GLADSTONE LAND Corp 10-Q

ITEM 1. FINANCIAL STATEMENTS GLADSTONE LAND CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share and per-share data) (Unaudited) September 30, 2022 December 31, 2021 ASSETS Real estate, at cost $ 1,427,482 $ 1,357,800 Less: accumulated depreciation ( 98,285 ) ( 74,002 ) Total real estate, net 1,329,197 1,283,798 Lease intangibles, net 5,951 4,456 Cash and cash equivalents 37,006 16,708 Other assets, net 65,658 46,588 TOTAL ASSETS $ 1,437,812 $ 1,351,550 LIABILITIES AND EQUITY LIABILITIES: Borrowings under lines of credit $ 100 $ 100 Notes and bonds payable, net 639,646 667,882 Series D mandatorily-redeemable preferred stock, net, $ 0.001 par value, $ 25.00 per share liquidation preference; 3,600,000 shares authorized, 2,415,000 shares issued and outstanding as of September 30, 2022, and December 31, 2021 59,005 58,696 Accounts payable and accrued expenses 11,572 10,874 Due to related parties, net 3,253 4,224 Other liabilities, net 17,010 20,708 Total liabilities 730,586 762,484 Commitments and contingencies (Note 7) EQUITY: Stockholders’ equity: Series B cumulative redeemable preferred stock, $ 0.001 par value, $ 25.00 per share liquidation preference; 6,456,065 shares authorized, 5,956,065 shares issued and outstanding as of September 30, 2022, and December 31, 2021 6 6 Series C cumulative redeemable preferred stock, $ 0.001 par value, $ 25.00 per share liquidation preference; 25,967,227 shares authorized, 8,992,776 shares issued and outstanding as of September 30, 2022; 25,989,942 shares authorized, 3,493,333 shares issued and outstanding as of December 31, 2021 9 3 Common stock, $ 0.001 par value; 63,976,708 shares authorized, 34,704,005 shares issued and outstanding as of September 30, 2022; 63,953,993 shares authorized, 34,210,013 shares issued and outstanding as of December 31, 2021 35 34 Additional paid-in capital 802,496 668,275 Distributions in excess of accumulated earnings ( 104,775 ) ( 80,467 ) Accumulated other comprehensive income (loss) 9,455 ( 1,036 ) Total stockholders’ equity 707,226 586,815 Non-controlling interests in Operating Partnership — 2,251 Total equity 707,226 589,066 TOTAL LIABILITIES AND EQUITY $ 1,437,812 $ 1,351,550 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 Table of Contents GLADSTONE LAND CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (In thousands, except share and per-share data) (Unaudited) For the Three Months Ended September 30, For the Nine Months Ended September 30, 2022 2021 2022 2021 OPERATING REVENUES: Lease revenue, net $ 24,209 $ 19,591 $ 64,445 $ 52,518 Total operating revenues 24,209 19,591 64,445 52,518 OPERATING EXPENSES: Depreciation and amortization 9,146 6,944 25,883 19,280 Property operating expenses 706 696 2,103 2,031 Base management fee 2,086 1,748 6,165 4,494 Incentive fee 505 945 1,636 2,107 Administration fee 543 412 1,470 1,115 General and administrative expenses 729 462 1,983 1,582 Write-off of costs associated with offering of Series C cumulative redeemable preferred stock 851 — 851 — Total operating expenses 14,566 11,207 40,091 30,609 OTHER INCOME (EXPENSE): Other income 237 20 3,067 2,274 Interest expense ( 6,476 ) ( 6,126 ) ( 19,446 ) ( 18,460 ) Dividends declared on Series A and Series D cumulative term preferred stock ( 755 ) ( 755 ) ( 2,264 ) ( 2,314 ) Loss on dispositions of real estate assets, net ( 819 ) ( 1 ) ( 2,100 ) ( 1,841 ) Property and casualty recovery, net — — 49 — Loss from investments in unconsolidated entities ( 24 ) ( 19 ) ( 54 ) ( 42 ) Total other expense, net ( 7,837 ) ( 6,881 ) ( 20,748 ) ( 20,383 ) NET INCOME 1,806 1,503 3,606 1,526 Net income attributable to non-controlling interests ( 2 ) ( 8 ) ( 9 ) ( 8 ) NET INCOME ATTRIBUTABLE TO THE COMPANY 1,804 1,495 3,597 1,518 Dividends declared on Series B and Series C cumulative redeemable preferred stock ( 5,389 ) ( 3,111 ) ( 13,786 ) ( 8,814 ) Loss on extinguishment of Series C cumulative redeemable preferred stock ( 9 ) ( 23 ) ( 15 ) ( 23 ) NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS $ ( 3,594 ) $ ( 1,639 ) $ ( 10,204 ) $ ( 7,319 ) LOSS PER COMMON SHARE: Basic and diluted $ ( 0.10 ) $ ( 0.05 ) $ ( 0.30 ) $ ( 0.25 ) WEIGHTED-AVERAGE SHARES OF COMMON STOCK OUTSTANDING: Basic and diluted 34,607,440 31,362,423 34,472,018 29,215,628 COMPREHENSIVE INCOME : Net income attributable to the Company $ 1,804 $ 1,495 $ 3,597 $ 1,518 Change in fair value related to interest rate hedging instruments 3,199 357 10,491 513 COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY $ 5,003 $ 1,852 $ 14,088 $ 2,031 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 Table of Contents GLADSTONE LAND CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (In thousands, except share data) (Unaudited) Three Months Ended September 30, 2022 Series B Preferred Stock Series C Preferred Stock Common Stock Additional Paid-in Capital Distributions in Excess of Accumulated Earnings Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity Non- Controlling Interests Total Equity Number of Shares Par Value Number of Shares Par Value Number of Shares Par Value Balance at June 30, 2022 5,956,065 $ 6 6,529,895 $ 7 34,520,068 $ 35 $ 742,070 $ ( 96,442 ) $ 6,256 $ 651,932 $ — $ 651,932 Issuance of Series C Preferred Stock, net — — 2,480,956 2 — — 56,272 — — 56,274 — 56,274 Redemptions of Series C Preferred Stock — — ( 18,075 ) — — — ( 411 ) ( 9 ) — ( 420 ) — ( 420 ) Issuance of common stock, net — — — — 183,937 — 4,563 — — 4,563 — 4,563 Net income — — — — — — — 1,804 — 1,804 2 1,806 Dividends—Series B Preferred Stock and Series C Preferred Stock — — — — — — — ( 5,389 ) — ( 5,389 ) — ( 5,389 ) Distributions—OP Units and common stock — — — — — — — ( 4,739 ) — ( 4,739 ) — ( 4,739 ) Comprehensive income attributable to the Company — — — — — — — — 3,199 3,199 — 3,199 Adjustment to non-controlling interests resulting from changes in ownership of the Operating Partnership — — — — — — 2 — — 2 ( 2 ) — Balance at September 30, 2022 5,956,065 $ 6 8,992,776 $ 9 34,704,005 $ 35 $ 802,496 $ ( 104,775 ) $ 9,455 $ 707,226 $ — $ 707,226 Nine Months Ended September 30, 2022 Series B Preferred Stock Series C Preferred Stock Common Stock Additional Paid-in Capital Distributions in Excess of Accumulated Earnings Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity Non- Controlling Interests Total Equity Number of Shares Par Value Number of Shares Par Value Number of Shares Par Value Balance at December 31, 2021 5,956,065 $ 6 3,493,333 $ 3 34,210,013 $ 34 $ 668,275 $ ( 80,467 ) $ ( 1,036 ) $ 586,815 $ 2,251 $ 589,066 Issuance of Series C Preferred Stock, net — — 5,522,158 6 — — 125,291 — — 125,297 — 125,297 Redemptions of Series C Preferred Stock — — ( 22,715 ) — — — ( 516 ) ( 15 ) — ( 531 ) — ( 531 ) Redemptions of OP Units — — — — — — ( 3,700 ) — — ( 3,700 ) ( 3,970 ) ( 7,670 ) Issuance of common stock, net — — — — 493,992 1 14,884 — — 14,885 — 14,885 Net income — — — — — — — 3,597 — 3,597 9 3,606 Dividends—Series B Preferred Stock and Series C Preferred Stock — — — — — — — ( 13,786 ) — ( 13,786 ) — ( 13,786 ) Distributions—OP Units and common stock — — — — — — — ( 14,104 ) — ( 14,104 ) ( 28 ) ( 14,132 ) Comprehensive income attributable to the Company — — — — — — — — 10,491 10,491 — 10,491 Adjustment to non-controlling interests resulting from changes in ownership of the Operating Partnership — — — — — — ( 1,738 ) — — ( 1,738 ) 1,738 — Balance at September 30, 2022 5,956,065 $ 6 8,992,776 $ 9 34,704,005 $ 35 $ 802,496 $ ( 104,775 ) $ 9,455 $ 707,226 $ — $ 707,226 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 Table of Contents GLADSTONE LAND CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Continued) (In thousands, except share data) (Unaudited) Three Months Ended September 30, 2021 Series B Preferred Stock Series C Preferred Stock Common Stock Additional Paid-in Capital Distributions in Excess of Accumulated Earnings Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity Non- Controlling Interests Total Equity Number of Shares Par Value Number of Shares Par Value Number of Shares Par Value Balance at June 30, 2021 5,956,065 $ 6 2,029,455 $ 2 30,478,064 $ 30 $ 549,123 $ ( 68,533 ) $ ( 1,344 ) $ 479,284 $ 2,030 $ 481,314 Issuance of Series C Preferred Stock, net — — 581,069 1 — — 13,253 — — 13,254 — 13,254 Redemptions of Series C Preferred Stock — — ( 9,920 ) — — — ( 225 ) ( 23 ) — ( 248 ) — ( 248 ) Issuance of common stock, net — — — — 1,565,925 2 36,659 — — 36,661 — 36,661 Net income — — — — — — — 1,495 — 1,495 8 1,503 Dividends—Series B Preferred Stock and Series C Preferred Stock — — — — — — — ( 3,111 ) — ( 3,111 ) — ( 3,111 ) Distributions—OP Units and common stock — — — — — — — ( 4,255 ) — ( 4,255 ) ( 28 ) ( 4,283 ) Comprehensive income attributable to the Company — — — — — — — — 357 357 — 357 Adjustment to non-controlling interests resulting from changes in ownership of the Operating Partnership — — — — — — ( 117 ) — — ( 117 ) 117 — Balance at September 30, 2021 5,956,065 $ 6 2,600,604 $ 3 32,043,989 $ 32 $ 598,693 $ ( 74,427 ) $ ( 987 ) $ 523,320 $ 2,127 $ 525,447 Nine Months Ended September 30, 2021 Series B Preferred Stock Series C Preferred Stock Common Stock Additional Paid-in Capital Distributions in Excess of Accumulated Earnings Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity Non- Controlling Interests Total Equity Number of Shares Par Value Number of Shares Par Value Number of Shares Par Value Balance at December 31, 2020 5,956,065 $ 6 1,088,435 $ 1 26,219,019 $ 26 $ 440,470 $ ( 55,213 ) $ ( 1,500 ) $ 383,790 $ — $ 383,790 Issuance of Series C Preferred Stock, net — — 1,522,089 2 — — 34,617 — 34,619 — 34,619 Redemptions of Series C Preferred Stock — — ( 9,920 ) — — — ( 225 ) ( 23 ) — ( 248 ) — ( 248 ) Issuance of OP Units as consideration in real estate acquisitions, net — — — — — — — — — — 3,970 3,970 Issuance of common stock, net — — — — 5,824,970 6 122,045 — 122,051 — 122,051 Net income — — — — — — — 1,518 — 1,518 8 1,526 Dividends—Series B Preferred Stock and Series C Preferred Stock — — — — — — — ( 8,814 ) — ( 8,814 ) — ( 8,814 ) Distributions—OP Units and common stock — — — — — — — ( 11,895 ) — ( 11,895 ) ( 65 ) ( 11,960 ) Comprehensive income attributable to the Company — — — — — — — — 513 513 — 513 Adjustment to non-controlling interests resulting from changes in ownership of the Operating Partnership — — — — — — 1,786 — — 1,786 ( 1,786 ) — Balance at September 30, 2021 5,956,065 $ 6 2,600,604 $ 3 32,043,989 $ 32 $ 598,693 $ ( 74,427 ) $ ( 987 ) $ 523,320 $ 2,127 $ 525,447 The accompanying notes are an integral part of these condensed consolidated financial statements. 6 Table of Contents GLADSTONE LAND CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) For the Nine Months Ended September 30, 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 3,606 $ 1,526 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 25,883 19,280 Amortization of debt issuance costs 817 905 Amortization of deferred rent assets and liabilities, net ( 180 ) ( 397 ) Amortization of right-of-use assets from operating leases and operating lease liabilities, net 69 10 Loss from investments in unconsolidated entities 54 42 Bad debt expense 68 11 Write-off of unamortized deferred offering costs associated with cumulative redeemable preferred stock (Series C) 798 — Loss on dispositions of real estate assets, net 2,100 1,841 Property and casualty recovery, net ( 49 ) — Changes in operating assets and liabilities: Other assets, net ( 7,549 ) ( 5,761 ) Accounts payable and accrued expenses and Due to related parties, net ( 431 ) 1,652 Other liabilities, net ( 2,113 ) 1,247 Net cash provided by operating activities 23,073 20,356 CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of new real estate assets ( 59,102 ) ( 144,253 ) Capital expenditures on existing real estate assets ( 16,072 ) ( 3,373 ) Contributions to unconsolidated real estate entities ( 2,749 ) — Deposits on prospective real estate acquisitions and investments ( 704 ) ( 1,875 ) Net cash used in investing activities ( 78,627 ) ( 149,501 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of preferred and common equity 151,237 161,318 Offering costs ( 11,318 ) ( 4,359 ) Redemptions of cumulative redeemable preferred stock (Series B and Series C) ( 531 ) ( 248 ) Payments for redemptions of OP Units ( 7,669 ) — Proceeds from issuance of cumulative term preferred stock — 60,375 Redemption of cumulative term preferred stock (Series A) — ( 28,750 ) Borrowings from notes and bonds payable 9,932 40,683 Repayments of notes and bonds payable ( 38,260 ) ( 18,816 ) Payments of financing fees ( 826 ) ( 2,455 ) Dividends paid on cumulative redeemable preferred stock (Series B and Series C) ( 12,581 ) ( 9,370 ) Distributions paid on non-controlling common interests in Operating Partnership ( 28 ) ( 65 ) Distributions paid on common stock ( 14,104 ) ( 11,895 ) Net cash provided by financing activities 75,852 186,418 NET INCREASE IN CASH AND CASH EQUIVALENTS 20,298 57,273 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 16,708 9,218 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 37,006 $ 66,491 The accompanying notes are an integral part of these condensed consolidated financial statements. 7 Table of Contents GLADSTONE LAND CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (In thousands) (Unaudited) For the Nine Months Ended September 30, 2022 2021 NON-CASH INVESTING AND FINANCING INFORMATION: Issuance of non-controlling interests in Operating Partnership in conjunction with acquisitions, net $ — $ 3,970 Real estate additions included in Accounts payable and accrued expenses and Due to related parties, net 2,980 670 Stock offering and OP Unit issuance costs included in Accounts payable and accrued expenses and Due to related parties, net 10 6 Financing fees included in Accounts payable and accrued expenses and Due to related parties, net 32 57 Unrealized gain related to interest rate hedging instruments 9,455 987 Dividends paid on Series C Preferred Stock via additional share issuances 290 106 The accompanying notes are an integral part of these condensed consolidated financial statements. 8 Table of Contents GLADSTONE LAND CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1. BUSINESS AND ORGANIZATION Business and Organization Gladstone Land Corporation (“we,” “us,” or the “Company”) is an agricultural real estate investment trust (“REIT”) that was re-incorporated in Maryland on March 24, 2011, having been originally incorporated in California on June 14, 1997. We are primarily in the business of owning and leasing farmland, and we conduct substantially all of our operations through a subsidiary, Gladstone Land Limited Partnership (the “Operating Partnership”), a Delaware limited partnership. As we currently control the sole general partner of the Operating Partnership and own, directly or indirectly, a majority of the common units of limited partnership interest in the Operating Partnership (“OP Units”), the financial position and results of operations of the Operating Partnership are consolidated within our financial statements. As of September 30, 2022, and December 31, 2021, the Company owned 100.0 % and approximately 99.4 %, respectively, of the outstanding OP Units (see Note 8, “ Equity ,” for additional discussion regarding OP Units). Gladstone Land Advisers, Inc. (“Land Advisers”), a Delaware corporation and a subsidiary of ours, was created to collect any non-qualifying income related to our real estate portfolio and to perform certain small-scale farming business operations. We have elected for Land Advisers to be taxed as a taxable REIT subsidiary (“TRS”) of ours. Since we currently own 100 % of the voting securities of Land Advisers, its financial position and results of operations are consolidated within our financial statements. For the nine months ended September 30, 2022, and for the tax year ended December 31, 2021, there was no taxable income or loss from Land Advisers, nor did we have any undistributed REIT taxable income. Subject to certain restrictions and limitations, and pursuant to contractual agreements, our business is managed by Gladstone Management Corporation (the “Adviser”), a Delaware corporation, and administrative services are provided to us by Gladstone Administration, LLC (the “Administrator”), a Delaware limited liability company. Our Adviser and Administrator are both affiliates of ours (see Note 6, “ Related-Party Transactions ,” for additional discussion regarding our Adviser and Administrator). All further references herein to “we,” “us,” “our,” and the “Company” refer, collectively, to Gladstone Land Corporation and its consolidated subsidiaries, except where indicated otherwise. NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Interim Financial Information Our interim financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q in accordance with Article 10 of Regulation S-X. Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with GAAP are omitted. The interim financial statements and accompanying notes should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 22, 2022 (the “Form 10-K”). The results of operations for the three and nine months ended September 30, 2022, are not necessarily indicative of the results that may be expected for other interim periods or for the full fiscal year. Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making certain judgments. Actual results may materially differ from these estimates. Recently-Issued Accounting Pronouncements As of September 30, 2022, there were no recently-issued accounting pronouncements that had a material impact on our condensed consolidated financial statements. 9 NOTE 3. REAL ESTATE AND INTANGIBLE ASSETS All of our properties are wholly-owned on a fee-simple basis, except where noted. The following table provides certain summary information about the 169 farms we owned as of September 30, 2022 (dollars in thousands, except for footnotes): Location No. of Farms Total Acres Farm Acres Net Cost Basis (1) Encumbrances (2) California (3)(4)(5) 63 34,401 31,951 $ 866,226 $ 410,697 Florida 26 22,606 17,639 223,659 110,249 Washington 6 2,529 1,997 66,053 24,411 Arizona (6) 6 6,320 5,333 56,077 15,999 Colorado 12 32,773 25,577 46,650 28,527 Nebraska 9 7,782 7,050 30,465 12,135 Oregon (7) 6 898 736 29,372 11,845 Michigan 23 1,892 1,245 24,067 14,204 Texas 1 3,667 2,219 8,194 4,940 Maryland 6 987 863 8,104 4,466 South Carolina 3 597 447 3,655 2,193 Georgia 2 230 175 2,776 1,689 North Carolina 2 310 295 2,172 — New Jersey 3 116 101 2,138 1,273 Delaware 1 180 140 1,308 717 169 115,288 95,768 $ 1,370,916 $ 643,345 (1) Consists of the initial acquisition price (including the costs allocated to both tangible and intangible assets acquired and liabilities assumed), plus subsequent improvements and other capitalized costs associated with the properties, and adjusted for accumulated depreciation and amortization. Specifically, includes Total real estate, net (excluding improvements paid for by the tenant) and Lease intangibles, net; plus long-term water assets, net above-market lease values, lease incentives, and investments in special-purpose LLCs included in Other assets, net; and less net below-market lease values and other deferred revenue included in Other liabilities, net; each as shown on the accompanying Condensed Consolidated Balance Sheets. (2) Excludes approximately $ 3.6 million of debt issuance costs related to notes and bonds payable, included in Notes and bonds payable, net on the accompanying Condensed Consolidated Balance Sheets. (3) Includes ownership in a special-purpose LLC that owns a pipeline conveying water to certain of our properties. As of September 30, 2022, this investment had a net carrying value of approximately $ 1.1 million and is included within Other assets, net on the accompanying Condensed Consolidated Balance Sheets. (4) Includes five acres in which we own a leasehold interest via a ground sublease with a California municipality that expires in December 2041. The ground sublease had a net cost basis of approximately $ 734,000 as of September 30, 2022 (included in Lease intangibles, net on the accompanying Condensed Consolidated Balance Sheets). (5) Includes 45,000 acre-feet of water stored with Semitropic Water Storage District, located in Kern County, California. See “— Investments in Water Assets ” below for additional information on this water. (6) Includes two farms in which we own a leasehold interest via ground leases with the State of Arizona that expire in February 2025 and February 2032, respectively. In total, these two ground leases consist of 1,368 total acres and 1,221 farm acres and had an aggregate net cost basis of approximately $ 794,000 as of September 30, 2022 (included in Lease intangibles, net on the accompanying Condensed Consolidated Balance Sheets). (7) Includes ownership in a special-purpose LLC that owns certain irrigation infrastructure that provides water to two of our farms. As of September 30, 2022, this investment had a net carrying value of approximately $ 4.8 million and is included within Other assets, net on the accompanying Condensed Consolidated Balance Sheets. Real Estate The following table sets forth the components of our investments in tangible real estate assets as of September 30, 2022, and December 31, 2021 (dollars in thousands): September 30, 2022 December 31, 2021 Real estate: Land and land improvements $ 843,444 $ 812,830 Permanent plantings 357,772 331,969 Irrigation and drainage systems 164,626 153,688 Farm-related facilities 47,470 46,804 Other site improvements 14,170 12,509 Real estate, at cost 1,427,482 1,357,800 Accumulated depreciation ( 98,285 ) ( 74,002 ) Total real estate, net $ 1,329,197 $ 1,283,798 10 Real estate depreciation expense on these tangible assets was approximately $ 8.9 million and $ 25.1 million for the three and nine months ended September 30, 2022, respectively, and approximately $ 6.6 million and $ 18.3 million for the three and nine months ended September 30, 2021, respectively. Included in the figures above are amounts related to improvements made on certain of our properties paid for by our tenants but owned by us, or tenant improvements. As of September 30, 2022, and December 31, 2021, we recorded tenant improvements, net of accumulated depreciation, of approximately $ 3.5 million and $ 2.5 million, respectively. We recorded both depreciation expense and additional lease revenue related to these tenant improvements of approximately $ 178,000 a nd $ 385,000 for the three and nine months ended September 30, 2022, respectively, and approximately $ 88,000 and $ 282,000 for the three and nine months ended September 30, 2021 respectively. Intangible Assets and Liabilities The following table summarizes the carrying values of certain lease intangible assets and the related accumulated amortization as of September 30, 2022, and December 31, 2021 (dollars in thousands): September 30, 2022 December 31, 2021 Lease intangibles: Leasehold interest – land $ 4,295 $ 4,295 In-place lease values 2,763 2,174 Leasing costs 3,095 1,808 Other (1) 130 130 Lease intangibles, at cost 10,283 8,407 Accumulated amortization ( 4,332 ) ( 3,951 ) Lease intangibles, net $ 5,951 $ 4,456 (1) Other consists primarily of acquisition-related costs allocated to miscellaneous lease intangibles. Total amortization expense related to these lease intangible assets was approximately $ 258,000 and $ 769,000 for the three and nine months ended September 30, 2022, respectively, and approximately $ 296,000 and $ 983,000 for the three and nine months ended September 30, 2021, respectively. The following table summarizes the carrying values of certain lease intangible assets or liabilities included in Other assets, net or Other liabilities, net, respectively, on the accompanying Condensed Consolidated Balance Sheets and the related accumulated amortization or accretion, respectively, as of September 30, 2022, and December 31, 2021 (dollars in thousands): September 30, 2022 December 31, 2021 Intangible Asset or Liability Deferred Rent Asset (Liability) Accumulated (Amortization) Accretion Deferred Rent Asset (Liability) Accumulated (Amortization) Accretion Above-market lease values and lease incentives (1) $ 1,267 $ ( 351 ) $ 65 $ ( 12 ) Below-market lease values and other deferred revenue (2) ( 2,010 ) 473 ( 2,010 ) 340 $ ( 743 ) $ 122 $ ( 1,945 ) $ 328 (1) Net above-market lease values and lease incentives are included as part of Other assets, net on the accompanying Condensed Consolidated Balance Sheets, and the related amortization is recorded as a reduction of Lease revenue on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income. (2) Net below-market lease values and other deferred revenue are included as a part of Other liabilities, net on the accompanying Condensed Consolidated Balance Sheets, and the related accretion is recorded as an increase to Lease revenue on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income. Total amortization related to above-market lease values and lease incentives was approximately $ 136,000 and $ 339,000 for the three and nine months ended September 30, 2022, respectively, and approximately $ 47,000 for each of the three and nine months ended September 30, 2021. Total accretion related to below-market lease values and other deferred revenue was approximately $ 44,000 and $ 134,000 for the three and nine months ended September 30, 2022, respectively, and approximately $ 62,000 and $ 161,000 for the three and nine months ended September 30, 2021, respectively. Acquisitions 2022 Acquisitions 11 During the nine months ended September 30, 2022, we completed the following acquisitions, which are summarized in the table below (dollars in thousands, except for footnotes): Property Name Property Location Acquisition Date Total Acres No. of Farms Primary Crop(s) / Use Lease Term Renewal Options Total Purchase Price Acquisition Costs (1) Annualized Straight-line Rent (2) Farm Road (3) Charlotte, FL 5/20/2022 15 0 Adjacent parcel N/A None $ 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 55 1,714 Reagan Road (4) Cochise, AZ 7/13/2022 40 0 Corn 12.5 years None 120 17 39 North Columbia River Road (5)(7) Franklin & Grant, WA 7/21/2022 1,145 3 Wine Grapes 8.4 years None 30,320 146 2,296 Prunedale Road (6)(7) Umatilla, OR 7/21/2022 172 1 Wine Grapes 10.4 years None 7,008 35 286 2,746 5 $ 62,002 $ 268 $ 4,335 (1) Includes approximately $ 23,000 of 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) 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. (4) Represents the acquisition of a parcel of farmable land adjacent to an existing farm. Subsequent to acquisition, we spent approximately $ 153,000 to install certain improvements on this property. (5) Upon acquisition, we executed three 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 three leases. (6) In connection with the acquisition of this property, we also acquired an ownership interest in a related LLC, the sole purpose of which is to own and maintain an irrigation system providing water to this and other neighboring properties. Our acquired ownership, which equated to an 11.3 % interest in the LLC, was valued at approximately $ 2.7 million at the time of acquisition and is included within Other assets, net on the accompanying Consolidated Balance Sheets. See “— Investments in Unconsolidated Entities ” below for additional information on our aggregate ownership interest in this and other LLCs. (7) These two properties were acquired as part of a single transaction. In connection with the acquisition of these vineyards, we committed to provide up to an aggregate amount of $ 2.2 million for certain irrigation and vineyard improvements on these farms, for which we will earn additional rent as the funds are disbursed by us. During the three and nine months ended September 30, 2022, in the aggregate, we recognized operating revenues of approximately $ 920,000 and $ 991,000 , respectively, and net income of approximately $ 110,000 and $ 147,000 , respectively, related to the above acquisitions. 2021 Acquisitions During the nine months ended September 30, 2021, we completed the following acquisitions, which are summarized in the table below (dollars in thousands, except for footnotes): Property Name Property Location Acquisition Date Total Acres No. of Farms Primary Crop(s) / Use Lease Term Renewal Options Total Purchase Price Acquisition Costs (1) Annualized Straight-line Rent (2) Palmer Mill Road Dorchester, MD 3/3/2021 228 2 Sod 10.0 years 2 ( 5 years) $ 1,600 $ 56 $ 89 Eight Mile Road – Port Facility San Joaquin, CA 3/11/2021 5 1 Cooling facility and storage 9.8 years 3 ( 5 years) 3,977 50 189 South Avenue Tehama, CA 4/5/2021 2,285 1 Olives for olive oil 14.7 years 1 ( 5 years) 37,800 149 2,555 Richards Avenue Atlantic, NJ 6/3/2021 116 3 Blueberries 14.9 years 2 ( 5 years) 2,150 63 129 Lerdo Highway (Phase I) (3)(4) Kern, CA 6/4/2021 639 1 Conventional & organic almonds and banked water 10.4 years 3 ( 10 years) 26,492 111 974 Almena Drive Van Buren & Eaton, MI 6/9/2021 930 8 Blueberries 14.7 years 2 ( 5 years) 13,300 51 785 Maricopa Highway Kern, CA 8/11/2021 277 1 Organic blueberries 14.9 years 3 ( 5 years) 30,000 63 2,262 Wallace Road Yamhill, OR 8/11/2021 143 1 Organic blueberries 10.1 years 3 ( 5 years) 12,320 39 768 West Orange St. Lucie, FL 8/18/2021 617 2 Lemons and oranges 12.0 years None 5,241 184 367 Lerdo Highway (Phase II) (3)(5) Kern, CA 8/20/2021 479 1 Conventional & organic almonds and banked water 10.2 years 3 ( 10 years) 14,772 53 735 5,719 21 $ 147,652 $ 819 $ 8,853 (1) Includes approximately $ 52,000 of 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. 12 (3) Lease provides for an annual participation rent component based on the gross crop revenues earned on the farm. The rent figure above represents only the minimum cash guaranteed under the lease. (4) As part of the acquisition of this property, we acquired a contract to purchase 20,330 acre-feet of water stored with Semitropic Water Storage District, located in Kern County, California, at a fixed price. We executed this contract on June 25, 2021, at an additional cost of approximately $ 1.2 million, which is included in the total purchase price for this property in the table above. Rent is not currently being earned on the value attributable to the water. See “ —Investments in Water Assets ” below for additional information on this water. (5) As part of the acquisition of this property, we acquired a contract to purchase 5,000 acre-feet of water stored with Semitropic Water Storage District, located in Kern County, California, at a fixed price. We executed this contract on August 23, 2021, at an additional cost of approximately $ 306,000 , which is included in the total purchase price for this property in the table above. Rent is not currently being earned on the value attributable to the water. See “— Investments in Water Assets ” below for additional information on this water. During the three and nine months ended September 30, 2021, in the aggregate, we recognized operating revenues of approximately $ 1.8 million and $ 2.6 million, respectively, and net income of approximately $ 646,000 and $ 1.0 million, respectively, related to the above acquisitions. Purchase Price Allocations The allocation of the aggregate purchase price for the farms acquired during the nine months ended September 30, 2022, and 2021 respectively, is as follows (dollars in thousands): Assets (Liabilities) Acquired 2022 Acquisitions 2021 Acquisitions Land and land improvements $ 28,139 $ 55,318 Permanent plantings 24,706 47,502 Irrigation & drainage systems 2,973 6,492 Farm-related facilities 530 17,067 Other site improvements — 984 Leasehold interest—land — 787 In-place lease values 909 687 Leasing costs 1,355 509 Above-market lease values (1) 641 — Below-market lease values (2) — ( 1,321 ) Investment in LLC (1) 2,749 — Water purchase contracts (1)(3) — 18,075 Total Purchase Price $ 62,002 $ 146,100 (1) Included within Other assets, net on the accompanying Condensed Consolidated Balance Sheets. (2) Included within Other liabilities, net on the accompanying Condensed Consolidated Balance Sheets. (3) Represents only the value attributable to the water purchase contract acquired as part of the acquisition of Lerdo Highway and excludes approximately $ 1.6 million paid to execute the contract subsequent to acquisition. Investments in Unconsolidated Entities In connection with the acquisition of certain farmland located in Fresno County, California, we also acquired an ownership in a related limited liability company (the “Fresno LLC”), the sole purpose of which is to own and maintain a pipeline conveying water to our and other neighboring properties. In addition, in connection with the acquisition of certain farmland located in Umatilla County, Oregon, we also acquired an ownership in a related limited liability company (the “Umatilla LLC”), the sole purpose of which is to own and maintain an irrigation system providing water to our and other neighboring properties. As of September 30, 2022, our aggregate ownership interest in the Fresno LLC and the Umatilla LLC was 50.0 % and 20.4 %, respectively. As our investments in the Fresno LLC and Umatilla LLC are both deemed to constitute “significant influence,” we have accounted for these investments under the equity method. We recorded an aggregate loss of approximately $ 24,000 and $ 54,000 during the three and nine months ended September 30, 2022, respectively, and approximately $ 19,000 and $ 42,000 during the three and nine months ended September 30, 2021, respectively (included in Loss from investments in unconsolidated entities on our Condensed Consolidated Statements of Operations and Comprehensive Income), which represents our pro-rata share of the aggregate loss recognized by the Fresno LLC and Umatilla LLC. Our combined ownership interest in the Fresno LLC and Umatilla LLC, which had an aggregate carrying value of approximately $ 5.8 million and $ 3.1 million as of September 30, 2022, and December 31, 2021, respectively, is included within Other assets, net on the accompanying Condensed Consolidated Balance Sheets. Investments in Water Assets 13 In connection with the acquisition of certain farmland located in Kern County, California, we also acquired three contracts to purchase an aggregate of 45,000 acre-feet of banked water held by Semitropic Water Storage District (“SWSD”), a water storage district located in Kern County, California, at a fixed price. The contracts to purchase the banked water could not readily be net settled by means outside of the contracts, and all rights and obligations associated with the purchase contracts were transferred to us at acquisition of the related farmland. We were not required to purchase a specific amount, or any, of the 45,000 acre-feet of water. During the year ended December 31, 2021, we executed all three contracts to purchase all 45,000 acre-feet of banked water for an aggregate additional cost of approximately $ 2.8 million. The purchased banked water was recognized at cost, including any administrative fees necessary to transfer the water to our banked water account. While we may, in the future, sell the banked water to an unrelated third party for a profit, our current intent is to hold the water for the long-term for future use on our farms. There is no amount of time by which we must use the water held by SWSD. As of September 30, 2022, the investment in banked water had a carrying value of approximately $ 34.0 million, which includes the subsequent cost to execute the contracts, and is included within Other assets, net on our Condensed Consolidated Balance Sheets. Each quarter, we will review the investment in banked water for any indicators of impairment and perform an impairment analysis if there are any such indicators. As of September 30, 2022, we concluded that there were no such indicators and that the water was not impaired. Portfolio Concentrations Credit Risk As of September 30, 2022, our farms were leased to various different, unrelated third-party tenants, with certain tenants leasing more than one farm. No individual tenant represented greater than 10.0% of the total lease revenue recorded during the nine months ended September 30, 2022. Geographic Risk Farms located in California and Florida accounted for approximately $ 43.7 million ( 67.8 %) and $ 10.8 million ( 16.8 %), respectively, of the total lease revenue recorded during the nine months ended September 30, 2022. Though we seek to continue to further diversify geographically, as may be desirable or feasible, should an unexpected natural disaster (such as an earthquake, wildfire, or flood) occur or climate change impact the regions where our properties are located, there could be a material adverse effect on our financial performance and ability to continue operations. None of our farms in California or Florida have been materially impacted by the recent wildfires or hurricanes that occurred in those respective regions. In addition, with respect to the ongoing drought taking place in the western U.S., all of our farms in the region have independent (and, in most cases, multiple) sources of water, in addition to rainfall, and have not been materially impacted by the current drought conditions. No other single state accounted for more than 10.0% of our total lease revenue recorded during the nine months ended September 30, 2022. Impairment We evaluate our entire portfolio each quarter for any impairment indicators and perform an impairment analysis on those select properties that have an indication of impairment. As of September 30, 2022, and December 31, 2021, we concluded that no ne of our properties were impaired. There have been no impairments recognized on our real estate assets since our inception. NOTE 4. BORROWINGS Our borrowings as of September 30, 2022, and December 31, 2021, are summarized below (dollars in thousands): 14 Carrying Value as of As of September 30, 2022 September 30, 2022 December 31, 2021 Stated Interest Rates (1) (Range; Wtd. Avg) Maturity Dates (Range; Wtd. Avg) Notes and bonds payable: Fixed-rate notes payable $ 561,118 $ 582,665 2.44 %– 5.70 %; 3.72 % 10/1/2022–7/1/2051; April 2033 Variable-rate notes payable 1,124 2,856 5.25 % 5/1/2044 Fixed-rate bonds payable 81,003 86,052 2.13 %– 4.57 %; 3.46 % 12/22/2022–12/30/2030; June 2025 Total notes and bonds payable 643,245 671,573 Debt issuance costs – notes and bonds payable ( 3,599 ) ( 3,691 ) N/A N/A Notes and bonds payable, net $ 639,646 $ 667,882 Variable-rate revolving lines of credit $ 100 $ 100 4.30 % 4/5/2024 Total borrowings, net $ 639,746 $ 667,982 (1) Where applicable, stated interest rates are before interest patronage (as described below). As of September 30, 2022, the above borrowings were collateralized by certain of our farms with an aggregate net book value of approximately $ 1.2 billion. The weighted-average stated interest rate charged on the above borrowings (excluding the impact of debt issuance costs and before any interest patronage, or refunded interest) was 3.82 % and 3.76 % for the three and nine months ended September 30, 2022, respectively, as compared to 3.74 % and 3.72 % for the three and nine months ended September 30, 2021, respectively. In addition, 2021 interest patronage from our Farm Credit Notes Payable (as defined below) resulted in a 29.9 % reduction (approximately 137 basis points) to the stated interest rates on such borrowings. See below under “ —Farm Credit Notes Payable—Interest Patronage” for further discussion on interest patronage. As of September 30, 2022, we were in compliance with all covenants applicable to the above borrowings. 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. The following table summarizes the pertinent terms of the 2022 MetLife Facility as of September 30, 2022 (dollars in thousands, except for footnotes): Issuance Aggregate Commitment Maturity Dates Principal Outstanding Interest Rate Terms Undrawn Commitment (1) MetLife Lines of Credit $ 75,000 4/5/2024 $ 100 3-month LIBOR + 2.00 % (2) $ 74,900 2020 MetLife Term Note 75,000 (3) 1/5/2030 36,900 2.75 %, fixed through 1/4/2030 (4) 38,100 2022 MetLife Term Note 100,000 (5) 1/5/2032 — (6) 100,000 Totals $ 250,000 $ 37,000 $ 213,000 (1) Based on the properties that were pledged as collateral under the 2022 MetLife Facility, as of September 30, 2022, the maximum additional amount we could draw under the facility was approximately $ 110.3 million. (2) The interest rate on the MetLife Lines of Credit is subject to a minimum annualized rate of 2.50 %, plus an unused fee ranging from 0.10 % to 0.20 % on undrawn amounts (based on the balance drawn under each line of credit). (3) If the aggregate commitment under the 2020 MetLife Term Note is not fully utilized by December 31, 2022, MetLife has no obligation to disburse the remaining funds under the 2020 MetLife Term Note. 15 (4) Interest rates on future disbursements under the 2020 MetLife Term Note will be based on prevailing market rates at the time of such disbursements. In addition, through December 31, 2022, the 2020 MetLife Term Note is also subject to an unused fee ranging from 0.10 % to 0.20 % on undrawn amounts (based on the balance drawn under the 2020 MetLife Term Note). (5) If the aggregate commitment under the 2022 MetLife Term Note is not fully utilized by December 31, 2024, MetLife has no obligation to disburse the remaining funds under the 2022 MetLife Term Note. (6) Interest rates on future disbursements under the 2022 MetLife Term Note will be based on prevailing market rates at the time of such disbursements. 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). Farmer Mac Facility Through certain subsidiaries of our Operating Partnership, we have entered into a bond purchase agreement (the “Bond Purchase Agreement”) with Federal Agricultural Mortgage Corporation (“Farmer Mac”) and Farmer Mac Mortgage Securities Corporation (the “Bond Purchaser”) for a secured note purchase facility (the “Farmer Mac Facility”). As amended from time to time, the Farmer Mac Facility currently provides for bond issuances up to an aggregate amount of $ 225.0 million. Pursuant to the Bond Purchase Agreement, we may issue new bonds through May 31, 2023, and the final maturity date for new bonds issued under the Farmer Mac Facility will be December 31, 2030. During the nine months ended September 30, 2022, we issued two new bonds under the Farmer Mac Facility, the pertinent terms of which are summarized in the following table (dollars in thousands): Date of Issuance Amount Maturity Date Principal Amortization Stated Interest Rate Interest Rate Terms 1/11/2022 $ 1,980 12/30/2030 20.0 years 3.31 % Fixed throughout term 2/25/2022 1,710 12/30/2030 25.0 years 3.68 % Fixed throughout term As of September 30, 2022, we had approximately $ 81.0 million of bonds issued and outstanding under the Farmer Mac Facility. Farm Credit Notes Payable 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 nine months ended September 30, 2022, we entered into the following loan agreement with Farm Credit (dollars in thousands): Issuer Date of Issuance Amount Maturity Date Principal Amortization Stated Interest Rate (1) Interest Rate Terms Northwest Farm Credit Services, FLCA 1/31/2022 $ 1,442 2/1/2032 20.1 years 4.65 % Fixed throughout term Farm Credit of Central Florida, ACA 4/5/2022 4,800 2/1/2046 23.8 years 4.36 % Fixed through 2/28/2027; variable thereafter (1) Stated rate is before interest patronage, as described below. Interest Patronage Interest patronage, or refunded interest, on our borrowings from Farm Credit is generally recorded upon receipt and is included within Other income on our Condensed Consolidated Statements of Operations and Comprehensive Income. Receipt of interest patronage typically occurs in the first half of the calendar year following the calendar year in which the respective interest expense is accrued. During the three months ended March 31, 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. Loan Maturities During the nine months ended September 30, 2022, we repaid approximately $ 16.9 million of maturing loans from Farm Credit. 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 %. Debt Service – Aggregate Maturities Scheduled principal payments of our aggregate notes and bonds payable as of September 30, 2022, for the succeeding years are as follows (dollars in thousands): 16 Period Scheduled Principal Payments For the remaining three months ending December 31: 2022 $ 13,391 (1) For the fiscal years ending December 31: 2023 45,791 2024 42,111 2025 39,165 2026 18,335 2027 51,564 Thereafter 432,888 $ 643,245 (1) Subsequent to September 30, 2022, we repaid approximately $ 432,000 of expiring loans. Fair Value ASC 820, “Fair Value Measurement (Subtopic 820)” (“ASC 820”), provides a definition of fair value that focuses on the exchange (exit) price of an asset or liability in the principal, or most advantageous market, and prioritizes the use of market-based inputs to the valuation. ASC 820-10 establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows: • Level 1 — inputs that are based upon quoted prices (unadjusted) for identical assets or liabilities in active markets; • Level 2 — inputs are based upon quoted prices for similar assets or liabilities in active or inactive markets or model-based valuation techniques, for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and • Level 3 — inputs are generally unobservable and significant to the fair value measurement. These unobservable inputs are generally supported by little or no market activity and are based upon management’s estimates of assumptions that market participants would use in pricing the asset or liability. As of September 30, 2022, the aggregate fair value of our notes and bonds payable was approximately $ 581.8 million, as compared to an aggregate carrying value (excluding unamortized related debt issuance costs) of approximately $ 643.2 million. The fair value of our notes and bonds payable is valued using Level 3 inputs under the hierarchy established by ASC 820-10 and is calculated based on a discounted cash flow analysis, using discount rates based on management’s estimates of market interest rates on debt with comparable terms. Further, due to the revolving nature and variable interest rates applicable to the MetLife Lines of Credit, their aggregate fair value as of September 30, 2022, is deemed to approximate their aggregate carrying value of $ 100,000 . Interest Rate Swap Agreements In order to hedge our exposure to variable interest rates, we have entered into various interest rate swap agreements in connection with certain of our mortgage financings. In accordance with these swap agreements, we will pay our counterparty a fixed interest rate on a quarterly basis and receive payments from our counterparty equal to the respective stipulated floating rates. We have adopted the fair value measurement provision for these financial instruments, and the aggregate fair value of our interest rate swap agreements is recorded in Other assets, net or Other liabilities, net, as appropriate, on our accompanying Condensed Consolidated Balance Sheets. Generally, in the absence of observable market data, we will estimate the fair value of our interest rate swaps using estimates of certain data points, including estimated remaining life, counterparty credit risk, current market yield, and interest rate spreads of similar securities as of the measurement date. In accordance with the FASB’s fair value measurement guidance, we have made an accounting policy election to measure the credit risk of our derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio. As of September 30, 2022, our interest rate swaps were valued using Level 2 inputs. In addition, we have designated our interest rate swaps as cash flow hedges. For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is initially recorded in Accumulated other comprehensive income (loss) on the accompanying Condensed Consolidated Balance Sheets and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects. During the next 12 months, we estimate that an additional $ 1.9 million will be reclassified as a reduction to interest expense. Accounting Standards Update 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”), contains practical expedients for reference rate reform-related activities that impact debt, leases, derivatives, and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. As of September 30, 2022, we elected to apply hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the 17 corresponding derivatives. Application of the hedge accounting expedients preserves the presentation of derivatives consistent with past presentation. We had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk as of September 30, 2022, and December 31, 2021 (dollars in thousands): Period Number of Instruments Aggregate Notional Amount As of September 30, 2022 5 $ 81,489 As of December 31, 2021 5 82,980 The following table presents the fair value of our interest rate swaps as well as their classification on the Condensed Consolidated Balance Sheets as of September 30, 2022, and December 31, 2021 (dollars in thousands): Derivative Asset (Liability) Fair Value Derivative Type Balance Sheet Location September 30, 2022 December 31, 2021 Derivatives Designated as Hedging Instruments: Interest rate swaps Other assets, net $ 9,455 $ — Interest rate swaps Other liabilities, net — ( 1,036 ) Total $ 9,455 $ ( 1,036 ) The following table presents the amount of income (loss) recognized in comprehensive income within our condensed consolidated financial statements for the three and nine months ended September 30, 2022 and 2021 (dollars in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2022 2021 2022 2021 Derivative in cash flow hedging relationship: Interest rate swaps $ 3,199 $ 357 $ 10,491 $ 513 Total $ 3,199 $ 357 $ 10,491 $ 513 Credit-risk-related Contingent Features We have agreements with each of our derivative counterparties that contain a provision where if we default on any of our indebtedness, then we could also be declared in default on our derivative obligations. As of September 30, 2022, we did not have any derivatives in a net liability position, nor have we posted any collateral related to these agreements. NOTE 5. CUMULATIVE TERM PREFERRED STOCK Series A Term Preferred Stock In August 2016, we completed a public offering of 6.375 % Series A Cumulative Term Preferred Stock, par value $ 0.001 per share (the “Series A Term Preferred Stock”), at a public offering price of $ 25.00 per share. As a result of this offering (including the underwriters’ exercise of their option to purchase additional shares to cover over-allotments), we issued a total of 1,150,000 shares of the Series A Term Preferred Stock for gross proceeds of approximately $ 28.8 million and net proceeds, after deducting underwriting discounts and offering expenses borne by us, of approximately $ 27.6 million. On February 12, 2021, we redeemed all of our outstanding shares of Series A Term Preferred Stock at a cash redemption price of $ 25.00 per share plus all accrued and unpaid dividends up to, but excluding, the redemption date. In total, we paid approximately $ 28.8 million for the redemption of the Series A Term Preferred Stock using proceeds from the offering of our Series D Term Preferred Stock (as defined below). Our Series A Term Preferred Stock was delisted from Nasdaq on the date we redeemed all outstanding shares. In connection with this early redemption, during the three months ended March 31, 2021, we wrote off approximately $ 127,000 of unamortized issuance costs related to the issuance of the Series A Term Preferred Stock. Series D Term Preferred Stock In January 2021, we completed a public offering of 5.00 % Series D Cumulative Term Preferred Stock, par value $ 0.001 per share (the “Series D Term Preferred Stock”), at a public offering price of $ 25.00 per share. As a result of this offering (including the underwriters’ exercise of their option to purchase additional shares to cover over-allotments), we issued a total of 2,415,000 shares of the Series D Term Preferred Stock for gross proceeds of approximately $ 60.4 million and net proceeds, after deducting underwriting discounts and offering expenses borne by us, of approximately $ 58.3 million. The Series D Term Preferred Stock is traded under the ticker symbol “LANDM” on Nasdaq. 18 The shares of the Series D Term Preferred Stock have a mandatory redemption date of January 31, 2026, and are not convertible into our common stock or any other securities. Generally, we are not permitted to redeem shares of the Series D Term Preferred Stock prior to January 31, 2023, except in limited circumstances to preserve our qualification as a REIT. On or after January 31, 2023, we may redeem the shares at a redemption price of $ 25.00 per share, plus any accumulated and unpaid dividends up to, but excluding, the date of redemption. We incurred approximately $ 2.1 million in total offering costs related to this issuance, which have been recorded net of the Series D Term Preferred Stock as presented on the accompanying Condensed Consolidated Balance Sheets and are being amortized over the mandatory redemption period as a component of interest expense on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income. The Series D Term Preferred Stock is recorded as a liability on our accompanying Condensed Consolidated Balance Sheets in accordance with ASC 480, “Distinguishing Liabilities from Equity,” which states that mandatorily-redeemable financial instruments should be classified as liabilities. In addition, the related dividend payments are treated similarly to interest expense on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income. As of September 30, 2022, the fair value of our Series D Term Preferred Stock was approximately $ 59.0 million , as compared to the carrying value (exclusive of unamortized offering costs) of approximately $ 60.4 million . The fair value of our Series D Term Preferred Stock uses Level 1 inputs under the hierarchy established by ASC 820-10 and is calculated based on the closing per-share price on September 30, 2022, of $ 24.42 . For information on the dividends declared by our Board of Directors and paid by us on the Series D Term Preferred Stock during the three and nine months ended September 30, 2022, see Note 8, “ Equity—Distributions .” NOTE 6. RELATED-PARTY TRANSACTIONS Our Adviser and Administrator We are externally managed pursuant to contractual arrangements with our Adviser and our Administrator, which collectively employ all of our personnel and pay their salaries, benefits, and general expenses directly. Both our Adviser and Administrator are affiliates of ours, as their parent company is owned and controlled by David Gladstone, our chairman, chief executive officer, and president. In addition, two of our executive officers, Mr. Gladstone and Terry Brubaker (our vice chairman and chief operating officer), serve as directors and executive officers of each of our Adviser and Administrator, and Michael LiCalsi, our general counsel and secretary (who also serves as our Administrator’s president, general counsel, and secretary) is also executive vice president of administration of our Adviser. We have entered into an investment advisory agreement with our Adviser and an administration agreement with our Administrator (the “Administration Agreement”). The advisory agreement with our Adviser that was in effect through June 30, 2021 (the “Prior Advisory Agreement”), was amended and restated effective July 1, 2021 (as amended, the “Current Advisory Agreement,” and together with the Prior Advisory Agreement, the “Advisory Agreements”). Each of the Advisory Agreements and the Administration Agreement were approved unanimously by our Board of Directors, including our independent directors. A summary of the compensation terms for each of the Advisory Agreements and a summary of the Administration Agreement is below. Advisory Agreements Pursuant to each of the Prior Advisory Agreement (which was in effect from January 1, 2020, through June 30, 2021) and the Current Advisory Agreement (which has been in effect since July 1, 2021), our Adviser is compensated in the form of a base management fee and, each as applicable, an incentive fee, a capital gains fee, and a termination fee. Our Adviser does not charge acquisition or disposition fees when we acquire or dispose of properties, as is common in other externally-managed REITs. Each of the base management, incentive, capital gains, and termination fees is described below. Base Management Fee Pursuant to the Prior Advisory Agreement, a base management fee was paid quarterly and was calculated at an annual rate of 0.50 % ( 0.125 % per quarter) of the prior calendar quarter’s “Gross Tangible Real Estate,” defined as the gross cost of tangible real estate owned by us (including land and land improvements, permanent plantings, irrigation and drainage systems, farm-related facilities, and other tangible site improvements), prior to any accumulated depreciation, and as shown on our balance sheet or the notes thereto for the applicable quarter. Pursuant to the Current Advisory Agreement, a base management fee is paid quarterly and is calculated at an annual rate of 0.60 % ( 0.15 % per quarter) of the prior calendar quarter’s Gross Tangible Real Estate. 19 Incentive Fee Pursuant to each of the Advisory Agreements, an incentive fee is calculated and payable quarterly in arrears if the Pre-Incentive Fee FFO for a particular quarter exceeded a hurdle rate of 1.75 % ( 7.0 % annualized) of the prior calendar quarter’s Total Adjusted Common Equity. For purposes of this calculation, Pre-Incentive Fee FFO is defined in each of the Advisory Agreements as FFO (also as defined in each of the Advisory Agreements) accrued by the Company during the current calendar quarter (prior to any incentive fee calculation for the current calendar quarter), less any dividends declared on preferred stock securities that were not treated as a liability for GAAP purposes. In addition, Total Adjusted Common Equity is defined as common stockholders’ equity plus non-controlling common interests in the Operating Partnership, if any (each as reported on our balance sheet), adjusted to exclude unrealized gains and losses and certain other one-time events and non-cash items. Our Adviser receives: (i) no Incentive Fee in any calendar quarter in which the Pre-Incentive Fee FFO does not exceed the hurdle rate; (ii) 100 % of the Pre-Incentive Fee FFO with respect to that portion of such Pre-Incentive Fee FFO, if any, that exceeds the hurdle rate but is less than 2.1875 % in any calendar quarter ( 8.75 % annualized); and (iii) 20 % of the amount of the Pre-Incentive Fee FFO, if any, that exceeds 2.1875 % in any calendar quarter ( 8.75 % annualized). Capital Gains Fee Pursuant to each of the Advisory Agreements, a capital gains-based incentive fee is calculated and payable in arrears at the end of each fiscal year (or upon termination of the Advisory Agreement). The capital gains fee shall equal: (i) 15 % of the cumulative aggregate realized capital gains minus the cumulative aggregate realized capital losses, minus (ii) any aggregate capital gains fees paid in prior periods. For purposes of this calculation, realized capital gains and losses will be calculated as (x) the sales price of the property, minus (y) any costs to sell the property and the then-current gross value of the property (which includes the property’s original acquisition price plus any subsequent, non-reimbursed capital improvements). At the end of each fiscal year, if this figure is negative, no capital gains fee shall be paid. Termination Fee Pursuant to each of the Advisory Agreements, in the event of our termination of the agreement with our Adviser for any reason (with 120 days’ prior written notice and the vote of at least two-thirds of our independent directors), a termination fee would be payable to the Adviser equal to three times the sum of the average annual base management fee and incentive fee earned by the Adviser during the 24-month period prior to such termination. Administration Agreement Pursuant to the Administration Agreement, we pay for our allocable portion of the Administrator’s expenses incurred while performing its obligations to us, including, but not limited to, rent and the salaries and benefits expenses of our Administrator’s employees, including our chief financial officer, treasurer, chief compliance officer, general counsel and secretary (who also serves as our Administrator’s president, general counsel, and secretary), and their respective staffs. As approved by our Board of Directors, our allocable portion of the Administrator’s expenses is generally derived by multiplying our Administrator’s total expenses by the approximate percentage of time the Administrator’s employees perform services for us in relation to their time spent performing services for all companies serviced by our Administrator under similar contractual agreements. Gladstone Securities We have entered into an agreement with Gladstone Securities, LLC (“Gladstone Securities”), for it to act as our non-exclusive agent to assist us with arranging financing for our properties (the “Financing Arrangement Agreement”). Gladstone Securities is a privately-held broker-dealer and a member of the Financial Industry Regulatory Authority and the Securities Investor Protection Corporation. Gladstone Securities is an affiliate of ours, as its parent company is owned and controlled by Mr. Gladstone, who also serves on the board of managers of Gladstone Securities. In addition, Michael LiCalsi, our general counsel and secretary, serves in several capacities for Gladstone Securities, including as chief legal officer, secretary, a member of its board of managers, and a managing principal. Financing Arrangement Agreement We pay Gladstone Securities a financing fee in connection with the services it provides to us for securing financing on our properties. Depending on the size of the financing obtained, the maximum amount of the financing fee, which will be payable upon closing of the respective financing, will range from 0.5 % to 1.0 % of the amount of financing obtained. The amount of the financing fee may be reduced or eliminated as determined by us and Gladstone Securities after taking into consideration various factors, including, but not limited to, the involvement of any unrelated third-party brokers and general market conditions. 20 We paid total financing fees to Gladstone Securities of approximately $ 23,000 and $ 117,000 during the three and nine months ended September 30, 2022, respectively and approximately $ 12,000 and $ 64,000 during the three and nine months ended September 30, 2021, respectively. Through September 30, 2022, the total amount of financing fees paid to Gladstone Securities represented approximately 0.14 % of the total financings secured since the Financing Arrangement Agreement has been in place. Dealer-Manager Agreement Pursuant to a dealer-manager agreement entered into on February 20, 2020 and amended and restated on August 24, 2022 (the “Dealer-Manager Agreement”), Gladstone Securities serves as our exclusive dealer-manager in connection with the offering of our Series C Preferred Stock (as defined in Note 8, “ Equity—Equity Issuances—Series C Preferred Stock ”). Pursuant to the Dealer-Manager Agreement, Gladstone Securities provides certain sales, promotional, and marketing services to us in connection with the offering of the Series C Preferred Stock, and we generally pay Gladstone Securities the following: i selling commissions of up to 6.0 % of the gross proceeds from sales in the offering (the “Selling Commissions”), and ii a dealer-manager fee of 3.0 % of the gross proceeds from sales in the offering (the “Dealer-Manager Fees”). No Selling Commissions or Dealer-Manager Fee shall be paid with respect to shares of the Series C Preferred Stock sold pursuant to our dividend reinvestment plan (the “DRIP”) for the Series C Preferred Stock. Gladstone Securities may, in its sole discretion, remit all or a portion of the Selling Commissions and also reallow all or a portion of the Dealer-Manager Fees to participating broker-dealers and wholesalers in support of the offerings. The terms of the Dealer-Manager Agreement were approved by our board of directors, including its independent directors. In connection with sales of the Series C Preferred Stock, we paid total Selling Commissions and Dealer-Manager Fees to Gladstone Securities of approximately $ 5.0 million and $ 11.1 million during the three and nine months ended September 30, 2022, respectively, and approximately $ 1.2 million and $ 3.2 million during the three and nine months ended September 30, 2021, respectively. Selling Commissions and Dealer-Manager Fees paid to Gladstone Securities are netted against the gross proceeds received from sales of the respective securities and are included within Additional paid-in capital on the accompanying Condensed Consolidated Balance Sheets. Related-Party Fees The following table summarizes related-party fees paid or accrued for and reflected in our accompanying condensed consolidated financial statements (dollars in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2022 2021 2022 2021 Base management fee (1)(2) $ 2,086 $ 1,748 $ 6,165 $ 4,494 Incentive fee (1)(2) 505 945 1,636 2,107 Total fees to our Adviser, net $ 2,591 $ 2,693 $ 7,801 $ 6,601 Administration fee (1)(2) $ 543 $ 412 $ 1,470 $ 1,115 Selling Commissions and Dealer-Manager Fees (1)(3) $ 5,046 $ 1,213 $ 11,115 $ 3,165 Financing fees (1)(4) 23 12 117 64 Total fees to Gladstone Securities $ 5,069 $ 1,225 $ 11,232 $ 3,229 (1) Pursuant to the agreements with the respective related-party entities, as discussed above. (2) Reflected as a line item on our accompanying Condensed Consolidated Statements of Operations and Comprehensive Income. (3) Included within Additional paid-in capital on the accompanying Condensed Consolidated Balance Sheets. (4) Included within Notes and bonds payable, net on the Condensed Consolidated Balance Sheets and amortized into Interest expense on the Condensed Consolidated Statements of Operations and Comprehensive Income. Related-Party Fees Due Amounts due to related parties on our accompanying Condensed Consolidated Balance Sheets as of September 30, 2022, and December 31, 2021, were as follows (dollars in thousands): 21 September 30, 2022 December 31, 2021 Base management fee $ 2,086 $ 1,836 Incentive fee 505 1,793 Other, net (1) 119 95 Total due to Adviser 2,710 3,724 Administration fee 543 411 Cumulative accrued but unpaid portion of prior Administration Fees (2) — 89 Total due to Administrator 543 500 Total due to related parties (3) $ 3,253 $ 4,224 (1) Other amounts due to or from our Adviser primarily relate to miscellaneous general and administrative expenses either paid by our Adviser on our behalf or by us on our Adviser’s behalf. (2) Represents the cumulative accrued but unpaid portion of prior Administration fees that are scheduled to be paid during the three months ending September 30 of each year, which is the quarter following our Administrator’s fiscal year end. (3) Reflected as a line item on our accompanying Condensed Consolidated Balance Sheets. NOTE 7. COMMITMENTS AND CONTINGENCIES Litigation In the ordinary course of business, we may be involved in legal proceedings from time to time. We are not currently subject to any material known or threatened litigation. NOTE 8. EQUITY Registration Statement On March 6, 2020, we filed a universal registration statement on Form S-3 (File No. 333-236943) with the SEC (the “Registration Statement”) to replace our prior universal registration statement. The Registration Statement, which was declared effective by the SEC on April 1, 2020, permits us to issue up to an aggregate of $ 1.0 billion in securities, consisting of common stock, preferred stock, warrants, debt securities, depository shares, subscription rights, and units, including through separate, concurrent offerings of two or more of such securities. Through September 30, 2022, we have issued a total of 9,025,549 shares of Series C Preferred Stock for gross proceeds of approximately $ 223.6 million, 2,415,000 shares of Series D Term Preferred Stock for gross proceeds of approximately $ 60.4 million, and 13,357,547 shares of common stock (including common stock issued to redeem OP Units) for gross proceeds of approximately $ 260.6 million under the Registration Statement. Equity Issuances Series C Preferred Stock On April 3, 2020, we filed a prospectus supplement with the SEC for a continuous public offering (the “Series C Offering”) of up to 26,000,000 shares of our newly-designated 6.00 % Series C Cumulative Redeemable Preferred Stock, par value $ 0.001 per share (the “Series C Preferred Stock”). The Series C Offering permitted us to sell up to 20,000,000 shares (the “Primary Series C Offering”) of our Series C Preferred Stock on a “reasonable best efforts” basis through Gladstone Securities at an offering price of $ 25.00 per share and up to 6,000,000 shares of our Series C Preferred Stock pursuant to the DRIP at a price of $ 22.75 per share. On August 24, 2022, we amended the Series C Offering, to (i) reduce the amount of shares of the Series C Preferred Stock offered through the Primary Series C Offering to 10,200,000 , (ii) reduce the amount of shares of the Series C Preferred Stock offered pursuant to the DRIP to 200,000 ; and (iii) reduce the duration of the period during which shares of the Series C Preferred Stock may be offered for sale to the earlier of (a) December 31, 2022 (unless earlier terminated or extended by our Board of Directors) or (b) the date on which all 10,200,000 shares of the Series C Preferred Stock offered in the Primary Series C Offering are sold. The offering period for the DRIP will terminate on the earlier of (1) the issuance of all 200,000 shares of Series C Preferred Stock under the DRIP and (2) the listing of the Series C Preferred Stock on the Nasdaq Global Market or another national securities exchange. The following table provides information on sales of our Series C Preferred Stock during the three and nine months ended September 30, 2022 and 2021 (dollars in thousands, except per-share amounts): 22 Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Number of shares sold (1) 2,470,908 578,426 5,499,383 1,517,446 Weighted-average offering price per share $ 24.79 $ 24.85 $ 24.77 $ 24.84 Gross proceeds $ 61,259 $ 14,372 $ 136,226 $ 37,687 Net proceeds (2) $ 56,213 $ 13,159 $ 125,111 $ 34,522 (1) Excludes shares issued pursuant to the DRIP. We issued approximately 10,048 and 22,775 shares of the Series C Preferred Stock pursuant to the DRIP during the three and nine months ended September 30, 2022, respectively, and approximately 2,642 and 4,643 shares of the Series C Preferred Stock pursuant to the DRIP during the three and nine months ended September 30, 2021, respectively. (2) Net of Selling Commissions, Dealer-Manager Fees, and underwriting discounts. In addition, during the three and nine months ended September 30, 2022, 18,075 and 22,715 shares, respectively, of Series C Preferred Stock were tendered for optional redemption, which we satisfied with an aggregate cash payment of approximately $ 420,000 and $ 531,000 , respectively. During the three and nine months ended September 30, 2021, 9,920 shares of Series C Preferred Stock, were tendered for optional redemption, which we satisfied with aggregate cash payment of approximately $ 248,000 . As of September 30, 2022, excluding Selling Commissions and Dealer-Manager Fees, we have incurred approximately $ 1.4 million of costs related to the Series C Offering, which are initially recorded as deferred offering costs (included within Other assets, net on the accompanying Condensed Consolidated Balance Sheets) and are applied against gross proceeds received from the offering through additional paid-in capital as shares of the Series C Preferred Stock are sold. In conjunction with the amendment of the Series C Offering, which reduced the amount of shares of Series C Preferred Stock to be offered, during the three months ended September 30, 2022, we expensed approximately $ 798,000 of unamortized deferred offering costs. These costs were recorded to Write-off of costs associated with offering of Series C cumulative redeemable preferred stock on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income during the three and nine months ended September 30, 2022. See Note 6, “ Related-Party Transactions—Gladstone Securities—Dealer-Manager Agreement ,” for a discussion of the commissions and fees to be paid to Gladstone Securities in connection with the Series C Offering. As amended, the Series C Offering will terminate on the date (the “Series C Termination Date”) that is the earlier of either December 31, 2022 (unless terminated earlier or extended by our Board of Directors), or the date on which all 10,200,000 shares in the Primary Series C Offering are sold. There is currently no public market for shares of the Series C Preferred Stock; however, we intend to apply to list the Series C Preferred Stock on Nasdaq or another national securities exchange within one calendar year after the Series C Termination Date, though there can be no assurance that a listing will be achieved in such timeframe, or at all. See Note 11, “ Subsequent Events—Equity Activity—Equity Issuances ,” for sales of Series C Preferred Stock completed subsequent to September 30, 2022. Common Stock At-the-Market Program On May 12, 2020, we entered into equity distribution agreements (commonly referred to as “at-the-market 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 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 provides information on shares of common stock sold by the Sales Agents under the ATM Program during the three and nine months ended September 30, 2022 and 2021 (dollars in thousands, except per-share amounts): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Number of shares sold 183,937 1,565,925 493,992 5,824,970 Weighted-average offering price per share $ 25.21 $ 23.66 $ 30.50 $ 21.19 Gross proceeds $ 4,637 $ 37,053 $ 15,068 $ 123,458 Net proceeds (1) $ 4,565 $ 36,682 $ 14,892 $ 122,223 (1) Net of underwriting commissions. 23 Non-Controlling Interests in Operating Partnership We consolidate our Operating Partnership, which is a majority-owned partnership. As of September 30, 2022, and December 31, 2021, we owned 100.0 % and approximately 99.4 %, respectively, of the outstanding OP Units. There were 0 and 204,778 OP Units held by non-controlling OP Unitholders as of September 30, 2022, and December 31, 2021, respectively. On or after 12 months after becoming a holder of OP Units, each limited partner, other than the Company, has the right, subject to the terms and conditions set forth in the partnership agreement of the Operating Partnership, to require the Operating Partnership to redeem all or a portion of such units in exchange for cash or, at the Company’s option, shares of our common stock on a one -for-one basis. The cash redemption per OP Unit would be based on the market price of our common stock at the time of redemption. A limited partner will not be entitled to exercise redemption rights if the delivery of common stock to the redeeming limited partner would breach restrictions on the ownership of common stock imposed under our charter and other limitations thereof. Regardless of the rights described above, the Operating Partnership will not have an obligation to issue cash to a unitholder upon a redemption request if the Company elects to redeem the OP Units for shares of its common stock. When a non-controlling unitholder redeems OP Units and the Company elects to satisfy that redemption through the issuance of common stock, non-controlling interest in the Operating Partnership is reduced, and stockholders’ equity is increased. During the nine months ended September 30, 2021, we issued 204,778 OP Units to noncontrolling OP Unitholders representing an aggregate value of approximately $ 4.0 million, or $ 19.42 per OP Unit. During the nine months ended September 30, 2022, we redeemed those 204,778 OP Units with a cash payment of approximately $ 7.7 million, or $ 37.45 per OP Unit. The Operating Partnership is required to make distributions on each OP Unit in the same amount as those paid on each share of the Company’s common stock, with the distributions on the OP Units held by the Company being utilized to make distributions to the Company’s common stockholders. Distributions The per-share distributions to preferred and common stockholders declared by our Board of Directors during the three and nine months ended September 30, 2022 and 2021 are reflected in the table below. Three Months Ended September 30, Nine Months Ended September 30, Issuance 2022 2021 2022 2021 Series A Term Preferred Stock (1)(2) $ — $ — $ — $ 0.1815104 Series B Preferred Stock 0.375 0.375 1.125 1.125 Series C Preferred Stock 0.375 0.375 1.125 1.125 Series D Term Preferred Stock (1)(3) 0.312501 0.312501 0.937503 0.871530 Common Stock (4) 0.13680 0.13530 0.40890 0.40515 (1) Dividends are treated similar to interest expense on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income. (2) The Series A Term Preferred Stock was redeemed in full on February 12, 2021. (3) The Series D Term Preferred Stock was issued on January 19, 2021. (4) The same amounts were paid as distributions on each OP Unit held by non-controlling OP Unitholders. NOTE 9. LEASE REVENUES The following table sets forth the components of our lease revenue for the three and nine months ended September 30, 2022 and 2021 (dollars in thousands, except for footnotes): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Fixed lease payments (1) $ 21,178 $ 17,791 $ 61,387 $ 50,607 Variable lease payments (2) 3,031 1,800 3,058 1,911 Lease revenue, net (3) $ 24,209 $ 19,591 $ 64,445 $ 52,518 24 (1) Fixed lease payments include contractual rents under lease agreements with tenants recognized on a straight-line basis over the respective lease terms and includes the amortization of above-market lease values and lease incentives and the accretion of below-market lease values and other deferred revenue. (2) Variable lease payments include participation rents, which are generally based on a percentage of the gross crop revenues earned on the farm, and reimbursements of certain property operating expenses by tenants. Participation rents are generally recognized when all contingencies have been resolved and when actual results become known or estimable, enabling us to estimate and/or measure our share of such gross revenues. During the three and nine months ended September 30, 2022, we recorded participation rents of approximately $ 3.0 million during each period and reimbursements of certain property operating expenses by tenants of approximately $ 28,000 and $ 34,000 , respectively. During the three and nine months ended September 30, 2021, we recorded participation rents of approximately $ 1.8 million during each period and reimbursements of certain property operating expenses by tenants of approximately $ 0 and $ 66,000 , respectively. (3) Reflected as a line item on our accompanying Condensed Consolidated Statements of Operations and Comprehensive Income. NOTE 10. EARNINGS PER SHARE OF COMMON STOCK The following table sets forth the computation of basic and diluted earnings per common share for the three and nine months ended September 30, 2022 and 2021, computed using the weighted average number of shares outstanding during the respective periods. Earnings figures are presented net of non-controlling interests in the earnings per share calculations. The non-controlling limited partners’ outstanding OP Units (which may be redeemed for shares of common stock) have been excluded from the diluted per-share calculation, as there would be no effect on the amounts since the non-controlling OP Unitholders’ share of earnings would also be added back to net income or loss. Three Months Ended September 30, Nine Months Ended September 30, (Dollars in thousands, except per-share amounts): 2022 2021 2022 2021 Net loss attributable to common stockholders $ ( 3,594 ) $ ( 1,639 ) $ ( 10,204 ) $ ( 7,319 ) Weighted average shares of common stock outstanding – basic and diluted 34,607,440 31,362,423 34,472,018 29,215,628 Loss per common share – basic and diluted $ ( 0.10 ) $ ( 0.05 ) $ ( 0.30 ) $ ( 0.25 ) The weighted-average number of OP Units held by non-controlling OP Unitholders was 0 and 82,511 for the three and nine months ended September 30, 2022, respectively , and 204,778 and 153,021 for the three and three and nine months ended September 30, 2021, respectively . NOTE 11. SUBSEQUENT EVENTS Financing Activity—Equity Activity The following table provides information on equity sales that have occurred subsequent to September 30, 2022 (dollars in thousands, except per-share amounts): Type of Issuance Number of Shares Sold Weighted Average Offering Price Per Share Gross Proceeds Net Proceeds (1) Series C Preferred Stock (2) 814,119 $ 24.68 $ 20,093 $ 18,521 (1) Net of Selling Commissions and Dealer-Manager Fees or underwriting discounts and commissions (in each case, as applicable). (2) Excludes approximately 7,513 shares issued pursuant to the DRIP. Distributions On October 11, 2022, our Board of Directors authorized and we declared the following monthly cash distributions to holders of our preferred and common stock: 25 Issuance Record Date Payment Date Distribution per Share Series B Preferred Stock: October 21, 2022 October 31, 2022 $ 0.125 November 18, 2022 November 30, 2022 0.125 December 20, 2022 December 30, 2022 0.125 Total Series B Preferred Stock Distributions: $ 0.375 Series C Preferred Stock: October 26, 2022 November 4, 2022 $ 0.125 November 23, 2022 December 5, 2022 0.125 December 28, 2022 January 6, 2023 0.125 Total Series C Preferred Stock Distributions: $ 0.375 Series D Term Preferred Stock: October 21, 2022 October 31, 2022 $ 0.104167 November 18, 2022 November 30, 2022 0.104167 December 20, 2022 December 30, 2022 0.104167 Total Series D Term Preferred Stock Distributions: $ 0.312501 Common Stock (1) : October 21, 2022 October 31, 2022 $ 0.0458 November 18, 2022 November 30, 2022 0.0458 December 20, 2022 December 30, 2022 0.0458 Total Common Stock Distributions: $ 0.1374 (1) The same amounts paid to common stockholders will be paid as distributions on each OP Unit held by non-controlling OP Unitholders as of the above record dates. Election of Director Effective October 11, 2022, Paula Novara was elected to our Board of Directors. Ms. Novara also serves as head of human resources, facilities and office management, and IT of the Adviser and certain of its affiliates. 26