What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-08-09 compared with 2022-05-10 · 239 added, 156 removed, 440 unchanged (47% of the section changed)

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

The following table summarizes the different geographic locations (by state) of our farms owned 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

The following table summarizes the different geographic locations (by state) of our farms owned as of and for the six months ended June 30, 2022 and 2021 (dollars in thousands):

As of and For the six months ended June 30, 2022 As of and For the six months ended June 30, 2021

Revenue % of Total

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Arizona 6 6,280 5.5% 1,016 2.5% 6 6,280 6.0% 968 2.9%

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

Michigan 23 1,892 1.7% 783 1.9% 23 1,892 1.8% 262 0.8%

Oregon 5 726 0.6% 734 1.8% 3 418 0.4% 268 0.8%

Nebraska 9 7,782 6.8% 596 1.5% 9 7,782 7.4% 794 2.4%

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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 March 31, 2022 (dollars in thousands):

The following table summarizes the lease expirations by year for the farms owned and with leases in place as of June 30, 2022 (dollars in thousands):

Year Number of

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Acreage Lease Revenues for the

Three Months Ended

March 31, 2022 % of Total

Six Months Ended

June 30, 2022 % of Total

4 3,720 3.3% $ 2,467 6.1%

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(1) Certain lease agreements encompass multiple farms.

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

(2) Includes one lease that was renewed subsequent to June 30, 2022 (see “ Recent Development—Portfolio Activity—Existing Properties—Leasing Activity ” below for a summary of this and certain other recent leasing activities), one lease in which the tenant termination option expired subsequent to June 30, 2022, without such option being exercised, resulting in the minimum lease term being extended through 2028, and one lease with a tenant termination option that we do not currently expect to be exercised.

(3) Consists of ancillary leases (e.g., renewable energy leases;

oil, gas, and mineral leases;

telecommunications leases;

etc.) with varying expirations on certain of our farms.

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.

We currently anticipate the rental rate on this renewal to be relatively flat 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.

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Portfolio Activity

Property Acquisitions

Since April 1, 2022, through the date of this filing, we acquired five new farms, which are summarized in the table below (dollars in thousands, except for footnotes):

Name Property

Location Acquisition

Farms Primary

Options Total

Price Acquisition

Costs Annualized

Straight-line

Farm Road (2)

Charlotte, FL 5/20/2022 15 0 Adjacent parcel N/A N/A $ 54 $ 15 $ —

County Road 35 Glenn, CA 6/16/2022 1,374 1 Olives for Olive Oil 14.5 years 1 (5 years)

24,500 54 1,714

Reagan Road (3)

Cochise, AZ 7/13/2022 40 0 Corn 12.5 years None 120 14 39

North Columbia River Road and Prunedale Road (4)

Franklin & Grant, WA, and Umatilla, OR 7/21/2022 1,317 4 Wine Grapes 8.6 years None 37,250 94 2,569

2,746 5 $ 61,924 $ 177 $ 4,322

(1) 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.

(2) Represents the acquisition of a parcel of land adjacent to an existing farm, providing additional road access to such farm.

No new lease was executed related to this acquisition.

(3) Represents the acquisition of a parcel of farmable land adjacent to an existing farm.

(4) Upon acquisition, we executed four new leases with the existing tenants on these farms.

The lease terms above represent the weighted-average lease term and aggregate annualized straight-line rent of these four leases.

Existing Properties

Leasing Activity

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):

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

PRIOR LEASES (1)

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/ NN / N) (4)

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.

CA & CO 2 11,905 $ 631 1 1 / 1 / 0 $ 853 6.5 0 0 / 2 / 0

(1) Prior leases include certain leases that were terminated early during the six months ended June 30, 2022.

In connection with these early terminations, during the six months ended June 30, 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.

See Note 7, “ Commitments and Contingencies—Operating Obligations ,” within the accompanying notes to our condensed consolidated financial statements for additional information on these and other commitments.

See “ Liquidity and Capital Resources—Operating Commitments and Obligations—Operating Obligations ” below for additional information on these and other commitments.

(3) Based on the minimum cash rental payments guaranteed under the applicable leases (presented on an annualized basis), as required under GAAP, and excludes contingent rental payments, such as participation rents.

(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.

In addition to the above renewals, we also entered into a renewable energy lease to allow for the development of both wind and solar energy facilities on 16,595 acres in Colorado.

During the development period, which runs through June 2026, the lease is expected to provide for annual rental payments of approximately $332,000.

Financing Activity

Debt Activity

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

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

Issuer Date of

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Date Principal

Amortization Stated

Rate Expected

Amortization Stated Interest Rate Expected Effective Interest Rate (1)

Interest Rate Terms

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;

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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 ,” below for additional information on interest patronage.

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

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, LLC (“Gladstone Securities”), an affiliate of ours, earned total financing fees of approximately $7,000.

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.

In addition, subsequent to June 30, 2022, we repaid approximately $16.9 million of maturing loans.

On a weighted-average basis, these borrowings bore interest at a stated rate of 4.47% and an effective interest rate (after interest patronage) of 2.89%.

Equity Activity

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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 January 1, 2022, 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 April 1, 2022, through the date of this filing (dollars in thousands, except per-share amounts and footnotes):

Shares Sold (1)

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(1) Excludes share redemptions and shares issued 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.

From April 1, 2022, through the date of this filing, we redeemed 8,034 shares and issued approximately 13,853 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.

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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.

Common Stock—At-the-Market 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 January 1, 2022, through the date of this filing (dollars in thousands):

Shares Sold Weighted-average

Offering Price per Share Gross Proceeds Net Proceeds (1)

310,055 $ 33.64 $ 10,431 $ 10,327

(1) Net of underwriter commissions.

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.

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

LIBOR Transition

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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.

As such, we expect we will need to

renegotiate these agreements in the future.

Assuming that SOFR replaces LIBOR and is appropriately adjusted, we currently expect the transition to result in a minimal impact to our overall operations.

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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.

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.

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.

Smaller Reporting Company Status

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 of December 31, 2018, and through June 30, 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.

We currently anticipate that we will no longer qualify as a smaller reporting company beginning with the year ending December 31, 2022, due to our public float as of the last business day of our current second fiscal quarter exceeding the $700 million threshold.

Critical Accounting Policies

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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 three months ended March 31, 2022.

There were no material changes to our critical accounting policies during the six months ended June 30, 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 March 31, 2022 and 2021:

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

• With regard to the comparison between the three months ended June 30, 2022 versus 2021:

◦ Same-property basis represents farms owned as of March 31, 2021, and were not vacant at any point during either period presented;

◦ Properties acquired or disposed of are farms that were either acquired or disposed of at any point subsequent to March 31, 2021.

From April 1, 2021, through June 30, 2022, we acquired 26 new farms and did not have any farm dispositions.

• With regard to the comparison between the six months ended June 30, 2022 versus 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, 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,

From January 1, 2021, through June 30, 2022, we acquired 28 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 six months ended June 30, 2022 or 2021.

A comparison of results of components comprising our operating income for the three and six months ended June 30, 2022 and 2021 is below (dollars in thousands):

For the Three Months Ended June 30,

2022 2021 $ Change % Change

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Operating income $ 8,133 $ 7,398 $ 735 9.9%

For the Six Months Ended June 30,

2022 2021 $ Change % Change

Operating revenues:

Lease revenues:

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

Fixed lease payments $ 40,210 $ 32,816 $ 7,394 22.5%

Variable lease payments – participation rents 20 45 (25) (55.6)%

Variable lease payments – tenant reimbursements 6 66 (60) (90.9)%

Total operating revenues 40,236 32,927 7,309 22.2%

Operating expenses:

Depreciation and amortization 16,738 12,336 4,402 35.7%

Property operating expenses 1,398 1,336 62 4.6%

Base management and incentive fees 5,210 3,908 1,302 33.3%

Administration fee 926 703 223 31.7%

General and administrative expenses 1,253 1,119 134 12.0%

Total operating expenses 25,525 19,402 6,123 31.6%

Operating income $ 14,711 $ 13,525 $ 1,186 8.8%

Operating Revenues

Lease revenues

The following table provides a summary of our lease revenues during the three and six months ended June 30, 2022 and 2021 (dollars in thousands):

For the Three Months Ended June 30, For the Six Months Ended June 30,

2022 2021 $ Change % Change 2022 2021 $ Change % Change

Same-property basis:

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Same-property Basis – 2022 compared to 2021

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.

Lease revenues from fixed lease payments increased primarily due to certain new leases, amendments, and renewals executed at higher rental rates.

The increase in fixed lease payments as a result of these leases was partially offset by a decrease due to certain lease amendments and renewals executed, through which we decreased the fixed base rent component in exchange for either adding a participation rent component to the lease structure or reducing certain operating expenses for which the landlord was previously responsible for.

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 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).

Lease revenue from properties acquired or disposed of increased primarily due to additional revenues earned on new farms acquired subsequent to December 31, 2020.

Tenant reimbursements decreased 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.

Operating Expenses

Depreciation and amortization

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)%

Properties acquired or disposed of 2,483 22 2,461 11,186.4%

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

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.

Depreciation and amortization expense increased primarily due to additional depreciation and amortization expense incurred on new farms acquired subsequent to December 31, 2020, as well as an increase in depreciation associated with additional capital expenditure on certain of our farms.

This increase was partially offset by a decrease attributable to the expiration of certain lease intangible amortization periods.

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 months ended March 31, 2022 and 2021 (dollars in thousands):

For the Three Months Ended March 31,

2022 2021 $ Change % Change

The following table provides a summary of the property-operating expenses recorded during the three and six months ended June 30, 2022 and 2021 (dollars in thousands):

For the Three Months Ended June 30, For the Six Months Ended June 30,

2022 2021 $ Change % Change 2022 2021 $ Change % Change

Same-property basis $ 667 $ 829 $ (162) (19.5)% $ 1,330 $ 1,224 $ 106 8.7%

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Same-property Basis – 2022 compared to 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.

Property operating expenses decreased for the three months ended June 30, 2022, primarily due to a decrease in costs associated with our limited obligation to reimburse one of our tenants for certain water usage in accordance with the lease terms during the prior-year period.

We were not obligated to reimburse the tenant for such costs subsequent to December 31, 2021.

This decrease was partially offset by additional miscellaneous property operating costs incurred on certain properties and higher

property tax expenses due to certain lease renewals recently executed converting the leases from a triple-net structure to a partial-net structure, with us, as landlord, now responsible for the property taxes on these properties.

Property operating expenses increased for the six months ended June 30, 2022, primarily due to higher property tax expenses, as well as additional legal fees incurred in connection with protecting water rights on certain farms in California and higher miscellaneous property operating expenses on certain properties.

This increase was partially offset by a decrease in costs associated with our limited obligation to reimburse one of our tenants for certain water usage in accordance with the lease terms during the prior-year period, which obligation expired on December 31, 2021.

Other – 2022 compared to 2021

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.

Tenant reimbursement expense decreased primarily due to a decrease in miscellaneous property operating costs incurred by us in connection with our ownership interests in an unconsolidated entity, for which our tenants are contractually obligated to reimburse us under the terms of the respective leases.

Related-Party Fees

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;

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 and six months ended June 30, 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):

Quarter Ended

Quarter Ended Year to Date

March 31 June 30

FY 2022 Fee Calculations:

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Gross Tangible Real Estate (1)(2)

$ 1,357,800 $ 1,361,757

Quarterly rate 0.150 % 0.150 %

Base management fee (3)

$ 2,036 $ 2,043 $ 4,079

Incentive Fee:

Total Adjusted Common Equity (1)(2)

$ 378,299 $ 381,201

First hurdle quarterly rate 1.750 % 1.750 %

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Pre-Incentive Fee FFO (1)

$ 7,751 $ 4,819

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)

$ 1,131 $ — $ 1,131

Total fees due to Adviser, net $ 3,167 $ 2,043 $ 5,210

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Gross Tangible Real Estate (1)(2)

$ 1,095,440 $ 1,101,071

Quarterly rate 0.125 % 0.125 %

Base management fee (3)

$ 1,370 $ 1,376 $ 2,746

Incentive Fee:

Total Adjusted Common Equity (1)(2)

$ 228,161 $ 248,501

First hurdle quarterly rate 1.750 % 1.750 %

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Pre-Incentive Fee FFO (1)

$ 5,810 $ 3,867

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

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Total Incentive fee (3)

$ 1,162 $ — $ 1,162

Total fees due to Adviser, net $ 2,532 $ 1,376 $ 3,908

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(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.

The base management fee increased 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.

No incentive fee was earned by our Advisor during either of the three months ended June 30, 2022 or 2021.

The administration fee paid to our Administrator increased 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 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,

General and administrative expenses increased for the six months ended June 30, 2022, as compared to the prior-year period, primarily due to increased professional fees (driven by higher audit fees and appraisal costs) and additional director fees expensed during the period.

This increase was partially offset by a decrease in acquisition-related costs for investments no longer being pursued.

A comparison of results of other components contributing to net loss attributable to common stockholders for the three and six months ended June 30, 2022 and 2021 is below (dollars in thousands):

For the Three Months Ended June 30,

2022 2021 $ Change % Change

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Interest expense (6,523) (6,141) (382) 6.2%

Aggregate dividends declared on Series A and Series D Term Preferred Stock (755) (804) 49 (6.1)%

Dividends declared on Series A and Series D cumulative term preferred stock (755) (755) — —%

Loss on dispositions of real estate assets, net (305) (1,042) 737 (70.7)%

Loss from investments in unconsolidated entities — (11) 11 (100.0)%

Total other expense, net (7,520) (7,929) 409 (5.2)%

Net income (loss) 613 (531) 1,144 (215.4)%

Net loss attributable to non-controlling interests 3 1 2 200.0%

Net income (loss) attributable to the Company 616 (530) 1,146 (216.2)%

Dividends declared on and charges related to Series B and Series C cumulative redeemable preferred stock (4,489) (2,939) (1,550) 52.7%

Net loss attributable to common stockholders $ (3,873) $ (3,469) $ (404) 11.6%

For the Six Months Ended June 30,

2022 2021 $ Change % Change

Operating income $ 14,711 $ 13,525 $ 1,186 8.8%

Other income (expense):

Other income 2,829 2,255 574 25.5%

Interest expense (12,971) (12,334) (637) 5.2%

Dividends declared on Series A and Series D cumulative term preferred stock (1,509) (1,559) 50 (3.2)%

Loss on dispositions of real estate assets, net (1,280) (1,840) 560 (30.4)%

Property and casualty recovery, net 49 — 49 NM

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Net income 1,800 23 1,777 7,726.1%

Net income attributable to non-controlling interests (9) (1) (8) 800.0%

Net income attributable to non-controlling interests (6) — (6) NM

Net income attributable to the Company 1,794 23 1,771 7,700.0%

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

Dividends declared on and charges related to Series B and Series C cumulative redeemable preferred stock (8,404) (5,702) (2,702) 47.4%

Net loss attributable to common stockholders $ (6,610) $ (5,679) $ (931) 16.4%

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Other Income (Expense)

Other income, which generally consists of interest patronage received from Farm Credit (as defined in Note 4, “ Borrowings ,” in the accompanying notes to our condensed consolidated financial statements) and interest earned on short-term investments, increased for 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).

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 primarily driven by additional interest patronage received from Farm Credit (primarily due to increased borrowings from Farm Credit) and higher interest rates earned on short-term investments.

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.

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 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.

Interest expense increased, 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 six months ended June 30, 2022, was approximately $666.9 million and $665.6 million, respectively, as compared to approximately $631.5 million and $629.8 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 six months ended June 30, 2022, was 3.75% and 3.73%, respectively, as compared to 3.73% and 3.71% for the respective prior-year periods.

Losses on dispositions of real estate assets related to the disposals of certain irrigation and other improvements on certain of our farms.

The aggregate dividends paid on our Series B Preferred Stock and Series C Preferred Stock increased due to additional shares issued and outstanding during the current-year periods.

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 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.

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 credit facility with Metropolitan Life Insurance Company “MetLife”)), and issuances of additional equity securities.

Our current available liquidity is approximately $133.3 million, consisting of approximately $21.0 million in cash on hand and, based on the current level of collateral pledged, approximately $112.3 million of availability under our credit facility with MetLife (subject to compliance with covenants) and other undrawn notes or bonds.

In addition, we currently have certain properties valued at a total of approximately $129.4 million that are unencumbered and eligible to be pledged as collateral.

Over 99% of our borrowings are currently at fixed rates, and on a weighted-average basis, these rates are fixed at an effective interest rate of 3.26% for another five-plus years.

So with respect to our current borrowings, we have experienced minimal

impact from the recent increases in interest rates, and we believe we are well-protected against any future interest rate increases.

Despite ongoing volatility in the markets, based on discussions with our lenders, we do not believe there will be a credit freeze on agricultural lending in the near term.

We are in compliance with all of our debt covenants under our respective credit facilities and borrowings, and we believe we currently have adequate liquidity to cover all near-term debt obligations and operating expenses.

Future Capital Needs

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.

While public equity markets have experienced significant volatility lately, based on discussions with our lenders, we do not believe there will be a credit freeze in the near term.

We believe that our current and short-term cash resources will be sufficient to fund our distributions to stockholders (including non-controlling OP Unitholders, if any), 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 “at-the-market program” (the “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.

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 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.

We also have many other properties that are in various other stages of our due diligence process.

We continue to actively seek and evaluate acquisitions of additional farms and farm-related facilities that satisfy our investment criteria, and we have several properties that are in various stages of our due diligence process.

However, all potential acquisitions will be subject to our due diligence investigation of such properties, and there can be no assurance that we will be successful in identifying or acquiring any properties in the future.

Operating Commitments and Obligations

Operating Obligations

In connection with the execution of certain lease agreements, we have committed to provide capital improvements on certain of our farms.

Below is a summary of certain of those projects for which we have incurred or accrued costs as June 30, 2022 (dollars in thousands):

Location(s) Farm

Acreage Total

Commitment Obligated

Amount Expended

or Accrued as of

June 30, 2022

Lucie, FL 549 $ 230 Q3 2022 $ 148

Hillsborough, FL 55 2,250 (2)

Q4 2022 1,575

Charlotte, FL 975 3,000 (2)

Q4 2022 2,457

Napa, CA 270 1,548 (2)

Q3 2023 1,019

Umatilla, OR 135 2,750 (2)

Q4 2023 1,352

Columbia, OR 157 1,800 (2)

Q3 2024 1,146

Monterey, CA 304 950 (2)

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.

Future minimum lease payments due under the remaining non-cancelable terms of these leases as of June 30, 2022, is as follows (dollars in thousands):

Period Future Lease Payments (1)

For the remaining six months ending December 31:

For the fiscal years ending December 31:

Thereafter 693

Total undiscounted lease payments 1,103

imputed interest (468)

Present value of lease payments $ 635

(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 Condensed Consolidated Statement of Operations and Comprehensive Income) of approximately $23,000 and $46,000 during the three and six months ended June 30, 2022, respectively, and approximately $22,000 and $36,000 during the three and six months ended June 30, 2021, respectively.

Cash Flow Resources

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,

The following table summarizes total net cash flows from operating, investing, and financing activities for the three and six months ended June 30, 2022 and 2021 (dollars in thousands):

For the Six Months Ended June 30,

2022 2021 $ Change % Change

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

Cash provided by operating activities increased for the 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.

Cash provided by operating activities increased 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 and increases in the amount of interest payments made.

Investing Activities

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.

The decrease in cash used in investing activities was primarily due to a decrease in aggregate cash paid for acquisitions of new farms, partially offset by an increase in the amount of cash paid for capital improvements on existing farms during the current-year period.

Financing Activities

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.

The decrease in cash provided by financing activities 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), a decrease in aggregate net cash proceeds received from equity offerings (including our common stock and the Series C Preferred Stock) of approximately $27.7 million, and a decrease in aggregate net borrowings of approximately $9.3 million.

In addition, during the six months ended June 30, 2022, we paid approximately $7.7 million to redeem 204,778 OP Units.

MetLife Facility

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.

As amended in February 2022, our facility with MetLife currently consists of $75.0 million of revolving equity lines of credit and an aggregate of $175.0 million of term notes (the “2022 MetLife Facility”).

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

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 (see Note 8, “ Borrowings—MetLife Facility ,” within the accompanying notes to our condensed consolidated financial statements for information on certain defined terms).

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 has no obligation to purchase additional bonds under this facility.

As amended in December 2020, our agreement with Federal Agricultural Mortgage Corporation (“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.

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Off-Balance Sheet Arrangements

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

As of June 30, 2022, we did not have any material off-balance sheet arrangements.

NON-GAAP FINANCIAL INFORMATION

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

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

We believe the exclusion of such non-cash amounts improves comparability of our operating results on a

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

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

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

The following table provides a reconciliation of our FFO, CFFO, and AFFO for the three 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,

The following table provides a reconciliation of our FFO, CFFO, and AFFO for the three and six months ended June 30, 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 June 30, For the Six Months Ended June 30,

2022 2021 2022 2021

Net income $ 613 $ (531) $ 1,800 $ 23

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FFO available to common stockholders and non-controlling OP Unitholders 4,819 3,867 11,439 8,515

Acquisition- and disposition-related expenses 109 70

Acquisition- and disposition-related (credits) expenses, net (88) 71 21 140

Other nonrecurring (receipts) charges, net (3)

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Other non-cash charges (4)

192 38 342 63

AFFO available to common stockholders and non-controlling OP Unitholders 4,469 3,726 10,851 8,410

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We will also obtain updated market data related to the property, such as updated sales and market rent comparisons and market capitalization rates, and perform an updated assessment of the tenants’ credit risk profiles, among others.

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 March 31, 2022, determined by each method is shown in the table below (dollars in thousands, except in footnotes):

Sources of this data may come from market inputs from recent acquisitions of our own portfolio of real estate, recent appraisals of properties we own that are similar

in nature and in the same region (as applicable) as the property being valued, market conditions and trends we observe in our due diligence process, and conversations with appraisers, brokers, and farmers.

A breakdown of the methodologies used to value our properties and the aggregate value as of June 30, 2022, determined by each method is shown in the table below (dollars in thousands, except in footnotes):

Valuation Method Number of

Acres Net Cost

Acres Acre-feet

of Water Net Cost

Fair Value % of Total

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(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 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.

(2) Appraisals performed between June 2021 and June 2022.

Some of the significant assumptions used by appraisers and the Valuation Team in valuing our portfolio as of June 30, 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.

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

Management believes that the purchase prices of the farms acquired during the previous 12 months and the most recent appraisals available for the farms acquired prior to the previous 12 months fairly represent the current market values of the properties as of 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 March 31, 2022 13,185

Management believes that the purchase prices of the farms acquired during the previous 12 months and the most recent appraisals available for the farms acquired prior to the previous 12 months fairly represent the current market values of the properties as of June 30, 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 June 30, 2022, from the prior value basis as of March 31, 2022, is provided in the table below (dollars in thousands):

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

Acquisition of new farms during the three months ended June 30, 2022 24,554

Plus net value appreciation during the three months ended June 30, 2022:

Farms valued via third-party appraisals $ 490

Total net appreciation for the three months ended June 30, 2022 490

Total portfolio fair value as of June 30, 2022 $ 1,501,880

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 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).

Using a discounted cash flow analysis, management determined that the fair value of all long-term encumbrances on our properties as of June 30, 2022, was approximately $621.9 million, as compared to a carrying value (excluding unamortized related debt issuance costs) of approximately $665.6 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 June 30, 2022, of $26.30 per share and $24.90 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 June 30, 2022 (see Exhibit 99.1 to this Form 10-Q).

Calculation of Estimated Net Asset Value

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

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

As of June 30, 2022, we estimate the NAV per common share to be $15.60.

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

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

The Series 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.

The Series D Term Preferred Stock was valued based on its closing stock price as of June 30, 2022.

(5) The Series B Preferred Stock was valued based on its closing stock price as of June 30, 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 0 OP Units held by non-controlling OP Unitholders.

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

A quarterly roll-forward in the estimated NAV per common share for the three months ended June 30, 2022, is provided below:

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

Less net loss attributable to common stockholders and non-controlling OP Unitholders (0.11)

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Less distributions on common stock and non-controlling OP Units (0.14)

Plus net accretive effect of equity issuances 0.31

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

Less net dilutive effect of equity issuances (0.22)

Estimated NAV per common share and non-controlling OP Unit as of June 30, 2022 $ 15.60

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

(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.

(i) an increase of $0.01 per share due to the net appreciation in value of the farms that were valued during the three months ended June 30, 2022, (ii) an increase of $0.24 per share due to the aggregate depreciation and amortization expense recorded during the three months ended June 30, 2022, and (iii) a decrease of $0.15 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 $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.

For example, while we estimated our NAV per common share to be $15.60 as of June 30, 2022, based on the calculation above, the closing price of our common stock on June 30, 2022, was $22.16 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