What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-05-08 compared with 2022-11-08 · 232 added, 276 removed, 416 unchanged (55% of the section changed)

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We are an externally-managed, agricultural real estate investment trust (“REIT”) that is engaged in the business of owning and leasing farmland.

We are not a grower of crops, nor do we typically farm the properties we own.

With the exception of one farm in California, which is currently self-operated (on a temporary basis and via a management agreement with an unrelated third-party), we are not a grower of crops, nor do we typically farm the properties we own.

We currently own 169 farms comprised of 115,731 acres located across 15 states in the U.S.

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

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

As of and For the nine months ended September 30, 2022 As of and For the nine months ended September 30, 2021

The following table summarizes the different geographic locations (by state) of our farms owned as of and during the three months ended March 31, 2023 and 2022 (dollars in thousands):

As of and For the Three Months Ended March 31, 2023 As of and For the Three Months Ended March 31, 2022

Revenue % of Total

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Arizona 6 6,320 5.5% 563 2.7% 6 6,280 5.6% 503 2.5%

Michigan 23 1,892 1.6% 1,182 1.8% 23 1,892 1.8% 619 1.2%

Oregon 6 898 0.8% 518 2.4% 5 726 0.6% 363 1.8%

Nebraska 9 7,782 6.7% 369 1.7% 9 7,782 6.9% 336 1.7%

Texas 1 3,667 3.2% 337 0.5% 1 3,667 3.4% 337 0.6%

Michigan 23 1,892 1.6% 246 1.2% 23 1,892 1.7% 353 1.8%

Maryland 6 987 0.8% 115 0.5% 6 987 0.9% 110 0.5%

Texas 1 3,667 3.2% 112 0.5% 1 3,667 3.3% 113 0.6%

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

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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).

Rent is generally payable to us in advance on either an annual or semi-annual basis, with such rent typically subject to periodic escalation clauses provided for within the lease.

Currently, 128 of our farms are leased on a pure, triple-net basis, 38 farms are leased on a partial-net basis (with us, as landlord, responsible for all or a portion of the related property taxes), and 3 farms are leased on a single-net basis (with us, as landlord, responsible for the related property taxes, as well as certain maintenance, repairs, and insurance costs).

Rent is generally payable to us in advance on either an annual, semi-annual, or quarterly basis, with such rent typically subject to periodic escalation clauses provided for within the lease.

Currently, 120 of our farms are leased on a pure, triple-net basis, 45 farms are leased on a partial-net basis (with us, as landlord, responsible for all or a portion of the related property taxes), 3 farms are leased on a single-net basis (with us, as landlord, responsible for the related property taxes, as well as certain maintenance, repairs, or insurance costs), and 1 farm is self-operated.

Additionally, 29 of our farms are leased under agreements that include a variable rent component, called “participation rents,” that are based on the gross revenues earned on the respective farms.

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

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

The following table summarizes the lease expirations by year for the farms owned and with leases in place as of March 31, 2023 (dollars in thousands):

Year Number of

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Acreage Lease Revenues for the

Nine Months Ended

September 30, 2022 % of Total

Three Months Ended March 31, 2023

7 5,921 5.1% $ 1,710 8.1%

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(1) Certain lease agreements encompass multiple farms.

(2) Represents a lease with a tenant termination option that we do not currently expect to be exercised.

(3) Includes one lease that was renewed subsequent to September 30, 2022 (see “ Recent Development—Portfolio Activity—Existing Properties—Leasing Activity ” below for a summary of this and certain other recent leasing activities).

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

(2) Includes one lease with a tenant termination option that we do not currently expect to be exercised.

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

oil, gas, and mineral leases;

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

Aside from an early termination option available to the tenant on one of our farms in California (which we do not currently expect to be exercised), we currently have one agricultural lease scheduled to expire within the next six months on a farm in Nebraska.

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

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

Also includes one farm that was self-operated as of March 31, 2023, for which we recorded approximately $77,000 of lease revenues attributable to the former tenant during the three months ended March 31, 2023.

Aside from an early termination option available to the tenant on one of our farms in Michigan (which we do not currently expect to be exercised), we currently have two agricultural leases scheduled to expire within the next six months, both on farms in California.

We are currently in negotiations with the existing tenants on each of the farms, as well as other potential tenants, and we anticipate being able to renew the leases at their respective current market rental rates without incurring any downtime on either of the farms.

We currently anticipate the rental rates on these lease renewals to be flat to slightly higher compared to that of the existing leases.

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.

Recent Developments

Portfolio Activity

Property Acquisitions

Since July 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

Location Acquisition

Farms Primary

Options Total

Price Acquisition

Straight-line

Reagan Road (3)

Cochise, AZ 7/13/2022 40 0 Corn 12.5 years None 120 17 39

North Columbia River Road (4)(6)

Franklin & Grant, WA 7/21/2022 1,145 3 Wine Grapes 8.4 years None 30,320 146 2,296

Prunedale Road (5)(6)

Umatilla, OR 7/21/2022 172 1 Wine Grapes 10.4 years None 7,008 35 286

1,357 4 $ 37,448 $ 198 $ 2,621

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

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

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

Subsequent to acquisition, we spent approximately $153,000 to install certain improvements on this property.

(4) 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.

(5) In connection with the acquisition of this property, we also acquired an ownership interest in a related LLC, the sole purpose of which is to own and maintain an irrigation system providing water to this and other neighboring properties.

Our acquired ownership, which equated to an 11.3% interest in the LLC, was valued at approximately $2.7 million at the time of acquisition and is included within Other assets, net on the accompanying Consolidated Balance Sheets.

See Note 3, “ Real Estate and Intangible Assets—Investments in Unconsolidated Entities, ” within the accompanying notes to our condensed consolidated financial statements for additional information on our aggregate ownership interest in this and other LLCs.

(6) 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.

Existing Properties

Portfolio Activity—Existing Properties

Leasing Activity

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

The following table summarizes certain leasing activity that has occurred on our existing properties since January 1, 2023, through the date of this filing (dollars in thousands, except for footnotes):

PRIOR LEASES (1)

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/ NN / N) (4)

AZ, CA, & FL 6 4,082 $ 3,084 0 0 / 6 / 0 $ 3,378 4.4 0 1 / 5 / 0

(1) Prior leases include one lease that was terminated early during the three months ended September 30, 2022.

In connection with this early termination, during the three months ended September 30, 2022, we wrote off aggregate deferred rent and rent receivable balances of approximately $24,000 against lease revenue.

CA, CO, & NE 5 8,933 $ 4,914 2 3 / 2 / 0 $ 5,509 7.4 0 3 / 2 / 0

(1) Prior leases include one lease that was terminated early during the three months ended March 31, 2023.

In connection with this early termination, during the three months ended March 31, 2023, we wrote off aggregate deferred rent and rent receivable balances of approximately $128,000 against lease revenue.

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

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

Self-operated and Non-accrual Properties

As of and during a portion of the three months ended March 31, 2023, we had one farm in California that was self-operated (via a management agreement with an unrelated third-party).

We are in discussions with potential tenants to lease this farm and currently expect to come to an agreement within the next three months;

however, there can be no guarantee that we will be able to reach a lease agreement with a tenant at favorable terms to us, or at all.

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

As such, during the three months ended March 31, 2023, we recognized lease revenues from the seven leases with these three tenants (three on farms in California and four 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 at market rental rates within 1 to 12 months.

During the three months ended March 31, 2023, we recorded aggregate lease revenues related to the aforementioned properties of approximately $363,000 (including approximately $72,000 of participation rents), as compared to approximately $470,000 (including no participation rents) during the three months ended March 31, 2022.

California Floods

In January 2023, periods of heavy rainfall in California resulted in floods that impacted several areas of the state, including regions where certain of our farms are located.

As a result of the flooding, one of our farms in the Central Valley suffered damage to certain structures located on the farm.

We are still in the process of assessing the damage;

however, as of March 31, 2023, we estimated the carrying value of the structures on this property damaged by the floods to be approximately $855,000.

As such, during the three months ended March 31, 2023, we wrote down the carrying value of these structures and also

recorded a corresponding property and casualty loss, included within Property and casualty (loss) recovery, net on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income.

We currently expect the damage to be fully covered by either insurance or the tenant’s obligations pursuant to the lease.

Certain of our other farms in California suffered minor damage as a result of the floods, but no other farms were materially impacted.

Financing Activity

Debt Activity

Since July 1, 2022, we repaid approximately $17.3 million of maturing loans.

On a weighted-average basis, these borrowings bore interest at a stated rate of 4.47% and an effective interest rate (after interest patronage) of 2.93%.

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, 2023, we recorded interest patronage of approximately $2.3 million related to interest accrued on the Farm Credit Notes Payable during the year ended December 31, 2022, 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 total, 2022 interest patronage resulted in a 24.1% reduction (approximately 109 basis points) to the interest rates on such borrowings.

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

Loan Repayments

From January 1, 2023, through the date of this filing, we repaid approximately $21.8 million of maturing loans.

On a weighted-average basis, these borrowings bore interest at a stated rate of 3.46% and an effective interest rate (after interest patronage, where applicable) of 3.40%.

Equity Activity

Series C Preferred Stock

On April 3, 2020, we filed a prospectus supplement with the SEC for a continuous public offering (the “Series C Offering”) of up to 26,000,000 shares of our 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 pursuant to the DRIP to 200,000;

and (iii) reduce the duration of the period during which shares of the Series C Preferred Stock may be offered for sale to the earlier of (a) December 31, 2022 (unless earlier terminated or extended by our Board of Directors) or (b) the date on which all 10,200,000 shares of the Series C Preferred Stock offered in the Primary Series C Offering are sold.

The offering period for the DRIP will terminate on the earlier of (1) the issuance of all 200,000 shares of Series C Preferred Stock under the DRIP and (2) the listing of the Series C Preferred Stock on the Nasdaq Global Market or another national securities exchange.

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

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

Shares Sold (1)

Weighted-average

Sales Price per Share Gross Proceeds Net Proceeds (2)

On April 3, 2020, we filed a prospectus supplement with the SEC for a continuous public offering (the “Series C Offering”) of our 6.00% Series C Cumulative Redeemable Preferred Stock (the “Series C Preferred Stock”).

Under the Series C Offering, as amended, we were permitted to sell up to 10,200,000 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 200,000 additional shares of our Series C Preferred Stock pursuant to our dividend reinvestment plan (the “DRIP”) at a price of $22.75 per share.

The Primary Series C Offering terminated on December 31, 2022, and the DRIP was terminated effective March 22, 2023.

From January 1, 2023, through the date of this filing, we issued approximately 6,913 shares of the Series C Preferred Stock pursuant to the DRIP and redeemed 400 shares that were tendered for optional redemption.

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.

The following table summarizes the sales of our Series E Preferred Stock that occurred from January 1, 2023, through the date of this filing (dollars in thousands):

Shares Sold Weighted-average

Offering Price Per Share Gross Proceeds Net Proceeds (1)

99,981 $ 24.94 $ 2,494 $ 2,250

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

From July 1, 2022, through the date of this filing, we redeemed 33,955 shares and issued approximately 17,562 shares of the Series C Preferred Stock pursuant to the DRIP.

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

Aggregate selling commissions and dealer-manager fees paid to Gladstone Securities as a result of these sales was approximately $6.6 million.

As amended, the Series C Offering will terminate on the date (the “Series C Termination Date”) that is the earlier of either December 31, 2022 (unless terminated earlier or extended by our Board of Directors), or the date on which all 10,200,000 shares in the Primary Series C Offering are sold.

There is currently no public market for shares of the Series C Preferred Stock;

however, we intend to apply to list the Series C Preferred Stock on Nasdaq or another national securities exchange within one calendar year after the Series C Termination Date, though there can be no assurance that a listing will be achieved in such timeframe, or at all.

(1) Net of underwriting discounts, 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 $244,000.

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 offered in the Series E Offering are sold.

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

We intend 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

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

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

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

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

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

(each a “Sales Agent”), that, as subsequently amended, permitted us to issue and sell, from time to time and through the Sales Agents, shares of our common stock having an aggregate offering price of up to $260.0 million (the “ATM Program”).

On April 13, 2023, we entered into separate amended and restated equity distribution agreements with the Sales Agents to allow us to sell shares of our common stock having an aggregate offering price of up to $500.0 million.

The following table summarizes the activity under the ATM Program from January 1, 2023, through the date of this filing (dollars in thousands):

Number of Shares Sold Weighted-average

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According to the U.S.

Bureau of Labor Statistics, the consumer price index (“CPI”) grew at an annual rate of 8.2% through September 2022, as inflation continues to hover near the highest rates seen in over four decades.

However, food prices have continued to outpace the rate of inflation, with the overall food segment increasing by 11.2% over that same period, and the food at home segment (which encompasses over 90% of the crops grown on our farms) growing by 13.0%.

In addition, according to the NCREIF Farmland Index, which, as of September 30, 2022, consisted of approximately $14.9 billion of farms across the U.S., the total return on U.S.

farmland (including appreciation and income) was 10.2% for the 12 months ended September 30, 2022.

Bureau of Labor Statistics, the consumer price index (“CPI”) grew at an annual rate of 5.0% through March 2023, as overall inflation continued to ease from the peak levels experienced in the summer of 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 8.5% through March 2023, and the food at home segment (which encompasses over 90% of the crops grown on our farms) growing by 8.4%.

In addition, according to the NCREIF Farmland Index, which, as of March 31, 2023, consisted of approximately $15.9 billion of farms across the U.S., the total return on U.S.

farmland (including appreciation and income) was 8.9% for the 12 months ended March 31, 2023.

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.

Interest rates remain volatile in response to competing concerns about inflationary pressures and the spread and effect of coronavirus (“COVID-19”) variants, coupled with the threat of a near-term recession.

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 ten 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 since the beginning of 2022 and has 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 ongoing COVID-19 pandemic, and geopolitical conditions, although the actual timeline, impact, and duration are unknown.

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

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.

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 public health emergencies, and geopolitical conditions, although the actual timeline, impact, and duration are unknown.

Over 99.9% of our borrowings are currently at fixed rates, and on a weighted-average basis, these rates are fixed at an effective interest rate of 3.34% for another 4.8 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.

LIBOR Transition

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

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

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

SOFR was formally adopted by the Alternative Reference Rates Committee in July 2021.

The current intent is to adjust the SOFR to minimize the differences between the interest that a borrower would be paying using LIBOR versus what it will be paying SOFR.

We continue to monitor the transition and currently expect SOFR to 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 LIBOR and include fallback language providing a mechanism for the parties to negotiate a new reference interest rate in the event that LIBOR ceases to exist.

As such, we anticipate we will need to renegotiate these agreements in the near-term future and expect such discussions with the respective lenders to commence soon.

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

The intent was to adjust the SOFR to minimize the differences between the interest that a borrower was paying using LIBOR versus what it will be paying SOFR.

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) were previously indexed based on LIBOR, and all have since transitioned to SOFR, resulting in a minimal impact to our overall operations.

Our Adviser and Administrator

We are externally managed pursuant to contractual arrangements with our Adviser and our Administrator (both affiliates of ours), which collectively employ all of our personnel and pay their salaries, benefits, and general expenses directly.

The investment advisory agreement with our Adviser that was in effect through June 30, 2021 (the “Prior Advisory Agreement”), was amended and restated effective July 1, 2021 (as amended, the “Current Advisory Agreement,” and together with the Prior Advisory Agreement, the “Advisory Agreements”).

The Current Advisory Agreement revised the calculation of the base management fee beginning with the three months ended September 30, 2021, while all other terms of the Prior Advisory Agreement remained the same.

Each of the Advisory Agreements and the current administration agreement with our Administrator (the “Administration Agreement”) were approved unanimously by our board of directors, including, specifically, our independent directors.

A summary of certain compensation terms within the Advisory Agreements and a summary of the Administration Agreement is below.

Advisory Agreements

Pursuant to each of the Advisory Agreements, our Adviser is compensated in the form of a base management fee and, each as applicable, an incentive fee, a capital gains fee, and a termination fee.

The current investment advisory agreement with our Adviser (the “Advisory Agreement”) and the current administration agreement with our Administrator (the “Administration Agreement”) were each approved unanimously by our board of directors, including, specifically, our independent directors.

A summary of certain compensation terms within the Advisory Agreement and a summary of the Administration Agreement is below.

Advisory Agreement

Pursuant to the Advisory Agreement, our Adviser is compensated in the form of a base management fee and, each as applicable, an incentive fee, a capital gains fee, and a termination fee.

Our Adviser does not charge acquisition or disposition fees when we acquire or dispose of properties, as is common in other externally-managed REITs.

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Base Management Fee

Pursuant to the Prior Advisory Agreement, through June 30, 2021, a base management fee was paid quarterly and was calculated at an annual rate of 0.50% (0.125% per quarter) of the prior calendar quarter’s “Gross Tangible Real Estate,” defined as the gross cost of tangible real estate owned by us (including land and land improvements, permanent plantings, irrigation and drainage systems, farm-related facilities, and other tangible site improvements), prior to any accumulated depreciation, and as shown on our balance sheet or the notes thereto for the applicable quarter.

Pursuant to the Current Advisory Agreement, beginning with the three months ended September 30, 2021, a base management fee is paid quarterly and is calculated at an annual rate of 0.60% (0.15% per quarter) of the prior calendar quarter’s Gross Tangible Real Estate.

Pursuant to the Advisory Agreement, a base management fee is paid quarterly and is calculated at an annual rate of 0.60% (0.15% per quarter) of the prior calendar quarter’s “Gross Tangible Real Estate,” defined as the gross cost of tangible real estate owned by us (including land and land improvements, permanent plantings, irrigation and drainage systems, farm-related facilities, and other tangible site improvements), prior to any accumulated depreciation, and as shown on our balance sheet or the notes thereto for the applicable quarter.

Incentive Fee

Pursuant to each of the Advisory Agreements, an incentive fee is calculated and payable quarterly in arrears if the Pre-Incentive Fee FFO for a particular quarter exceeded a hurdle rate of 1.75% (7.0% annualized) of the prior calendar quarter’s Total Adjusted Common Equity.

Pursuant to the Advisory Agreement, an incentive fee is calculated and payable quarterly in arrears if the Pre-Incentive Fee FFO for a particular quarter exceeded a hurdle rate of 1.75% (7.0% annualized) of the prior calendar quarter’s Total Adjusted Common Equity.

For purposes of this calculation, Pre-Incentive Fee FFO is defined in the Advisory Agreement as FFO (also as defined in the Advisory Agreement) accrued by the Company during the current calendar quarter (prior to any incentive fee calculation for the current calendar quarter), less any dividends declared on preferred stock securities that were not treated as a liability for GAAP purposes.

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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 September 30, 2022, we qualified as a “smaller reporting company” under Rule 12b-2 of the Exchange Act because we had annual revenues of less than $100 million for the previous year and a public float of less than $700 million as of the last business day of our previous second fiscal quarter.

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

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

Critical Accounting Policies

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

There were no material changes to our critical accounting policies during the nine months ended September 30, 2022.

There were no material changes to our critical accounting policies during the three months ended March 31, 2023.

RESULTS OF OPERATIONS

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

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

◦ Same-property basis represents farms owned as of June 30, 2021, and were not vacant at any point during either period presented;

◦ Properties acquired or disposed of are farms that were either acquired or disposed of at any point subsequent to June 30, 2021.

From July 1, 2021, through September 30, 2022, we acquired 17 new farms and did not have any farm dispositions.

• With regard to the comparison between the nine months ended September 30, 2022 versus 2021:

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

For the purposes of the following discussions on certain operating revenues and expenses with regard to the comparison between the three months ended March 31, 2023 and 2022:

• Same-property basis represents farms owned as of December 31, 2021, which were not vacant at any point during either period presented and full collectability of future rental payments under the respective leases was deemed probable during the entirety of both periods;

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

From January 1, 2021, through September 30, 2022, we acquired 32 new farms and did not have any farm dispositions.

We did not have any vacant or self-operated farms during either of the three and nine months ended September 30, 2022 or 2021.

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

For the Three Months Ended September 30,

2022 2021 $ Change % Change

Operating revenues:

Lease revenues:

Fixed lease payments $ 21,178 $ 17,791 $ 3,387 19.0%

Variable lease payments – participation rents 3,003 1,800 1,203 66.8%

Variable lease payments – tenant reimbursements 28 — 28 100.0%

Total operating revenues 24,209 19,591 4,618 23.6%

Operating expenses:

Depreciation and amortization 9,146 6,944 2,202 31.7%

Property operating expenses 706 696 10 1.4%

Base management and incentive fees 2,591 2,693 (102) (3.8)%

Administration fee 543 412 131 31.8%

General and administrative expenses 729 462 267 57.8%

Write-off of costs associated with Series C cumulative redeemable preferred stock 851 — 851 100.0%

Total operating expenses 14,566 11,207 3,359 30.0%

Operating income $ 9,643 $ 8,384 $ 1,259 15.0%

For the Nine Months Ended September 30,

From January 1, 2022, through March 31, 2023, we acquired five new farms and did not have any farm dispositions;

• Vacant, self-operated, or non-accrual properties are:

◦ Farms that were vacant (either wholly or partially) at any point during either period presented.

We did not have any vacant farms during either of the three months ended March 31, 2023 or 2022;

◦ Farms that were self-operated at any point during either period presented.

One of our farms was self-operated (via a management agreement with an unrelated third-party) during a portion of the three months ended March 31, 2023;

◦ Farms with leases where revenue was recognized on a cash basis during either period presented (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 three months ended March 31, 2023, we recognized revenue from 7 different leases with 3 separate tenants (encompassing 17 different farms) on a cash basis.

A comparison of results of components comprising our operating income for the three months ended March 31, 2023 and 2022 is below (dollars in thousands):

For the Three Months Ended March 31,

2023 2022 $ Change % Change

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Fixed lease payments $ 20,960 $ 19,938 $ 1,022 5.1%

Variable lease payments – participation rents 3,024 1,845 1,179 63.9%

Variable lease payments – participation rents 195 — 195 NM

Variable lease payments – tenant reimbursements 47 5 42 840.0%

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General and administrative expenses 786 684 102 14.9%

Write-off of costs associated with Series C cumulative redeemable preferred stock 851 — 851 100.0%

Total operating expenses 13,757 13,364 393 2.9%

Operating income $ 7,445 $ 6,579 $ 866 13.2%

NM = Not Meaningful

Operating Revenues

Lease revenues

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

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

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

The following table provides a summary of our lease revenues during the three months ended March 31, 2023 and 2022 (dollars in thousands):

For the Three Months Ended March 31,

2023 2022 $ Change % Change

Same-property basis:

Fixed lease payments $ 19,604 $ 19,469 $ 135 0.7%

Participation rents 3,003 1,800 1,203 66.8% 3,024 1,845 1,179 63.9%

Participation rents 123 — 123 NM

Total – Same-property basis 19,727 19,469 258 1.3%

Properties acquired or disposed of:

Tenant reimbursements (1)

Fixed lease payments 1,075 — 1,075 NM

Participation rents — — — NM

Total – Properties acquired or disposed of 1,075 — 1,075 NM

Vacant, self-operated, or non-accrual, properties:

Fixed lease payments 281 469 (188) (40.1)%

Participation rents 72 — 72 NM

Total – Vacant, self-operated, or non-accrual properties 353 469 (116) (24.7)%

Tenant reimbursements and other (1)

47 5 42 840.0%

Total Lease revenues $ 21,202 $ 19,943 $ 1,259 6.3%

(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.

NM = Not Meaningful

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

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

Same-property Basis – 2023 compared to 2022

Lease revenues from fixed lease payments increased primarily due to 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 fixed lease payments was partially offset by a decrease due to certain lease amendments and renewals executed, through which we decreased the fixed base rent component in exchange for either adding a participation rent component to the lease structure or reducing certain operating expenses for which the landlord was previously responsible.

Participation rents related to these leases, if any, are expected to be recorded during the three months ending December 31, 2022.

Lease revenues from participation rents increased primarily due to more farms having scheduled participation rent payments due during 2022 compared to 2021.

Lease revenues from fixed lease payments remained relatively flat for the three months ended March 31, 2023, as compared to the prior-year period.

Lease revenues from participation rents increased primarily due to additional information being made available to us during the three months ended March 31, 2023, that allowed such amounts to be reasonably determinable and thus recorded.

These amounts were originally scheduled to be paid during the three months ended December 31, 2022;

however, sufficient information to record such amounts were not known at the time.

Other – 2023 compared to 2022

Lease revenue from properties acquired or disposed of increased primarily due to additional revenues earned on new farms acquired subsequent to December 31, 2021.

Fixed lease payments from vacant, self-operated, or non-accrual properties decreased primarily due to revenue from certain of our leases being recognized on a cash basis during the three months ended March 31, 2023 (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.

These leases will continue to be recognized on a non-accrual basis until we deem full collectability of future rental payment under these leases to be probable.

In addition, one of our farms was self-operated (via a management agreement with an unrelated third-party) for a portion of the three months ended March 31, 2023.

This decrease was partially offset by cash collections (in part or in whole) from tenants occupying certain of these properties during the three months ended March 31, 2023.

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.

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Depreciation and amortization expense increased primarily due to additional depreciation and amortization expense incurred on new farms acquired subsequent to December 31, 2021, as well as an increase in depreciation associated with additional capital expenditures on certain of our farms.

This 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.

This increase was partially offset by a decrease attributable to certain assets reaching the end of their useful lives.

Property operating expenses

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

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

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

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

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

The following table provides a summary of the property-operating expenses recorded during the three months ended March 31, 2023 and 2022 (dollars in thousands):

For the Three Months Ended March 31,

2023 2022 $ Change % Change

Same-property basis $ 854 $ 654 $ 200 30.6%

Properties acquired or disposed of 19 21 (2) (9.5)% 79 52 27 51.9%

Properties acquired or disposed of 4 — 4 NM

Vacant, self-operated, or non-accrual properties 228 37 191 516.2%

Tenant-reimbursed property operating expenses (1)

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Total Property operating expenses $ 1,128 $ 703 $ 425 60.5%

NM = Not Meaningful

(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.

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Same-property Basis – 2023 compared to 2022

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

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.

Property operating expenses increased primarily due to higher legal fees and other costs incurred in connection with protecting water rights on certain farms in California, as well as additional repair and maintenance expenses incurred as a result of natural disasters at certain of our farms.

This increase was partially offset by a decrease in property tax expenses.

Other – 2023 compared to 2022

Property operating expenses attributable to vacant, self-operated, or non-accrual properties increased primarily due to third-party property management expenses incurred on a farm that was self-operated for a portion of the three months ended March 31, 2023.

The increase in property operating expenses was also attributable to additional legal fees incurred in connection with rent collection or lease termination efforts for those tenants on farms that were placed on non-accrual status.

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 cost incurred by the underlying entities.

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

Related-Party Fees

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

The following table provides the calculations of the base management and incentive fees due to our Adviser pursuant to the Advisory Agreement for the three months ended March 31, 2023 and 2022 (dollars in thousands;

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

Quarter Ended Year to Date

March 31 June 30 September 30

Quarter Ended

FY 2023 Fee Calculations:

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Gross Tangible Real Estate (1)(2)

$ 1,357,800 $ 1,361,757 $ 1,390,646

Quarterly rate 0.150 %

Base management fee (3)

$ 2,036 $ 2,043 $ 2,086 $ 6,165

Incentive Fee:

Total Adjusted Common Equity (1)(2)

$ 378,299 $ 381,201 $ 364,955

First hurdle quarterly rate 1.750 %

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Pre-Incentive Fee FFO (1)

$ 7,751 $ 4,819 $ 6,892

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

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Total Incentive fee (3)

$ 1,131 $ — $ 505 $ 1,636

Total fees due to Adviser, net $ 3,167 $ 2,043 $ 2,591 $ 7,801

Total fees due to Adviser $ 2,149

FY 2022 Fee Calculations:

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Gross Tangible Real Estate (1)(2)

$ 1,095,440 $ 1,101,071 $ 1,165,366

Quarterly rate 0.150 %

Base management fee (3)

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

Incentive Fee:

Total Adjusted Common Equity (1)(2)

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

First hurdle quarterly rate 1.750 %

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Pre-Incentive Fee FFO (1)

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

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

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Total Incentive fee (3)

$ 1,162 $ — $ 945 $ 2,107

Total fees due to Adviser, net $ 2,532 $ 1,376 $ 2,693 $ 6,601

(1) As defined in the Advisory Agreements.

Total fees due to Adviser $ 3,168

(1) As defined in the Advisory Agreement.

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

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

The base management fee increased primarily due to additional assets acquired since December 31, 2020, and an increase in the annual rate applied to the prior calendar quarter’s Gross Tangible Real Estate Assets (from 0.50% pursuant to the Prior Advisory Agreement to 0.60% pursuant to the Current Advisory Agreement), effective July 1, 2021.

Our Adviser earned incentive fees during each of the three and nine months ended September 30, 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 and third quarters of fiscal years 2022 and 2021.

The base management fee increased primarily due to additional assets acquired and improvements made on certain of our farms since December 31, 2021.

Our Adviser earned an incentive fee during the three months ended March 31, 2022, due to our Pre-Incentive Fee FFO (as defined in the Advisory Agreement) exceeding the required hurdle rate of the applicable equity base during the first quarter of fiscal year 2022.

No incentive fee was earned by our Adviser during the three months ended March 31, 2023, as our Pre-Incentive Fee FFO did not surpass the required hurdle rate.

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.

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

General and administrative expenses increased for each of the three and nine months ended September 30, 2022, as compared to the respective prior-year periods, primarily due to an increase in professional fees (driven by higher audit fees and appraisal costs) and, for the three months ended September 30, 2022, an increase in acquisition-related costs for investments no longer being pursued.

During each of the three and nine months ended September 30, 2022, we wrote off approximately $851,000 of costs (including approximately $798,000 of unamortized deferred offering costs) related to the Series C Offering due to an amendment that reduced the amount 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 three and nine months ended September 30, 2022 and 2021 is below (dollars in thousands):

For the Three Months Ended September 30,

2022 2021 $ Change % Change

Operating income $ 9,643 $ 8,384 $ 1,259 15.0%

Other income (expense):

Other income 237 20 217 1,085.0%

Interest expense (6,476) (6,126) (350) 5.7%

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

Loss on dispositions of real estate assets, net (819) (1) (818) 81,800.0%

Loss from investments in unconsolidated entities (24) (19) (5) 26.3%

Total other expense, net (7,837) (6,881) (956) 13.9%

Net income 1,806 1,503 303 20.2%

Net income attributable to non-controlling interests (2) (8) 6 (75.0)%

Net income attributable to the Company 1,804 1,495 309 20.7%

Dividends declared on and charges related to Series B and Series C cumulative redeemable preferred stock (5,398) (3,134) (2,264) 72.2%

Net loss attributable to common stockholders $ (3,594) $ (1,639) $ (1,955) 119.3%

For the Nine Months Ended September 30,

General and administrative expenses increased during the three months ended March 31, 2023, primarily due to stockholder-related expenses incurred related to the annual stockholders’ meeting and higher professional fees..

A comparison of results of other components contributing to net loss attributable to common stockholders for the three months ended March 31, 2023 and 2022 is below (dollars in thousands):

For the Three Months Ended March 31,

2023 2022 $ Change % Change

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Interest expense (6,036) (6,448) 412 (6.4)%

Dividends declared on Series A and Series D cumulative term preferred stock (2,264) (2,314) 50 (2.2)%

Dividends declared on cumulative term preferred stock (755) (755) — —%

Loss on dispositions of real estate assets, net (481) (976) 495 (50.7)%

Property and casualty recovery, net 49 — 49 100.0%

Property and casualty (loss) recovery, net (1,016) 49 (1,065) (2,173.5)%

Loss from investments in unconsolidated entities (27) (29) 2 (6.9)%

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Net income attributable to the Company 1,750 1,178 572 48.6%

Dividends declared on and charges related to Series B and Series C cumulative redeemable preferred stock (13,801) (8,837) (4,964) 56.2%

Aggregate dividends declared on and charges related to extinguishment of cumulative redeemable preferred stock (6,070) (3,915) (2,155) 55.0%

Net loss attributable to common stockholders $ (4,320) $ (2,737) $ (1,583) 57.8%

Other Income (Expense)

Other income, which generally consists of interest patronage received from Farm Credit (as defined in Note 4, “ Borrowings ,” in the accompanying notes to our condensed consolidated financial statements) and interest earned on short-term investments, increased 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 2023 interest patronage (which relates to interest accrued during 2022) early.

In the aggregate, we recorded approximately $2.9 million of interest patronage from Farm Credit during the three months ended September 30, 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 three and nine months ended September 30, 2022, was approximately $649.2 million and $660.1 million, respectively, as compared to approximately $627.6 million and $629.2 million for the respective prior-year periods.

Excluding interest patronage received on certain of our Farm Credit borrowings and the impact of debt issuance costs, the overall effective interest rate charged on our aggregate borrowings for the three and nine months ended September 30, 2022, was 3.82% and 3.76%, respectively, as compared to 3.74% and 3.72% for the respective prior-year periods.

Other income, which generally consists of interest patronage received from Farm Credit (as defined in Note 4, “ Borrowings ,” in the accompanying notes to our condensed consolidated financial statements) and interest earned on short-term investments, decreased primarily due to less interest patronage received from Farm Credit (primarily due to decreased borrowings from Farm Credit), partially offset by an increase in income earned on short-term investments due to higher interest rates.

During the three months ended March 31, 2023, we recorded approximately $2.3 million of interest patronage from Farm Credit related to interest accrued during 2022, as compared to approximately $2.8 million of interest patronage recorded during the prior-year period that related to interest accrued during 2021.

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

In total, 2022 interest patronage resulted in a 24.1% reduction (approximately 109 basis points) to the interest rate of such borrowings.

Interest expense decreased, primarily due to a decrease in overall borrowings.

The weighted-average principal balance of our aggregate borrowings (excluding our cumulative term preferred stock) outstanding for the three months ended March 31, 2023, was approximately $612.2 million, as compared to approximately $664.3 million for the prior-year period.

Excluding interest patronage received on certain of our Farm Credit borrowings and the impact of debt issuance costs, the overall effective interest rate charged on our aggregate borrowings for the three months ended March 31, 2023, was 3.77% as compared to 3.72% for the prior-year period.

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

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

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 property and casualty loss recorded during the three months ended March 31, 2023, was primarily due to the heavy rainfall that occurred in California in early 2023, resulting in floods that impacted several areas of the state, including regions where certain of our farms are located.

See Item 2, “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Developments ,” for further discussion on the damage caused by the California floods.

The aggregate dividends paid on our cumulative redeemable preferred stock increased due to additional shares of the Series C Preferred Stock and Series E Preferred Stock issued and outstanding during the current-year period.

LIQUIDITY AND CAPITAL RESOURCES

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

Our current available liquidity is approximately $176.2 million, consisting of approximately $48.9 million in cash on hand and, based on the current level of collateral pledged, approximately $127.3 million of availability under our credit facility with MetLife (subject to compliance with covenants) and other undrawn

notes or bonds.

Our current available liquidity is approximately $192.4 million, consisting of approximately $42.7 million in cash on hand and, based on the current level of collateral pledged, approximately $149.7 million of availability under our credit facility with MetLife (subject to compliance with covenants) and other undrawn notes or bonds.

In addition, we currently have certain properties valued at a total of approximately $131.1 million that are unencumbered and eligible to be pledged as collateral.

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

Over 99.9% of our borrowings are currently at fixed rates, and on a weighted-average basis, these rates are fixed at an effective interest rate of 3.34% for another 4.8 years.

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

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Future Capital Needs

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

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

We expect to meet our long-term liquidity requirements through various sources of capital, including future equity issuances (including, but not limited to, shares of common stock through our 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.

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 cumulative term preferred stock and cumulative redeemable 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 cumulative term preferred stock and cumulative redeemable 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.

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

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

Below is a summary of certain of those projects for which we have incurred or accrued costs as March 31, 2023 (dollars in thousands):

Location(s) Farm

3 unchanged sentences

or Accrued as of

September 30, 2022

Hillsborough, FL 55 $ 2,250 (2)

Q4 2022 $ 1,681

Charlotte, FL 975 3,000 (2)

Q4 2022 2,841

March 31, 2023

Lucie, FL 549 $ 230 Q3 2023 $ 201

Umatilla, OR 135 2,750 (2)

Q4 2023 2,233

Columbia, OR 157 1,800 (2)

Q3 2024 1,146

Napa, CA 270 1,635 (2)

Umatilla, OR 135 2,750 (2) Q4 2023 2,321

Columbia, OR 157 1,800 (2) Q3 2024 1,146

Ventura, CA 402 1,000 (2) Q4 2025 448

Napa, CA 270 1,635 (2) Q4 2029 876

Wicomico & Caroline, MD, and Sussex, DE 833 115 Q3 2030 49

Franklin & Grant, WA, and Umatilla, OR 1,126 2,169 (2)

Yuma, AZ 3,033 941 (2) Q4 2031 808

Franklin & Grant, WA, & Umatilla, OR 1,126 2,169 (2) Q4 2032 660

(1) Our obligation to provide capital to fund these improvements does not extend beyond these respective dates.

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In connection with certain farms acquired through a leasehold interest, we assumed certain ground lease arrangements under which we are the lessee.

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

Future minimum lease payments due under the remaining non-cancelable terms of these leases as of March 31, 2023, is as follows (dollars in thousands):

Period Future Lease Payments (1)

For the remaining three months ending December 31:

For the remaining nine months ending December 31:

For the fiscal years ending December 31:

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The amounts shown above represent estimated amounts based on the lease rates currently in place.

As a result of these ground leases, we recorded lease expense (included within Property operating expenses on the accompanying Condensed Consolidated Statement of Operations and Comprehensive Income) of approximately $23,000 and $69,000 during the three and nine months ended September 30, 2022, respectively, and approximately $22,000 and $58,000 during the three and nine months ended September 30, 2021, respectively.

As a result of these ground leases, we recorded lease expense (included within Property operating expenses on the accompanying Condensed Consolidated Statement of Operations and Comprehensive Income) of approximately $25,000 and $23,000 during the three months ended March 31, 2023 and 2022, respectively.

Cash Flow Resources

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

For the Nine Months Ended September 30,

The following table summarizes total net cash flows from operating, investing, and financing activities for the three months ended March 31, 2023 and 2022 (dollars in thousands):

For the Three Months Ended March 31,

2023 2022 $ Change % Change

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

Cash provided by operating activities increased primarily due to additional fixed lease (from recent acquisitions) and participation rental payments (due to more farms having scheduled participation rents) and interest patronage received from Farm Credit, partially offset by an increase in fees paid to our Adviser and increases in the amount of interest payments made.

Cash provided by operating activities decreased primarily due to less interest patronage received during the three months ended March 31, 2023 (as a significant portion was received subsequent to March 31, 2023), and an increase in certain non-rent receivables from two entities that we expect to collect in full over the next couple of months.

Investing Activities

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

The decrease in cash used in investing activities was primarily due to a decrease in the amount of cash paid for capital improvements on existing farms during the current-year period.

Financing Activities

The decrease in cash provided by financing activities was primarily due to the issuance of our Series D Term Preferred Stock in the first quarter of 2021 (which, after voluntarily redeeming our Series A Term Preferred Stock in full, resulted in net cash proceeds of approximately $31.6 million), a decrease in aggregate net cash proceeds received from equity offerings (including our common stock and the Series C Preferred Stock) of approximately $17.0 million, and a decrease in aggregate net borrowings of approximately $50.2 million.

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

The decrease in cash provided by financing activities was primarily due to a decrease in aggregate net cash proceeds received from preferred and common equity offerings of approximately $31.2 million and a decrease in aggregate net borrowings of approximately $19.8 million.

MetLife Facility

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

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

The draw period for the 2020 MetLife Term Note expires on December 31, 2022, and the draw period for the 2022 MetLife Term Note expires on December 31, 2024 (see Note 4, “ Borrowings—MetLife Facility ,” within the accompanying notes to our condensed consolidated financial statements for information on certain defined terms).

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

While $213.0 million of the full commitment amount under the MetLife Facility remains undrawn, based on the level of collateral pledged, we currently have approximately $110.3 million of availability under the 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 in December 2020, our agreement with Federal Agricultural Mortgage Corporation (“Farmer Mac”) provides for bond issuances up to an aggregate amount of $225.0 million (the “Farmer Mac Facility”) by May 31, 2023, after which Farmer Mac has no obligation to purchase additional bonds under this facility.

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

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

We are currently in discussions with Farmer Mac to extend the period during which we may issue new bonds under the facility, and we expect to execute such an agreement during the three months ending June 30, 2023.

Farm Credit and Other Lenders

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The following table provides information on equity sales that have occurred since January 1, 2023 (dollars in thousands, except per-share amounts;

excludes shares of Series C Preferred Stock issued pursuant to the DRIP):

Type of Issuance Number of

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Per Share Gross Proceeds Net Proceeds (1)

Series C Preferred Stock (2)(3)

6,313,502 $ 24.76 $ 156,319 $ 143,632

Series E Preferred Stock 99,981 $ 24.94 $ 2,494 $ 2,250

Common Stock – ATM Program 663,585 19.72 13,084 12,953

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

(2) Excludes share redemptions.

(3) Excludes approximately 30,288 shares issued pursuant to the DRIP.

Our Registration Statement (as defined in Note 8, “ Equity—Registration Statement ,” within the accompanying notes to our condensed consolidated financial statements) permits us to issue up to an aggregate of $1.0 billion in securities (including up to approximately $259.6 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 $243.9 million of Series C Preferred Stock (including approximately $872,000 issued pursuant to the DRIP), $60.4 million of Series D Term Preferred Stock, and $260.6 million of common stock (including common stock issued to redeem OP Units) under the Registration Statement.

Our 2023 Registration Statement (as defined in Note 8, “ Equity—Registration Statement ,” within the accompanying notes to our condensed consolidated financial statements) permits us to issue up to an aggregate of $1.5 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 $553,000 of Series E Preferred Stock under the 2023 Registration Statement.

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

Off-Balance Sheet Arrangements

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

As of March 31, 2023, we did not have any material off-balance sheet arrangements.

NON-GAAP FINANCIAL INFORMATION

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In addition to these adjustments, we also modify the calculation of cash rents within our definition of AFFO to provide greater consistency and comparability due to the period-to-period volatility in which cash rents are received.

To coincide with our tenants’ harvest seasons, our leases typically provide for cash rents to be paid at various points throughout the lease year, usually annually or semi-annually.

To coincide with our tenants’ harvest seasons, our leases typically provide for cash rents to be paid at various points

throughout the lease year, usually annually or semi-annually.

As a result, cash rents received during a particular period may not necessarily be comparable to other periods or represent the cash rents indicative of a given lease year.

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

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

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

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

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

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

The following table provides a reconciliation of our FFO, CFFO, and AFFO for the three and nine months ended September 30, 2022 and 2021 to the most directly-comparable GAAP measure, net income, and a computation of diluted FFO, CFFO, and AFFO per share, using the weighted-average number of total shares (including shares of our common stock and OP Units held by non-controlling OP Unitholders) outstanding during the respective periods (dollars in thousands, except per-share amounts):

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

2022 2021 2022 2021

The following table provides a reconciliation of our FFO, CFFO, and AFFO for the three months ended March 31, 2023 and 2022 to the most directly-comparable GAAP measure, net income, and a computation of diluted FFO, CFFO, and AFFO per share, using the weighted-average number of total shares (including shares of our common stock and OP Units held by non-controlling OP Unitholders) outstanding during the respective periods (dollars in thousands, except per-share amounts):

For the Three Months Ended March 31,

Net income $ 1,750 $ 1,187

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

Aggregate dividends declared on and charges related to extinguishment of cumulative redeemable preferred stock (1)

(6,070) (3,915)

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Acquisition- and disposition-related expenses, net 19 109

Other nonrecurring charges, net (3)

Other nonrecurring charges (receipts), net (3)

CFFO available to common stockholders and non-controlling OP Unitholders 6,458 6,680

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Other non-cash charges (4)

264 101 606 164

AFFO available to common stockholders and non-controlling OP Unitholders 6,039 6,381

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Distributions declared per total common share $ 0.14 $ 0.14

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

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

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

(3) Consists primarily of (i) costs related to the reduction in size of the Series C Offering that were expensed during the three months ended September 30, 2022, (ii) net property and casualty recoveries recorded, net of the cost of related repairs expensed, as a result of the damage caused to certain irrigation improvements by natural disasters on certain of our properties, (iii) one-time listing fees related to our Series D Term Preferred Stock, and (iv) certain one-time costs related to the early redemption of our Series A Term Preferred Stock.

(3) Consists primarily of (i) net property and casualty losses (recoveries) recorded and the cost of related repairs expensed as a result of the damage caused to certain improvements by natural disasters on certain of our farms and (ii) costs related to the amendment of the Series C Offering that were expensed.

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

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

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

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

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

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

A breakdown of the methodologies used to value our properties and the aggregate value as of March 31, 2023, determined by each method is shown in the table below (dollars in thousands, except in footnotes):

Valuation Method Number of

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

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

Some of the significant assumptions used by appraisers and the Valuation Team in valuing our portfolio as of September 30, 2022, include land values per farmable acre, market rental rates per farmable acre and the resulting net operating income (“NOI”) at the property level, and capitalization rates, among others.

(2) Appraisals performed between June 2022 and March 2023.

Some of the significant assumptions used by appraisers and the Valuation Team in valuing our portfolio as of March 31, 2023, include land values per farmable acre, market rental rates per farmable acre and the resulting net operating income (“NOI”) at the property level, and capitalization rates, among others.

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

A summary of these significant assumptions is provided in the following table:

A summary of these significant assumptions as of March 31, 2023, is provided in the following table:

Appraisal Assumptions Internal Valuation Assumptions

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

Management believes that the purchase prices of the farms acquired during the previous 12 months and the most recent appraisals available for the farms acquired prior to the previous 12 months fairly represent the current market values of the properties as of September 30, 2022, and, accordingly, did not make any adjustment to these values.

A quarterly roll-forward of the change in our portfolio value for the three months ended September 30, 2022, from the prior value basis as of June 30, 2022, is provided in the table below (dollars in thousands):

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

Acquisition of new farms during the three months ended September 30, 2022 37,448

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

Management believes that the purchase prices of the farms acquired during the previous 12 months and the most recent appraisals available for the farms acquired prior to the previous 12 months fairly represent the current market values of the properties as of March 31, 2023, and, accordingly, did not make any adjustment to these values.

A quarterly roll-forward of the change in our portfolio value for the three months ended March 31, 2023, from the prior value basis as of December 31, 2022, is provided in the table below (dollars in thousands):

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

Acquisitions of new farms during the three months ended March 31, 2023 —

Plus net value appreciation during the three months ended March 31, 2023

Farms valued via third-party appraisals $ 11,655

Total net appreciation for the three months ended September 30, 2022 16,700

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

Total net appreciation for the three months ended March 31, 2023 11,655

Total portfolio fair value as of March 31, 2023 $ 1,579,927

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

Using a discounted cash flow analysis, management determined that the fair value of all long-term encumbrances on our properties as of September 30, 2022, was approximately $581.8 million, as compared to a carrying value (excluding unamortized related debt issuance costs) of approximately $643.2 million.

The fair values of our Series B Preferred Stock and Series D Term Preferred Stock were determined using the closing stock prices as of September 30, 2022, of $26.13 per share and $24.42 per share, respectively.

Finally, pursuant to Financial Industry Regulatory Authority Rule 2310(b)(5), with the assistance of a third-party valuation

expert, we determined the estimated value of our Series C Preferred Stock to be $25.00 per share as of September 30, 2022 (see Exhibit 99.1 to this Form 10-Q).

Using a discounted cash flow analysis, management determined that the fair value of all long-term encumbrances on our properties as of March 31, 2023, was approximately $553.6 million, as compared to a carrying value (excluding unamortized related debt issuance costs) of approximately $602.3 million.

The fair values of our Series B Preferred Stock and Series D Term Preferred Stock were determined using the closing stock prices as of March 31, 2023, of $23.25 per share and $24.00 per share, respectively.

Finally, pursuant to Financial Industry Regulatory Authority Rule 2310(b)(5), with the assistance of a third-party valuation expert, we determined the estimated value of each of our Series C Preferred Stock and Series E Preferred Stock to be $25.00 per share as of March 31, 2023 (see Exhibits 99.1 and 99.2 to this Form 10-Q).

Calculation of Estimated Net Asset Value

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

As of September 30, 2022, we estimate the NAV per common share to be $16.56.

As of March 31, 2023, we estimate the NAV per common share to be $17.12.

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

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Estimated NAV 1,004,745

aggregate fair value of Series B Preferred Stock and Series C Preferred Stock (5)

aggregate fair value of cumulative redeemable preferred stock (5)

Estimated NAV available to common stockholders and non-controlling OP Unitholders $ 611,376

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

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

(5) The Series B Preferred Stock was valued based on its closing stock price as of September 30, 2022, while the Series C Preferred Stock was valued at its liquidation value, as discussed above.

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

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

The Series D Term Preferred Stock was valued based on its closing stock price as of March 31, 2023.

(5) The Series B Preferred Stock was valued based on its closing stock price as of March 31, 2023, while the Series C Preferred Stock and Series E Preferred Stock were each valued at its liquidation value, as discussed above.

A quarterly roll-forward in the estimated NAV per common share for the three months ended March 31, 2023, is provided below:

Estimated NAV per common share and non-controlling OP Unit as of December 31, 2022 $ 17.08

Less net loss attributable to common stockholders and non-controlling OP Unitholders (0.12)

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

Plus accretive effect of equity issuances and redemptions, net —

Estimated NAV per common share and non-controlling OP Unit as of September 30, 2022 $ 16.56

Plus net accretive effect of equity issuances 0.09

Estimated NAV per common share and non-controlling OP Unit as of March 31, 2023 $ 17.12

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

(i) an increase of $0.48 per share due to the net appreciation in value of the farms that were valued during the three months ended September 30, 2022, (ii) an increase of $0.26 per share due to the aggregate depreciation and amortization expense recorded during the three months ended September 30, 2022, and (iii) a decrease of $0.09 per share due to net asset dispositions or capital improvements made on certain farms that have not yet been considered in the determination of the respective farms’ estimated fair values.

(i) an increase of $0.33 per share due to the net appreciation in value of the farms that were valued during the three months ended March 31, 2023, (ii) an increase of $0.25 per share due to the aggregate depreciation and amortization expense recorded during the three months ended March 31, 2023, and (iii) an increase of $0.01 per share due to net disposition of certain assets that did not impact 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 $16.56 as of September 30, 2022, based on the calculation above, the closing price of our common stock on September 30, 2022, was $18.10 per share.

For example, while we estimated our NAV per common share to be $17.12 as of March 31, 2023, based on the calculation above, the closing price of our common stock on March 31, 2023, was $16.65 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.

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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-Q

Item 2. Management’s Discussion and Analysis