What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-05-10 compared with 2021-11-09 · 167 added, 240 removed, 429 unchanged (49% of the section changed)

13 unchanged sentences

We conduct substantially all of our activities through, and all of our properties are held, directly or indirectly, by, Gladstone Land Limited Partnership (the “Operating Partnership”).

Gladstone Land Corporation controls the sole general partner of the Operating Partnership and currently owns, directly or indirectly, approximately 99.4% of the units of limited partnership interest in the Operating Partnership (“OP Units”).

Gladstone Land Corporation controls the sole general partner of the Operating Partnership and currently owns, directly or indirectly, 100.0% of the units of limited partnership interest in the Operating Partnership (“OP Units”).

In addition, we have elected for Gladstone Land Advisers, Inc.

2 unchanged sentences

Our Adviser and our Administrator collectively employ all of our personnel and directly pay their salaries, benefits, and general expenses.

Portfolio Diversity

Portfolio Diversification

Since our initial public offering in January 2013 (the “IPO”), we have expanded our portfolio from 12 farms leased to 7 different, unrelated tenants to a current portfolio of 164 farms leased to 86 different, unrelated third-party tenants who grow over 60 different types of crops on our farms.

While our focus remains in farmland suitable for growing fresh produce annual row crops, we have also diversified our portfolio into farmland suitable for other crop types, including permanent crops (e.g., almonds, blueberries, pistachios, and wine grapes) and, to a lesser extent, certain commodity crops (e.g., beans and corn).

Our investment focus is in farmland suitable for growing either fresh produce annual row crops (e.g., certain berries and vegetables) or certain permanent crops (e.g., almonds, blueberries, pistachios, and wine grapes), with an ancillary focus on farmland growing certain commodity crops (e.g., beans and corn).

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

The following table summarizes the different geographic locations (by state) of our farms owned and with leases in place as of and for the nine months ended September 30, 2021 and 2020 (dollars in thousands):

As of and For the nine months ended September 30, 2021 As of and For the nine months ended September 30, 2020

The following table summarizes the different geographic locations (by state) of our farms owned as of and for the three months ended March 31, 2022 and 2021 (dollars in thousands):

As of and For the three months ended March 31, 2022 As of and For the three months ended March 31, 2021

Revenue % of Total

4 unchanged sentences

Florida 26 22,591 20.1% 3,587 18.0% 23 20,770 20.5% 3,358 20.9%

Colorado 12 32,773 30.7% 2,009 3.8% 12 32,773 35.4% 2,501 6.0%

Washington 3 1,384 1.2% 599 3.0% 3 1,384 1.4% 594 3.7%

Colorado 12 32,773 29.1% 529 2.6% 12 32,773 32.3% 731 4.6%

Arizona 6 6,280 5.6% 503 2.5% 6 6,280 6.2% 467 2.9%

Nebraska 9 7,782 7.3% 1,191 2.3% 9 7,782 8.4% 1,159 2.7%

Michigan 23 1,892 1.8% 619 1.2% 15 962 1.0% 554 1.3%

Oregon 5 726 0.6% 363 1.8% 3 418 0.4% 133 0.8%

Maryland 6 987 0.9% 354 0.7% 4 759 0.8% 35 0.1%

Michigan 23 1,892 1.7% 353 1.8% 15 962 0.9% 93 0.6%

Nebraska 9 7,782 6.9% 336 1.7% 9 7,782 7.7% 397 2.5%

Texas 1 3,667 3.3% 113 0.6% 1 3,667 3.6% 112 0.7%

Maryland 6 987 0.9% 110 0.5% 6 987 1.0% 108 0.7%

South Carolina 3 597 0.5% 61 0.3% 3 597 0.6% 61 0.4%

Georgia 2 230 0.2% 56 0.3% — — —% — —%

North Carolina 2 310 0.3% 33 0.2% 2 310 0.3% 33 0.2%

Delaware 1 180 0.2% 61 0.1% 1 180 0.2% 7 —%

New Jersey 3 116 0.1% 32 0.2% — — —% — —%

Delaware 1 180 0.2% 18 0.1% 1 180 0.2% 20 0.1%

TOTALS 164 112,542 100.0% $ 19,943 100.0% 139 101,312 100.0% $ 16,034 100.0%

8 unchanged sentences

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

The following table summarizes the lease expirations by year for the farms owned and with leases in place as of September 30, 2021 (dollars in thousands):

The following table summarizes the lease expirations by year for the farms owned and with leases in place as of March 31, 2022 (dollars in thousands):

Year Number of

Acreage % of Total

Acreage Lease Revenues for the Nine Months Ended September 30, 2021 % of Total

Acreage Lease Revenues for the

Three Months Ended

March 31, 2022 % of Total

2022 5 20,315 18.0% $ 1,357 6.8%

7 unchanged sentences

(1) Certain lease agreements encompass multiple farms.

(2) Includes one lease that was extended subsequent to September 30, 2021 (see “ Recent Developments—Portfolio Activity—Existing Properties—Leasing Activity ” below for a summary of this and other recent leasing activity).

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

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

Two of these potential lease expirations are the result of tenant termination options that we currently do not expect the tenants to exercise.

Regarding the remaining lease expiration, we are currently in negotiations with the existing tenant on the farm, as well as other potential tenants, and we anticipate being able to renew the lease at its current market rental rate without incurring any downtime on the farm.

Overall, we currently anticipate the rental rates on these lease renewals to be relatively flat compared to that of the existing leases.

We currently have one agricultural lease scheduled to expire within the next six months on a farm in California.

We are currently in negotiations with the existing tenant on the farm, as well as other potential tenants, and we anticipate being able to renew the lease at its current market rental rate without incurring any downtime on the farm.

We currently anticipate the rental rate on this renewal to be relatively flat compared to that of the existing lease.

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

1 unchanged sentence

Portfolio Activity

Property Acquisitions

Since July 1, 2021, through the date of this filing, we have acquired seven farms, which are summarized in the table below (dollars in thousands, except for footnotes):

Name Property

Location Acquisition

Farms Primary

Crop(s) / Use Lease

Options Total

Price Acquisition

Straight-line

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 5,241 180 367

Lerdo Highway (Phase II) (3)(4)

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)(5)

Kern, CA 10/8/2021 1,284 1 Conventional & organic almonds, conventional & organic pistachios, and banked water 10.1 years 3 (10 years) 42,959 77 1,981

Raymond Road (3)

Madera, CA 10/21/2021 219 1 Almonds 10.4 years 1 (5 years) 3,300 50 183

3,019 7 $ 108,592 $ 462 $ 6,296

(1) Includes approximately $20,000 of aggregate external legal fees associated with negotiating and originating the leases associated with these acquisitions, which were expensed in the period incurred.

(2) Based on the minimum cash rental payments guaranteed under the respective leases, as required under GAAP, and excludes contingent rental payments, such as participation rents.

(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 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 June 25, 2021, at an additional cost of approximately $306,000, which is included in the total purchase price for this property in the table above.

Rent is not currently being earned on the value attributable to the water.

See Note 3, “ Real Estate and Intangible Assets—Investments in Water Assets ,” within the accompanying notes to our condensed consolidated financial statements for additional information on this water.

(5) 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, which is included in the total purchase price for this property in the table above.

Rent is not currently being earned on the value attributable to the water.

Existing Properties

Leasing Activity

The following table summarizes certain leasing activity that has occurred on our existing properties since July 1, 2021, through the date of this filing (dollars in thousands, except for footnotes):

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

PRIOR LEASES (1)

8 unchanged sentences

/ NN / N) (4)

CA, CO, FL, & MI 10 2,978 $ 3,026 2 7 / 3 / 0 $ 3,295 6.3 0 8 / 2 / 0

(1) Prior leases includes one lease that was terminated early in July 2021.

In connection with this early termination, during the nine months ended September 30, 2021, we wrote off aggregate deferred rent and rent receivable balances of approximately $43,000 against lease revenue.

Upon termination of this lease, we entered into a new lease with a new tenant, effective immediately, which is included in the above table.

CA, CO, MI, & NE 7 9,941 $ 2,105 3 7 / 0 / 0 $ 2,069 6.2 1 5 / 2 / 0

(1) Prior leases include certain leases that were terminated early during the three months ended March 31, 2022.

In connection with these early terminations, during the three months ended March 31, 2022, we wrote off aggregate deferred rent and rent receivable balances of approximately $20,000 against lease revenue.

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

(2) In connection with certain of these leases, we committed to provide capital for certain improvements on these farms.

2 unchanged sentences

(4) “NNN” refers to leases under triple-net lease arrangements, “NN” refers to leases under partial-net lease arrangements, and “N” refers to leases under single-net lease arrangements, in each case, as described above under “ Leases—General .”

(5) Total annualized straight-line rent for new leases is net of a one-time fixed payment of $560,000 we agreed to pay in connection with one lease to cover the majority of the operating expenses on the farm in exchange for adding a significant participation rent component into the lease.

Financing Activity

Debt Activity

From July 1, 2021, through the date of this filing, we entered into the following loan agreements with Farm Credit (dollars in thousands):

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

Issuer Date of

1 unchanged sentence

Date Principal

Amortization Stated Interest Rate Expected Effective Interest Rate (1)

Amortization Stated

Rate Expected

Interest Rate Terms

GreenStone Farm Credit Services, FLCA 8/17/2021 $ 7,980 8/1/2046 25.5 years 4.00% 2.74% 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% 2.75% 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% 2.75% Fixed through 9/30/2031 (variable thereafter)

Farmer Mac (2)

1/11/2022 $ 1,980 12/30/2030 20.0 years 3.31% 3.31% Fixed throughout term

Northwest Farm Credit Services, FLCA 1/31/2022 1,442 2/1/2032 20.1 years 4.65% 3.40% Fixed throughout term

Farmer Mac (2)

2/25/2022 1,710 12/30/2030 25.0 years 3.68% 3.68% Fixed throughout term

Farm Credit Of Central Florida, ACA 4/5/2022 4,800 2/1/2046 23.8 years 4.36% 2.89% Fixed through 2/28/2027;

variable thereafter

(1) On borrowings from the various Farm Credit associations, we receive interest patronage, or refunded interest, which is typically received in the calendar year following the year in which the related interest expense was accrued.

The expected effective interest rates reflected in the table above are the interest rates net of expected interest patronage, which is based on either historical patronage actually received (for pre-existing lenders whom we have received interest patronage from) or indications from the respective lenders of estimated patronage to be paid (for new lenders).

See Note 4, “ Borrowings—Farm Credit Notes Payable—Interest Patronage ,” in the accompanying notes to our consolidated financial statements for additional information on interest patronage.

In connection with securing the above borrowings, Gladstone Securities, an affiliate of ours, earned total financing fees of $47,000.

See Note 4, “ Borrowings—Farm Credit Notes Payable—Interest Patronage ,” below for additional information on interest patronage.

(2) Bonds issued under our facility with Federal Agricultural Mortgage Corporation (“Farmer Mac”)

In connection with securing the above borrowings, Gladstone Securities, LLC (“Gladstone Securities”), an affiliate of ours, earned total financing fees of approximately $17,000 .

MetLife Facility

On February 3, 2022, we amended our credit facility with Metropolitan Life Insurance Company (“MetLife”), which previously consisted of a $75.0 million long-term note payable (the “2020 MetLife Term Note”) and $75.0 million of revolving equity lines of credit (the “MetLife Lines of Credit,” and together with the 2020 MetLife Term Note, the “2020 MetLife Facility”).

Pursuant to the amendment, our credit facility with MetLife now consists of the 2020 MetLife Term Note, the MetLife Lines of Credit, and a new $100.0 million long-term note payable (the “2022 MetLife Term Note,” and together with the 2020 MetLife Term Note and the MetLife Lines of Credit, the “2022 MetLife Facility”).

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.

All other material items of the 2020 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.

For information on the pertinent terms of the issuances under the 2022 MetLife Facility, refer to Note 4, “ Borrowings—MetLife Facility ,” within the accompanying notes to our condensed consolidated financial statements.

Farm Credit Notes Payable—Interest Patronage

From time to time since September 2014, 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 three months ended March 31, 2022, we recorded interest patronage of approximately $2.8 million related to interest accrued on the Farm Credit Notes Payable during the year ended December 31, 2021, which resulted in a 29.9% reduction (approximately 137 basis points) to the interest rates on such borrowings.

For further discussion on interest patronage, refer to Note 4, “ Borrowings—Farm Credit Notes Payable—Interest Patronage ,” in the accompanying notes to our condensed consolidated financial statements.

Equity Activity

3 unchanged sentences

See Note 6, “ Related-Party Transactions—Gladstone Securities—Dealer-Manager Agreement ,” within the accompanying notes to our condensed consolidated financial statements for more details on the dealer-manager agreement entered into with Gladstone Securities in connection with the Series C Offering.

The following table summarizes the sales of our Series C Preferred Stock that occurred since July 1, 2021, through the date of this filing (dollars in thousands, except per-share amounts and footnotes):

The following table summarizes the sales of our Series C Preferred Stock that occurred since January 1, 2022, through the date of this filing (dollars in thousands, except per-share amounts and footnotes):

Shares Sold (1)

3 unchanged sentences

(1) Excludes share redemptions and shares issued pursuant to the DRIP.

From July 1, 2021, through the date of this filing, we issued approximately 4,536 shares of the Series C Preferred Stock pursuant to the DRIP.

From January 1, 2022, through the date of this filing, we redeemed 2,480 shares and issued approximately 9,816 shares of the Series C Preferred Stock pursuant to the DRIP.

(2) Net of underwriting discounts and selling commissions and dealer-manager fees borne by us.

4 unchanged sentences

Common Stock—At-the-Market Program

On May 12, 2020, we entered into new equity distribution agreements with Virtu Americas, LLC, and Ladenburg & Co., Inc.

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

On May 12, 2020, we entered into new equity distribution agreements with Virtu Americas LLC and Ladenburg & Co.

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

On May 18, 2021, we entered into separate amendments to the existing equity distribution agreements to allow us to sell up to $160.0 million of additional shares of our common stock, expanding the aggregate offering price to up to $260.0 million.

The following table summarizes the activity under the ATM Program from July 1, 2021, through the date of this filing (dollars in thousands):

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

Shares Sold Weighted-average

2 unchanged sentences

(1) Net of underwriter commissions.

While we have not been materially adversely impacted by the novel coronavirus (“COVID-19”) to date, the extent to which the ongoing COVID-19 pandemic may, in the future, impact our business, financial condition, liquidity, results of operations, funds from operations, or prospects will depend on numerous evolving factors that we are not able to predict at this time, including the duration and long-term scope of the pandemic, the spread and effect of COVID-19 variants;

the adequate production, efficacy, and dissemination of vaccinations;

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

the impact on economic activity from the pandemic, including due constraints on global supply chains, and actions taken in response;

increased unemployment and underemployment levels and labor shortages in some industries;

the effect on our tenants and their farming operations;

the ability of our tenants to make their rental payments;

While we have not been materially adversely impacted by the ongoing coronavirus (“COVID-19”) to date, the extent to which the COVID-19 pandemic may, in the future, impact our business, financial condition, liquidity, results of operations, funds from operations, or prospects will depend on numerous evolving factors that we are not able to predict at this time, including the duration and long-term scope of the pandemic and the impact on economic activity from the pandemic;

any disruptions of our tenants’ operations;

changes in interest rates;

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

1 unchanged sentence

LIBOR Transition

The majority of our debt is at fixed rates, and we currently have very limited exposure to variable-rate debt based upon the London Interbank Offered Rate (“LIBOR”), which is currently anticipated to be partially phased out by the end of 2021 and completely phased out by June 2023.

The majority of our debt is at fixed rates, and we currently have very limited exposure to variable-rate debt based upon the London Interbank Offered Rate (“LIBOR”), which is currently being phased out and is anticipated to be completely phased out by June 2023.

LIBOR is currently expected to transition to a new standard rate, the Secured Overnight Financing Rate (“SOFR”), which will incorporate certain overnight repo market data collected from multiple data sets.

2 unchanged sentences

We are currently monitoring the transition and cannot yet assess whether SOFR will become the standard rate for all of our variable-rate debt.

Our lines of credit with Metropolitan Life Insurance Company (“MetLife”) and five term loans with Rabo AgriFinance, LLC, (which are effectively fixed through our entry into interest swap agreements) are currently based upon one-month LIBOR.

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

As such, we expect we will need to renegotiate these agreements in the future.

7 unchanged sentences

Advisory Agreements

Pursuant to each of the Advisory Agreements, our Adviser is compensated in the form of a base management fee, 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.

Pursuant to each of the Advisory Agreements, 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.

The base management and incentive fees are described below.

15 unchanged sentences

Smaller Reporting Company Status

As of December 31, 2018, and through September 30, 2021, we qualified as a “smaller reporting company” under Rule 12b-2 of the Exchange Act because we had annual revenues of less than $100 million for the previous year and a public float of less than $700 million.

As a smaller reporting company, we have reduced disclosure requirements for our public filings, including the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.

As of December 31, 2018, and through March 31, 2022, we qualified as a “smaller reporting company” under Rule 12b-2 of the Exchange Act because we had annual revenues of less than $100 million for the previous year and a public float of less than $700 million as of the last business day of our previous second fiscal quarter.

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

Critical Accounting Policies

3 unchanged sentences

A summary of our significant accounting policies is provided in Note 2 to our consolidated financial statements in our Form 10-K.

There were no material changes to our critical accounting policies during the nine months ended September 30, 2021.

There were no material changes to our critical accounting policies during the three months ended March 31, 2022.

RESULTS OF OPERATIONS

For the purposes of the following discussions on certain operating revenues and expenses:

• With regard to the comparison between the three months ended September 30, 2021 versus 2020:

◦ Same-property basis represents farms owned as of June 30, 2020, and were not vacant at any point during either period presented;

◦ Properties acquired or disposed of are farms that were either acquired or disposed of at any point subsequent to June 30, 2020.

From July 1, 2020, through September 30, 2021, we acquired 43 new farms and did not have any farm dispositions.

• With regard to the comparison between the nine months ended September 30, 2021 versus 2020:

For the purposes of the following discussions on certain operating revenues and expenses with regard to the comparison between the three months ended March 31, 2022 and 2021:

• Same-property basis represents farms owned as of December 31, 2020, and were not vacant at any point during either period presented;

• Properties acquired or disposed of are farms that were either acquired or disposed of at any point subsequent to December 31, 2020.

From January 1, 2020, through September 30, 2021, we acquired 47 new farms and did not have any farm dispositions.

We did not have any vacant or self-operated farms during either of the three and nine months ended September 30, 2021 or 2020.

A comparison of results of components comprising our operating income for the three and nine months ended September 30, 2021 and 2020 is below (dollars in thousands):

For the Three Months Ended September 30,

2021 2020 $ Change % Change

Operating revenues:

Lease revenues:

Fixed lease payments $ 17,791 $ 12,838 $ 4,953 38.6%

Variable lease payments – participation rents 1,800 1,132 668 59.0%

Variable lease payments – tenant reimbursements — 19 (19) (100.0)%

Total operating revenues 19,591 13,989 5,602 40.0%

Operating expenses:

Depreciation and amortization 6,944 3,909 3,035 77.6%

Property operating expenses 696 287 409 142.5%

Base management and incentive fees 2,693 1,899 794 41.8%

Administration fee 412 344 68 19.8%

General and administrative expenses 462 419 43 10.3%

Total operating expenses 11,207 6,858 4,349 63.4%

Operating income $ 8,384 $ 7,131 $ 1,253 17.6%

For the Nine Months Ended September 30,

From January 1, 2021, through March 31, 2022, we acquired 53 new farms and did not have any farm dispositions.

We did not have any vacant or self-operated farms during either of the three months ended March 31, 2022 or 2021.

A comparison of results of components comprising our operating income for the three months ended March 31, 2022 and 2021 is below (dollars in thousands):

For the Three Months Ended March 31,

2022 2021 $ Change % Change

4 unchanged sentences

Variable lease payments – tenant reimbursements 5 29 (24) (82.8)%

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

Total operating revenues 19,943 16,034 3,909 24.4%

7 unchanged sentences

Operating income $ 6,579 $ 6,127 $ 452 7.4%

NM = Not Meaningful

Operating Revenues

Lease Revenues

The following table provides a summary of our lease revenues during the three and nine months ended September 30, 2021 and 2020 (dollars in thousands):

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

2021 2020 $ Change % Change 2021 2020 $ Change % Change

The following table provides a summary of our lease revenues during the three months ended March 31, 2022 and 2021 (dollars in thousands):

For the Three Months Ended March 31,

2022 2021 $ Change % Change

Same-property basis:

1 unchanged sentence

Participation rents — 26 (26) (100.0)%

Lease termination income, net — — — —% — 2,810 (2,810) (100.0)%

Total – Same-property basis 15,863 15,975 (112) (0.7)%

4 unchanged sentences

(1) Tenant reimbursements generally represent tenant-reimbursed property operating expenses on certain of our farms, including property taxes, insurance premiums, and other property-related expenses.

Corresponding amounts were also recorded as property operating expenses during the respective periods.

Similar amounts are also recorded as property operating expenses during the respective periods.

Same-property Basis – 2022 compared to 2021

Lease revenues from fixed lease payments decreased by approximately $63,000 during the three months ended September 30, 2021, primarily due to certain lease renewals and amendments executed, in which we decreased the fixed base rent component in exchange for adding a participation rent component to the lease structure.

Lease revenues from fixed lease payments increased slightly during the nine months ended September 30, 2021, primarily due to additional rents earned on capital improvements completed on certain of our farms, largely offset by certain lease renewals and amendments executed, in which we decreased the fixed base rent component in exchange for adding a participation rent component to the lease structure.

Participation rents related to these leases, if any, are expected to be recorded during the three months ending December 31, 2021.

Lease revenues from participation rents increased for each of the three and nine months ended September 30, 2021, primarily due to more farms having scheduled participation rent payments due during 2021 compared to 2020.

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

Lease revenues from fixed lease payments decreased by approximately $86,000 during the three months ended March 31, 2022, primarily due to certain lease renewals and amendments executed, through which we decreased the fixed base rent component in exchange for either adding a participation rent component to the lease structure or reduced certain operating expenses for which the landlord was previously responsible for.

The decrease in fixed lease payments as a result of these particular renewals

was partially offset by other lease renewals and amendments executed at higher rental rates and additional rents earned on capital improvements completed on certain of our farms.

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

Lease revenues from participation rents decreased for the three months ended March 31, 2022, primarily due to the timing of when such rental payments are scheduled to be paid pursuant to their respective leases or when information is made available to us to allow such amounts to be reasonably determinable.

Other – 2022 compared to 2021

Lease revenue from properties acquired or disposed of increased for each of the three and nine months ended September 30, 2021, primarily due to additional revenues earned on new farms acquired subsequent to December 31, 2019.

Tenant reimbursements decreased for each of the three and nine months ended September 30, 2021, primarily due to additional payments made during the prior-year periods by certain tenants on our behalf (pursuant to the lease agreements) to an unconsolidated entity of ours that conveys water to the respective properties.

Lease revenue from properties acquired or disposed of increased for the three months ended March 31, 2022, primarily due to additional revenues earned on new farms acquired subsequent to December 31, 2020.

Tenant reimbursements decreased for the three months ended March 31, 2022, primarily due to additional payments made during the prior-year period by certain tenants on our behalf (pursuant to the lease agreements) to unconsolidated entities of ours that convey water to the respective properties and as consideration for the use of certain of our ground leases for which we are the lessee (refer to Note 7, “ Commitments & Contingencies ,” within the accompanying notes to our condensed consolidated financial statements for additional information on these ground leases).

Operating Expenses

Depreciation and Amortization

The following table provides a summary of the depreciation and amortization expense recorded during the three and nine months ended September 30, 2021 and 2020 (dollars in thousands):

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

2021 2020 $ Change % Change 2021 2020 $ Change % Change

The following table provides a summary of the depreciation and amortization expense recorded during the three months ended March 31, 2022 and 2021 (dollars in thousands):

For the Three Months Ended March 31,

2022 2021 $ Change % Change

Same-property basis $ 5,863 $ 6,029 $ (166) (2.8)%

1 unchanged sentence

Total depreciation and amortization $ 8,346 $ 6,051 $ 2,295 37.9%

Depreciation and amortization expense on a same-property basis decreased for each of the three and nine months ended September 30, 2021, as compared to the respective prior-year periods, primarily due to the expiration of certain lease intangible amortization periods subsequent to December 31, 2019, partially offset by an increase in depreciation associated with additional capital expenditure on certain of our farms.

Depreciation and amortization expense on properties acquired or disposed of increased for each of the three and nine months ended September 30, 2021, as compared to the same respective prior-year periods, primarily due to the additional depreciation and amortization expense incurred on the new farms acquired subsequent to December 31, 2019.

Depreciation and amortization expense on a same-property basis decreased for the three months ended March 31, 2022, as compared to the respective prior-year period, primarily due to the expiration of certain lease intangible amortization periods subsequent to December 31, 2020, partially offset by an increase in depreciation associated with additional capital expenditure on certain of our farms.

Depreciation and amortization expense on properties acquired or disposed of increased for the three months ended March 31, 2022, as compared to the respective prior-year period, primarily due to the additional depreciation and amortization expense incurred on new farms acquired subsequent to December 31, 2020.

Property-operating Expenses

Property operating expenses consist primarily of real estate taxes, repair and maintenance expense, insurance premiums, and other miscellaneous operating expenses paid for certain of our properties.

The following table provides a summary of the property-operating expenses recorded during the three and nine months ended September 30, 2021 and 2020 (dollars in thousands):

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

2021 2020 $ Change % Change 2021 2020 $ Change % Change

The following table provides a summary of the property-operating expenses recorded during the three months ended March 31, 2022 and 2021 (dollars in thousands):

For the Three Months Ended March 31,

2022 2021 $ Change % Change

Same-property basis $ 668 $ 395 $ 273 69.1%

4 unchanged sentences

(1) Represents certain operating expenses (property taxes, insurance premiums, and other property-related expenses) paid by us that, per the respective leases, are required to be reimbursed to us by the tenant.

Corresponding amounts were also recorded as lease revenues during the respective periods.

Similar amounts are also recorded as lease revenue when earned in accordance with the lease.

Same-property Basis – 2022 compared to 2021

Property-operating expenses increased for each of the three and nine months ended September 30, 2021, primarily due to an increase in our obligation to reimburse one of our tenants for water usage over a specific cost threshold in accordance with the lease.

We currently anticipate incurring similar costs for water usage on this particular farm throughout the remainder of 2021 but do not currently expect such elevated costs to continue beyond 2021.

Property-operating expenses increased for the three months ended March 31, 2022, primarily due to an increase in property tax obligations on certain properties and additional fees incurred in connection with protecting water rights on certain farms in California.

Other – 2022 compared to 2021

Property operating expenses on properties acquired or disposed of increased for each of the three and nine months ended September 30, 2021, primarily due to additional miscellaneous property-operating expenses incurred on certain of the new farms we acquired subsequent to December 31, 2019.

Tenant reimbursement expense decreased for each of the three and nine months ended September 30, 2021, primarily due to a decrease in miscellaneous property-operating costs incurred by us in connection with our ownership interest in an unconsolidated entity.

Property operating expenses on properties acquired or disposed of increased for the three months ended March 31, 2022, primarily due to additional miscellaneous property-operating expenses incurred on certain of the new farms we acquired subsequent to December 31, 2020.

Tenant reimbursement expense decreased for the three months ended March 31, 2022, primarily due to a decrease in miscellaneous property-operating costs incurred by us in connection with our ownership interests in an unconsolidated entity.

Our tenants are contractually obligated to reimburse us for these costs under the terms of the respective leases.

Related-Party Fees

The following tables provide the calculations of the base management and incentive fees due to our Adviser pursuant to the Prior Advisory Agreement (which was in effect from January 1, 2020 through June 30, 2021) and the Current Advisory Agreement (which has been in effect since July 1, 2021) for each of the three and nine months ended September 30, 2021 and 2020 (dollars in thousands;

The following table provides the calculations of the base management and incentive fees due to our Adviser pursuant to the Prior Advisory Agreement (which was in effect from January 1, 2020 through June 30, 2021) and the Current Advisory Agreement (which has been in effect since July 1, 2021) for each of the three months ended March 31, 2022 and 2021 (dollars in thousands;

for further discussion on certain defined terms used below, refer to Note 6, “ Related-Party Transactions ,” within the accompanying notes to our condensed consolidated financial statements):

Quarters Ended Year to Date

March 31 June 30 September 30

Quarter Ended

FY 2022 Fee Calculations:

1 unchanged sentence

Gross Tangible Real Estate (1)(2)

$ 1,095,439 $ 1,101,071 $ 1,165,366

Quarterly rate 0.150 %

Base management fee (3)

$ 1,370 $ 1,376 $ 1,748 $ 4,494

Incentive Fee:

Total Adjusted Common Equity (1)(2)

$ 228,161 $ 248,501 $ 304,164

First hurdle quarterly rate 1.750 %

3 unchanged sentences

Pre-Incentive Fee FFO (1)

$ 5,810 $ 3,867 $ 6,268

100% of Pre-Incentive Fee FFO in excess of first hurdle threshold, up to second hurdle threshold $ 1,131

1 unchanged sentence

Total Incentive fee (3)

$ 1,162 $ — $ 945 $ 2,107

Total fees due to Adviser, net $ 3,168

2 unchanged sentences

Gross Tangible Real Estate (1)(2)

$ 827,256 $ 837,603 $ 862,329

Quarterly rate 0.125 %

Base management fee (3)

$ 1,034 $ 1,047 $ 1,078 $ 3,159

Incentive Fee:

Total Adjusted Common Equity (1)(2)

$ 173,358 $ 176,768 $ 172,490

First hurdle quarterly rate 1.750 %

3 unchanged sentences

Pre-Incentive Fee FFO (1)

$ 6,670 $ 2,334 $ 4,106

100% of Pre-Incentive Fee FFO in excess of first hurdle threshold, up to second hurdle threshold $ 998

1 unchanged sentence

Total Incentive fee (3)

$ 1,334 $ — $ 821 $ 2,155

Total fees due to Adviser, net $ 2,531

1 unchanged sentence

(2) As of the end of the respective prior quarters.

(3) Reflected as a line item on our accompanying Consolidated Statements of Operations and Comprehensive Income.

The base management fee increased during each of the three and nine months ended September 30, 2021, as compared to each of the respective prior-year periods, primarily due to additional assets acquired since December 31, 2019 and an increase in the annual rate applied to the prior calendar quarter’s Gross Tangible Real Estate Assets (from 0.50% pursuant to the Prior Advisory Agreement to 0.60% pursuant to the Current Advisory Agreement), effective July 1, 2021.

Our Adviser earned incentive fees during each of the three and nine months ended September 30, 2021 and 2020 due to our Pre-Incentive Fee FFO (as defined in the Advisory Agreements) exceeding the required hurdle rate of the applicable equity base during each of the first and third quarters of fiscal years 2021 and 2020.

The administration fee paid to our Administrator increased for each of the three and nine months ended September 30, 2021, as compared to the respective prior-year periods, primarily due to hiring additional personnel and us using a higher overall share of our Administrator’s resources in relation to those used by other funds and affiliated companies serviced by our Administrator.

(3) Reflected as a line item on our accompanying Condensed Consolidated Statements of Operations and Comprehensive Income.

The base management fee increased during the three months ended March 31, 2022, as compared to the prior-year period, primarily due to additional assets acquired since December 31, 2020, and an increase in the annual rate applied to the prior

calendar quarter’s Gross Tangible Real Estate Assets (from 0.50% pursuant to the Prior Advisory Agreement to 0.60% pursuant to the Current Advisory Agreement), effective July 1, 2021.

Our Adviser earned incentive fees during each of the three months ended March 31, 2022 and 2021 due to our Pre-Incentive Fee FFO (as defined in the Advisory Agreements) exceeding the required hurdle rate of the applicable equity base during each of the periods.

The administration fee paid to our Administrator increased for the three months ended March 31, 2022, as compared to the prior-year period, primarily due to hiring additional personnel and us using a higher overall share of our Administrator’s resources in relation to those used by other funds and affiliated companies serviced by our Administrator.

Other Operating Expenses

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

General and administrative expenses increased for each of the three and nine months ended September 30, 2021, as compared to the respective prior-year periods, primarily due to increased stockholder-related expenses related to the annual stockholders’ meeting and higher professional fees related to additional appraisal costs.

A comparison of results of other components contributing to net loss attributable to common stockholders for the three and nine months ended September 30, 2021 and 2020 is below (dollars in thousands):

For the Three Months Ended September 30,

General and administrative expenses increased for the three months ended March 31, 2022, as compared to the respective prior-year period, primarily due to increased professional fees (driven by higher audit fees and appraisal costs) and additional director fees expensed during the quarter.

A comparison of results of other components contributing to net loss attributable to common stockholders for the three months ended March 31, 2022 and 2021 is below (dollars in thousands):

For the Three Months Ended March 31,

2022 2021 $ Change % Change

5 unchanged sentences

Loss on dispositions of real estate assets, net (976) (798) (178) 22.3%

Property and casualty recovery, net — 1 (1) —%

Property and casualty recovery, net 49 — 49 NM

Loss from investments in unconsolidated entities (29) (13) (16) 123.1%

3 unchanged sentences

Net income attributable to the Company 1,178 553 625 113.0%

Aggregate dividends declared on Series B and Series C Preferred Stock (3,134) (2,405) (729) 30.3%

Net loss attributable to common stockholders $ (1,639) $ (837) $ (802) 95.8%

For the Nine Months Ended September 30,

2021 2020 $ Change % Change

Operating income $ 21,909 $ 20,512 $ 1,397 6.8%

Other income (expense):

Other income 2,274 1,668 606 36.3%

Interest expense (18,460) (15,155) (3,305) 21.8%

Aggregate dividends declared on Series A and Series D Term Preferred Stock (2,314) (1,375) (939) 68.3%

Loss on dispositions of real estate assets, net (1,841) (861) (980) 113.8%

Property and casualty recovery, net — 68 (68) (100.0)%

(Loss) income from investments in unconsolidated entities (42) 7 (49) NM

Total other expense, net (20,383) (15,648) (4,735) 30.3%

Net income 1,526 4,864 (3,338) (68.6)%

Net income attributable to non-controlling interests (8) (52) 44 (84.6)%

Net income attributable to the Company 1,518 4,812 (3,294) (68.5)%

Aggregate dividends declared on Series B and Series C Preferred Stock (8,837) (6,793) (2,044) 30.1%

Aggregate dividends declared on and charges related to Series B and Series C Preferred Stock (3,915) (2,764) (1,151) 41.6%

Net loss attributable to common stockholders $ (2,737) $ (2,211) $ (526) 23.8%

1 unchanged sentence

Other Income (Expense)

Other income, which generally consists of interest patronage received from Farm Credit (as defined in Note 4, “ Borrowings ,” in the accompanying notes to our condensed consolidated financial statements) and interest earned on short-term investments, decreased for the three months ended September 30, 2021, as compared to the prior-year period, and increased for the nine months ended September 30, 2021, as compared to the prior-year period, primarily driven by additional interest patronage received from Farm Credit during each of the respective periods (primarily due to increased borrowings from Farm Credit).

Other income, which generally consists of interest patronage received from Farm Credit (as defined in Note 4, “ Borrowings ,” in the accompanying notes to our condensed consolidated financial statements) and interest earned on short-term investments, increased for the three months ended March 31, 2022, as compared to the prior-year period, primarily driven by additional interest patronage received from Farm Credit (primarily due to increased borrowings from Farm Credit).

During the three months ended March 31, 2022, we recorded approximately $2.8 million of interest patronage from Farm Credit related to interest accrued during 2021, compared to approximately $2.2 million of interest patronage recorded during the prior-year period.

Coupled with approximately $306,000 of 2020 interest patronage that was received during the three months ended September 30, 2020, we recorded a total of approximately $2.5 million of 2020 interest patronage from Farm Credit, which resulted in a 28.7% reduction (approximately 135 basis points) to the interest rates on such borrowings.

Interest expense increased for each of the three and nine months ended September 30, 2021, as compared to the respective prior-year periods, primarily due to increased overall borrowings.

The weighted-average principal balance of our aggregate borrowings (excluding our Series A Term Preferred Stock and Series D Term Preferred Stock) outstanding for the three and nine months ended September 30, 2021, was approximately $627.6 million and $629.2 million, respectively, as compared to approximately $496.9 million and $487.2 million for the respective prior-year periods.

Excluding interest patronage received on certain of our Farm Credit borrowings and the impact of debt issuance costs, the overall effective interest rate charged on our aggregate borrowings for the three and nine months ended September 30, 2021, was 3.74% and 3.72%, respectively, as compared to 4.03% and 3.99% for the respective prior-year periods.

During the three and nine months ended September 30, 2021, we paid aggregate distributions on our Series A Term Preferred Stock and Series D Term Preferred Stock of approximately $755,000 and $2.3 million, respectively.

Interest expense increased for the three months ended March 31, 2022, as compared to the prior-year period, primarily due to increased overall borrowings.

The weighted-average principal balance of our aggregate borrowings (excluding our Series A Term Preferred Stock and Series D Term Preferred Stock) outstanding for the three months ended March 31, 2022, was approximately $664.3 million as compared to approximately $628.0 million for the prior-year period.

Excluding interest patronage received on certain of our Farm Credit borrowings and the impact of debt issuance costs, the overall effective interest rate charged on our aggregate borrowings for the three months ended March 31, 2022, was 3.72% as compared to 3.70% for the prior-year period.

During the three months ended March 31, 2022, we paid distributions on our Series D Term Preferred Stock of approximately $755,000.

The Series D Term Preferred Stock was issued in January 2021, and the Series A Term Preferred Stock was voluntarily redeemed in full in February 2021.

During the three and nine months ended September 30, 2020, we paid distributions on our Series A Term Preferred Stock of approximately $458,000 and $1.4 million, respectively.

During each of the three and nine months ended September 30, 2021 and 2020, we recorded net losses on dispositions of real estate assets primarily due to the disposal of certain irrigation improvements on certain of our farms, partially offset during the nine months ended September 30, 2021, by net gains recognized on the sale of irrigation pivots on two of our farms that were replaced.

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

During the three and nine months ended September 30, 2021, we recognized a loss from investments in an unconsolidated entity of approximately $19,000 and $42,000, respectively, as compared to a loss of approximately $19,000 and income of $7,000 for the respective prior-year periods.

During the three and nine months ended September 30, 2021, the aggregate dividends paid on our Series B Preferred Stock and Series C Preferred Stock increased over that of the respective prior-year periods due to additional shares issued and outstanding during the current-year periods.

In addition, during the three and nine months ended September 30, 2021, we also recognized a loss of approximately $23,000 related to the early optional redemption of 9,920 shares of our Series C Preferred Stock.

During the three months ended March 31, 2021, we paid aggregate distributions on our Series A Term Preferred Stock and Series D Term Preferred Stock of approximately $804,000.

During each of the three months ended March 31, 2022 and 2021, we recorded net losses on dispositions of real estate assets primarily due to the disposal of certain irrigation and other improvements on certain of our farms.

The net property and casualty recovery recorded during the three months ended March 31, 2021, related to insurance recoveries received for certain improvements that were damaged due to natural disasters.

During the three months ended March 31, 2022 and 2021, we recognized a loss from investments in unconsolidated entities of approximately $29,000 and $13,000, respectively.

During the three months ended March 31, 2022, the aggregate dividends paid on our Series B Preferred Stock and Series C Preferred Stock increased over that of the prior-year period due to additional shares issued and outstanding during the current-year period.

LIQUIDITY AND CAPITAL RESOURCES

Our current short- and long-term sources of funds include cash and cash equivalents, cash flows from operations, borrowings (including the undrawn commitments available under our facility with MetLife), and issuances of additional equity securities.

Our current available liquidity is approximately $135.7 million, consisting of approximately $85.7 million in cash on hand and, based on the current level of collateral pledged, approximately $50.0 million of availability under our facility with MetLife (subject to compliance with covenants) and other undrawn notes or bonds.

In addition, we currently have six properties valued at approximately $105.5 million that are unencumbered and eligible to be pledged as collateral.

Our current short- and long-term sources of funds include cash and cash equivalents, cash flows from operations, borrowings (including the undrawn commitments available under the 2022 MetLife Facility), and issuances of additional equity securities.

Our current available liquidity is approximately $178.0 million, consisting of approximately $65.7 million in cash on hand and, based on the current level of collateral pledged, approximately $112.3 million of availability under the 2022 MetLife Facility (subject to compliance with covenants) and other undrawn notes or bonds.

In addition, we currently have certain properties valued at a total of approximately $29.9 million that are unencumbered and eligible to be pledged as collateral.

Future Capital Needs

Our short- and long-term liquidity requirements consist primarily of making distributions to stockholders (including to non-controlling OP Unitholders) to maintain our qualification as a REIT, funding our general operating costs, making principal and interest payments on outstanding borrowings, making dividend payments on our Series B Preferred Stock, Series C Preferred Stock, and Series D Term Preferred Stock, and, as capital is available, funding new farmland and farm-related acquisitions consistent with our investment strategy.

Notwithstanding the ongoing COVID-19 pandemic, including the recent surge in certain variants, we believe that our current and short-term cash resources will be sufficient to fund our distributions to stockholders (including non-controlling OP Unitholders), service our debt, pay dividends on our Series B Preferred Stock, Series C Preferred Stock, and Series D Term Preferred Stock, and fund our current operating costs in the near term.

Our short- and long-term liquidity requirements consist primarily of making distributions to stockholders (including to non-controlling OP Unitholders, if any) to maintain our qualification as a REIT, funding our general operating costs, making principal and interest payments on outstanding borrowings, making dividend payments on our Series B Preferred Stock, Series C Preferred Stock, and Series D Term Preferred Stock, and, as capital is available, funding new farmland and farm-related acquisitions consistent with our investment strategy.

Notwithstanding the ongoing COVID-19 pandemic, we believe that our current and short-term cash resources will be sufficient to fund our distributions to stockholders (including non-controlling OP Unitholders), service our debt, pay dividends on our Series B Preferred Stock, Series C Preferred Stock, and Series D Term Preferred Stock, and fund our current operating costs in the near term.

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

2 unchanged sentences

We intend to use a significant portion of any current and future available liquidity to purchase additional farms and farm-related facilities.

We continue to actively seek and evaluate acquisitions of additional farms and farm-related facilities that satisfy our investment criteria, and despite the ongoing COVID-19 pandemic, our pipeline of potential acquisitions remains healthy.

We continue to actively seek and evaluate acquisitions of additional farms and farm-related facilities that satisfy our investment criteria, and our pipeline of potential acquisitions remains healthy.

We have several properties under signed purchase and sale agreements or non-binding letters of intent that we hope to consummate over the next several months.

2 unchanged sentences

Cash Flow Resources

The following table summarizes total net cash flows from operating, investing, and financing activities for the nine months ended September 30, 2021 and 2020 (dollars in thousands):

For the Nine Months Ended September 30,

The following table summarizes total net cash flows from operating, investing, and financing activities for the three months ended March 31, 2022 and 2021 (dollars in thousands):

For the Three Months Ended March 31,

2022 2021 $ Change % Change

6 unchanged sentences

The majority of cash from operating activities is generated from the rental payments we receive from our tenants, which is first used to fund our property-level operating expenses, with any excess cash being primarily used for principal and interest payments on our borrowings, management fees to our Adviser, administrative fees to our Administrator, and other corporate-level expenses.

Cash provided by operating activities increased for the nine months ended September 30, 2021, as compared to the prior-year period, primarily due to additional rental payments received from recent acquisitions and interest patronage received from Farm Credit, partially offset by increases in the amount of interest payments made.

Cash provided by operating activities increased for the three months ended March 31, 2022, as compared to the prior-year period, primarily due to additional rental payments received from recent acquisitions and interest patronage received from Farm Credit, partially offset by an increase in fees paid to our Adviser in the current quarter.

Investing Activities

The increase in cash used in investing activities during the nine months ended September 30, 2021, as compared to the prior-year period, was primarily due to an increase in cash paid for acquisitions of new farms, partially offset by a decrease in the amount of cash paid for capital improvements on existing farms during the nine months ended September 30, 2021.

The decrease in cash used in investing activities during the three months ended March 31, 2022, as compared to the prior-year period, was primarily due to a decrease in aggregate cash paid for acquisitions or potential acquisitions of new farms, partially offset by an increase in the amount of cash paid for capital improvements on existing farms during the three months ended March 31, 2022.

Financing Activities

The increase in cash provided by financing activities during the nine months ended September 30, 2021, as compared to the prior-year period, was primarily due to an increase in aggregate net cash proceeds from equity issuances (including our common stock and the Series C Preferred Stock) of approximately $105.4 million and the issuance of our Series D Term Preferred Stock (which after voluntarily redeeming our Series A Term Preferred Stock in full, resulted in net cash proceeds of approximately $31.6 million), partially offset by an increase in total distributions.

The decrease in cash provided by financing activities during the three months ended March 31, 2022, as compared to the prior-year period, was primarily due to the issuance of our Series D Term Preferred Stock in the first quarter of 2021 (which, after voluntarily redeeming our Series A Term Preferred Stock in full, resulted in net cash proceeds of approximately $31.6 million) and a decrease in net borrowings of approximately $12.7 million.

The decrease in cash provided by financing activities was partially offset by an increase in aggregate net cash proceeds from equity issuances (including our common stock and the Series C Preferred Stock) of approximately $11.1 million.

MetLife Facility

As amended, our facility with MetLife currently consists of a $75.0 million long-term note payable (the “MetLife Term Note”) and $75.0 million of revolving equity lines of credit (the “MetLife Lines of Credit,” and together with the MetLife Term Note, the “MetLife Facility”).

We currently have $36.9 million outstanding on the MetLife Term Note and $100,000 outstanding under the MetLife Lines of Credit.

As amended, the 2022 MetLife Facility currently consists of $75.0 million of revolving equity lines of credit and an aggregate of $175.0 million of term notes.

We currently have $100,000 outstanding under the lines of credit and $36.9 million outstanding on the term notes.

While $213.0 million of the full commitment amount under the 2022 MetLife Facility remains undrawn, based on the current level of collateral pledged, we currently have approximately $110.3 million of availability under the 2022 MetLife Facility.

The draw period for the MetLife Term Note expires on December 31, 2022, after which time MetLife has the option to be relieved of its obligation to disburse any additional undrawn funds under the MetLife Term Note.

We are currently in discussions with MetLife to further expand the size of the MetLife Facility and extend the draw period under the MetLife Term Note;

however, there is no guarantee that we will be able to reach terms favorable to us, if at all.

The draw period for the 2020 MetLife Term Note expires on December 31, 2022, and the draw period for the 2022 MetLife Term Note expires on December 31, 2024.

After these dates, MetLife has no obligation to disburse any additional undrawn funds under the term notes.

Farmer Mac Facility

As amended on December 10, 2020, our agreement with Farmer Mac provides for bond issuances up to an aggregate amount of $225.0 million (the “Farmer Mac Facility”) by May 31, 2023, after which Farmer Mac had the option to be relieved of its obligation to purchase additional bonds under this facility.

As amended on December 10, 2020, our agreement with Farmer Mac provides for bond issuances up to an aggregate amount of $225.0 million (the “Farmer Mac Facility”) by May 31, 2023, after which Farmer Mac has no obligation to purchase additional bonds under this facility.

To date, we have issued aggregate bonds of approximately $100.1 million under the Farmer Mac Facility.

1 unchanged sentence

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

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

In addition, we expect to enter into additional borrowing agreements with existing and new lenders in connection with certain potential new acquisitions in the future.

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

As such, we expect to enter into additional borrowing agreements with existing and new lenders in connection with certain potential new acquisitions in the future.

Equity Capital

8 unchanged sentences

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

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

(2) Excludes share redemptions.

(3) Excludes approximately 9,816 shares issued pursuant to the DRIP.

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

To date, we have issued approximately $74.7 million of Series C Preferred Stock, approximately $60.4 million of Series D Term Preferred Stock, and approximately $241.2 million of common stock (excluding common stock issued to redeem OP Units) under the Registration Statement.

To date, we have issued approximately $142.0 million of Series C Preferred Stock (including approximately $406,000 issued pursuant to the DRIP), $60.4 million of Series D Term Preferred Stock, and $256.0 million of common stock (including common stock issued to redeem OP Units) under the Registration Statement.

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

Off-Balance Sheet Arrangements

As of September 30, 2021, we did not have any material off-balance sheet arrangements.

As of March 31, 2022, we did not have any material off-balance sheet arrangements.

NON-GAAP FINANCIAL INFORMATION

12 unchanged sentences

Acquisition- and disposition-related expenses (including due diligence costs on acquisitions not consummated and certain auditing and accounting fees incurred that were directly related to completed acquisitions or dispositions) are incurred for investment purposes and do not correlate with the ongoing operations of our existing portfolio.

Further, certain auditing and accounting fees incurred vary depending on the

number and complexity of acquisitions or dispositions completed during the period.

Further, certain auditing and accounting fees incurred vary depending on the number and complexity of acquisitions or dispositions completed during the period.

Due to the inconsistency in which these costs are incurred and how they have historically been treated for accounting purposes, we believe the exclusion of these expenses improves comparability of our operating results on a period-to-period basis.

21 unchanged sentences

We believe that FFO, CFFO, and AFFO and Diluted FFO, CFFO, and AFFO per share are useful to investors because they provide investors with a further context for evaluating our FFO, CFFO, and AFFO results in the same manner that investors use net income and EPS in evaluating net income.

The following table provides a reconciliation of our FFO, CFFO, and AFFO for the three and nine months ended September 30, 2021 and 2020 to the most directly-comparable GAAP measure, net income, and a computation of diluted FFO, CFFO, and AFFO per share, using the weighted-average number of total shares (including shares of our common stock and OP Units held by non-controlling OP Unitholders) outstanding during the respective periods (dollars in thousands, except per-share amounts):

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

2021 2020 2021 2020

The following table provides a reconciliation of our FFO, CFFO, and AFFO for the three months ended March 31, 2022 and 2021 to the most directly-comparable GAAP measure, net income, and a computation of diluted FFO, CFFO, and AFFO per share, using the weighted-average number of total shares (including shares of our common stock and OP Units held by non-controlling OP Unitholders) outstanding during the respective periods (dollars in thousands, except per-share amounts):

For the Three Months Ended March 31,

Net income $ 1,187 $ 554

7 unchanged sentences

Acquisition- and disposition-related expenses 109 70

Other nonrecurring charges (receipts), net (3)

Other nonrecurring (receipts) charges, net (3)

CFFO available to common stockholders and non-controlling OP Unitholders 6,680 4,761

1 unchanged sentence

Amortization of debt issuance costs 271 388

Other non-cash charges (receipts) (4)

101 63 164 38

Other non-cash charges (4)

AFFO available to common stockholders and non-controlling OP Unitholders 6,381 4,683

5 unchanged sentences

Diluted AFFO per weighted-average total common share $ 0.19 $ 0.17

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

Distributions declared per total common share $ 0.14 $ 0.14

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

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

(3) Consists primarily of (i) net property and casualty recoveries recorded, net of the cost of related repairs expensed, as a result of the damage caused to certain irrigation improvements by natural disasters on certain of our properties, (ii) one-time listing fees related to our Series D Term Preferred Stock, (iii) the write-off of certain unallocated costs related to a prior universal registration statement, and (iv) certain one-time costs related to the early redemption of our Series A Term Preferred Stock.

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

(3) Consists primarily of (i) net property and casualty recoveries recorded, net of the cost of related repairs expensed, as a result of the damage caused to certain irrigation improvements by natural disasters on certain of our properties, (ii) one-time listing fees related to our Series D Term Preferred Stock, and (iii) certain one-time costs related to the early redemption of our Series A Term Preferred Stock.

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

Net Asset Value

21 unchanged sentences

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

A breakdown of the methodologies used to value our properties and the aggregate value as of September 30, 2021, determined by each method is shown in the table below (dollars in thousands, except in footnotes):

A breakdown of the methodologies used to value our properties and the aggregate value as of March 31, 2022, determined by each method is shown in the table below (dollars in thousands, except in footnotes):

Valuation Method Number of

7 unchanged sentences

(1) Consists of the initial acquisition price (including the costs allocated to both tangible and intangible assets acquired and liabilities assumed), plus subsequent improvements and other capitalized costs paid for by us that were associated with the properties, and adjusted for accumulated depreciation and amortization.

(2) Appraisals performed between December 2020 and September 2021.

Some of the significant assumptions used by appraisers and the Valuation Team in valuing our portfolio as of September 30, 2021, include land values per farmable acre, market rental rates per farmable acre and the resulting net operating income (“NOI”) at the property level, and capitalization rates, among others.

(2) Appraisals performed between April 2021 and March 2022.

Some of the significant assumptions used by appraisers and the Valuation Team in valuing our portfolio as of March 31, 2022, include land values per farmable acre, market rental rates per farmable acre and the resulting net operating income (“NOI”) at the property level, and capitalization rates, among others.

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

8 unchanged sentences

Developments considered that may have an impact on the fair value of our real estate include, but are not limited to, changes in tenant credit profiles, changes in lease terms (such as expirations and notices of non-renewals or to vacate), and potential asset sales (particularly those at prices different from the appraised values of our properties).

Management believes that the purchase prices of the farms acquired during the previous 12 months and the most recent appraisals available for the farms acquired prior to the previous 12 months fairly represent the current market values of the properties as of September 30, 2021, and, accordingly, did not make any adjustment to these values.

A quarterly roll-forward of the change in our portfolio value for the three months ended September 30, 2021, from the prior value basis as of June 30, 2021, is provided in the table below (dollars in thousands):

Total portfolio fair value as of June 30, 2021 $ 1,250,371

Acquisition of five new farms during the three months ended September 30, 2021 62,333 (1)

Plus net value appreciation during the three months ended September 30, 2021:

Three farms valued internally $ (1,650)

Management believes that the purchase prices of the farms acquired during the previous 12 months and the most recent appraisals available for the farms acquired prior to the previous 12 months fairly represent the current market values of the properties as of March 31, 2022, and, accordingly, did not make any adjustment to these values.

A quarterly roll-forward of the change in our portfolio value for the three months ended March 31, 2022, from the prior value basis as of December 31, 2021, is provided in the table below (dollars in thousands):

Total portfolio fair value as of December 31, 2021 $ 1,463,651

Plus net value appreciation during the three months ended March 31, 2022:

34 farms valued via third-party appraisals $ 13,185

Total net appreciation for the three months ended September 30, 2021 1,966

Total portfolio fair value as of September 30, 2021 $ 1,314,670

(1) Includes approximately $306,000 paid to exercise a water purchase option that was acquired in connection with one of the farms that was acquired during the three months ended September 30, 2021.

Total net appreciation for the three months ended March 31, 2022 13,185

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

Management also determined fair values of all of its long-term borrowings and preferred stock.

Using a discounted cash flow analysis, management determined that the fair value of all long-term encumbrances on our properties as of September 30, 2021, was approximately $644.7 million, as compared to a carrying value (excluding unamortized related debt issuance costs) of approximately $649.5 million.

The fair values of our Series B Preferred Stock and Series D Term Preferred Stock were determined using the closing stock prices as of September 30, 2021, of $25.80 per share and $26.03 per share, respectively.

Finally, pursuant to Financial Industry Regulatory Authority Rule 2310(b)(5), with the assistance of a third-party valuation expert, we determined the estimated value of our Series C Preferred Stock to be $25.00 per share as of September 30, 2021 (see Exhibit 99.1 to this Form 10-Q).

Using a discounted cash flow analysis, management determined that the fair value of all long-term encumbrances on our properties as of March 31, 2022, was approximately $633.6 million, as compared to a carrying value (excluding unamortized related debt issuance costs) of approximately $663.8 million.

The fair values of our Series B Preferred Stock and Series D Term Preferred Stock were determined using the closing stock prices as of March 31, 2022, of $25.90 per share and $25.50 per share, respectively.

Finally, pursuant to Financial Industry Regulatory Authority Rule 2310(b)(5), with the assistance of a third-party valuation expert, we determined the estimated value of our Series C Preferred Stock to be $25.00 per share as of March 31, 2022 (see Exhibit 99.1 to this Form 10-Q).

Calculation of Estimated Net Asset Value

4 unchanged sentences

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

As of September 30, 2021, we estimate the NAV per common share to be $13.80.

As of March 31, 2022, we estimate the NAV per common share to be $15.54.

A reconciliation of NAV to total equity, which we believe is the most directly-comparable GAAP measure, is provided below (dollars in thousands, except per-share data) :

18 unchanged sentences

(4) Long-term notes and bonds payable were valued using a discounted cash flow model.

The Series D Term Preferred Stock was valued based on its closing stock price as of September 30, 2021.

(5) The Series B Preferred Stock was valued based on its closing stock price as of September 30, 2021, while the Series C Preferred Stock was valued at its liquidation value, as discussed above.

The Series D Term Preferred Stock was valued based on its closing stock price as of March 31, 2022.

(5) The Series B Preferred Stock was valued based on its closing stock price as of March 31, 2022, while the Series C Preferred Stock was valued at its liquidation value, as discussed above.

(6) Includes 34,520,068 shares of common stock and 204,778 OP Units held by non-controlling OP Unitholders.

A quarterly roll-forward in the estimated NAV per common share for the three months ended September 30, 2021, is provided below:

Estimated NAV per common share and non-controlling OP Unit as of June 30, 2021 $ 13.16

A quarterly roll-forward in the estimated NAV per common share for the three months ended March 31, 2022, is provided below:

Estimated NAV per common share and non-controlling OP Unit as of December 31, 2021 $ 14.31

Less net loss attributable to common stockholders and non-controlling OP Unitholders (0.08)

5 unchanged sentences

Plus net accretive effect of equity issuances 0.31

Estimated NAV per common share and non-controlling OP Unit as of September 30, 2021 $ 13.80

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

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

(i) an increase of $0.06 per share due to the net appreciation in value of the farms that were valued during the three months ended September 30, 2021, (ii) an increase of $0.22 per share due to the aggregate depreciation and amortization expense recorded during the three months ended September 30, 2021, and (iii) a decrease of $0.03 per share due to net asset dispositions or capital improvements made on certain farms that have not yet been considered in the determination of the respective farms’ estimated fair values.

(i) an increase of $0.38 per share due to the net appreciation in value of the farms that were valued during the three months ended March 31, 2022, (ii) an increase of $0.24 per share due to the aggregate depreciation and amortization expense recorded during the three months ended March 31, 2022, and (iii) a decrease of $0.14 per share due to net asset dispositions or capital improvements made on certain farms that have not yet been considered in the determination of the respective farms’ estimated fair values.

Comparison of estimated NAV and estimated NAV per common share, using the definitions above, to similarly-titled measures for other REITs may not necessarily be meaningful due to possible differences in the calculation or application of the definition of NAV used by such REITs.

In addition, the trading price of our common shares may differ significantly from our most recent estimated NAV per common share calculation.

For example, while we estimated our NAV per common share to be $13.80 as of September 30, 2021, based on the calculation above, the closing price of our common stock on September 30, 2021, was $22.77 per share.

For example, while we estimated our NAV per common share to be $15.54 as of March 31, 2022, based on the calculation above, the closing price of our common stock on March 31, 2022, was $36.42 per share.

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

6 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis