What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-02-21 compared with 2022-02-22 · 250 added, 255 removed, 519 unchanged (49% of the section changed)

15 unchanged sentences

• the weighted-average remaining lease term across our agricultural real estate holdings was 6.2 years;

• the weighted-average term to maturity of our notes and bonds payable was 9.8 years, and the weighted-average remaining fixed-price term of our borrowings was 5.6 years, with an expected weighted-average effective interest rate of 3.36% over that term.

• the weighted-average term to maturity of our notes and bonds payable was 9.4 years, and over 99.8% of our notes and bonds payable bore interest at fixed rates;

on a weighted-average basis, the remaining fixed-price term of our borrowings was 4.9 years, with an expected weighted-average effective interest rate (after interest patronage, as described below) of 3.26% over that term.

Business Environment

Impact of Inflation and Rising Interest Rates

According to the U.S.

Bureau of Labor Statistics, the consumer price index (“CPI”) grew at an annual rate of 6.5% through December 2022, as overall inflation continued to ease from levels earlier in 2022, when it reached the highest rates seen in over 40 years.

However, food prices have continued to outpace the rate of inflation, with the overall food segment increasing at an annual rate of 10.4% through December 2022, and the food at home segment (which encompasses over 90% of the crops grown on our farms) growing by 11.8%.

In addition, according to the NCREIF Farmland Index, which, as of December 31, 2022, consisted of approximately $15.3 billion of farms across the U.S., the total return on U.S.

farmland (including appreciation and income) was 9.6% for the 12 months ended December 31, 2022.

If the increases in food prices continue to outpace inflation, we believe this will help mitigate the increase in input costs currently experienced by our farm operators.

While showing signs of slowing from its peak levels, overall inflation remains significantly above the Federal Reserve’s target long-term rate of 2.0%, leading the Federal Reserve to raise its benchmark funds rate eight times since March 2022.

As such, interest rates remain volatile in response to competing concerns regarding inflationary pressures, coupled with the threat of a near-term recession.

The yield on the 10-year U.S.

Treasury Note has increased substantially over the past 12 months and recently surpassed 4% for the first time since 2008, which adversely affects interest rates on long-term financing.

In addition, global recessionary conditions appear likely to occur within the next 12 months, caused in part by inflation, the potential emergence of new COVID-19 variants, and geopolitical conditions, although the actual timeline, impact, and duration are unknown.

Over 99.8% 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 4.9 years.

As such, 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 further interest rate increases, which seem likely to continue in the near term.

California Floods and Impact on Drought

Recent storms have brought tremendous amounts of rain and snow to California, increasing the state’s snowpack and water resources and bringing some much-needed relief to a region that, as of now, remains in a prolonged drought.

As a result of the heavy rain and snowfall, drought conditions throughout California have been significantly improved, as the state no longer has any areas under “extreme drought” or “exceptional drought” conditions, the two most severe drought categories, thus marking a vast improvement from three months earlier when approximately 58% of the state fell under these two categories.

On a statewide basis, snowpack levels are more than twice their 20-year historical averages for this time of year and have already surpassed their historical average April 1 st benchmark levels (April 1 st has been used as a benchmark since 1941 by the California Department of Water Resources, as it is when the snowpack in California is generally the deepest).

reservoirs across California have seen their water levels rise significantly.

The state’s three largest reservoirs are currently at approximately 86% of their historical average, compared to just 53% just a few months ago.

However, despite the storms reducing the intensity of the drought, approximately one-third of California is still considered to be under “severe drought” conditions.

In addition, most underground aquifers remain depleted, as the state does not have the infrastructure in place to allow the aquifers to fully benefit from such a massive rainfall to recharge.

As such, groundwater pumping continues to be strained, due to both aquifers’ receding water lines and pumping restrictions pursuant to regulations under the Sustainable Groundwater Management Act (“SGMA”).

To date, none of our farms have suffered water shortages due to our wells not being able to reach the aquifers.

We continue to seek out opportunities to provide additional sources of water to our farms, such as acquiring supplemental water banked at local water districts or by entering into separate agreements directly with water districts for surface water deliveries.

In addition, we are also currently looking into capital improvements on certain of our farms, such as building pipelines to allow for surface water deliveries and building recharge basins on unplanted acres to capture stormwater and allow it to recharge the aquifers below.

Factors Impacting Agricultural Land Values in our Regions of Focus

The agricultural real estate market in the western U.S.

is largely driven by water availability, which is impacted by both environmental and regulatory conditions.

Going into the winter of 2021-2022, the current drought caused major shortages of surface water deliveries, and the persistence of below-normal rainfall and snowpack levels in California into 2022 led to groundwater levels dropping so far as to significantly reduce groundwater well production in a number of areas throughout the state.

From a regulatory perspective, while the winter of 2022-2023 is off to a very strong start, the capture of runoff from the storms has been extremely limited due to restrictions imposed by current management guidelines over potentially endangered species in the California water system.

In addition, the impact of SGMA is affecting grower operations, as sustainable pumping levels are being identified, thus allowing operators to calculate or estimate their future groundwater access and plan (or scale back) accordingly.

From a land value perspective, a growing divide is occurring between farms that have adequate water and farms that are short on water.

We are seeing land values in areas with strong water sources increase significantly, while values of farms in areas with more limited water sources are decreasing to price levels not seen in decades.

Farmland with infrastructure in place to allow it to bring in more water or to store water is also generally experiencing increases in value.

Expectations of future water availability are also causing a change in crop economics throughout the state.

The profitability of crops being grown is also driving agricultural land values.

Most almond growers have had difficulties due to operating costs at all-time highs and almond prices dropping to levels not seen since the 1990s.

As a result, the pace of new almond plantings has slowed dramatically, and older orchards are being removed at a quicker pace.

Farmland growing pistachios have maintained their high values but have generally plateaued since last year’s run-up in land value.

Crop yields for the 2022 harvest were mostly lower, which led to increased pricing for the 2022 marketing window, which runs through late 2023.

In coastal California, strawberry production was down on a per-acre basis, and leafy greens experienced unprecedented crop failures due to disease.

This lower production led to historically high crop prices, which more than offset the lower yields.

As a result, growers were generally willing to pay slightly higher rents, causing land prices to trend slightly higher.

Southeastern U.S.

Values of farmland growing strawberries in Florida have been steadily increasing for the past several years, with several out-of-state growers expanding their operations to the central area of the state.

Values of vegetable farms in Florida, which are often impacted by production from Mexico, continue to be stable.

Overall, land values throughout the Southeastern U.S.

continue to benefit from upward pricing pressure caused, in part, by the large influx of new people moving to the region, each year, particularly Florida and the Carolinas.

Portfolio Diversification

Since our initial public offering in January 2013 (the “IPO”), we have expanded our portfolio from 12 farms leased to 7 different, unrelated third-party tenants to a current portfolio of 164 farms leased to 85 different, unrelated third-party tenants who grow over 60 different types of crops on our farms.

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

Since our initial public offering in January 2013 (the “IPO”), we have expanded our portfolio from 12 farms leased to 7 different, unrelated tenants to a current portfolio of 169 farms leased to 89 different, unrelated third-party tenants who grow over 60 different types of crops on our farms.

Our investment focus is in farmland suitable for growing either fresh produce

annual row crops (e.g., certain berries and vegetables) or certain permanent crops (e.g., almonds, blueberries, pistachios, and wine grapes), with an ancillary focus on farmland growing certain commodity crops (e.g., beans and corn).

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

The following table summarizes the geographic locations (by state) of our farms owned and with leases in place as of December 31, 2022, 2021, and 2020 (dollars in thousands):

As of and For the Year Ended December 31, 2021 As of and For the Year Ended December 31, 2020

Revenue % of Total

Revenue Number

Revenue % of Total

As of and For the Year Ended

December 31, 2022 As of and For the Year Ended

December 31, 2021 As of and For the Year Ended

December 31, 2020

California (1)

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Florida 26 22,606 19.5% 14,537 16.3% 26 22,591 20.1% 13,675 18.2% 23 20,770 20.5% 13,342 23.4%

Colorado 12 32,773 29.1% 2,675 3.6% 12 32,773 32.4% 3,264 5.7%

Washington 6 2,529 2.2% 3,401 3.8% 3 1,384 1.2% 2,384 3.2% 3 1,384 1.4% 531 1.0%

Colorado 12 32,773 28.3% 2,153 2.4% 12 32,773 29.1% 2,675 3.6% 12 32,773 32.4% 3,264 5.7%

Arizona 6 6,320 5.5% 2,100 2.4% 6 6,280 5.6% 1,951 2.6% 6 6,280 6.2% 4,739 8.3%

Nebraska 9 7,782 6.7% 1,712 1.9% 9 7,782 6.9% 1,588 2.1% 9 7,782 7.7% 1,556 2.7%

Michigan 23 1,892 1.7% 1,040 1.4% 15 962 1.0% 723 1.3%

Oregon 6 898 0.8% 1,710 1.9% 5 726 0.6% 854 1.1% 3 418 0.4% 528 0.9%

Michigan 23 1,892 1.6% 786 0.9% 23 1,892 1.7% 1,040 1.4% 15 962 1.0% 723 1.3%

Maryland 6 987 0.8% 453 0.5% 6 987 0.9% 476 0.6% 4 759 0.8% 135 0.2%

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South Carolina 3 597 0.5% 244 0.3% 3 597 0.5% 244 0.3% 3 597 0.6% 47 0.1%

Georgia 2 230 0.2% 224 0.3% 2 230 0.2% 31 —% — — —% — —%

New Jersey 2 310 0.3% 145 0.2% 2 310 0.3% 150 0.2% — — —% — —%

North Carolina 3 116 0.1% 129 0.1% 3 116 0.1% 75 0.1% 2 310 0.3% 153 0.3%

Delaware 1 180 0.2% 74 —% 1 180 0.2% 81 0.1% 1 180 0.2% 27 —%

New Jersey 3 116 0.1% 75 0.1% — — —% — —%

Georgia 2 230 0.2% 31 —% — — —% — —%

TOTALS 169 115,731 100.0% $ 89,236 100.0% 164 112,542 100.0% $ 75,318 100.0% 137 101,079 100.0% $ 57,031 100.0%

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our farms are spread across six of these growing regions.

Most of our leases are on a triple-net basis, an arrangement under which, in addition to rent, the tenant is required to pay the related taxes, insurance costs, maintenance, and other operating costs.

Most of our leases are on a triple-net basis, an arrangement under which, in addition to rent, the tenant is required to directly pay the related taxes, insurance costs, maintenance, and other operating costs.

Our leases generally have original terms ranging from 3 to 10 years for farms growing row crops and 7 to 15 years for farms growing permanent crops (in each case, often with options to extend the lease further).

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Acreage % of Total

Acreage Lease Revenues for the

Year ended December 31, 2021 % of Total

Acreage Lease Revenues for the Year Ended December 31, 2022 % of Total

2023 8 12,110 10.5% $ 8,954 10.0%

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(1) Certain lease agreements encompass multiple farms.

(2) Includes one lease that was renewed subsequent to December 31, 2021 (see “ Recent Developments—Portfolio Activity—Existing Properties—Leasing Activity ” below for a summary of this and certain other recent leasing activities).

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

(2) 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 rates on this lease renewal to be relatively flat compared to that of the existing lease.

We currently anticipate the rental rates on this lease renewal to be flat to slightly higher compared to that of the existing lease.

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

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Property Acquisitions

Since January 1, 2021, through the date of this filing, we have acquired 27 farms, which are summarized in the table below (dollars in thousands, except for footnotes):

Since January 1, 2022, through the date of this filing, we completed the following acquisitions, which are summarized in the table below (dollars in thousands, except for footnotes):

Name Property

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Straight-line

Palmer Mill Road Dorchester, MD 3/3/2021 228 2 Sod 10.0 years 2 (5 years) $ 1,600 $ 56 $ 89

Eight Mile Road – Port Facility San Joaquin, CA 3/11/2021 5 — Cooling facility and storage 9.8 years 3 (5 years) 3,977 50 189

South Avenue Tehama, CA 4/5/2021 2,285 1 Olives for olive oil 14.7 years 1 (5 years) 37,800 149 2,555

Richards Avenue Atlantic, NJ 6/3/2021 116 3 Blueberries 14.9 years 2 (5 years) 2,150 63 129

Lerdo Highway (Phase I) (3)(4)

Kern, CA 6/4/2021 639 1 Conventional & organic almonds and banked water 10.4 years 3 (10 years) 26,492 111 974

Almena Drive Van Buren

& Eaton, MI 6/9/2021 930 8 Blueberries 14.7 years 2 (5 years) 13,300 51 785

Maricopa Highway Kern, CA 8/11/2021 277 1 Organic blueberries 14.9 years 3 (5 years) 30,000 63 2,262

Wallace Road Yamhill, OR 8/11/2021 143 1 Organic blueberries 10.1 years 3 (5 years) 12,320 39 768

West Orange St.

Lucie, FL 8/18/2021 617 2 Lemons and oranges 12.0 years None 5,241 184 367

Lerdo Highway (Phase II) (3)(5)

Kern, CA 8/20/2021 479 1 Conventional & organic almonds and banked water 10.2 years 3 (10 years) 14,772 53 735

Lerdo Highway (Phase III) (3)(6)

Kern, CA 10/8/2021 1,291 1 Conventional & organic almonds, conventional & organic pistachios, and banked water 10.1 years 3 (10 years) 42,959 90 1,981

Raymond Road (3)

Madera, CA 10/21/2021 219 1 Almonds 10.0 years 1 (5 years) 3,300 78 183

Cogdell Highway Atkinson, GA 11/12/2021 230 2 Blueberries 14.8 years None 2,850 45 224

Chuckhole Lane (7)

Umatilla, OR 11/23/2021 165 1 Wine grapes 9.9 years 2 (10 years) 2,383 117 139

West Lerdo Highway (3)(8)

Kern, CA 12/3/2021 2,635 1 Pistachios 2.9 years None 88,000 97 4,395

Farm Road Charlotte, FL 12/16/2021 1,204 1 Sod, watermelons, and cattle 5.0 years 1 (5 years) 7,350 94 388

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 36 286

Phelps Avenue (8)

Fresno, CA 12/29/2022 443 0 Open ground and water credits 5.0 years 1 (5 years) 3,100 72 25

3,189 5 $ 65,102 $ 341 $ 4,360

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

(3) Lease provides for an annual participation rent component based on the gross crop revenues earned on the farm.

The rent figure above represents only the minimum cash guaranteed under the lease.

(4) As part of the acquisition of this property, we acquired a contract to purchase 20,330 acre-feet of water stored with Semitropic Water Storage District, located in Kern County, California, at a fixed price.

We executed this contract on June 25, 2021, at an additional cost of approximately $1.2 million, which is included in the total purchase price for this property in the table above.

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

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

(5) As part of the acquisition of this property, we acquired a contract to purchase 5,000 acre-feet of water stored with Semitropic Water Storage District, located in Kern County, California, at a fixed price.

We executed this contract on August 23, 2021, at an additional cost of approximately $306,000, which is included in the total purchase price for this property in the table above.

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

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

(6) As part of the acquisition of this property, we acquired a contract to purchase 19,670 acre-feet of water stored with Semitropic Water Storage District, located in Kern County, California, at a fixed price.

We executed this contract on October 11, 2021, at an additional cost of approximately $1.2 million, which is included in the total purchase price for this property in the table above.

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

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

(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 a 9.1% interest in the LLC, was valued at approximately $2.1 million at the time of acquisition and is included within Other assets, net on the accompanying Consolidated Balance Sheets.

See Note 2, “ Summary of Significant Accounting Policies — Investments in Unconsolidated Entities ,” within the accompanying notes to our consolidated financial statements for further information for our aggregate ownership interest in this and other LLCs.

(8) Lease provides for an initial term of 9.9 years but also includes an annual tenant termination option, effective as of the end of the lease year (as defined within the lease) following the exercise of such termination option.

The lease term stated above represents the term through the first available termination option, and the annualized straight-line rent amount represents the rent guaranteed through the noncancellable term of the lease.

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 Note 3, “ Real Estate and Intangible Assets — Investments in Unconsolidated Entities ,” within the accompanying notes to our consolidated financial statements 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.

(8) Represents the acquisition of three parcels of land adjacent to an existing farm that will initially be utilized for its water rights (including additional surface water rights and groundwater pumping rights) to be used on nearby farms.

In addition, a portion of this acquisition was leased back to the seller.

Existing Properties

1 unchanged sentence

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

PRIOR LEASES (1)

NEW LEASES (2)

PRIOR LEASES NEW LEASES (1)

Locations Number

6 unchanged sentences

/ NN / N) (3)

AZ, CA, CO, FL, GA, MI, & NE 22 27,002 $ 8,299 5 15 / 7 / 0 $ 7,794 4.6 1 15 / 7 / 0

(1) Prior leases include certain leases that were terminated early during year ended December 31, 2021.

In connection with these early terminations, during the year ended December 31, 2021, we wrote off aggregate deferred rent and rent receivable balances of approximately $127,000 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.

FL, MI, & NE 23 31,317 $ 9,446 8 14 / 8 / 1 $ 9,094 5.4 5 11 / 12 / 0

(1) 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 consolidated financial statements 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.

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

(3) “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.

(4) Total annualized straight-line rent for new leases is net of aggregate one-time fixed payments of approximately $3.4 million we agreed to pay in connection with two leases to cover the majority of the operating expenses on the farms in exchange for adding a significant participation rent component into the leases.

Additionally, as of December 31, 2022, due to credit issues with two of our tenants, we determined that the full collectability of the remaining rental payments under the respective leases with these two tenants was not deemed to be probable.

As such, during the three months ended December 31, 2022, we began recognizing lease revenues from the six leases with these two tenants (three on farms in California and three on farms in Michigan) on a cash basis.

We are continuing to work with the current tenants and will seek to come to an agreement for the remaining rental payments, if possible.

Such agreement, if one can be reached, may include placing these tenants on payment plans, deferring a portion of the rent owed to us, or agreeing to terminate the respective leases.

In the event of a termination, we estimate that we would be able to find new tenants to lease each of these properties to at market rental rates within 1 to 12 months.

During the year ended December 31, 2022, we recorded aggregate lease revenues from these six leases of approximately $258,000 (including approximately $31,000 of participation rents), as compared to approximately $1.7 million (including approximately $121,000 of participation rents) and approximately $1.5 million (including approximately $221,000 of participation rents) during the years ended December 31, 2021 and 2020, respectively.

Financing Activity

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

Lender Date of Issuance Amount Maturity

Lender Date of

Issuance Amount Maturity

Date Principal

2 unchanged sentences

Interest Rate Terms

Farm Credit West, FLCA 1/28/2021 $ 2,073 11/1/2045 24.5 years 3.23% 2.20% Fixed through 12/31/2027 (variable thereafter)

Farmer Mac (2)

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

Mid Atlantic Farm Credit, ACA 3/3/2021 960 6/1/2045 24.4 years 3.80% 3.31% Fixed through 1/31/2031 (variable thereafter)

Rabo AgriFinance, LLC (3)

3/11/2021 3,780 12/1/2030 25.0 years 3.27% 3.27% Fixed throughout term

Rabo AgriFinance, LLC (3)

3/11/2021 630 12/1/2022 None

(interest only) 2.44% 2.44% Fixed throughout term

GreenStone Farm Credit Services, FLCA 8/17/2021 7,980 8/1/2046 25.5 years 4.00% 2.74% Fixed through 7/31/2031 (variable thereafter)

Golden State Farm Credit, FLCA 9/28/2021 15,960 7/1/2051 30.0 years 3.75% 2.75% Fixed through 9/30/2031 (variable thereafter)

Golden State Farm Credit, FLCA 9/28/2021 6,840 7/1/2046 25.0 years 3.75% 2.75% Fixed through 9/30/2031 (variable thereafter)

Farmer Mac (2)

11/10/2021 1,290 12/30/2030 25.0 years 3.32% 3.32% Fixed throughout term

Rabo AgriFinance, LLC (3)

11/10/2021 22,620 12/1/2030 25.0 years 3.42% 3.42% Fixed throughout term

Farm Credit Florida, ACA 12/13/2021 3,174 1/1/2047 25.0 years 4.13% 3.45% Fixed through 12/31/2031 (variable thereafter)

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

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

Total / Weighted-averages $ 71,189 3.62% 3.06%

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

variable thereafter

Total / Weighted-average $ 9,932 4.08% 3.19%

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

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

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

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.

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

(3) Loans were issued as variable-rate loans but were fixed subsequent to their issuance through our entry into interest rate swap agreements with the lender (as counterparty).

See Note 4, “ Borrowings—Interest Rate Swap Agreements ,” in the accompanying notes to our consolidated financial statements for further discussion on these agreements.

Proceeds from these financings were used to fund new acquisitions, repay existing indebtedness, and for general corporate purposes.

In connection with securing the above borrowings, Gladstone Securities LLC (“Gladstone Securities”), an affiliate of ours, earned total financing fees of $114,000.

In connection with securing the above borrowings, Gladstone Securities LLC (“Gladstone Securities”), an affiliate of ours, earned total financing fees of approximately $15,000.

In addition, from January 1, 2022, through the date of this filing, we repaid approximately $44.7 million of maturing loans.

On a weighted-average basis, these borrowings bore interest at a stated rate of 4.14% and an effective interest rate (after interest patronage) of 3.09%.

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.

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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 MetLife Facility remained unchanged.

All other material items of the Prior 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 2020 MetLife Facility, refer to Note 4, “ Borrowings—MetLife Facility ,” within the accompanying notes to our condensed consolidated financial statements.

For information on the pertinent terms of the issuances under the Current 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, 2021, we recorded interest patronage of approximately $2.2 million related to interest accrued on the Farm Credit Notes Payable during the year ended December 31, 2020.

In addition, during the three months ended September 30, 2020, we recorded approximately $306,000 of 2020 interest patronage, as certain Farm Credit associations prepaid a portion of the 2020 interest patronage (which related to interest accrued during 2020 but is typically received in 2021).

In total, we recorded approximately $2.5 million of 2020 interest patronage related to our Farm Credit Notes Payable, which resulted in a 28.7% reduction (approximately 135 basis points) to the interest rates on such borrowings.

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 , and during the three months ended September 30, 2022, we received approximately $113,000 of interest patronage, as certain Farm Credit associations paid a portion of the 2022 interest patronage (which relates to interest accrued during 2022 but is typically paid during the first half of 2023) early.

2021 interest patronage (which was recorded during the three months ended March 31, 2022) 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 consolidated financial statements.

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 selling concessions and underwriting fees, of approximately $58.3 million.

The Series D Term Preferred Stock is traded under the ticker symbol “LANDM” on Nasdaq.

The shares of the Series D Term Preferred Stock have a mandatory redemption date of January 31, 2026, and are not convertible into our common stock or any other securities.

Generally, we are not permitted to redeem shares of the Series D Term Preferred Stock prior to January 31, 2023, except in limited circumstances to preserve our status 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.

Redemption of Series A Term Preferred Stock

On February 12, 2021, we redeemed all of our outstanding shares of our 6.375% Series A Cumulative Term Preferred Stock, par value $0.01 per share (the “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.

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 ending March 31, 2021, we wrote off approximately $127,000 of unamortized issuance costs related to the issuance of the Series A Term Preferred Stock.

Equity Activity

Series C Preferred Stock

On April 3, 2020, we filed a prospectus supplement (which superseded and replaced a previously-filed prospectus supplement) with the SEC for a continuous public offering (the “Series C Offering”) of up to 26,000,000 shares of our 6.00% Series C Cumulative Redeemable Preferred Stock (the “Series C Preferred Stock”).

Under the Series C Offering, we may sell up to 20,000,000 shares of our Series C Preferred Stock on a “reasonable best efforts” basis through Gladstone Securities at an offering price of $25.00 per share (the “Primary Series C Offering”) and up to 6,000,000 additional shares of our Series C Preferred Stock pursuant to our dividend reinvestment plan (the “DRIP”) to those holders of the Series C Preferred Stock who do not elect to opt-out of such plan.

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 6.00% Series C Cumulative Redeemable Preferred Stock (the “Series C Preferred Stock”).

Under the Series C Offering, we were permitted to sell up to 20,000,000 shares of our Series C Preferred Stock on a “reasonable best efforts” basis through Gladstone Securities at an offering price of $25.00 per share (the “Primary Series C Offering”) and up to 6,000,000 additional shares of our Series C Preferred Stock pursuant to our dividend reinvestment plan (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 through the Primary Series C Offering 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 were 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 or (2) the listing of the Series C Preferred Stock on Nasdaq or another national securities exchange.

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

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Aggregate selling commissions and dealer-manager fees paid to Gladstone Securities as a result of these sales was approximately $13.5 million.

The Primary Series C Offering will terminate on the date (the “Series C Termination Date”) that is the earlier of either June 1, 2025 (unless terminated earlier or extended by our Board of Directors), or the date on which all 20,000,000 shares in the Primary Series C Offering are sold.

The Primary Series C Offering terminated on December 31, 2022, with substantially all of the allotted 10,200,000 shares being sold.

Exclusive of redemptions, the Primary Series C Offering resulted in total gross proceeds of approximately $252.6 million and net proceeds, after deducting Series C Selling Commissions, Series C Dealer-Manager Fees, and offering expenses payable by us, of approximately $230.5 million.

In conjunction with the amendment of the Series C Offering, which reduced the number of shares of Series C Preferred Stock to be offered, during the year ended December 31, 2022, we expensed approximately $798,000 of unamortized deferred offering costs.

These costs were recorded to Write-off of costs associated with the offering of Series C cumulative redeemable preferred stock on the accompanying Consolidated Statements of Operations and Comprehensive Income during the year ended December 31, 2022.

See Note 6, “ Related-Party Transactions—Gladstone Securities—Dealer-Manager Agreements ,” for a discussion of the commissions and fees paid to Gladstone Securities in connection with the Series C Offering.

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.

however, we intend to apply to list the Series C Preferred Stock on Nasdaq or another national securities exchange by December 31, 2023, though there can be no assurance that a listing will be achieved in such timeframe, or at all.

Series E Preferred Stock

On November 9, 2022, we filed a prospectus supplement with the SEC for a continuous public offering (the “Series E Offering”) of up to 8,000,000 shares of our newly-designated 5.00% Series E Cumulative Redeemable Preferred Stock, par value $0.001 per share (the “Series E Preferred Stock”), on a “reasonable best efforts” basis through Gladstone Securities at an offering price of $25.00 per share.

See Note 6, “Related-Party Transactions—Gladstone Securities—Dealer-Manager Agreements,” for a discussion of the commissions and fees to be paid to Gladstone Securities in connection with the Series E Offering.

No sales of the Series E Preferred Stock occurred during the year ended December 31, 2022.

The following table summarizes the sales of our Series E Preferred Stock that occurred subsequent to December 31, 2022, through the date of this filing (dollars in thousands, except per-share amounts and footnotes):

Shares Sold Weighted-average

Offering Price Per Share Gross Proceeds Net Proceeds (1)

34,600 $ 24.96 $ 864 $ 779

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

Aggregate selling commissions and dealer-manager fees paid to Gladstone Securities as a result of these sales was approximately $85,000.

The Series E Offering will terminate on the date (the “Series E Termination Date”) that is the earlier of (i) December 31, 2025 (unless terminated or extended by our Board of Directors) and (ii) the date on which all 8,000,000 shares of Series E Preferred Stock offering in the Series E Offering are sold.

There is currently no public market for shares of Series E Preferred Stock.

The Company intends to apply to list the Series E Preferred Stock on Nasdaq or another national securities exchange within one calendar year of the Series E Termination Date;

however, there can be no assurance that a listing will be achieved in such timeframe, or at all.

Common Stock—At-the-Market Program

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(1) Net of underwriter commissions.

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

the adequate production, efficacy, and dissemination of vaccinations;

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

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

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

the effect on our tenants and their farming operations;

the ability of our tenants to make their rental payments;

any disruptions of our tenants’ operations;

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

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

LIBOR Transition

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

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

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

Our lines of credit with MetLife and four term loans with Rabo AgriFinance LLC (which are effectively fixed through our entry into interest swap agreements) are currently indexed based on LIBOR, and we have begun discussions with the respective lenders to negotiate these agreements prior to the phase-out of LIBOR.

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.

Smaller Reporting Company Status

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

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

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.

Critical Accounting Policies

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Certain of our acquisitions involve sale-leaseback transactions with newly-originated leases, and other of our acquisitions involve the acquisition of farmland that is already being operated as rental property, in which case we will typically assume the lease in place at the time of acquisition.

Prior to us early adopting Accounting Standards Update (“ASU”) 2017-01, “Clarifying the Definition of a Business” (as further described in Note 2, “ Summary of Significant Accounting Pronouncements ,” under the caption, “ —Recently-Issued Accounting Pronouncements, ” in the accompanying consolidated financial statements), acquisitions of farmland already being operated as rental property were generally considered to be business combinations under Accounting Standards Codification (“ASC”) 805, “Business Combinations.” However, after our adoption of ASU 2017-01, effective October 1, 2016, we now generally consider both types of acquisitions to be asset acquisitions under ASC 360, “Property Plant and Equipment.” ASC 360 requires us to capitalize the transaction costs incurred in connection with the acquisition, whereas ASC 805 required that all costs related to the acquisition be expensed as incurred, rather than capitalized into the cost of the acquisition.

Whether an acquisition is considered an asset acquisition or a business combination, both ASC 360 and ASC 805 require that the purchase price of real estate be allocated to (i) the tangible assets acquired and liabilities assumed, and, if applicable, (ii) any identifiable intangible assets and liabilities, by valuing the property as if it was vacant, based on management’s determination of the relative fair values of such assets and liabilities as of the date of acquisition.

We generally consider both types of acquisitions to be asset acquisitions under ASC 360, “Property Plant and Equipment,” which requires us to capitalize the transaction costs incurred in connection with the acquisition.

ASC 360 further requires that the purchase price of real estate be allocated to (i) the tangible assets acquired and

liabilities assumed, and, if applicable, (ii) any identifiable intangible assets and liabilities, by valuing the property as if it was vacant, based on management’s determination of the relative fair values of such assets and liabilities as of the date of acquisition.

For a more detailed discussion on this accounting policy, see Note 2, “ Summary of Significant Accounting Policies—Real Estate and Lease Intangibles ,” in the accompanying notes to our consolidated financial statements.

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110 101 9 8.9%

Lease termination income, net

— 2,810 (2,810) NM

Total operating revenues

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2,740 2,139 601 28.1%

Write-off of costs associated with offering of Series C cumulative redeemable preferred stock 853 — 853 NM

Total operating expenses

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Participation rents 6,351 4,589 1,762 38.4%

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

Total – Same-property basis 69,219 68,801 418 0.6%

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Participation rents 1,352 630 722 114.6%

Properties acquired or disposed of:

21,650 2,496 19,154 767.4%

Total – Properties acquired or disposed of 19,907 6,416 13,491 210.3%

Tenant reimbursements (1)

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

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

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

Same-property Basis – 2022 compared to 2021

Lease revenues from fixed lease payments increased for the year ended December 31, 2021, primarily due to additional rents earned on capital improvements completed on certain of our farms, largely offset by certain lease renewals and amendments executed, in which we decreased the fixed base rent component in exchange for adding a participation rent component to the lease structure.

Lease revenues from participation rents increased for the year ended December 31, 2021, primarily due to more farms having scheduled rent payments due during 2021 compared to 2020.

During the year ended December 31, 2021, 39 of our farms, consisting of 34,477 farm acres, were subject to leases with active participation rent components, as compared to 19 farms consisting of 4,844 farm acres in the prior year.

During the year ended December 31, 2020, we received an early lease termination payment of approximately $3.0 million from an outgoing tenant on a property, which we recognized as additional lease revenue upon receipt, less a net balance of approximately $165,000 of aggregate prepaid rent and deferred rent assets balances that were written off against this amount.

Lease revenues from fixed lease payments decreased primarily due to revenue from six leases (collectively leased to two separate tenants) being recognized on a cash basis during the year ended December 31, 2022, rather than a straight-line basis (as prescribed under GAAP) due to full collectability of future rental payments under the respective leases deemed not to be probable as a result of tenant credit issues.

During the year ended December 31, 2022, we recognized aggregate fixed lease payments from these six leases of approximately $227,000, as compared to approximately $1.6 million during the prior year.

See above under “ —Recent Developments—Portfolio Activity—Existing Properties—Leasing Activity ” for further discussion on these leases.

The decrease in lease revenues from fixed lease payments was also attributable 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.

These decreases in fixed lease payments were partially offset by certain new leases, amendments, and renewals executed at higher rental rates and additional rents earned on capital improvements completed on certain of our farms.

The increase in participation rents was primarily driven by strong production (i.e., pounds per acre) on many of our pistachio farms coupled with continued strong demand for the crop, partially offset by weaker almond prices, as the almond market continued to be hampered with oversupply exacerbated by supply chain disruptions that occurred during the height of the COVID-19 pandemic.

Other – 2022 compared to 2021

Lease revenue from properties acquired or disposed of increased for the year ended December 31, 2021, due to additional revenues earned on new farms acquired subsequent to December 31, 2019.

Tenant reimbursement revenue decreased for the year ended December 31, 2021, primarily due to additional payments made during the prior year by certain tenants on our behalf (pursuant to the lease agreements) to an unconsolidated entity of ours that conveys water to the respective properties.

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

The fluctuations in tenant reimbursement revenue are primarily driven by payments made by certain tenants on our behalf (pursuant to the lease agreements) to unconsolidated entities of ours that convey water to the respective properties.

As such, the timing of tenant reimbursement revenue fluctuates as payments are made by our tenants.

Operating Expenses

Depreciation and Amortization

The following table provides a summary of the depreciation and amortization expense recorded during the years ended December 31, 2021 and 2020 (dollars in thousands):

For the Years Ended December 31,

2021 2020 $ Change % Change

Same-property basis $ 15,045 $ 15,696 $ (651) (4.1)%

Properties acquired or disposed of 12,138 959 11,179 1,165.7%

Total Depreciation and amortization expense $ 27,183 $ 16,655 $ 10,528 63.2%

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

Depreciation and amortization expense on properties acquired or disposed of increased for the year ended December 31, 2021, as compared to the prior year, primarily due to the additional depreciation and amortization expense incurred on the new farms acquired subsequent to December 31, 2019.

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 expenditures on certain of our farms.

The increase was partially offset by a decrease attributable to asset dispositions on certain of our farms and the expiration of certain lease intangible amortization periods.

Property-operating Expenses

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

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

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

Same-property Basis – 2022 compared to 2021

Property operating expenses increased for the year ended December 31, 2021, primarily due to an increase in our obligation to reimburse one of our tenants for water usage over a specific cost threshold in accordance with the lease.

We currently do not expect such elevated costs to continue beyond 2021.

In addition, during the year ended December 31, 2021, we incurred additional legal fees in connection with protecting water rights on certain farms in California and higher property tax expenses due to certain of the lease renewals executed during the year 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.

These increases were partially offset by lower costs incurred related to repairs and maintenance of certain properties compared to the prior year.

Property operating expenses increased 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.

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 year ended December 31, 2021, primarily due to additional miscellaneous property-operating expenses incurred on certain of the new farms we acquired subsequent to December 31, 2019.

Tenant reimbursement expense decreased for the year ended December 31, 2021, primarily due to a decrease in miscellaneous property-operating costs incurred by us in connection with our ownership interest in an unconsolidated entity.

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

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

The fluctuations in tenant-reimbursed property operating expenses are primarily driven by miscellaneous property operating costs incurred by us in connection with our ownership interests in certain unconsolidated entities, for which our tenants are contractually obligated to reimburse us under the terms of the respective leases.

Such expenses will fluctuate commensurate with the timing and amount of miscellaneous operating costs incurred by the underlying entities.

Related-Party Fees

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

The base management fee increased during the year ended December 31, 2021, as compared to the prior year, primarily due to additional assets acquired since December 31, 2019, and an increase in the annual rate applied to the prior calendar quarter’s

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

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 years ended December 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 first, third, and fourth quarters of fiscal years 2022 and 2021.

Our Adviser did not earn a capital gains fee during the year ended December 31, 2021 or 2020, as we did not sell any of our properties during either period.

The administration fee paid to our Administrator increased during the year ended December 31, 2021, as compared to the prior year, 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.

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 slightly during the year ended December 31, 2021, as compared to the prior year, primarily due to an increase in due diligence costs associated with potential acquisitions that were subsequently aborted, at which time the costs were expensed, and higher professional fees related to additional appraisal costs.

These increases were largely offset by a decrease in stockholder-related expenses due to a one-time listing fee paid to Nasdaq in the prior year for the listing of our Series B Preferred Stock.

General and administrative expenses increased during the year ended December 31, 2022, primarily due to an increase in professional fees (driven by higher audit fees and appraisal costs) and an increase in acquisition-related costs for investments no longer being pursued.

During the year ended December 31, 2022, we wrote off approximately $853,000 of costs (including approximately $798,000 of unamortized deferred offering costs) related to the Series C Offering due to an amendment that reduced the number of shares of Series C Preferred Stock to be offered.

See Note 8, “Equity - Equity Issuances - Series C Preferred Stock,” in the accompanying notes to our condensed consolidated financial statements for additional discussion of the amendment of the Series C Offering.

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

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(3,760) (2,537) (1,223) 48.2%

Property and casualty recovery, net

Property and casualty (loss) recovery, net

(56) 68 (124) (182.4)%

Loss from investments in unconsolidated entities

(61) (4) (57) NM

(73) (61) (12) 19.7%

Total other expense, net

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4,708 3,495 1,213 34.7%

Aggregate dividends declared on and charges related to Series B and Series C Preferred Stock

Aggregate dividends declared on and charges related to extinguishment of Series B and Series C cumulative redeemable preferred stock

(19,718) (12,258) (7,460) 60.9%

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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 consolidated financial statements) and interest earned on short-term investments, increased for the year ended December 31, 2021, as compared to the prior year, primarily driven by additional interest patronage received from Farm Credit (due to increased borrowings from Farm Credit).

During the year ended December 31, 2021, we recorded approximately $2.2 million of interest patronage from Farm Credit related to interest accrued during 2020, compared to approximately $1.6 million of interest patronage recorded during the prior year.

Interest expense increased for the year ended December 31, 2021, as compared to the prior year, 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 year ended December 31, 2021, was approximately

$637.6 million, as compared to approximately $502.4 million for the prior year.

Other income, which generally consists of interest patronage received from Farm Credit (as defined in Note 4, “ Borrowings ,” in the accompanying notes to our 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, and during the three months ended September 30, 2022, we received approximately $113,000 of interest patronage, as certain Farm Credit associations paid a portion of the 2022 interest patronage (which relates to interest accrued during 2022 but is typically paid during the first half of 2023) early.

In the aggregate, we

recorded approximately $2.9 million of interest patronage from Farm Credit during the year ended December 31, 2022, as compared to approximately $2.2 million of interest patronage recorded during the prior-year period.

2021 interest patronage (which was recorded during the three months ended March 31, 2022), resulted in a 29.9% reduction (approximately 137 basis points) to the interest rate of such borrowings.

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 year ended December 31, 2022, was approximately $654.7 million, as compared to approximately $637.6 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 was 3.77% and 3.72% for the years ended December 31, 2022 and 2021, respectively.

During the year ended December 31, 2021, we paid aggregate distributions on our Series A Term Preferred Stock and Series D Term Preferred Stock of approximately $3.1 million.

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 year ended December 31, 2020, we paid distributions on our Series A Term Preferred Stock of approximately $1.8 million.

During both years ended December 31, 2021 and 2020, 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 years ended December 31, 2021 and 2020 related to insurance recoveries received for certain improvements that were damaged due to natural disasters.

During the years ended December 31, 2021 and 2020, we recognized a loss from investments in an unconsolidated entity of approximately $61,000 and $4,000, respectively.

During the year ended December 31, 2021, the aggregate dividends paid on our Series B Preferred Stock and Series C Preferred Stock increased over that of the prior year due to additional shares issued and outstanding during the current year.

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

The net property and casualty (loss) recovery related to net expenses incurred and insurance recoveries received for certain improvements that were damaged due to natural disasters.

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.

Comparison of Results of Operations for the Years Ended December 31, 2021 and 2020

A comparison of our operating results for the years ended December 31, 2021 and 2020 was included in our Annual Report on Form 10-K for the year ended December 31, 2021, beginning on page 43 under Part II, Item 7, “Management’s Discussion and Analysis of Financial Position and Results of Operations,” which was filed with the Securities and Exchange Commission, or SEC, on February 22, 2022.

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 $138.1 million, consisting of approximately $24.1 million in cash on hand and, based on the current level of collateral pledged, approximately $114.0 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 the Current MetLife Facility), and issuances of additional equity securities.

Our current available liquidity is approximately $206.4 million, consisting of approximately $56.7 million in cash on hand and, based on the current level of collateral pledged, approximately $149.7 million of availability under the Current MetLife Facility (subject to compliance with covenants) and other undrawn notes or bonds.

In addition, we currently have certain properties valued at a total of approximately $92.1 million that are unencumbered and eligible to be pledged as collateral.

Over 99.8% of our borrowings are currently at fixed rates, and on a weighted-average basis, these rates are fixed at an effective interest rate (after interest patronage) of 3.26% for another 4.9 years.

In addition, the weighted-average remaining term of our notes and bonds payable is approximately 9.4 years.

As such, 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- and long-term debt obligations and operating expenses.

Future Capital Needs

Our short- and long-term liquidity requirements consist primarily of making distributions to stockholders (including 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, including surges in certain variants of COVID-19, 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 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.

Our short- and long-term liquidity requirements consist primarily of making principal and interest payments on outstanding borrowings;

funding our general operating costs;

making dividend payments on our Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, and Series E Preferred Stock;

making distributions to stockholders (including non-controlling OP Unitholders, if any) to maintain our qualification as a REIT;

and, as capital is available, funding capital improvements on existing farms and new farmland and farm-related acquisitions consistent with our investment strategy.

In the near term, we believe that our current and short-term cash resources will be sufficient to service our debt;

fund our current operating costs;

pay dividends on our Series B Preferred Stock, Series C Preferred Stock, Series D Term Preferred Stock, and Series E Preferred Stock;

and fund our distributions to stockholders (including non-controlling OP Unitholders).

We expect to meet our long-term liquidity requirements through various sources of capital, including long-term mortgage indebtedness and bond issuances, future equity issuances (including, but not limited to, shares of our Series E Preferred Stock,

OP Units through our Operating Partnership as consideration for future acquisitions, and shares of common stock through our ATM Program), 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 despite the ongoing COVID-19 pandemic, 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 Obligations

In connection with the execution of certain lease agreements, we have committed to provide capital improvements on certain of our farms, which are summarized in the table below (dollars in thousands):

Location Farm

Acreage Total

Commitment Obligated

Amount Expended

or Accrued as of

December 31, 2021

Lucie, FL 549 $ 230 Q3 2022 $ 111

Santa Barbara, CA 271 4,000 (2)

Q3 2022 2,427

Manatee, FL 590 280 Q4 2022 —

Manatee, FL 271 280 Q4 2022 —

Hillsborough, FL 55 2,250 (2)

Q4 2022 1,554

Charlotte, FL 975 3,000 (2)

Napa, CA 270 1,548 (2)

Q3 2023 1,019

Columbia, OR 157 1,800 (2)

Q3 2024 1,146

Collier & Hendry, FL 3,612 2,000 (2)

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.

Operating Commitments and Obligations

See Note 7, “Commitments and Contingencies,” in the accompanying notes to our consolidated financial statements for additional discussion around certain operating and ground lease obligations.

Cash Flow Resources

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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 year ended December 31, 2021, as compared to the prior year, primarily due to additional rental payments received from recent acquisitions and interest patronage received from Farm Credit, partially offset by increases in the amount of interest payments made.

Cash provided by operating activities increased primarily due to additional rental payments received from tenants and interest patronage received from Farm Credit, partially offset by an increase in fees paid to our Advisor and increases in the amount of interest payments made.

Investing Activities

The increase in cash used in investing activities for the year ended December 31, 2021, as compared to the prior year, was primarily due to an increase in aggregate cash paid for acquisitions of new farms, partially offset by a decrease in the amount of cash paid for capital improvements on existing farms during the year ended December 31, 2021.

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.

Financing Activities

The increase in cash provided by financing activities during the year ended December 31, 2021, as compared to the prior year, was primarily due to an increase in aggregate net cash proceeds from equity issuances (including on our common stock and Series C Preferred Stock) of approximately $103.0 million and the issuance of our Series D Term Preferred Stock (which, after voluntarily redeeming our Series A Term Preferred Stock in full, resulted in net cash proceeds of approximately $31.6 million), partially offset by decrease in net borrowings of approximately $98.7 million and an increase in total distributions of approximately $8.2 million.

The decrease in cash provided by financing activities was primarily due to a decrease in aggregate net borrowings of approximately $85.7 million, 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 $52.4 million, and an increase in aggregate distributions paid on our preferred stock (including our Series B Preferred Stock and our Series C Preferred Stock) and common stock of approximately $7.7 million.

In addition, during the year ended December 31, 2022, we paid approximately $7.7 million to redeem 204,778 OP Units.

MetLife Facility

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

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

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.

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

The Current MetLife Facility currently consists of an aggregate of $75.0 million of revolving equity lines of credit and an aggregate of $175.0 million of term notes.

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

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

availability under the Current MetLife Facility.

The draw period for both term notes expires on December 31, 2024, after which 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 Facility provides for bond issuances up to an aggregate amount of $225.0 million by May 31, 2023, after which, Farmer Mac has no obligation to purchase additional bonds under this facility.

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

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

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6,701,987 $ 24.76 $ 165,941 $ 152,470

Series E Preferred Stock 34,600 24.96 864 779

Common Stock – ATM Program 1,503,969 23.49 35,325 34,946

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

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

(3) Excludes approximately 11,021 shares issued pursuant to the DRIP.

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

To date, we have issued approximately $103.4 million of Series C Preferred Stock (including approximately $257,000 issued pursuant to the DRIP), $60.4 million of Series D Term Preferred Stock, and $245.6 million of common stock (including approximately $4.4 million of common stock issued to redeem OP Units) under the Registration Statement.

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

Our Registration Statement (as defined in Note 8, “ Equity—Registration Statement ,” within the accompanying notes to our consolidated financial statements) 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.

To date, we have issued approximately $253.8 million of Series C Preferred Stock (including $1.2 million issued pursuant to the DRIP), $60.4 million of Series D Term Preferred Stock, $864,000 of Series E Preferred Stock, and $280.9 million of common stock (including common stock issued to redeem OP Units) under the Registration Statement.

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

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FFO, as defined by NAREIT, is net income (computed in accordance with GAAP), excluding gains or losses from sales of property and impairment losses on property, plus depreciation and amortization of real estate assets, and after adjustments for unconsolidated partnerships and joint ventures.

We further present core FFO (“CFFO”) and adjusted FFO (“AFFO”) as additional non-GAAP financial measures of our operational

performance, as we believe both CFFO and AFFO improve comparability on a period-over-period basis and are more useful supplemental metrics for investors to use in assessing our operational performance on a more sustainable basis than FFO.

We believe that these additional performance metrics, along with the most directly-comparable GAAP measure, provide investors with helpful insight regarding how management measures our ongoing performance, as each of CFFO and AFFO (and their respective per-share amounts) are used by management and our board of directors, as appropriate, in assessing overall performance, as well as in certain decision-making analysis, including, but not limited to, the timing of acquisitions and potential equity raises (and the type of securities to offer in any such equity raises), the determination of any fee credits, and declarations of distributions on our common stock.

We further present core FFO (“CFFO”) and adjusted FFO (“AFFO”) as additional non-GAAP financial measures of our operational performance, as we believe both CFFO and AFFO improve comparability on a period-over-period basis and are more useful supplemental metrics for investors to use in assessing our operational performance on a more sustainable basis than FFO.

potential equity raises (and the type of securities to offer in any such equity raises), the determination of any fee credits, and declarations of distributions on our common stock.

The non-GAAP financial measures presented herein have limitations as analytical tools and should not be considered in isolation or as a substitute for an analysis of our results calculated in accordance with GAAP.

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

FFO, CFFO and AFFO do not represent cash flows from operating activities in accordance with GAAP, which, unlike FFO, CFFO, and AFFO, generally reflects all cash effects of transactions and other events in the determination of net income, and should not be considered an alternative to net income as an indication of our performance or to cash flows from operations as a

measure of liquidity or ability to make distributions.

Comparisons of FFO, CFFO, and AFFO, using the NAREIT definition for FFO and the definitions above for CFFO and AFFO, to similarly-titled measures for other REITs may not necessarily be meaningful due to possible differences in the definitions used by such REITs.

Diluted funds from operations (“Diluted FFO”), diluted core funds from operations (“Diluted CFFO”), and diluted adjusted funds from operations (“Diluted AFFO”) per share are FFO, CFFO, and AFFO, respectively, divided by the weighted-average number of total shares (including shares of our common stock and OP Units held by non-controlling limited partners) outstanding on a fully-diluted basis during a period.

number of total shares (including shares of our common stock and OP Units held by non-controlling limited partners) outstanding on a fully-diluted basis during a period.

We believe that diluted earnings per share is the most directly-comparable GAAP measure to each of Diluted FFO, CFFO, and AFFO per share.

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For the Years Ended December 31,

2022 2021 2020

Net income $ 4,716 $ 3,514 $ 4,955

Aggregate dividends declared on Series B Preferred Stock and Series C Preferred Stock (1)

Aggregate dividends declared on and charges related to extinguishment of Series B Preferred Stock and Series C Preferred Stock (1)

(19,718) (12,258) (9,322)

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Acquisition- and disposition-related expenses 438 355 210

Other nonrecurring (receipts) charges, net (3)

Other nonrecurring charges (receipts), net (3)

1,023 (12) 159

CFFO available to common stockholders and non-controlling OP Unitholders 25,642 21,355 14,855

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

(3) Consists primarily of (i) net property and casualty recoveries recorded (net of the cost of related repairs expensed) as a result of the damage caused to certain improvements by natural disasters on certain of our farms, (ii) one-time listing fees related to our Series D Term Preferred Stock, (iii) the write-off of certain unallocated costs related to a prior universal registration statement and, in 2020 only, costs expensed during the year related to an aborted offering, and (iv) certain one-time costs related to the early redemption of our Series A Term Preferred Stock.

(3) Consists primarily of (i) costs related to the reduction in size of the Series C Offering that were expensed during the year ended December 31, 2022, (ii) net property and casualty losses (recoveries) recorded and the cost of related repairs expensed as a result of damage caused to certain improvements by natural disasters on certain of our farms, (iii) one-time listing fees related to our Series D Term Preferred Stock, (iv) certain one-time costs related to the early redemption of our Series A Term Preferred Stock, and (v) for 2020 only, the write-off of certain unallocated costs related to a prior universal registration statement and costs expensed during the year related to an aborted offering.

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

Net Asset Value

Real estate companies are required to record real estate using the historical cost basis of the real estate, adjusted for accumulated depreciation and amortization, and, as a result, the carrying value of the real estate does not typically change as the fair value of the assets change.

fair value of the assets change.

Thus, one challenge is determining the fair value of the real estate in order to allow stockholders to see the value of the real estate increase or decrease over time, which we believe is useful to our investors.

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Valuation Method Number of

Acres Net Cost

Acres Acre-feet

of Water Net Cost

Fair Value % of Total

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Land Value (per farmable acre) $707 – $123,280 $34,921 $5,512 – $5,512 $5,512

Market NOI (per farmable acre) $158 – $3,543 $1,482 $214 – $214 $214

Market Capitalization Rate 3.00% – 10.50% 5.49% 4.00% – 4.00% 4.00%

Market NOI (per farmable acre) $25 – $4,215 $2,078 N/A N/A

Market Capitalization Rate 3.75% – 10.50% 5.40% N/A N/A

Figures in the table above apply only to the farmland portion of our portfolio and exclude assumptions made relating to farm-related facilities (e.g., cooling facilities), and other structures on our properties (e.g., residential housing), as their aggregate value was considered to be insignificant in relation to that of the farmland.

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Total portfolio fair value as of September 30, 2022 $ 1,556,028

Acquisition of seven new farms during the three months ended December 31, 2021 146,842 (1)

Acquisitions of new farms during the three months ended December 31, 2022 3,100

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

One cooling facility valued internally $ 2,323

Farms valued via third-party appraisals $ 9,144

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Total portfolio fair value as of December 31, 2022 $ 1,568,272

(1) Includes approximately $1.2 million paid to exercise a water purchase option that was acquired in connection with one of the farms that was acquired during the three months ended December 31, 2021.

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

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NAV is a non-GAAP, supplemental measure of financial position of an equity REIT and is calculated as total equity, adjusted for the increase or decrease in fair value of our real estate assets and long-term borrowings (including any preferred stock required to be treated as debt for GAAP purposes) relative to their respective cost bases.

Further, we calculate NAV per common share by dividing

NAV by our total common shares outstanding (consisting of our common stock and OP Units held by non-controlling limited partners).

Further, we calculate NAV per common share by dividing NAV by our total common shares outstanding (consisting of our common stock and OP Units held by non-controlling limited partners).

The fair values presented above and their usage in the calculation of net asset value per share presented below have been prepared by and is the responsibility of management.

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.

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 December 31, 2022, we estimate the NAV per common share to be $17.08.

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

(6) Includes 34,210,013 shares of common stock and 204,778 OP Units held by non-controlling OP Unitholders.

A quarterly rollforward in the estimated NAV per common share and OP Unit for the three months ended December 31, 2022, is provided below:

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

(i) an increase of $0.06 per share due to the farms that were valued during the three months ended December 31, 2021, (ii) an increase of $0.23 per share due to the aggregate depreciation and amortization expense recorded during the three months ended December 31, 2021, and (iii) a decrease of $0.11 per share due to 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 $0.26 per share due to the net appreciation in value of the farms that were valued during the three months ended December 31, 2022, (ii) an increase of $0.27 per share due to the aggregate depreciation and amortization expense recorded during the three months ended December 31, 2022, and (iii) a decrease of $0.17 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 $14.31 as

of December 31, 2021, based on the calculation above, the closing price of our common stock on December 31, 2021, was $33.76 per share.

For example, while we estimated our NAV per common share to be $17.08 as of December 31, 2022, based on the calculation above, the closing price of our common stock on December 31, 2022, was $18.35 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.

In addition, many of the assumptions used are sensitive to market conditions and can change frequently.

Changes in the market environment and other events that may occur during our ownership of these properties may cause the values reported above to vary from the actual fair value that may be obtained in the open market.

Changes in the market environment and other events that may occur during our ownership of these properties may cause the values reported above to

vary from the actual fair value that may be obtained in the open market.

Further, while management believes the values presented reflect current market conditions, the ultimate amount realized on any asset will be based on the timing of such dispositions and the then-current market conditions.

There can be no assurance that the ultimate realized value upon disposition of an asset will approximate the estimated fair value above.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

This Item is not applicable to smaller reporting companies.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis