wine vineyards). We record investments in real estate at cost 66 Table of Contents and generally capitalize improvements and replacements when they extend the useful life or improve the efficiency of the asset. We expense costs of routine repairs and maintenance as such costs are incurred. We generally compute depreciation using the straight-line method over the shorter of the estimated useful life or 39 years for buildings and improvements, the shorter of the estimated useful life or 40 years for permanent plantings, 5 to 20 years for equipment and fixtures. Certain of our acquisitions involve sale-leaseback transactions with newly-originated leases, and other of our acquisitions involve the acquisition of farmland that was already being operated as rental property, in which case we will typically assume the lease in place at the time of acquisition. Most of our acquisitions, including those with a prior leasing history, are generally treated as asset acquisitions under Accounting Standards Codification 805, “Business Combinations” (“ASC 805”). ASC 805 requires that the purchase price of real estate be allocated to (i) the tangible assets acquired and liabilities assumed (typically consisting of land, buildings, improvements, permanent plantings, and long-term debt) and, if applicable, (ii) any identifiable intangible assets and liabilities (typically consisting of in-place lease values, lease origination costs, the values of above- and below-market leases, and tenant relationships), based in each case on their fair values. In addition, all acquisition-related costs (other than legal costs incurred directly related to either originating new leases we execute upon acquisition or reviewing in-place leases we assumed upon acquisition) are capitalized and included as part of the fair value allocation of the identifiable tangible and intangible assets acquired or liabilities assumed. ASC 805 required that all costs related to the acquisition be expensed as incurred, rather than capitalized into the cost of the acquisition. Management’s estimates of fair value are made using methods similar to those used by independent appraisers, such as a sales comparison approach, a cost approach, and either an income capitalization approach or discounted cash flow analysis. Factors considered by management in its analysis include an estimate of carrying costs during hypothetical, expected lease-up periods, taking into consideration current market conditions and costs to execute similar leases. We also consider information obtained about each property as a result of our pre-acquisition due diligence, marketing, and leasing activities in estimating the fair value of the tangible and intangible assets acquired and liabilities assumed. In estimating carrying costs, management also includes lost reimbursement of real estate taxes, insurance, and certain other operating expenses, as well as estimates of lost rental income at market rates during the hypothetical, expected lease-up periods, which typically range from 1 to 24 months, depending on specific local market conditions. Management also estimates costs to execute similar leases, including leasing commissions, legal fees, and other related expenses, to the extent that such costs are not already incurred in connection with a new lease origination as part of the transaction. While management believes these estimates to be reasonable based on the information available at the time of acquisition, the purchase price allocation may be adjusted if management obtains more information regarding the valuations of the assets acquired or liabilities assumed. We allocate the purchase price to the fair value of the tangible assets and liabilities of an acquired property by valuing the property as if it were vacant. The “as-if-vacant” value is allocated to land, buildings, improvements, and permanent plantings, based on management’s determination of the relative fair values of such assets and liabilities as of the date of acquisition. We record above- and below-market lease values for acquired properties based on the present value (using a discount rate that reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place lease agreements, and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining, non-cancelable term of the lease. When determining the non-cancelable term of the lease, we evaluate whether fixed-rate or below-market renewal options, if any, should be included. The fair value of capitalized above-market lease values, included as part of Other assets in the accompanying Consolidated Balance Sheets, is amortized as a reduction of rental income on a straight-line basis over the remaining, non-cancelable terms of the respective leases. The fair value of capitalized below-market lease values, included as part of Other liabilities in the accompanying Consolidated Balance Sheets, is amortized as an increase to rental income on a straight-line basis over the remaining, non-cancelable terms of the respective leases, including that of any fixed-price or below-market renewal options. The value of the remaining intangible assets acquired, which consists of in-place lease values, lease origination costs, and tenant relationship values, are determined based on management’s evaluation of the specific characteristics of each tenant’s lease and our overall relationship with that respective tenant. Characteristics to be considered by management in allocating these values include the nature and extent of our existing business relationships with the tenant, prospects for developing additional business with the tenant, the tenant’s credit quality, and our expectations of lease renewals (including those existing under the terms of the current lease agreement), among other factors. The value of in-place leases and certain lease origination costs (if any) are amortized to amortization expense on a straight-line basis over the remaining, non-cancelable terms of the respective leases. The value of tenant relationship intangibles, which is the benefit to us resulting from the likelihood of an existing tenant renewing its lease at the existing property or entering into a lease at a different property we own, is amortized to amortization expense over the remaining lease term and any anticipated renewal periods in the respective leases. Should a tenant terminate its lease, the unamortized portion of the above intangible assets or liabilities would be charged to the appropriate income or expense account. 67 Table of Contents Total consideration for acquisitions may include a combination of cash and equity securities, such as OP Units. When OP Units are issued in connection with acquisitions, we determine the fair value of the OP Units issued based on the number of units issued multiplied by the closing price of the Company’s common stock on the date of acquisition. Impairment of Real Estate Assets We account for the impairment of our tangible and identifiable intangible real estate assets in accordance with ASC 360, which requires us to periodically review the carrying value of each property to determine whether indicators of impairment exist. Such indicators may include, but are not limited to, declines in a property’s operating performance, deteriorating market conditions, vacancy rates, and environmental or legal concerns. If circumstances support the possibility of impairment, we prepare a projection of the total undiscounted future cash flows of the specific property (without interest charges), including proceeds from disposition, and compare them to the net book value of the property to determine whether the carrying value of the property is recoverable. In performing the analysis, we consider such factors as the tenants’ payment history and financial condition, the likelihood of lease renewal, agricultural and business conditions in the regions in which our farms are located, and whether there are indications that the fair value of the real estate has decreased. If the carrying amount is more than the aggregate undiscounted future cash flows, we would recognize an impairment loss to the extent the carrying value exceeds the estimated fair value of the property. We evaluate our entire property portfolio each quarter for any impairment indicators and perform an impairment analysis on those select properties that have an indication of impairment. As of December 31, 2021 and 2020, we concluded that no ne of our properties were impaired. There have been no impairments recognized on our real estate assets since our inception. Tenant Improvements From time to time, our tenants may pay for improvements on certain of our properties with the ownership of the improvements remaining with us, in which case we will record the cost of such improvements as an asset (tenant improvements, included within Investments in real estate, net), along with a corresponding liability (deferred rent liability, included within Other liabilities, net) on our Consolidated Balance Sheets. When we are determined to be the owner of the tenant improvements, such improvements will be depreciated, and the related deferred rent liability will be amortized as an addition to rental income, each over the shorter of the useful life of the respective improvement or the remaining term of the existing lease in place. If the tenant is determined to be the owner of the tenant improvements, any tenant improvements funded by us are treated as a lease incentive and amortized as a reduction of rental income over the remaining term of the existing lease in place. In determining whether the tenant or the Company is the owner of such improvements, several factors will be considered, including, but not limited to: (i) whether the tenant or landlord retains legal title to the improvements upon expiration of the lease; (ii) whether the lease stipulates how such improvements should be treated; (iii) the uniqueness of the improvements (i.e., whether the improvements were made to meet the specific needs or for the benefit of the tenant leasing the property, or if the improvements generally increased the value or extended the useful life of the asset improved upon); (iv) the expected useful life of the improvements relative to the remaining length of the lease; (v) whether the tenant improvements are expected to have significant residual value at the end of the lease term; and (vi) whether the tenant or the Company constructs or directs construction of the improvements. The determination of who owns the improvements can be subject to significant judgment. Cash and Cash Equivalents We consider cash equivalents to be all short-term, highly-liquid investments that are both readily convertible to cash and have a maturity of three months or less at the time of purchase, except that any such investments purchased with funds held in escrow or similar accounts are classified as restricted cash. Items classified as cash equivalents include money-market deposit accounts. Our cash and cash equivalents as of December 31, 2021 and 2020 were held in the custody of one financial institution, and our balance at times may exceed federally-insurable limits. We did no t have any restricted cash or restricted cash equivalents as of December 31, 2021 or 2020. Debt Issuance Costs Debt issuance costs consist of costs incurred to obtain debt financing, including legal fees, origination fees, and administrative fees. Costs associated with our long-term borrowings are deferred and amortized over the terms of the respective financings using the straight-line method, which approximates the effective interest method. In the case of our lines of credit, the straight-line method is used due to the revolving nature of the financing instrument. Upon early extinguishment of any borrowings, the unamortized portion of the related deferred financing costs will be immediately charged to expense. In addition, in accordance with ASC 470, “Debt,” when a financing arrangement is amended so that the only material change is an increase in the borrowing capacity, the unamortized deferred financing costs from the prior arrangement is amortized over the term of the new 68 Table of Contents arrangement. During the years ended December 31, 2021 and 2020, we recorded approximately $ 1.2 million and $ 756 ,000, respectively, of total amortization expense related to debt issuance costs. Deferred Offering Costs We account for offering costs in accordance with SEC Staff Accounting Bulletin Topic 5.A., which states that incremental offering costs directly attributable to a proposed or actual offering of securities may be deferred and charged against the gross proceeds of such offering. Accordingly, costs incurred related to our ongoing equity offerings are included in Other assets, net on the accompanying Consolidated Balance Sheets and are ratably applied to the cost of equity as the related securities are issued. If an equity offering is subsequently terminated, the remaining, unallocated portion of the related deferred offering costs are charged to expense in the period such offering is aborted and recorded as General and administrative expenses on the accompanying Consolidated Statements of Operations and Comprehensive Income. During the year ended December 31, 2020, we incurred approximately $ 113,000 of costs for an offering that was subsequently aborted and charged such costs to General and administrative expenses on the accompanying Consolidated Statements of Operations and Comprehensive Income. Other Assets and Other Liabilities Other assets, net generally consists primarily of net deferred rent assets, rents receivable, deferred offering costs, prepaid expenses, deferred financing costs associated with our lines of credit, operating lease right-of-use assets, deposits on potential real estate acquisitions, the carrying value of five industrial generators used to provide temporary power for newly-drilled wells on certain of our farms, investments in long-term water assets (see Note 3, “Real Estate and Lease Intangibles—Investments in Water Assets ,” for further discussion), and net ownership interests in special-purpose LLCs (see “ —Investments in Unconsolidated Entities ” below for further discussion). Other liabilities, net generally consists primarily of rents received in advance, net deferred rent liabilities, operating lease liabilities, and the fair value of interest rate swaps if market interest rates are below the fixed rate of the respective swap (see Note 4, “Borrowings—Interest Rate Swap Agreements ,” for further discussion). Investments in Unconsolidated Entities We determine if an entity is a variable interest entity (“VIE”) in accordance with ASC Topic 810, “Consolidation.” For an entity in which we have acquired an interest, the entity will be considered a VIE if either of the following characteristics are met: (i) the entity lacks sufficient equity to finance its activities without additional subordinated financial support, or (ii) equity holders, as a group, lack the characteristics of a controlling financial interest. We evaluate all significant investments in real estate-related assets to determine if they are VIEs, utilizing judgment and estimates that are inherently subjective. If an entity is determined to be a VIE, we then determine whether to consolidate the entity as the primary beneficiary. The primary beneficiary has both (i) the power to direct the activities that most significantly impact the VIE’s economic performance, and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the entity. Non-controlling Interests Non-controlling limited interests in our Operating Partnership (“OP Units”) are those OP Units not owned by us. We evaluate whether OP Units held by non-controlling OP Unitholders are subject to redemption features outside of our control. OP Units held by non-controlling OP Unitholders are redeemable at the option of the holder for cash or, at our election, shares of our common stock and thus are reported in the equity section of the Consolidated Balance Sheets but separate from stockholders’ equity. The amount reported for such non-controlling interests on the Consolidated Statements of Operations and Comprehensive Income represent the portion of income (loss) from the Operating Partnership not attributable to us. At the end of each reporting period, we determine the amount of equity (at book value) that is allocable to non-controlling interests based upon the respective ownership interests. To reflect such non-controlling interests’ equity interest in the Company, an adjustment is made to non-controlling interests, with a corresponding adjustment to paid-in capital, as reflected on the Consolidated Statements of Equity. Lease Revenue Lease revenue includes rents that each tenant pays in accordance with the terms of its respective lease, reported evenly over the non-cancelable term of the lease. Most of our leases contain rental increases at specified intervals, which we recognize on a straight-line basis. In the event that the collectability of rental payments with respect to any given tenant is in doubt, the revenue recognition pattern for that particular lease would convert from a straight-line basis to a cash basis. We are not currently recognizing any lease revenues on a cash basis. Certain other leases provide for additional rental payments that are 69 Table of Contents based on a percentage of the gross crop revenues earned on the farm, which we refer to as participation rents. Such contingent revenue is generally recognized when all contingencies have been resolved and when actual results become known or estimable, enabling us to estimate and/or measure our share of such gross revenues. As a result, depending on the circumstances of each lease, certain participation rents may be recognized by us in the year the crop was harvested, while other participation rents may be recognized in the year following the harvest. Deferred rent receivable, included in Other assets on the accompanying Consolidated Balance Sheets, includes the cumulative difference between rental revenue as recorded on a straight-line basis and cash rents received from the tenants in accordance with the lease terms. In addition, we determine, in our judgment, to what extent the deferred rent receivable applicable to each specific tenant is collectible. We perform a quarterly review of the net deferred rent receivable balance as it relates to straight-line rents and take into consideration the tenant’s payment history, the financial condition of the tenant, business conditions of the industry in which the tenant operates, and economic and agricultural conditions in the geographic area in which the property is located. In the event that the collectability of deferred rent with respect to any given tenant is in doubt, we record a direct write-off of the specific rent receivable, with a corresponding adjustment to lease revenue. Tenant recovery revenue includes payments received from tenants as reimbursements for certain operating expenses, such as property taxes and insurance premiums. These expenses and their subsequent reimbursements are recognized under property operating expenses as incurred and tenant recovery revenue as earned, respectively, and are recorded in the same periods. We do not record any tenant recovery revenue or property operating expenses associated with costs paid directly by our tenants for net-leased properties. Involuntary Conversions and Property and Casualty Loss We account for involuntary conversions, for example, when a nonmonetary asset, such as property or equipment, is involuntarily converted to a monetary asset, such as insurance proceeds, in accordance with ASC 606, “Revenue Recognition – Gains and Losses,” which requires us to recognize a gain or a loss equal to the difference between the carrying amount of the nonmonetary asset and the amount of monetary assets received. Further, in accordance with ASC 450, “Contingencies,” if recovery of the loss is considered to be probable, we will recognize a receivable for the amount expected to be covered by insurance proceeds, not to exceed the related loss recognized, unless such amounts have been realized. (Loss) Gain on Dispositions of Real Estate Assets We recognize net (losses) or gains on dispositions of real estate assets either upon the abandonment of an asset before the end of its useful life or upon the closing of a transaction (be it an outright sale of a property or the sale of a perpetual, right-of-way easement on all or a portion of a property) with the purchaser. When a real estate asset is abandoned prior to the end of its useful life, a loss is recorded in an amount equal to the net book value of the related real estate asset at the time of abandonment. In the case of a sale of a property, a (loss) gain is recorded to the extent that the total consideration received for a property is (less) more than the property’s net carrying value (plus any closing costs incurred) at the time of the sale. Gains are recognized using the full accrual method (i.e., when the collectability of the sales price is reasonably assured, we are not obligated to perform additional activities that may be considered significant, the initial investment from the buyer is sufficient, and other profit recognition criteria have been satisfied). Gains on sales of real estate assets may be deferred in whole or in part until the requirements for gain recognition have been met. Income Taxes We have operated and intend to continue to operate in a manner that will allow us to qualify as a REIT under the Sections 856-860 of the Internal Revenue Code of 1986, as amended (the “Code”). Beginning with our tax year ended December 31, 2013, we elected to be taxed as a REIT for federal income tax purposes, and Land Advisers has been treated as a wholly-owned TRS that is subject to federal and state income taxes. As a REIT, we generally are not subject to federal corporate income taxes on amounts that we distribute to our stockholders (except income from any foreclosure property), provided that, on an annual basis, we distribute at least 90 % of our REIT taxable income (excluding net capital gains) to our stockholders and meet certain other conditions. To the extent that we satisfy the annual distribution requirement but distribute less than 100 % of our taxable income (including net capital gains), we will be subject to corporate income tax on our undistributed taxable income. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax on our taxable income at regular corporate rates (including any alternative minimum tax) and may not be able to qualify as a REIT for the four immediately-subsequent taxable years. Even as a REIT, we may be subject to certain state and local income and property taxes and to federal income and excise taxes on undistributed taxable income. In general, however, as long as we qualify as a REIT, no provision for federal income taxes will be necessary, except for taxes on undistributed REIT taxable income and taxes on the income generated by a TRS (such as Land Advisers), if any. 70 Table of Contents Should we have any taxable income or loss in the future, we will account for any income taxes in accordance with the provisions of ASC 740, “Income Taxes,” using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized based on differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax basis (including for operating loss, capital loss, and tax credit carryforwards) and are calculated using the enacted tax rates and laws expected to be in effect when such amounts are realized or settled. In addition, we will establish valuation allowances for tax benefits when we believe it is more-likely-than-not (defined as a likelihood of more than 50%) that such assets will not be realized. We perform an annual review for any uncertain tax positions and, if necessary, will record future tax consequences of uncertain tax positions in the financial statements. An uncertain tax position is defined as a position taken or expected to be taken in a tax return that is not based on clear and unambiguous tax law and which is reflected in measuring current or deferred income tax assets and liabilities for interim or annual periods. As of December 31, 2021 and 2020, we had no provisions for uncertain tax positions. The prior three tax years remain open for an audit by the Internal Revenue Service. Comprehensive Income We record the effective portion of changes in the fair value of the interest rate swap agreements that qualify as cash flow hedges to accumulated other comprehensive income. For the years ended December 31, 2021 and 2020, we reconciled net income attributable to the Company to comprehensive income attributable to the Company on the accompanying Consolidated Statements of Operations and Comprehensive Income. Segment Reporting We manage our operations on an aggregated, single-segment basis for purposes of assessing performance and making operating decisions and, accordingly, have only one reporting and operating segment. Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications had no impact on previously-reported net income, equity, or net change in cash and cash equivalents. Recently-Issued Accounting Pronouncements In April 2020, the FASB issued a staff question-and-answer document, “Topic 842 and Topic 840: Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic” (the “COVID-19 Q&A”), to address certain frequently-asked questions pertaining to lease concessions arising from the effects of the COVID-19 pandemic. Existing lease guidance requires entities to determine if a lease concession is a result of a new arrangement reached with the tenant (which would be addressed under the lease modification accounting framework) or if a lease concession is under the enforceable rights and obligations within the existing lease agreement (which would not fall under the lease modification accounting framework). The COVID-19 Q&A clarifies that entities may elect to not evaluate whether lease-related relief granted in light of the effects of COVID-19 is a lease modification, provided that the concession does not result in a substantial increase in rights of the lessor or obligations of the lessee. This election is available for concessions that result in the total payments required by the modified contract being substantially the same as or less than the total payments required by the original contract. This election did not have a material impact on our consolidated financial statements. On July 19, 2021, the FASB issued Accounting Standards Update (“ASU”) 2021-05, “Leases (Topic 842): Lessors - Certain Leases With Variable Lease Payments,” to improve guidance for a lessor’s accounting for lease contracts that have variable lease payments not dependent on a reference index or a rate and that would have resulted in the recognition of a selling loss at commencement if classified as a sales-type or direct financing lease. Leases that contain such variable lease payments are to be classified and accounted for as operating leases by the lessor if the lease would have been classified as a sales-type lease or a direct financing lease and the lessor would otherwise have recognized a day-one loss. While earlier application is permitted, the amendments are effective for fiscal years beginning after December 15, 2021 and can be applied either retrospectively to leases that commenced or were modified on or subsequent to the adoption of Topic 842 or prospectively as of the date of adoption of ASU 2021-05. The Company early adopted this ASU using the prospective method, however the implementation of this update did not have a material impact on our consolidated financial statements. NOTE 3. REAL ESTATE AND INTANGIBLE ASSETS All of our properties are wholly-owned on a fee-simple basis, except where noted. The following table provides certain summary information about the 164 farms we owned as of December 31, 2021 (dollars in thousands, except for footnotes): 71 Table of Contents Location No. of Farms Total Acres Farm Acres Net Cost Basis (1) Encumbrances (2) California (3)(4)(5) 62 33,027 30,740 $ 854,859 $ 415,667 Florida 26 22,591 17,639 221,736 130,929 Arizona (6) 6 6,280 5,228 55,701 18,253 Colorado 12 32,773 25,577 47,314 29,466 Washington 3 1,384 1,001 37,543 24,921 Nebraska 9 7,782 7,050 30,416 12,173 Michigan 23 1,892 1,245 24,661 14,608 Oregon (7) 5 726 606 20,604 10,660 Texas 1 3,667 2,219 8,250 5,000 Maryland 6 987 863 7,970 4,584 South Carolina 3 597 447 3,722 2,215 Georgia 2 230 175 2,874 — North Carolina 2 310 295 2,204 1,172 New Jersey 3 116 101 2,181 1,290 Delaware 1 180 140 1,276 735 Totals 164 112,542 93,326 $ 1,321,311 $ 671,673 (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 associated with the properties, and adjusted for accumulated depreciation and amortization. Specifically, includes Total real estate, net (excluding improvements paid for by the tenant) and Lease intangibles, net; plus long-term water assets, net above-market lease values, net lease incentives, and net investments in special-purpose LLCs included in Other assets, net; and less net below-market lease values and other deferred revenue included in Other liabilities, net; each as shown on the accompanying Consolidated Balance Sheets. (2) Excludes approximately $ 3.7 million of debt issuance costs related to notes and bonds payable, included in Notes and bonds payable, net on the accompanying Consolidated Balance Sheets. (3) Includes ownership in a special-purpose LLC that owns a pipeline conveying water to certain of our properties. As of December 31, 2021, this investment had a net carrying value of approximately $ 1.1 million and is included within Other assets, net on the accompanying Consolidated Balance Sheet. (4) Includes five acres in which we own a leasehold interest via a ground sublease with a California municipality that expires in December 2041. The ground sublease had a net cost basis of approximately $ 763,000 as of December 31, 2021 (included in Lease intangibles, net on the accompanying Consolidated Balance Sheets). (5) Includes 45,000 acre-feet of water stored with Semitropic Water Storage District, located in Kern County, California. See “ —Investments in Water Assets ” below for additional information on this water. (6) Includes two farms in which we own a leasehold interest via ground leases with the State of Arizona that expire in February 2022 (which was extended to February 2032 subsequent to December 31, 2021) and February 2025, respectively. In total, these two farms consist of 1,368 total acres and 1,221 farm acres and had an aggregate net cost basis of approximately $ 1.1 million as of December 31, 2021 (included in Lease intangibles, net on the accompanying Consolidated Balance Sheets). (7) Includes ownership in a special-purpose LLC that owns certain irrigation infrastructure that provides water to one of our farms. As of December 31, 2021, this investment had a net carrying value of approximately $ 2.1 million and is included within Other assets, net on the accompanying Consolidated Balance Sheets. Real Estate The following table sets forth the components of our investments in tangible real estate assets as of December 31, 2021 and 2020 (dollars in thousands): December 31, 2021 December 31, 2020 Real estate: Land and land improvements $ 812,830 $ 713,333 Permanent Plantings 331,969 202,420 Irrigation and drainage systems 153,688 141,408 Farm-related facilities 46,804 28,146 Other site improvements 12,509 10,132 Real estate, at cost 1,357,800 1,095,439 Accumulated depreciation ( 74,002 ) ( 49,236 ) Real estate, net $ 1,283,798 $ 1,046,203 Real estate depreciation expense on these tangible assets was approximately $ 25.9 million and $ 14.9 million for the years ended December 31, 2021 and 2020, respectively. 72 Table of Contents Included in the figures above are amounts related to improvements made on certain of our properties paid for by our tenants but owned by us, or tenant improvements. As of December 31, 2021 and 2020, we recorded tenant improvements, net of accumulated depreciation, of approximately $ 2.5 million and $ 2.0 million, respectively. We recorded both depreciation expense and additional lease revenue related to these tenant improvements of approximately $ 406,000 and $ 304,000 during the years ended December 31, 2021 and 2020, respectively. Intangible Assets and Liabilities The following table summarizes the carrying value of certain lease intangible assets and the related accumulated amortization as of December 31, 2021 and 2020 (dollars in thousands): December 31, 2021 December 31, 2020 Lease intangibles: Leasehold interest – land $ 4,295 $ 3,498 In-place leases 2,174 1,968 Leasing costs 1,808 1,640 Other (1) 130 127 Lease intangibles, at gross cost 8,407 7,233 Accumulated amortization ( 3,951 ) ( 3,501 ) Lease intangibles, net $ 4,456 $ 3,732 (1) Other consists primarily of tenant relationships. Total amortization expense related to these lease intangible assets was approximately $ 1.3 million and $ 1.7 million for the years ended December 31, 2021 and 2020, respectively. The following table summarizes the carrying values of certain lease intangible assets or liabilities included in Other assets, net or Other liabilities, net, respectively, on the accompanying Consolidated Balance Sheets and the related accumulated amortization or accretion, respectively, as of December 31, 2021 and 2020 (dollars in thousands): December 31, 2021 December 31, 2020 Intangible Asset or Liability Deferred Rent Asset (Liability) Accumulated (Amortization) Accretion Deferred Rent Asset (Liability) Accumulated (Amortization) Accretion Above-market lease values and lease incentives (1) $ 65 $ ( 12 ) $ 308 $ ( 154 ) Below-market lease values and other deferred revenues (2) ( 2,010 ) 340 ( 908 ) 336 $ ( 1,945 ) $ 328 $ ( 600 ) $ 182 (1) Net above-market lease values and lease incentives are included as part of Other assets, net on the accompanying Consolidated Balance Sheets, and the related amortization is recorded as a reduction of Lease revenue, net on the accompanying Consolidated Statements of Operations and Comprehensive Income. (2) Net below-market lease values and other deferred revenue are included as a part of Other liabilities, net on the accompanying Consolidated Balance Sheets, and the related accretion is recorded as an increase to Lease revenue, net on the accompanying Consolidated Statements of Operations and Comprehensive Income. Total amortization related to above-market lease values and lease incentives was approximately $ 48,000 and $ 203,000 for the years ended December 31, 2021 and 2020, respectively. Total accretion related to below-market lease values and other deferred revenues was approximately $ 224,000 and $ 113,000 for the years ended December 31, 2021 and 2020, respectively. The estimated aggregate amortization expense to be recorded related to in-place lease values, leasing costs, and tenant relationships and the estimated net impact on lease revenue from the amortization of above-market lease values and lease incentives or accretion of above-market lease values and other deferred revenues for each of the five succeeding fiscal years and thereafter is as follows (dollars in thousands): 73 Table of Contents Period Estimated Amortization Expense Estimated Net Increase (Decrease) to Lease Revenue For the fiscal years ending December 31: 2022 $ 796 $ 179 2023 660 159 2024 631 155 2025 441 155 2026 362 155 Thereafter 1,566 814 $ 4,456 $ 1,617 Acquisitions 2021 Acquisitions During the year ended December 31, 2021, we acquired 27 new farms, which are summarized in the table below (dollars in thousands, except for footnotes): Property Name Property Location Acquisition Date Total Acres No. of Farms Primary Crop(s) / Use Lease Term Renewal Options Total Purchase Price Acquisition Costs (1) Annualized Straight-line Rent (2) Palmer Mill Road Dorchester, MD 3/3/2021 228 2 Sod 10.0 years 2 ( 5 years) $ 1,600 $ 56 $ 89 Eight Mile Road – Port Facility San Joaquin, CA 3/11/2021 5 — Cooling facility and storage 9.8 years 3 ( 5 years) 3,977 50 189 South Avenue Tehama, CA 4/5/2021 2,285 1 Olives for olive oil 14.7 years 1 ( 5 years) 37,800 149 2,555 Richards Avenue Atlantic, NJ 6/3/2021 116 3 Blueberries 14.9 years 2 ( 5 years) 2,150 63 129 Lerdo Highway (Phase I) (3)(4) Kern, CA 6/4/2021 639 1 Conventional & organic almonds and banked water 10.4 years 3 ( 10 years) 26,492 111 974 Almena Drive Van Buren & Eaton, MI 6/9/2021 930 8 Blueberries 14.7 years 2 ( 5 years) 13,300 51 785 Maricopa Highway Kern, CA 8/11/2021 277 1 Organic blueberries 14.9 years 3 ( 5 years) 30,000 63 2,262 Wallace Road Yamhill, OR 8/11/2021 143 1 Organic blueberries 10.1 years 3 ( 5 years) 12,320 39 768 West Orange St. Lucie, FL 8/18/2021 617 2 Lemons and oranges 12.0 years None 5,241 184 367 Lerdo Highway (Phase II) (3)(5) Kern, CA 8/20/2021 479 1 Conventional & organic almonds and banked water 10.2 years 3 ( 10 years) 14,772 53 735 Lerdo Highway (Phase III) (3)(6) Kern, CA 10/8/2021 1,291 1 Conventional & organic almonds, conventional & organic pistachios, and banked water 10.1 years 3 10 years) 42,959 90 1,981 Raymond Road (3) Madera, CA 10/21/2021 219 1 Almonds 10.0 years 1 ( 5 years) 3,300 78 183 Cogdell Highway Atkinson, GA 11/12/2021 230 2 Blueberries 14.8 years None 2,850 45 224 Chuckhole Lane (7) Umatilla, OR 11/23/2021 165 1 Wine grapes 9.9 years 2 ( 10 years) 2,383 117 139 West Lerdo Highway (3)(8) Kern, CA 12/3/2021 2,635 1 Pistachios 2.9 years None 88,000 97 4,395 Farm Road Charlotte, FL 12/16/2021 1,204 1 Sod, watermelons, and cattle 5.0 years 1 ( 5 years) 7,350 94 388 11,463 27 $ 294,494 $ 1,340 $ 16,163 (1) Includes approximately $ 78,000 of external legal fees associated with negotiating and originating the leases associated with these acquisitions, which were expensed in the period incurred. (2) Unaudited; based on the minimum cash rental payments guaranteed under the respective leases, as required under GAAP, and excludes contingent rental payments, such as participation rents. (3) Lease provides for an annual 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) As part of the acquisition of this property, we acquired a contract to purchase 20,330 acre-feet of water stored with Semitropic Water Storage District, located in Kern County, California, at a fixed price. We executed this contract on June 25, 2021, at an additional cost of approximately $ 1.2 million, which is included in the total purchase price for this property in the table above. Income is not currently being earned on the value attributable to the water. See “— Investments in Water Assets ” below for additional information on this water. (5) As part of the acquisition of this property, we acquired a contract to purchase 5,000 acre-feet of water stored with Semitropic Water Storage District, located in Kern County, California, at a fixed price. We executed this contract on August 23, 2021, at an additional cost of approximately $ 306,000 , which is included in the total purchase price for this property in the table above. Income is not currently being earned on the value attributable to the water. See “— Investments in Water Assets ” below for additional information on this water. (6) As part of the acquisition of this property, we acquired a contract to purchase 19,670 acre-feet of water stored with Semitropic Water Storage District, located in Kern County, California, at a fixed price. We executed this contract on October 11, 2021, at an additional cost of approximately $ 1.2 million, 74 Table of Contents which is included in the total purchase price for this property in the table above. Income is not currently being earned on the value attributable to the water. See “— Investments in Water Assets ” below for additional information on this water. (7) In connection with the acquisition of this property, we also acquired an ownership interest in a related LLC, the sole purpose of which is to own and maintain an irrigation system providing water to this and other neighboring properties. Our acquired ownership, which equated to a 9.1 % interest in the LLC, was valued at approximately $ 2.1 million at the time of acquisition and is included within Other assets, net on the accompanying Consolidated Balance Sheets. See “— Investments in Unconsolidated Entities ” below for further information for our aggregate ownership interest in this and other LLCs. (8) Lease provides for an initial term of 9.9 years but also includes an annual tenant termination option, effective as of the end of the lease year (as defined within the lease) following the exercise of such termination option. 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 noncancellable term of the lease. During the year ended December 31, 2021, in the aggregate, we recognized operating revenues of approximately $ 6.4 million and net income of approximately $ 2.4 million related to the above acquisitions. 2020 Acquisitions During the year ended December 31, 2020, we acquired 26 new farms, which are summarized in the table below (dollars in thousands, except for footnotes). Property Name Property Location Acquisition Date Total Acreage No. of Farms Primary Crop(s) Lease Term Renewal Options Total Purchase Price Acquisition Costs (1) Annualized Straight-line Rent (2) County Road 18 Phillips, CO 1/15/2020 1,325 2 Sugar beets, edible beans, potatoes, & corn 6.0 years None $ 7,500 $ 39 $ 416 Lamar Valley Chase, NE 5/7/2020 678 1 Potatoes, edible beans, & corn 6.7 years 2 ( 5 years) 3,500 43 204 Driver Road (3) Kern, CA 6/5/2020 590 1 Pecans 4.7 years 2 ( 10 years) 14,169 52 784 Mt. Hermon Wicomico & Caroline, MD, and Sussex, DE 8/31/2020 939 5 Sod & vegetables 10.0 years 2 ( 5 years) 7,347 226 432 Firestone Avenue (4)(5)(6) Fresno, CA 9/3/2020 2,534 3 Pistachios and misc. organic & conventional vegetables 1.2 years 2 ( 5 years) 31,833 131 1,734 West Lost Hills Road (4)(7)(8) Fresno, CA 10/1/2020 801 1 Pistachios 1.1 years 4 ( 3 years) 31,827 77 1,752 Tractor Road Bamberg & Orangeburg, SC 10/23/2020 597 3 Sod 9.5 years None 3,765 72 244 American Ave Fresno, CA 12/11/2020 236 1 Current: Table grapes; Future: Almonds 19.9 years 1 ( 5 years) 3,600 55 241 Round Mountain Ventura, CA 12/15/2020 368 3 Misc. vegetables 1.6 years None 20,750 66 949 West Sierra Tulare, CA 12/17/2020 4,642 1 Almonds, pomegranates (conventional & organic), pistachios, and oats 9.9 years 1 ( 10 years) 61,500 112 3,886 Eight Mile Road San Joaquin, CA 12/24/2020 1,036 2 Conventional & organic blueberries 10.0 years 3 ( 5 years) 34,300 57 2,234 Rock Road Whatcom, WA 12/24/2020 638 2 Blueberries 10.0 years 3 ( 5 years) 31,700 105 1,885 Fountain Springs (4) Tulare, CA 12/31/2020 160 1 Citrus (mandarins & lemons) 7.8 years 2 ( 5 years) 4,200 51 252 14,544 26 $ 255,991 $ 1,086 $ 15,013 (1) Includes approximately $ 75,000 of aggregate external legal fees associated with negotiating and originating the leases associated with these acquisitions, which costs were expensed in the period incurred. (2) Unaudited; based on the minimum cash rental payments guaranteed under the respective leases, as required under GAAP, and excludes contingent rental payments, such as participation rents. (3) 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 noncancellable term of the lease. (4) Lease provides for an annual 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. (5) Lease provides for an initial term of 8.2 years but also includes an annual tenant termination option should the tenant become physically unable to continue farming operations on the property, effective as of the end of the then-current lease year (as defined within the lease). 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 noncancellable term of the lease. (6) 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 Consolidated Balance Sheets. See “ Investments in Unconsolidated Entities ” below for further information on our aggregate ownership interest in this LLC. (7) Lease provides for an initial term of 5.1 years but also includes an annual tenant termination option should the tenant become physically unable to continue farming operations on the property, effective as of the end of the then-current lease year (as defined within the lease). 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 noncancellable term of the lease. 75 Table of Contents (8) 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 $ 294,000 at the time of acquisition and is included within Other assets, net on the accompanying Consolidated Balance Sheets. See “ Investments in Unconsolidated Entities ” below for further information on our aggregate ownership interest in this LLC. During the year ended December 31, 2020, in the aggregate, we recognized operating revenues of approximately $ 2.5 million and net income of approximately $ 984,000 related to the above acquisitions. Purchase Price Allocations The allocation of the aggregate purchase price for the farms acquired during each of the years ended December 31, 2021 and 2020 is as follows (dollars in thousands): Assets (Liabilities) Acquired 2021 Acquisitions 2020 Acquisitions Land and land improvements $ 98,403 $ 124,870 Permanent plantings 129,677 93,751 Irrigation & drainage systems 11,277 26,837 Farm-related facilities 17,521 6,620 Other site improvements 984 2,699 Leasehold interest—land 790 — In-place lease values 688 395 Leasing costs 511 250 Above-market lease values (1) — 54 Below-market lease values (2) ( 1,321 ) ( 58 ) Investment in LLC (1) 2,054 573 Water purchase contracts (1)(3) 31,153 — Total Purchase Price $ 291,737 255,991 (1) Included within Other assets, net on the accompanying Consolidated Balance Sheets. (2) Included within Other liabilities, net on the accompanying Consolidated Balance Sheets. (3) Represents only the value attributable to the water purchase contracts acquired as part of the acquisition of Lerdo Highway and excludes approximately $ 2.8 million paid to execute the contracts subsequent to the acquisition. Acquired Intangibles and Liabilities The following table shows the weighted-average amortization periods (in years) for the intangible assets acquired and liabilities assumed in connection with new real estate acquired during the years ended December 31, 2021 and 2020: Weighted-Average Amortization Period (in Years) Intangible Assets and Liabilities 2021 2020 Leasehold interest – land 20.8 0 In-place lease values 13.9 4.6 Leasing costs 13.3 8.3 Above-market lease values and lease incentives 0 10.0 Below-market lease values and other deferred revenue 9.8 1.3 All intangible assets and liabilities 13.8 5.9 Investments in Unconsolidated Entities In connection with the acquisition of certain farmland located in Fresno County, California, we also acquired an ownership in a related limited liability company (the “Fresno LLC”), the sole purpose of which is to own and maintain a pipeline conveying water to our and other neighboring properties. As of December 31, 2021, our aggregate ownership interest in the Fresno LLC was 50.0 %. As our investment in the Fresno LLC is deemed to constitute “significant influence,” we have accounted for this investment under the equity method. In the connection with the acquisition of certain farmland located in Umatilla County, Oregon, we also acquired an ownership in a related limited liability company (the “Umatilla LLC”), the sole purpose of which is to own and maintain an irrigation system providing water to our and other neighboring properties. As of December 31, 2021, our aggregate ownership interest in 76 Table of Contents the Umatilla LLC was 9.1 %. As our investment in the Umatilla LLC is deemed to constitute “significant influence,” we have accounted for this investment under the equity method. During the years ended December 31, 2021 and 2020, we recorded an aggregate loss of approximately $ 61,000 and $ 4,000 , respectively (included in Loss from investments in unconsolidated entities on our Consolidated Statements of Operations and Comprehensive Income), which represents our pro-rata share of the aggregate loss recognized by the Fresno LLC and Umatilla LLC. Our combined ownership interest in the Fresno LLC and the Umatilla LLC, which had an aggregate carrying value of approximately $ 3.1 million and $ 1.2 million as of December 31, 2021 and 2020, respectively, is included within Other assets, net on the accompanying Condensed Consolidated Balance Sheets. Investments in Water Assets In connection with the acquisition of certain farmland located in Kern County, California, we also acquired three contracts to purchase an aggregate of 45,000 acre-feet of banked water held by Semitropic Water Storage District (“SWSD”), a water storage district located in Kern County, California, at a fixed price. The contracts to purchase the banked water could not readily be net settled by means outside of the contracts, and all rights and obligations associated with the purchase contracts were transferred to us at acquisition of the related farmland. We were not required to purchase a specific amount, or any, of the 45,000 acre-feet of water. Upon acquisition, we recognized the contracts at their relative fair value in accordance with ASC 805. During the year ended December 31, 2021, we executed all three contracts to purchase all 45,000 acre-feet of banked water for an aggregate additional cost of approximately $ 2.8 million. The purchased banked water was recognized at cost, including any administrative fees necessary to transfer the water to our banked water account. While we may, in the future, sell the banked water to an unrelated third party for a profit, our current intent is to hold the water for the long-term for future use on our own farms. There is no amount of time by which we must use the water held by SWSD. As of December 31, 2021, the investment in banked water had a carrying value of approximately $ 34.0 million, which includes the subsequent cost to execute the contract, and is included within Other assets, net on our Consolidated Balance Sheets. Each quarter, we will review the investment in banked water for any indicators of impairment in accordance with ASC 360, “Property, Plant, and Equipment,” and perform an impairment analysis if there are any such indicators. As of December 31, 2021, we concluded that there were no such indicators and that the water was not impaired. Future Minimum Lease Payments We account for all of our leasing arrangements in which we are the lessor as operating leases. The majority of our leases are subject to fixed rental increases, and a small subset of our lease portfolio includes lease payments based on an index, such as the consumer price index (“CPI”). In addition, several of our leases contain participation rent components based on the gross revenues earned on the respective farms. Most of our leases also include tenant renewal options; however, these renewal options are generally based on then-current market rental rates and are therefore typically excluded from the determination of the minimum lease term. The majority of our leases do not generally include tenant termination options. The following tables summarize the future lease payments to be received under noncancellable leases as of December 31, 2021 (dollars in thousands): Period Tenant Lease Revenue For the fiscal years ending December 31, 2022 $ 75,700 2023 71,046 2024 64,985 2025 57,953 2026 53,829 Thereafter 206,361 $ 529,874 Portfolio Concentrations Credit Risk 77 Table of Contents As of December 31, 2021, our farms were leased to various different, unrelated third-party tenants, with certain tenants leasing more than one farm. No individual tenant represented greater than 10.0% of the total lease revenue recorded during the year ended December 31, 2021. Geographic Risk Farms located in California and Florida accounted for approximately $ 49.6 million ( 65.9 %) and $ 13.7 million ( 18.2 %), respectively, of the total lease revenue recorded during the year ended December 31, 2021. Though we seek to continue to further diversify geographically, as may be desirable or feasible, should an unexpected natural disaster (such as an earthquake, wildfire, or flood) occur or climactic change impact the regions where our properties are located, there could be a material adverse effect on our financial performance and ability to continue operations. None of our farms in California or Florida have been materially impacted by the recent wildfires, droughts, or hurricanes that occurred in those respective regions. In addition, in light of the ongoing drought taking place in the western U.S., all of our farms in the region have independent (and, in most cases, multiple) sources of water, in addition to rainfall, and have not been materially impacted by the current drought conditions. No other single state accounted for more than 10.0% of the total rental revenue recorded during the year ended December 31, 2021. NOTE 4. BORROWINGS Our borrowings as of December 31, 2021 and 2020 are summarized below (dollars in thousands): Carrying Value as of As of December 31, 2021 December 31, 2021 December 31, 2020 Stated Interest Rates (1) (Range; Wtd Avg) Maturity Dates (Range; Wtd Avg) Notes and bonds payable: Fixed-rate notes payable $ 583,807 $ 492,182 2.44 %– 5.70 %; 3.73 % 2/14/2022–7/1/2051; October 2032 Variable-rate notes payable (2) 1,714 45,525 3.00 %– 3.00 %; 3.00 % 10/1/2040–10/1/2040; October 2040 Fixed-rate bonds payable 86,052 89,883 2.13 %– 4.57 %; 3.45 % 1/12/2022–12/30/2030; November 2024 Total notes and bonds payable 671,573 627,590 Debt issuance costs – notes and bonds payable ( 3,691 ) ( 3,629 ) N/A N/A Notes and bonds payable, net $ 667,882 $ 623,961 Variable-rate revolving lines of credit $ 100 $ 100 2.50 % 4/5/2024 Total borrowings, net $ 667,982 $ 624,061 (1) Where applicable, stated interest rates are before interest patronage (as described below). (2) Notes were fixed subsequent to the respective fiscal year ends. As of December 31, 2021, the above borrowings were collateralized by certain of our farms with an aggregate net book value of approximately $ 1.2 billion. The weighted-average interest rate charged on the above borrowings (excluding the impact of debt issuance costs and before any interest patronage, or refunded interest) was 3.72 % and 3.95 % for the years ended December 31, 2021 and 2020, respectively. In addition, 2020 interest patronage from our Farm Credit Notes Payable (as defined below) resulted in a 28.7 % reduction (approximately 135 basis points) to the stated interest rates on such borrowings. See below under “— Farm Credit Notes Payables—Interest Patronage” for further discussion on interest patronage. We generally borrow at a rate of 60 % of the value of the underlying agricultural real estate, and, except as noted herein, the amounts borrowed are not generally guaranteed by the Company. Our loan agreements generally contain various affirmative and negative covenants, including with respect to liens, indebtedness, mergers, and asset sales, and customary events of default. These agreements may also require that we satisfy certain financial covenants at the end of each calendar quarter or year. Some of these financial covenants include, but are not limited to, staying below a maximum leverage ratio and maintaining a minimum net worth value, rental-revenue-to-debt ratio, current ratio, and fixed charge coverage ratio. As of December 31, 2021, we were in compliance with all covenants applicable to the above borrowings. MetLife Borrowings MetLife Facility 78 Table of Contents As of December 31, 2019, our facility with Metropolitan Life Insurance Company (“MetLife”) consisted of a total of $ 200.0 million of term notes (the “Prior MetLife Term Notes”) and $ 75.0 million of revolving equity lines of credit (the “MetLife Lines of Credit,” and together with the Prior MetLife Term Notes, the “Prior MetLife Facility”). The draw period for the Prior MetLife Term Notes expired on December 31, 2019, with approximately $ 21.5 million being left undrawn, and MetLife had no obligation to disburse the remaining funds under those notes. On February 20, 2020, we entered into an agreement with MetLife to remove the MetLife Lines of Credit from the Prior MetLife Facility and create a new credit facility consisting of a new $ 75.0 million long-term note payable (the “2020 MetLife Term Note”) and the MetLife Lines of Credit (collectively, the “2020 MetLife Facility”). The following table summarizes the pertinent terms of the 2020 MetLife Facility as of December 31, 2021 (dollars in thousands, except for footnotes): Issuance Aggregate Commitment Maturity Dates Principal Outstanding Interest Rate Terms Undrawn Commitment 2020 MetLife Term Note $ 75,000 (1) 1/5/2030 $ 36,900 2.75 %, fixed through 1/4/2030 (2) $ 38,100 (3) MetLife Lines of Credit 75,000 4/5/2024 100 3-month LIBOR + 2.00 % (4) 74,900 (3) Total principal outstanding $ 37,000 (1) If the aggregate commitment under the 2020 MetLife Term Note is not fully utilized by December 31, 2022, MetLife has no obligation to disburse the additional funds under the 2020 MetLife Term Note. (2) Interest rates on future disbursements under the 2020 MetLife Term Note will be based on prevailing market rates at the time of such disbursements. In addition, through December 31, 2022, the 2020 MetLife Term Note is also subject to an unused fee ranging from 0.10 % to 0.20 % on undrawn amounts (based on the balance drawn under the 2020 MetLife Term Note). (3) Based on the properties that were pledged as collateral under the 2020 MetLife Facility, as of December 31, 2021, the maximum additional amount we could draw under the facility was approximately $ 58.4 million. (4) The interest rate on the MetLife Lines of Credit is subject to a minimum annualized rate of 2.50 %, plus an unused fee ranging from 0.10 % to 0.20 % on undrawn amounts (based on the balance drawn under each line of credit). Under the 2020 MetLife Facility, we are generally allowed to borrow up to 60 % of the aggregate of the lower of cost or the appraised value of the pool of agricultural real estate pledged as collateral. Amounts owed to MetLife under the agreement are guaranteed by us and each subsidiary of ours that owns a property pledged as collateral pursuant to the loan documents. See Note 11, “ Subsequent Events—Financing Activity—MetLife Facility ,” for discussion on an amendment to the 2020 MetLife Facility executed subsequent to December 31, 2021. Farmer Mac Facility On December 5, 2014, we, through certain subsidiaries of our Operating Partnership, entered into a bond purchase agreement (the “Bond Purchase Agreement”) with Federal Agricultural Mortgage Corporation (“Farmer Mac”) and Farmer Mac Mortgage Securities Corporation (the “Bond Purchaser”), for a secured note purchase facility. As subsequently amended, the Bond Purchase Agreement provided for bond issuances up to an aggregate amount of $ 125.0 million (the “Prior Farmer Mac Facility”) through December 11, 2018, after which date the Bond Purchaser had the option to continue buying new bonds issued under the Prior Farmer Mac Facility. On December 10, 2020, we entered into an amended and restated bond purchase agreement (the “Amended and Restated Bond Purchase Agreement”) with Farmer Mac and the Bond Purchaser, increasing the secured note purchase facility to provide for bond issuances up to an aggregate principal amount of $ 225.0 million (the “2020 Farmer Mac Facility”). In addition, the Amended and Restated Bond Purchase Agreement extended the date up to which we can issue new bonds to May 31, 2023, and the final maturity date for bonds issued under the 2020 Farmer Mac Facility to December 31, 2030. The Amended and Restated Bond Purchase Agreement also included certain adjustments to the Fixed Charge Coverage Ratio definition and the Fixed Charge Ratio Covenant. All other terms of the Bond Purchase Agreement remained the same. During the year ended December 31, 2021, we issued two new bonds under the 2020 Farmer Mac Facility, the pertinent terms of which are summarized in the following table (dollars in thousands): Date of Issuance Amount Maturity Dates Principal Amortization Stated Interest Rate Interest Rate Terms 2/4/2021 $ 2,460 10/31/2028 25.0 years 3.13 % Fixed throughout term 11/10/2021 1,290 12/30/2030 25.0 years 3.32 % Fixed throughout term Pursuant to the Amended and Restated Bond Purchase Agreement, bonds issued by us to the Bond Purchaser will be secured by a security interest in loans originated by us (pursuant to a pledge and security agreement), which, in turn, will be collateralized by first liens on agricultural real estate owned by subsidiaries of ours. The bonds issued generally have a maximum aggregate, effective loan-to-value ratio of 60 % of the underlying agricultural real estate, after giving effect to certain overcollateralization 79 Table of Contents obligations. As of December 31, 2021, we had approximately $ 96.4 million of bonds issued and outstanding under the 2020 Farmer Mac Facility. Farm Credit Notes Payable From time to time since September 2014 through December 31, 2021, we, through certain subsidiaries of our Operating Partnership, have entered into various loan agreements (collectively, the “Farm Credit Notes Payable”) with 13 different Farm Credit associations (collectively, “Farm Credit”). During the year ended December 31, 2021, we entered into the following loan agreements with Farm Credit (dollars in thousands): Issuer Date of Issuance Amount Maturity Date Principal Amortization Stated Interest Rate (1) Interest Rate Terms Farm Credit West, FLCA (2) 1/28/2021 $ 2,073 11/1/2045 24.5 years 3.23 % Fixed through 12/31/2027 (variable thereafter) Mid Atlantic Farm Credit, ACA 3/3/2021 960 6/1/2045 24.4 years 3.80 % Fixed through 1/31/2031 (variable thereafter) GreenStone Farm Credit Services, FLCA 8/17/2021 7,980 8/1/2046 25.5 years 4.00 % Fixed through 7/31/2031 (variable thereafter) Golden State Farm Credit, FLCA 9/28/2021 15,960 7/1/2051 30.0 years 3.75 % Fixed through 9/30/2031 (variable thereafter) Golden State Farm Credit, FLCA 9/28/2021 6,840 7/1/2046 25.0 years 3.75 % Fixed through 9/30/2031 (variable thereafter) Farm Credit Florida, ACA 12/13/2021 3,174 1/1/2047 25.0 years 4.13 % Fixed through 12/31/2031 (variable thereafter) (1) Stated rate is before interest patronage, as described below. (2) Loan proceeds used to repay a previously-issued loan with an outstanding balance of approximately $ 1.4 million and a stated interest rate of 4.99 %. Certain amounts owed under the Farm Credit Notes Payable, limited to 12 months of principal and interest due under certain of the loans, are guaranteed by us pursuant to the respective loan documents. Interest Patronage Interest patronage, or refunded interest, on our borrowings from Farm Credit is generally recorded upon receipt and is included within Other income on our Consolidated Statements of Operations and Comprehensive Income. Receipt of interest patronage typically occurs in the first half of the calendar year following the calendar year in which the respective interest expense is accrued. During the three months ended March 31, 2021, we recorded interest patronage of approximately $ 2.2 million related to interest accrued on the Farm Credit Notes Payable during the year ended December 31, 2020. In addition, during the three months ended September 30, 2020, we recorded approximately $ 306,000 of 2020 interest patronage, as certain Farm Credit associations prepaid a portion of the 2020 interest patronage (which related to interest accrued during 2020 but is typically received in 2021). In total, we recorded approximately $ 2.5 million of 2020 interest patronage related to our Farm Credit Notes Payable, which resulted in a 28.7 % reduction (approximately 135 basis points) to the interest rates on such borrowings. Other Borrowings During the year ended December 31, 2021, we entered into loan agreements with certain other lenders, the terms of which are summarized in the following table (dollars in thousands): Lender Date of Issuance Amount Maturity Date Principal Amortization Stated Interest Rate Interest Rate Terms Rabo AgriFinance, LLC (1) 3/11/2021 $ 3,780 12/1/2030 25.0 years 3.27 % Fixed throughout term Rabo AgriFinance, LLC (1) 3/11/2021 630 12/1/2022 None (interest only) 2.44 % Fixed throughout term Rabo AgriFinance, LLC (1) 11/10/2021 22,620 12/1/2030 25.0 years 3.42 % Fixed throughout term (1) Loans were issued as variable-rate loans but were subsequently fixed through our entry into interest rate swap agreements with the lender (as counterparty). Debt Service – Aggregate Maturities Scheduled principal payments of our aggregate notes and bonds payable as of December 31, 2021, for the succeeding years are as follows (dollars in thousands): 80 Table of Contents For the Fiscal Years Ending December 31, Scheduled Principal Payments 2022 $ 51,534 2023 45,696 2024 41,846 2025 38,889 2026 18,043 Thereafter 475,565 $ 671,573 Fair Value ASC 820, “Fair Value Measurement (Subtopic 820)” (“ASC 820”), provides a definition of fair value that focuses on the exchange (exit) price of an asset or liability in the principal, or most advantageous, market and prioritizes the use of market-based inputs to the valuation. ASC 820-10 establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows: • Level 1 — inputs that are based upon quoted prices (unadjusted) for identical assets or liabilities in active markets; • Level 2 — inputs are based upon quoted prices for similar assets or liabilities in active or inactive markets or model-based valuation techniques, for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and • Level 3 — inputs are generally unobservable and significant to the fair value measurement. These unobservable inputs are generally supported by little or no market activity and are based upon management’s estimates of assumptions that market participants would use in pricing the asset or liability. As of December 31, 2021, the aggregate fair value of our notes and bonds payable was approximately $ 663.8 million, as compared to an aggregate carrying value (excluding unamortized related debt issuance costs) of approximately $ 671.6 million . The fair value of our long-term notes and bonds payable is valued using Level 3 inputs under the hierarchy established by ASC 820-10 and is determined by a discounted cash flow analysis, using discount rates based on management’s estimates of market interest rates on long-term debt with comparable terms. Further, due to the revolving nature and variable interest rates applicable to the MetLife Lines of Credit, their aggregate fair value as of December 31, 2021, is deemed to approximate their aggregate carrying value of $ 100 ,000. Interest Rate Swap Agreements In order to hedge our exposure to variable interest rates, we have entered into various interest rate swap agreements in connection with certain of our mortgage financings. In accordance with these swap agreements, we will pay our counterparty a fixed interest rate on a quarterly basis and receive payments from our counterparty equivalent to the respective stipulated floating rates. We have adopted the fair value measurement provision for these financial instruments, and the aggregate fair value of our interest rate swap agreements is recorded in Other assets, net or Other liabilities, net, as appropriate, on our accompanying Consolidated Balance Sheets. Generally, in the absence of observable market data, we will estimate the fair values of our interest rate swaps using estimates of certain data points, including estimated remaining life, counterparty credit risk, current market yield, and interest rate spreads of similar securities as of the measurement date. As of December 31, 2021, our interest rate swaps were valued using Level 2 inputs. In addition, we have designated our interest rate swaps as cash flow hedges, and we record changes in the fair values of the interest rate swap agreements to accumulated other comprehensive income on the Consolidated Balance Sheets. We record changes in fair value on a quarterly basis, using current market valuations at quarter end. The following table summarizes our interest rate swaps as of December 31, 2021 and 2020 (dollars in thousands): Period Aggregate Notional Amount Aggregate Fair Value Asset Aggregate Fair Value Liability As of December 31, 2021 $ 82,980 $ — $ ( 1,036 ) As of December 31, 2020 14,077 — ( 1,500 ) The following table presents the amount of income or loss recognized in comprehensive income within our consolidated financial statements for the years ended December 31, 2021 and 2020 (dollars in thousands): 81 Table of Contents For the Year Ended December 31, 2021 For the Year Ended December 31, 2020 Derivative in cash flow hedging relationship: Interest rate swaps $ 464 $ ( 1,110 ) Total $ 464 $ ( 1,110 ) The following table summarizes certain information regarding our derivative instruments as of December 31, 2021 and 2020 (dollars in thousands): Derivative Liability Fair Value Derivative Type Balance Sheet Location December 31, 2021 December 31, 2020 Derivatives Designated as Hedging Instruments: Interest rate swaps Other liabilities, net $ ( 1,036 ) $ ( 1,500 ) Total $ ( 1,036 ) $ ( 1,500 ) NOTE 5. MANDATORILY-REDEEMABLE PREFERRED STOCK Series A Term Preferred Stock In August 2016, we completed a public offering of 6.375 % Series A Cumulative Term Preferred Stock, par value $ 0.001 per share (the “Series A Term Preferred Stock”), at a public offering price of $ 25.00 per share. As a result of this offering (including the underwriters’ exercise of their option to purchase additional shares to cover over-allotments), we issued a total of 1,150,000 shares of the Series A Term Preferred Stock for gross proceeds of approximately $ 28.8 million and net proceeds, after deducting underwriting discounts and offering expenses borne by us, of approximately $ 27.6 million. On February 12, 2021, we redeemed all of our outstanding shares of Series A Term Preferred Stock at a cash redemption price of $ 25.00 per share plus all accrued and unpaid dividends up to, but excluding, the redemption date. In total, we paid approximately $ 28.8 million for the redemption of the Series A Term Preferred Stock using proceeds from the offering of our Series D Term Preferred Stock (as defined below). Our Series A Term Preferred Stock was delisted from Nasdaq on the date we redeemed all outstanding shares. In connection with this early redemption, during the three months ended March 31, 2021, we wrote off approximately $ 127,000 of unamortized issuance costs related to the issuance of the Series A Term Preferred Stock. On May 7, 2021, we filed Articles Supplementary reclassifying 850,000 shares of authorized but unissued Series A Term Preferred Stock as additional shares of common stock. Series D Term Preferred Stock In January 2021, we completed a public offering of 5.00 % Series D Cumulative Term Preferred Stock, par value $ 0.001 per share (the “Series D Term Preferred Stock”), at a public offering price of $ 25.00 per share. As a result of this offering (including the underwriters’ exercise of their option to purchase additional shares to cover over-allotments), we issued a total of 2,415,000 shares of the Series D Term Preferred Stock for gross proceeds of approximately $ 60.4 million and net proceeds, after deducting underwriting discounts and offering expenses borne by us, of approximately $ 58.3 million. The Series D Term Preferred Stock is traded under the ticker symbol “LANDM” on Nasdaq. The shares of the Series D Term Preferred Stock have a mandatory redemption date of January 31, 2026, and are not convertible into our common stock or any other securities. Generally, we are not permitted to redeem shares of the Series D Term Preferred Stock prior to January 31, 2023, except in limited circumstances to preserve our qualification as a REIT. On or after January 31, 2023, we may redeem the shares at a redemption price of $ 25.00 per share, plus any accumulated and unpaid dividends up to, but excluding, the date of redemption. We incurred approximately $ 2.1 million in total offering costs related to this issuance, which have been recorded net of the Series D Term Preferred Stock as presented on the accompanying Consolidated Balance Sheets and are being amortized over the mandatory redemption period as a component of interest expense on the accompanying Consolidated Statements of Operations and Comprehensive Income. The Series D Term Preferred Stock is recorded as a liability on our accompanying Consolidated Balance Sheets in accordance with ASC 480, “Distinguishing Liabilities from Equity,” which states that mandatorily-redeemable financial instruments should be classified as liabilities. In addition, the related dividend payments are treated similarly to interest expense on the accompanying Consolidated Statements of Operations and Comprehensive Income. As of December 31, 2021, the fair value of our Series D Term Preferred Stock was approximately $ 61.9 million, as compared to the carrying value (exclusive of unamortized offering costs) of approximately $ 60.4 million. The fair value of our Series D 82 Table of Contents Term Preferred Stock uses Level 1 inputs under the hierarchy established by ASC 820-10 and is calculated based on the closing per-share price on December 31, 2021, of $ 25.64 . For information on the dividends declared by our Board of Directors and paid by us on the Series D Term Preferred Stock during the year ended December 31, 2021, see Note 8, “ Equity—Distributions .” NOTE 6. RELATED-PARTY TRANSACTIONS Our Adviser and Administrator We are externally managed pursuant to contractual arrangements with our Adviser and our Administrator, which collectively employ all of our personnel and pay their salaries, benefits, and general expenses directly. Both our Adviser and Administrator are affiliates of ours, as their parent company is owned and controlled by David Gladstone, our chairman, chief executive officer, and president. In addition, two of our executive officers, Mr. Gladstone and Terry Brubaker (our vice chairman and chief operating officer), serve as directors and executive officers of each of our Adviser and Administrator, and Michael LiCalsi, our general counsel and secretary (who also serves as our Administrator’s president, general counsel, and secretary) is also executive vice president of administration of our Adviser. We have entered into an investment advisory agreement with our Adviser and an administration agreement with our Administrator (the “Administration Agreement”). The advisory agreement with our Advisor that was in effect through June 30, 2021 (the “Prior Advisory Agreement”), was amended and restated effective July 1, 2021 (as amended, the “Current Advisory Agreement,” and together with the Prior Advisory Agreement, the “Advisory Agreements”). Each of the Advisory Agreements and the Administration Agreement were approved unanimously by our Board of Directors, including our independent directors. Our Board of Directors reviews and considers renewing the agreement with our Adviser each July. During its July 2021 meeting, our Board of Directors reviewed and renewed each of the Current Advisory Agreement and the Administration Agreement for an additional year, through August 31, 2022. A summary of the compensation terms for each of the Advisory Agreements and a summary of the Administration Agreement is below. Advisory Agreements Pursuant to each of the Prior Advisory Agreement (which was in effect from January 1, 2020, through June 30, 2021) and the Current Advisory Agreement (which has been in effect since July 1, 2021), our Adviser is compensated in the form of a base management fee and, each as applicable, an incentive fee, a capital gains fee, and a termination fee. Our Adviser does not charge acquisition or disposition fees when we acquire or dispose of properties, as is common in other externally-managed REITs. Each of the base management, incentive, capital gains, and termination fees is described below. Base Management Fee Pursuant to the Prior Advisory Agreement, a base management fee was paid quarterly and was calculated as 0.50 % per annum ( 0.125 % per quarter) of the prior calendar quarter’s “Gross Tangible Real Estate,” defined as the gross cost of tangible real estate owned by us (including land and land improvements, permanent plantings, irrigation and drainage systems, farm-related facilities, and other tangible site improvements), prior to any accumulated depreciation, and as shown on our balance sheet or the notes thereto for the applicable quarter. Pursuant to the Current Advisory Agreement, a base management fee is paid quarterly and is calculated at an annual rate of 0.60 % ( 0.15 % per quarter) of the prior calendar quarter’s Gross Tangible Real Estate. Incentive Fee Pursuant to each of the Advisory Agreements, an incentive fee is calculated and payable quarterly in arrears if the Pre-Incentive Fee FFO for a particular quarter exceeded a hurdle rate of 1.75 % ( 7.0 % annualized) of the prior calendar quarter’s Total Adjusted Common Equity. For purposes of this calculation, Pre-Incentive Fee FFO is defined in 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 declared on preferred stock securities that were not treated as a liability for GAAP purposes. In addition, Total Adjusted Common Equity is 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. 83 Table of Contents Our Adviser receives: (i) no Incentive Fee in any calendar quarter in which the Pre-Incentive Fee FFO does not exceed the hurdle rate; (ii) 100 % of the Pre-Incentive Fee FFO with respect to that portion of such Pre-Incentive Fee FFO, if any, that exceeds the hurdle rate but was less than 2.1875 % in any calendar quarter ( 8.75 % annualized); and (iii) 20 % of the amount of the Pre-Incentive Fee FFO, if any, that exceeds 2.1875 % in any calendar quarter ( 8.75 % annualized). Capital Gains Fee Pursuant to each of the Advisory Agreements, a capital gains-based incentive fee is calculated and payable in arrears at the end of each fiscal year (or upon termination of the agreement with our Adviser). The capital gains fee shall equal: (i) 15 % of the cumulative aggregate realized capital gains minus the cumulative aggregate realized capital losses, minus (ii) any aggregate capital gains fees paid in prior periods. For purposes of this calculation, realized capital gains and losses will be calculated as (x) the sales price of the property, minus (y) any costs to sell the property and the then-current gross value of the property (which includes the property’s original acquisition price plus any subsequent, non-reimbursed capital improvements). At the end of each fiscal year, if this figure is negative, no capital gains fee shall be paid. Termination Fee Pursuant to each of the Advisory Agreements, in the event of our termination of the agreement with our Adviser for any reason (with 120 days’ prior written notice and the vote of at least two-thirds of our independent directors), a termination fee would be payable to the Adviser equal to three times the sum of the average annual base management fee and incentive fee earned by the Adviser during the 24-month period prior to such termination. Administration Agreement Pursuant to the Administration Agreement, we pay for our allocable portion of the Administrator’s expenses incurred while performing its obligations to us, including, but not limited to, rent and the salaries and benefits expenses of our Administrator’s employees, including our chief financial officer, treasurer, chief compliance officer, general counsel and secretary (who also serves as our Administrator’s president, general counsel, and secretary), and their respective staffs. As approved by our Board of Directors, effective July 1, 2014, our allocable portion of the Administrator’s expenses is generally derived by multiplying our Administrator’s total expenses by the approximate percentage of time the Administrator’s employees perform services for us in relation to their time spent performing services for all companies serviced by our Administrator under similar contractual agreements. Gladstone Securities On April 11, 2017, we entered into an agreement with Gladstone Securities, LLC (“Gladstone Securities”), for it to act as our non-exclusive agent to assist us with arranging financing for our properties (the “Financing Arrangement Agreement”). Gladstone Securities is a privately-held broker-dealer and a member of the Financial Industry Regulatory Authority and the Securities Investor Protection Corporation. Gladstone Securities is an affiliate of ours, as its parent company is owned and controlled by Mr. Gladstone, who 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, including as Chief Legal Officer, Secretary, and a member of its board of managers since 2010 and a managing principal since 2011. Financing Arrangement Agreement We pay Gladstone Securities a financing fee in connection with the services it provides to us for securing financing on our properties. Depending on the size of the financing obtained, the maximum amount of the financing fee, which will be payable upon closing of the respective financing, will range from 0.5 % to 1.0 % of the amount of financing obtained. The amount of the financing fee may be reduced or eliminated as determined by us and Gladstone Securities after taking into consideration various factors, including, but not limited to, the involvement of any unrelated third-party brokers and general market conditions. During the years ended December 31, 2021 and 2020, we paid total financing fees to Gladstone Securities of approximately $ 166,000 and $ 262,000 , respectively. Through December 31, 2021, the total amount of financing fees paid to Gladstone Securities represented approximately 0.14 % of the total financings secured since the Financing Arrangement Agreement has been in place. Dealer-Manager Agreements On January 10, 2018, we entered into a dealer-manager agreement, which was amended and restated on May 31, 2018 (the “Series B Dealer-Manager Agreement”), with Gladstone Securities, whereby Gladstone Securities served as our exclusive dealer-manager in connection with the offering of our Series B Preferred Stock (as defined in Note 8, “ Equity—Series B Preferred Stock ”). On February 20, 2020, we entered into a dealer-manager agreement (the “Series C Dealer-Manager 84 Table of Contents Agreement” and together with the Series B Dealer-Manager Agreement, the “Dealer-Manager Agreements”), with Gladstone Securities, whereby Gladstone Securities serves as our exclusive dealer-manager in connection with the offering of our Series C Preferred Stock (as defined in Note 8, “ Equity-Equity Issuances- Series C Preferred Stock ”). Pursuant to the Dealer-Manager Agreements, Gladstone Securities provides certain sales, promotional, and marketing services to us in connection with the offering of the Series B Preferred Stock and Series C Preferred Stock, and we generally paid or pay Gladstone Securities for the following: • With regard to the Series B Preferred Stock: i selling commissions of up to 7.0 % of the gross proceeds from sales in the offering (the “Series B Selling Commissions”), and ii a dealer-manager fee of 3.0 % of the gross proceeds from sales in the offering (the “Series B Dealer-Manager Fee”). • With regard to the Series C Preferred Stock: i selling commissions of up to 6.0 % of the gross proceeds from sales in the offering (the “Series C Selling Commissions,” and together with the Series B Selling Commissions, the “Selling Commissions”), and ii a dealer-manager fee of 3.0 % of the gross proceeds from sales in the offering (the “Series C Dealer-Manager Fee,” and together with the Series B Dealer-Manager Fees, the “Dealer-Manager Fees”). No Series C Selling Commissions or Series C Dealer-Manager Fee shall be paid with respect to shares of the Series C Preferred Stock sold pursuant to our dividend reinvestment plan (the “DRIP”) for the Series C Preferred Stock. Gladstone Securities may, in its sole discretion, remit all or a portion of the Selling Commissions and also reallow all or a portion of the Dealer-Manager Fees to participating broker-dealers and wholesalers in support of the offerings. The terms of each of the Dealer-Manager Agreements were approved by our board of directors, including all of our independent directors. During the year ended December 31, 2020 , we paid total Series B Selling Commissions and Series B Dealer-Manager Fees to Gladstone Securities of approximately $ 2.5 million in connection with sales of the Series B Preferred Stock. The offering of the Series B Preferred Stock was completed on March 9, 2020, and the security was listed on Nasdaq under the ticker “LANDO” during the year ended December 31, 2020 . During the years ended December 31, 2021 and 2020, we paid total Series C Selling Commissions and Series C Dealer-Manager Fees to Gladstone Securities of approximately $ 5.0 million and $ 2.2 million, respectively, in connection with sales of the Series C Preferred Stock. Selling Commissions and Dealer-Manager Fees paid to Gladstone Securities are netted against the gross proceeds received from sales of the respective securities and are included within Additional paid-in capital on the accompanying Consolidated Balance Sheets. Related Party Fees The following table summarizes related-party fees paid or accrued for and reflected in our accompanying consolidated financial statements (dollars in thousands): For the Years Ended December 31, 2021 2020 Base management fee (1)(2) $ 6,329 $ 4,289 Incentive fee (1)(2) 3,901 3,038 Total fees to our Adviser, net $ 10,230 $ 7,327 Administration fee (1)(2) $ 1,526 $ 1,448 Selling Commissions and Dealer-Manager Fees (1)(3) $ 4,961 $ 4,711 Financing fees (1)(4) 166 262 Total fees to Gladstone Securities $ 5,127 $ 4,973 (1) Pursuant to the agreements with the respective related-party entities, as discussed above. (2) Reflected as a line item on our accompanying Consolidated Statements of Operations and Comprehensive Income. (3) Included within Additional paid-in capital on the accompanying Consolidated Balance Sheets. (4) Included within Notes and bonds payable, net on the Consolidated Balance Sheets and amortized into Interest expense on the Consolidated Statements of Operations and Comprehensive Income. Related-Party Fees Due Amounts due to related parties on our accompanying Consolidated Balance Sheets as of December 31, 2021 and 2020 were as follows (dollars in thousands): 85 Table of Contents December 31, 2021 December 31, 2020 Base management fee $ 1,836 $ 1,130 Incentive fee 1,793 883 Other, net (1) 95 18 Total due to Adviser 3,724 2,031 Administration fee 411 363 Cumulative accrued but unpaid portions of prior Administration Fees (2) 89 75 Total due to Administrator 500 438 Total due to Gladstone Securities (3) — 15 Total due to related parties (4) $ 4,224 $ 2,484 (1) Other amounts due to or from our Adviser primarily relate to miscellaneous general and administrative expenses either paid by our Adviser on our behalf or by us on our Adviser’s behalf. (2) Represents the cumulative accrued but unpaid portion of prior Administration fees that are scheduled to be paid during the three months ending September 30 of each year, which is the quarter following our Administrator’s fiscal year end. (3) Represents certain Selling Commissions and Dealer-Manager Fees owed in connection with sales of our Series C Preferred Stock. (4) Reflected as a line item on our accompanying Consolidated Balance Sheets. NOTE 7. COMMITMENTS AND CONTINGENCIES Operating Obligations In connection with the execution of certain lease agreements, we have committed to provide capital improvements on certain of our farms, which are summarized in the table below (dollars in thousands): Farm Location Farm Acreage Total Commitment Obligated Completion Date (1) Amount Expended or Accrued as of December 31, 2021 St. Lucie, FL 549 230 Q3 2022 111 Santa Barbara, CA 271 4,000 (2) Q3 2022 2,427 Manatee, FL 590 280 Q4 2022 — Manatee, FL 271 280 Q4 2022 — Hillsborough, FL 55 2,250 (2) Q4 2022 1,554 Charlotte, FL 975 3,000 (2) Q4 2022 — Napa, CA 270 1,548 (2) Q3 2023 1,019 Columbia, OR 157 1,800 (2) Q3 2024 1,146 Collier & Hendry, FL 3,612 2,000 (2) Q2 2025 — Wicomico & Caroline, MD, and Sussex, DE 833 115 Q3 2030 49 (1) Our obligation to provide capital to fund these improvements does not extend beyond these respective dates. (2) Pursuant to contractual agreements, we will earn additional rent on the cost of these capital improvements as the funds are disbursed by us. Ground Lease Obligations In connection with certain farms acquired through a leasehold interest, we assumed certain ground lease arrangements under which we are the lessee. These operating ground leases have lease expiration dates ranging from February 2025 through December 2041, and none of these leases contain any extension, renewal, or termination options. At lease commencement, the net present value of the minimum lease payments was determined by discounting the respective future minimum lease payments using a discount rate equivalent to our fully-collateralized borrowing rate ranging from 4.22 % to 8.72 %. 86 Table of Contents As of December 31, 2021 and 2020, we recorded the following as a result of these operating ground leases (dollars in thousands, except for footnotes): December 31, 2021 December 31, 2020 Operating lease right-of-use assets (1) $ 671 $ 136 Operating lease liabilities (2) $ 664 $ 130 Weighted-average remaining lease term (years) 15.7 3.8 Weighted-average incremental borrowing rate 7.78 % 4.20 % (1) Operating lease right-of-use assets are shown net of prepaid lease payments of approximately $ 7,000 and $ 6,000 for the years ended December 31, 2021 and 2020, respectively, and are included within Other assets , net on the accompanying Consolidated Balance Sheets. (2) Included within Other liabilities , net on the accompanying Consolidated Balance Sheets. Future minimum lease payments due under the remaining non-cancelable terms of these leases as of December 31, 2021, is as follows (dollars in thousands): Period Future Lease Payments (1) For the fiscal years ending December 31: 2022 $ 92 2023 92 2024 92 2025 62 2026 62 Thereafter 755 Total undiscounted lease payments 1,155 Less: imputed interest ( 491 ) Present value of lease payments $ 664 (1) Certain annual lease payments are set at the beginning of each year to then-current market rates (as determined by the lessor). The amounts shown above represent estimated amounts based on the lease rates currently in place. As a result of these ground leases, we recorded lease expense (included within Property operating expenses on the accompanying Consolidated Statement of Operations and Comprehensive Income) of approximately $ 81,000 and $ 59,000 during the years ended December 31, 2021, and 2020, respectively. Litigation In the ordinary course of business, we may be involved in legal proceedings from time to time. We are not currently subject to any material known or threatened litigation. NOTE 8. EQUITY Amendment to Articles of Incorporation On February 20, 2020, we filed with the State Department of Assessments and Taxation of Maryland an Articles Supplementary (i) setting forth the rights, preferences, and terms of the Series C Preferred Stock and (ii) reclassifying and designating 26,000,000 shares of our authorized and unissued shares of common stock as shares of Series C Preferred Stock. On January 13, 2021, we further amended our articles of incorporation (i) setting forth the rights, preferences, and terms of the Series D Term Preferred Stock and (ii) reclassifying and designating 3,600,000 shares of our authorized and unissued shares of common stock as shares of Series D Term Preferred Stock. Amendment to Operating Partnership Agreement In connection with the authorization of the Series C Preferred Stock, the Operating Partnership adopted the Fourth Amendment to its First Amended and Restated Agreement of Limited Partnership (collectively, the “Amendment”), establishing the rights, privileges, and preferences of 6.00 % Series C Cumulative Redeemable Preferred Units (the “Series C Preferred OP Units”). The Amendment provides for the Operating Partnership’s establishment and issuance of an equal number of Series C Preferred OP Units as are issued shares of Series C Preferred Stock by the Company in connection with the Series C Offering upon the Company’s contributions to the Operating Partnership of the net proceeds of the Series C Offering. Generally, the Series C 87 Table of Contents Preferred OP Units provided for under the Amendment have preferences, distribution rights, and other provisions substantially equivalent to those of the Series C Preferred Stock. On January 13, 2021, we further amended our Operating Partnership agreement in order to establish the rights, privileges, and preferences of 5.00 % Series D Cumulative Term Preferred Units (the “Series D Term Preferred Units”). The Amendment provides for the Operating Partnership’s establishment and issuance of an equal number of Series D Term Preferred Units as are issued shares of Series D Term Preferred Stock by the Company in connection with the offering of Series D Term Preferred Stock upon the Company’s contribution to the Operating Partnership of the net proceeds of the offering of Series D Term Preferred Stock. Generally, the Series D Term Preferred Units provided for under the Amendment have preferences, distributions rights, and other provisions substantially equivalent to those of the Series D Term Preferred Stock. Registration Statement On March 6, 2020, we filed a universal registration statement on Form S-3 (File No. 333-236943) with the SEC (the “Registration Statement”) to replace our prior universal registration statement. The Registration Statement, which was declared effective by the SEC on April 1, 2020, permits us to issue up to an aggregate of $ 1.0 billion in securities, 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. Through December 31, 2021, we had issued a total of 3,503,391 shares of Series C Preferred Stock for gross proceeds of approximately $ 86.9 million, 2,415,000 shares of Series D Term Preferred Stock for gross proceeds of approximately $ 60.4 million, and 12,575,252 shares of common stock (excluding 288,303 shares of common stock issued in exchange for certain OP Units that were tendered for redemption) for gross proceeds of approximately $ 241.2 million under the 2020 Registration Statement. Equity Issuances Series B Preferred Stock On May 31, 2018, we filed a prospectus supplement with the SEC for a continuous public offering of up to 6,000,000 shares (the “Series B Offering”) of our 6.00 % Series B Cumulative Redeemable Preferred Stock, par value $ 0.001 per share (the “Series B Preferred Stock”) at an offering price of $ 25.00 per share for gross proceeds of up to $ 150.0 million. The Series B Preferred Stock was offered on a continuous, “reasonable best efforts” basis by Gladstone Securities, the dealer-manager for the Series B Offering. The Series B Offering was completed on March 9, 2020 (the “Series B Termination Date”), with the full 6,000,000 allotted shares being sold, and, exclusive of redemptions, resulted in total gross proceeds of approximately $ 147.5 million and net proceeds, after deducting Series B Selling Commissions, Series B Dealer-Manager Fees, and offering expenses payable by us, of approximately $ 133.4 million. See Note 6, “ Related-Party Transactions—Gladstone Securities—Dealer-Manager Agreements ,” for a discussion of the fees and commissions paid to Gladstone Securities in connection with the Series B Offering. During the year ended December 31, 2020, we listed the Series B Preferred Stock on Nasdaq under the ticker symbol “LANDO.” Trading of the Series B Preferred Stock on Nasdaq commenced on October 19, 2020. Series C Preferred Stock On April 3, 2020, we filed a prospectus supplement (which superseded and replaced a previously-filed prospectus supplement) with the SEC for a continuous offering (the “Series C Offering”) of up to 26,000,000 shares of our 6.00 % Series C Cumulative Redeemable Preferred Stock, par value $ 0.001 per share (the “Series C Preferred Stock”). The Series C Offering permits us to sell up to 20,000,000 shares (the “Primary Series C Offering”) of our Series C Preferred Stock on a “reasonable best efforts” basis through Gladstone Securities at an offering price of $ 25.00 per share and up to 6,000,000 shares of our Series C Preferred Stock pursuant to the DRIP at a price of $ 22.75 per share. The following table provides information on sales of the Series C Preferred Stock that occurred during the years ended December 31, 2021 and 2020 (dollars in thousands, except per-share amounts): 88 Table of Contents Years Ended December 31, 2021 2020 Number of shares sold (1) 2,407,027 1,088,315 Weighted-average offering price per share $ 24.81 $ 24.80 Gross proceeds $ 59,720 $ 26,987 Net proceeds (2) $ 54,760 $ 24,759 (1) Excludes shares issued pursuant to the DRIP. During the years ended December 31, 2021 and 2020, we issued approximately 7,791 shares and 258 shares, respectively, of the Series C Preferred Stock pursuant to the DRIP. (2) Net of Series C Selling Commissions, Series C Dealer-Manager Fees, and underwriting discounts. In addition, during the years ended December 31, 2021 and 2020, 9,920 shares and 138 shares, respectively, of Series C Preferred Stock were tendered for optional redemption, which we satisfied with aggregated cash payments of approximately $ 248,000 and $ 3,000 , respectively. As of December 31, 2021, excluding Selling Commissions and Dealer-Manager Fees, we have incurred approximately $ 704,000 of costs related to the Series C Offering, which are initially recorded as deferred offering costs (included within Other assets, net on the accompanying Consolidated Balance Sheets) and are applied against gross proceeds received from the offering through additional paid-in capital as shares of the Series C Preferred Stock are sold. See Note 6, “ Related-Party Transactions—Gladstone Securities—Dealer-Manager Agreements ,” for a discussion of the commissions and fees to be paid to Gladstone Securities in connection with the Series C Offering. The 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. There is currently no public market for shares of the Series C Preferred Stock; however, we intend to apply to list the Series C Preferred Stock on Nasdaq or another national securities exchange within one calendar year after the Series C Termination Date, though there can be no assurance that a listing will be achieved in such timeframe, or at all. See Note 11, “ Subsequent Events—Equity Activity—Equity Issuances—Series C Preferred Stock ,” for sales of Series C Preferred Stock completed subsequent to December 31, 2021. Common Stock Follow-on Offerings During the year ended December 31, 2020, we completed a public offering of 1,897,500 shares (including the underwriters’ exercise of the over-allotment option in connection with the offering) of our common stock at a public offering price of $ 14.40 per share, resulting in gross proceeds of approximately $ 27.3 million and net proceeds (after deducting underwriting discounts and direct offering expenses borne by us) of approximately $ 26.1 million. At-the-Market Program On August 7, 2015, we entered into equity distribution agreements (commonly referred to as “at-the-market agreements”), as amended from time to time, with Cantor Fitzgerald & Co., Ladenburg Thalmann & Co. Inc., and Virtu Americas LLC (each a “Sales Agent”), under which we were permitted to issue and sell, from time to time and through the Sales Agents, shares of our common stock having an aggregate offering price of up to $ 30.0 million (the “Prior ATM Program”). On May 12, 2020, we terminated the Prior ATM Program and entered into new equity distribution agreements with Virtu Americas LLC and Ladenburg Thalmann & Co. Inc., under which we may issue and sell, from time to time and through the current Sales Agents, shares of our common stock having an aggregate offering price up to $ 100.0 million (the “Current ATM Program.” and collectively with the Prior ATM Program, the “ATM Programs”). On May 18, 2021, we entered into separate amendments to the existing equity distribution agreements to allow us to sell up to $ 160.0 million of additional shares of our common stock, expanding the aggregate offering price to up to $ 260.0 million. The following table provides information on shares of common stock sold by the Sales Agents under the ATM Programs during the years ended December 31, 2021 and 2020 (dollars in thousands, except per-share amounts): 89 Table of Contents Years Ended December 31, 2021 2020 Number of shares sold 7,990,994 3,096,558 Weighted-average offering price per share $ 21.70 $ 14.82 Gross proceeds $ 173,428 $ 45,883 Net proceeds (1) $ 171,693 $ 45,424 (1) Net of underwriting commissions. Non-Controlling Interests in Operating Partnership We consolidate our Operating Partnership, which is a majority-owned partnership. As of December 31, 2021 and 2020, we owned approximately 99.4 % and 100.0 %, respectively, of the outstanding OP Units. As of December 31, 2021 and 2020, there were 204,778 and 0 OP Units held by non-controlling OP Unitholders, respectively. On or after 12 months after becoming a holder of OP Units, each non-controlling OP Unitholder has the right, subject to the terms and conditions set forth in the partnership agreement of the Operating Partnership, to require the Operating Partnership to redeem all or a portion of such units in exchange for cash or, at the Company’s option, shares of our common stock on a one-for-one basis. The cash redemption per OP Unit would be based on the market price of our common stock at the time of redemption. A limited partner will not be entitled to exercise redemption rights if the delivery of common stock to the redeeming limited partner would breach restrictions on the ownership of common stock imposed under our charter and other limitations thereof. Regardless of the rights described above, the Operating Partnership will not have an obligation to issue cash to a unitholder upon a redemption request if the Company elects to redeem the OP Units for shares of its common stock. When a non-controlling unitholder redeems OP Units and the Company elects to satisfy that redemption through the issuance of common stock, non-controlling interest in the Operating Partnership is reduced and stockholders’ equity is increased. During the year ended December 31, 2021, we issued 204,778 OP Units to noncontrolling OP Unitholders representing an aggregate value of approximately $ 4.0 million, or $ 19.42 per OP Unit. During the year ended December 31, 2020, we issued 288,303 shares of common stock to satisfy the redemption request of OP Units that were tendered for optional redemption. The Operating Partnership is required to make distributions on each OP Unit in the same amount as those paid on each share of the Company’s common stock, with the distributions on the OP Units held by the Company being utilized to make distributions to the Company’s common stockholders. Distributions The per-share distributions to preferred and common stockholders declared by our Board of Directors during the years ended December 31, 2021 and 2020 are reflected in the table below. For the Years Ended December 31, Issuance 2021 2020 Series A Term Preferred Stock (1)(2) $ 0.181510 $ 1.593750 Series B Preferred Stock 1.500000 1.500000 Series C Preferred Stock 1.500000 1.125000 Series D Term Preferred Stock (1)(3) 1.184031 — Common Stock (4) 0.540750 0.537150 (1) Dividends are treated similar to interest expense on the accompanying Consolidated Statements of Operations and Comprehensive Income. (2) The Series A Term Preferred Stock was redeemed in full on February 12, 2021. (3) The Series D Term Preferred Stock was issued on January 19, 2021. (4) The same amounts were paid as distributions on each OP Unit held by non-controlling OP Unitholders. For federal income tax characterization purposes, distributions paid to stockholders may be characterized as ordinary income, capital gains, return of capital, or a combination thereof. The characterization of distributions on our preferred and common stock during each of the years ended December 31, 2021 and 2020 is reflected in the following table: 90 Table of Contents Ordinary Income Return of Capital Long-term Capital Gain For the Year Ended December 31, 2021: Series A Term Preferred Stock 54.534493 % 45.465507 % — % Series B Preferred Stock 54.534493 % 45.465507 % — % Series C Preferred Stock 54.534493 % 45.465507 % — % Series D Term Preferred Stock 54.534493 % 45.465507 % — % Common Stock — % 100.000000 % — % For the Year Ended December 31, 2020: Series A Term Preferred Stock 70.743160 % 29.256840 % — % Series B Preferred Stock 70.743160 % 29.256840 % — % Series C Preferred Stock 70.743160 % 29.256840 % — % Common Stock — % 100.000000 % — % NOTE 9. LEASE REVENUES The following table sets forth the components of our lease revenues for the years ended December 31, 2021 and 2020 (dollars in thousands, except for footnotes): For the Years Ended December 31, 2021 2020 Fixed lease payments (1) $ 69,998 $ 51,377 Variable lease payments (2) 5,320 5,654 Lease revenue, net (3) $ 75,318 $ 57,031 (1) Fixed lease payments include contractual rents under lease agreements with tenants recognized on a straight-line basis over the respective lease terms and includes the amortization of above-market lease values and lease incentives and the accretion of below-market lease values and other deferred revenue. (2) Variable lease payments include participation rents, which are generally based on a percentage of the gross crop revenues earned on the farm, and reimbursements of certain property operating expenses by tenants. Participation rents are generally recognized when all contingencies have been resolved and when actual results become known or estimable, enabling us to estimate and/or measure our share of such gross revenues. During the years ended December 31, 2021 and 2020, we recorded participation rents of approximately $ 5.2 million and $ 2.4 million respectively, and reimbursements of certain property operating expenses by tenants of approximately $ 101,000 and $ 456,000 , respectively. In addition, during the year ended December 31, 2020, we received a lease termination payment of approximately $ 3.0 million. (3) Reflected as a line item on our accompanying Consolidated Statements of Operations and Comprehensive Income. NOTE 10. EARNINGS PER SHARE OF COMMON STOCK The following table sets forth the computation of basic and diluted earnings per common share for the years ended December 31, 2021 and 2020, computed using the weighted-average number of common shares outstanding during the respective periods. Earnings figures are presented net of non-controlling interests in the earnings per share calculations. The non-controlling limited partners’ outstanding OP Units (which may be redeemed for shares of common stock) have been excluded from the diluted per-share calculation, as there would be no effect on the amounts since the non-controlling OP Unitholders’ share of earnings would also be added back to net income or loss (dollars in thousands, except per-share amounts). For the Years Ended December 31, 2021 2020 Net loss attributable to common stockholders $ ( 8,763 ) $ ( 4,396 ) Weighted average shares of common stock outstanding – basic and diluted 30,357,268 22,258,121 Loss per common share – basic and diluted $ ( 0.29 ) $ ( 0.20 ) The weighted-average number of OP Units held by non-controlling OP Unitholders was 166,067 and 131,745 for the years ended December 31, 2021 and 2020, respectively. NOTE 11. SUBSEQUENT EVENTS 91 Table of Contents Financing Activity Borrowing Activity Subsequent to the year ended December 31, 2021, we entered into certain agreements to provide for current and future financings. The terms of these agreements are summarized in the following table (dollars in thousands): Issuer Date of Issuance Amount Maturity Dates Principal Amortization Stated Interest Rate (1) Interest Rate Terms Farmer Mac 1/11/2022 $ 1,980 12/30/2030 20.0 years 3.31 % Fixed throughout term Northwest Farm Credit Services, FLCA 2/01/2022 1,442 2/01/2032 20.1 years 4.65 % Fixed throughout term (1) Where applicable, stated rate is before interest patronage, as described in Note 4 “ Borrowings—Farm Credit Notes Payable—Interest Patronage .” In connection with securing the above borrowings, Gladstone Securities, an affiliate of ours, earned total financing fees of approximately $ 8,000 . MetLife Facility On February 3, 2022, we amended the 2020 MetLife Facility to increase the overall size of the facility through the addition of a new $ 100.0 million long-term note payable (the “2022 MetLife Term Note”). The 2022 MetLife Term Note is scheduled to mature on January 5, 2032, and the interest rates on future disbursements under the 2022 MetLife Term Note will be based on the 10-year U.S. Treasury at the time of such disbursements, with the initial disbursement priced based on the 10-year U.S. Treasury plus a spread to be determined by the lender. In addition, through December 31, 2024, the 2022 MetLife Term Note is also subject to an unused fee ranging from 0.10 % to 0.20 % on undrawn amounts (based on the balance drawn under the 2022 MetLife Term Note). If the full commitment of $ 100.0 million is not utilized by December 31, 2024, MetLife has no obligation to disburse the remaining funds under the 2022 MetLife Term Note. The amendment does not change the terms of the MetLife Facility and includes customary terms, covenants, events of default, and constraints on borrowing availability based on collateral for a credit facility of its size and nature. All other material items of the MetLife Facility remained unchanged. As part of this amendment, we paid an origination fee of $ 250,000 to MetLife and a financing fee of $ 80,000 to Gladstone Securities. Equity Activity The following table provides information on equity sales that have occurred subsequent to December 31, 2021 (dollars in thousands, except per-share amounts): Type of Issuance Number of Shares Sold Weighted Average Offering Price Per Share Gross Proceeds Net Proceeds (1) Series C Preferred Stock (2) 663,508 $ 24.75 $ 16,422 $ 15,095 (1) Net of Selling Commissions and Dealer-Manager Fees. (2) Excludes approximately 3,230 shares issued pursuant to the DRIP. Distributions On January 11, 2022, our Board of Directors authorized and we declared the following monthly cash distributions to holders of our preferred and common stock: 92 Table of Contents Issuance Record Date Payment Date Distribution per Share Series B Preferred Stock: January 21, 2022 January 31, 2022 $ 0.125 February 18, 2022 February 28, 2022 0.125 March 23, 2022 March 31, 2022 0.125 Total Series B Preferred Stock Distributions: $ 0.375 Series C Preferred Stock: January 26, 2022 February 4, 2022 $ 0.125 February 24, 2022 March 4, 2022 0.125 March 25, 2022 April 4, 2022 0.125 Total Series C Preferred Stock Distributions: $ 0.375 Series D Term Preferred Stock: January 21, 2022 January 31, 2022 $ 0.104167 February 18, 2022 February 28, 2022 0.104167 March 23, 2022 March 31, 2022 0.104167 Total Series D Term Preferred Stock Distributions: $ 0.312501 Common Stock (1) : January 21, 2022 January 31, 2022 $ 0.0453 February 18, 2022 February 28, 2022 0.0453 March 23, 2022 March 31, 2022 0.0453 Total Common Stock Distributions: $ 0.1359 (1) The same amounts paid to common stockholders will be paid as distributions on each OP Unit held by non-controlling OP Unitholders as of the above record dates. 93 Table of Contents GLADSTONE LAND CORPORATION SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 2021 (In Thousands) Initial Cost Subsequent Capitalized Additions Total Cost Location and Description of Property Date Acquired Encumbrances Land and Land Improvements Buildings & Improvements Permanent Plantings Land Improvements Buildings & Improvements Permanent Plantings Land and Land Improvements Buildings & Improvements Permanent Plantings Total (1) Accumulated Depreciation (2) Santa Cruz County, California: Land & Improvements 6/16/1997 $ 7,692 $ 4,350 $ — $ — $ — $ 579 $ — $ 4,350 $ 579 $ — $ 4,929 $ ( 380 ) Ventura County, California: Land, Buildings & Improvements 9/15/1998 29,977 9,895 5,256 — — 293 — 9,895 5,549 — 15,444 ( 4,531 ) Santa Cruz County, California: Land & Improvements 1/3/2011 6,708 8,328 — — 443 527 — 8,771 527 — 9,298 ( 200 ) Hillsborough County, Florida: Land, Buildings & Improvements 9/12/2012 2,468 2,199 1,657 — 14 1,779 — 2,213 3,436 — 5,649 ( 1,446 ) Monterey County, California: Land, Buildings & Improvements 10/21/2013 4,808 7,187 164 — 180 3,112 — 7,367 3,276 — 10,643 ( 892 ) Cochise County, Arizona: Land, Buildings & Improvements 12/27/2013 2,940 6,168 572 — 8 4,877 — 6,176 5,449 — 11,625 ( 1,421 ) Santa Cruz County, California: Land, Building & Improvements 6/13/2014 3,012 5,576 207 — — 12 — 5,576 219 — 5,795 ( 209 ) Ventura County, California: Land, Buildings & Improvements 7/23/2014 2,241 6,219 505 — — 85 — 6,219 590 — 6,809 ( 267 ) Kern County, California: Land & Improvements 7/25/2014 2,925 5,841 67 — — 993 — 5,841 1,060 — 6,901 ( 446 ) Manatee County, Florida: Land, Buildings & Improvements 9/29/2014 8,627 8,466 5,426 — — 667 — 8,466 6,093 — 14,559 ( 3,832 ) Ventura County, California: Land, Buildings & Improvements 10/29/2014 15,271 23,673 350 — — 2,166 — 23,673 2,516 — 26,189 ( 745 ) Ventura County, California: Land & Improvements 11/4/2014 3,180 5,860 92 — — 2 — 5,860 94 — 5,954 ( 67 ) Monterey County, California: Land, Buildings & Improvements 1/5/2015 10,673 15,852 582 — ( 156 ) 1,483 — 15,696 2,065 — 17,761 ( 861 ) Manatee County, Florida: Land, Buildings & Improvements 3/10/2015 3,595 2,403 1,871 — — 84 — 2,403 1,955 — 4,358 ( 1,213 ) Hendry County, Florida: Land, Buildings & Improvements 6/25/2015 10,356 14,411 789 — — — — 14,411 789 — 15,200 ( 643 ) Rock County, Nebraska: Land, Buildings & Improvements 8/20/2015 — 4,862 613 — — — — 4,862 613 — 5,475 ( 469 ) Holt County, Nebraska: Land, Buildings & Improvements 8/20/2015 — 4,690 786 — — — — 4,690 786 — 5,476 ( 399 ) Kern County, California: Land & Improvements 9/3/2015 15,837 18,893 497 — 688 5,959 1,418 19,581 6,456 1,418 27,455 ( 2,447 ) Cochise County, Arizona: Land, Buildings & Improvements 12/23/2015 3,210 4,234 1,502 — 5 3,599 — 4,239 5,101 — 9,340 ( 1,092 ) Saguache County, Colorado: Land, Buildings & Improvements 3/3/2016 14,557 16,756 8,348 — — 1,486 — 16,756 9,834 — 26,590 ( 5,348 ) Fresno County, California: Land, Improvements & Permanent plantings 4/5/2016 7,833 3,623 1,228 11,455 28 362 — 3,651 1,590 11,455 16,696 ( 2,937 ) Saint Lucie County, Florida: Land, Buildings & Improvements 7/1/2016 2,652 4,165 971 — — — — 4,165 971 — 5,136 ( 534 ) Baca County, Colorado: Land & Buildings 9/1/2016 3,394 6,167 214 — — — — 6,167 214 — 6,381 ( 76 ) Merced County, Colorado: Land & Improvements 9/14/2016 7,466 12,845 504 — — 190 — 12,845 694 — 13,539 ( 133 ) Stanislaus County, Colorado: Land & Improvements 9/14/2016 8,088 14,114 45 — — 463 — 14,114 508 — 14,622 ( 107 ) Fresno County, California: Land, Improvements & Permanent plantings 10/13/2016 3,392 2,937 139 3,452 — — — 2,937 139 3,452 6,528 ( 951 ) Baca County, Colorado: Land & Improvements 12/28/2016 6,561 11,430 278 — — — — 11,430 278 — 11,708 ( 278 ) Martin County, Florida: Land & Improvements 1/12/2017 32,400 52,443 1,627 — — — — 52,443 1,627 — 54,070 ( 325 ) 94 Table of Contents Yuma County, Arizona Land & Improvements 6/1/2017 13,158 12,390 12,191 — 151 16,775 — 12,541 28,966 — 41,507 ( 5,344 ) Fresno County, California: Land, Improvements & Permanent plantings 7/17/2017 6,807 5,048 777 7,818 2 1,521 ( 1,124 ) 5,050 2,298 6,694 14,042 ( 1,461 ) Santa Barbara County, California: Land, Improvements & Permanent plantings 8/9/2017 3,225 4,559 577 397 ( 50 ) 172 1,484 4,509 749 1,881 7,139 ( 529 ) Okeechobee County, Florida: Land & Improvements 8/9/2017 5,014 9,111 953 — 985 1,094 — 10,096 2,047 — 12,143 ( 549 ) Walla Walla County, Washington: Land, Improvements & Permanent plantings 9/8/2017 4,659 5,286 401 3,739 — — — 5,286 401 3,739 9,426 ( 2,238 ) Fresno County, California: Land, Improvements & Permanent plantings 12/15/2017 3,080 2,016 324 3,626 ( 1 ) — ( 3 ) 2,015 324 3,623 5,962 ( 1,451 ) Kern County, California: Land & Improvements 1/31/2018 2,045 2,733 249 — ( 4 ) 1,529 — 2,729 1,778 — 4,507 ( 229 ) Collier & Hendry, Florida Land & Improvements 7/12/2018 21,013 36,223 344 — 1 — — 36,224 344 — 36,568 ( 170 ) Kings County, California: Land, Improvements & Permanent plantings 9/13/2018 3,983 3,264 284 3,349 5 — 5 3,269 284 3,354 6,907 ( 412 ) Madera, California: Land, Improvements & Permanent plantings 11/1/2018 13,089 12,305 1,718 9,015 13 2 9 12,318 1,720 9,024 23,062 ( 1,060 ) Hartley County, Texas: Land & Improvements 11/20/2018 5,000 7,320 1,054 — 3 96 — 7,323 1,150 — 8,473 ( 223 ) Merced County, California: Land 12/6/2018 4,627 8,210 — — 5 — — 8,215 — — 8,215 — Madera County, California: Land & Improvements 4/9/2019 16,445 8,074 2,696 17,916 — 1,284 — 8,074 3,980 17,916 29,970 ( 2,567 ) Allegran and Van Buren County, Michigan: Land & Improvements 6/4/2019 2,920 1,634 800 2,694 — — — 1,634 800 2,694 5,128 ( 474 ) Yolo County, California: Land & Improvements 6/13/2019 4,852 5,939 665 2,648 — — — 5,939 665 2,648 9,252 ( 354 ) Monterey County, California: Land & Improvements 7/11/2019 5,708 8,629 254 — 1,342 1,561 — 9,971 1,815 — 11,786 ( 153 ) Martin County, Florida: Land & Improvements 7/22/2019 36,040 51,691 6,595 — 4 1 — 51,695 6,596 — 58,291 ( 1,237 ) Fresno County, California: Land & Improvements 8/16/2019 39,592 24,772 13,410 31,420 ( 3 ) 326 10 24,769 13,736 31,430 69,935 ( 4,141 ) Ventura County, California: Land & Improvements 8/28/2019 12,706 20,602 397 — 172 1,169 — 20,774 1,566 — 22,340 ( 290 ) Napa County, California: Land & Improvements 8/29/2019 17,569 27,509 1,646 2,923 3,435 451 648 30,944 2,097 3,571 36,612 ( 893 ) Hayes County, Nebraska: Land & Improvements 10/7/2019 3,045 4,750 264 — 16 1 — 4,766 265 — 5,031 ( 99 ) Hayes & Hitchcock County, Nebraska: Land & Improvements 10/7/2019 5,739 9,275 431 — 20 1 — 9,295 432 — 9,727 ( 179 ) Phillips County, Colorado: Land & Improvements 1/15/2020 4,500 6,875 660 — — 7 — 6,875 667 — 7,542 ( 130 ) Kern County, California: Land, Improvements & Permanent plantings 6/24/2020 8,290 12,521 1,325 370 — — — 12,521 1,325 370 14,216 — Wicomico & Caroline County, Maryland, and Sussex County, Delaware: Land & Improvements 8/31/2020 4,374 6,703 626 — — 114 — 6,703 740 — 7,443 ( 90 ) Fresno County, California: Land & Improvements 9/3/2020 18,199 15,071 4,680 11,921 — 203 — 15,071 4,883 11,921 31,875 ( 1,104 ) Fresno County, California: Land, Improvements & Permanent plantings 10/1/2020 18,248 7,128 9,206 15,242 8 98 16 7,136 9,304 15,258 31,698 ( 1,245 ) Ventura County, California: Land & Improvements 12/15/2020 12,450 19,215 1,264 — 48 3 — 19,263 1,267 — 20,530 ( 122 ) Tulare County, California: Land, Improvements & Permanent plantings 12/17/2020 22,319 26,952 6,420 28,152 36 9 37 26,988 6,429 28,189 61,606 ( 2,741 ) 95 Table of Contents Whatcom County, Washington: Land, Improvements, & Permanent plantings 12/24/2020 20,262 8,219 7,228 16,281 18 226 35 8,237 7,454 16,316 32,007 ( 1,483 ) San Joaquin County, California: Land, Improvements, & Permanent plantings 12/24/2020 26,694 12,265 2,142 19,924 6 40 10 12,271 2,182 19,934 34,387 ( 2,229 ) San Joaquin County, California: Land, Improvements, & Permanent plantings 3/11/2021 — — 4,306 — — — — — 4,306 — 4,306 ( 248 ) Tehama County, California Land & Improvements & Horticulture 4/5/2021 22,570 27,747 2,512 6,600 103 34 — 27,850 2,546 6,600 36,996 ( 584 ) Kern County, California Land & Improvements & Horticulture 6/4/2021 — 21,810 2,514 25,984 65 81 — 21,875 2,595 25,984 50,454 ( 1,014 ) Van Buren County, Michigan: Land & Improvements & Horticulture 6/9/2021 7,889 3,677 4,391 5,233 13 35 — 3,690 4,426 5,233 13,349 ( 220 ) Kern County, California Land & Improvements & Horticulture 8/11/2021 15,288 5,690 8,156 16,154 11 46 — 5,701 8,202 16,154 30,057 ( 623 ) Yamhill County, Oregon Land & Improvements & Horticulture 8/11/2021 6,880 2,854 2,493 6,972 36 — — 2,890 2,493 6,972 12,355 ( 230 ) St. Lucie County, Florida Land & Improvements & Horticulture 8/18/2021 3,174 2,494 601 2,146 173 — 111 2,667 601 2,257 5,525 ( 91 ) Kern County, California Land & Improvements & Horticulture 12/3/2021 — 22,363 2,894 62,744 90 — — 22,453 2,894 62,744 88,091 ( 206 ) Charlotte County, FL Land & Improvements & Horticulture 12/16/2021 — 7,275 75 — 85 — — 7,360 75 — 7,435 ( 1 ) Miscellaneous Investments Various 30,357 40,696 11,689 10,031 350 3,902 1,107 41,046 15,591 11,138 67,775 ( 5,339 ) $ 671,673 $ 804,482 $ 153,502 $ 328,206 $ 8,348 $ 59,499 $ 3,763 $ 812,830 $ 213,001 $ 331,969 $ 1,357,800 $ ( 74,002 ) (1) The aggregate cost for land, buildings, improvements and long-lived horticulture plantings for federal income tax purposes is approximately $ 1.3 billion. (2) The Company computes depreciation using the straight-line method over the shorter of the estimated useful life or 39 years for buildings and improvements, the shorter of the estimated useful life or 40 years for permanent plantings, 5 to 20 years for equipment and fixtures and the shorter of the useful life or the remaining lease term for tenant improvements. The following table reconciles the change in the balance of real estate during the years ended December 31, 2021 and 2020, respectively (dollars in thousands): 2021 2020 Balance, beginning of period $ 1,095,439 $ 827,255 Additions: Acquisitions during the period 257,862 257,055 Improvements 8,181 11,129 Deductions: Dispositions during period ( 3,682 ) — Balance, end of period $ 1,357,800 $ 1,095,439 The following table reconciles the change in the balance of accumulated depreciation during the years ended December 31, 2021 and 2020, respectively (dollars in thousands): 2021 2020 Balance, beginning of period $ 49,236 $ 35,174 Additions during period 25,905 16,655 Dispositions during period ( 1,139 ) ( 2,593 ) Balance, end of period $ 74,002 $ 49,236 96 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.