What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-11-06 compared with 2024-08-08 · 181 added, 146 removed, 554 unchanged (37% of the section changed)

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These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our business, financial condition, liquidity, results of operations, funds from operations or prospects to be materially different from any future business, financial condition, liquidity, results of operations, funds from operations or prospects expressed or implied by such forward-looking statements.

For further information about these and other factors that could affect our future results, please see the captions titled “Forward-Looking Statements” and “Risk Factors” in this report and our Annual Report on Form 10-K for the year ended December 31, 2023 (the “Form 10-K”).

For further information about these and other factors that could affect our future results, please see the captions titled “Forward-Looking Statements” and “Risk Factors” in this report and/or our Annual Report on Form 10-K for the year ended December 31, 2023 (the “Form 10-K”).

We caution readers not to place undue reliance on any such forward-looking statements, which are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made.

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Portfolio Diversification

Our farmland portfolio currently consists of 168 farms leased to 93 di fferent, unrelated third-party tenants who grow over 60 different types of crops on our farms.

Our farmland portfolio currently consists of 168 farms leased to 94 different, unrelated third-party tenants who grow over 60 different types of crops on our farms.

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

The following table summarizes the different geographic locations (by state) of our farms owned as of and during the six months ended June 30, 2024 and 2023 (dollars in thousands):

As of and For the Six Months Ended June 30, 2024 As of and For the Six Months Ended June 30, 2023

The following table summarizes the different geographic locations (by state) of our farms owned as of and during the nine months ended September 30, 2024 and 2023 (dollars in thousands):

As of and For the Nine Months Ended September 30, 2024 As of and For the Nine Months Ended September 30, 2023

Revenue % of Total

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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 as set forth within the lease.

Currently, 103 of our farms are leased on a pure, triple-net basis, 49 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), 12 farms are direct-operated, and 1 farm is vacant.

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 (though such leases generally include a guarantee of a minimum amount of rental income).

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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 June 30, 2024 (dollars in thousands):

The following table summarizes the lease expirations by year for the farms owned and with leases in place as of September 30, 2024 (dollars in thousands):

Year Number of

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Acreage Lease Revenue for the

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

2024 7 4,058 3.6% $ 2,050 3.2%

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8 1,973 1.8% 2,241 3.5%

Thereafter (2)

42 56,101 50.2% 30,477 47.9%

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(1) Certain lease agreements encompass multiple farms.

(2) Each category includes one lease that was terminated subsequent to June 30, 2024;

in both cases, we subsequently entered into management agreements with unrelated third parties to temporarily operate the respective farms on our behalf.

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

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We currently have nine agricultural leases scheduled to expire within the next six months.

We are currently exploring a variety of options with certain of these properties, including negotiating lease terms with existing and prospective new tenants, discussing sale options with prospective buyers, and considering operating the properties ourselves via third-party management agreements.

We are currently exploring a variety of options with certain of these properties, including negotiating lease terms with existing and prospective new tenants (potentially through an adjusted lease structure whereby we would decrease the fixed base rent amounts in exchange for increasing the participation rent component), discussing sale options with prospective buyers, and considering operating the properties ourselves via third-party management agreements.

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

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Portfolio Activity—Existing Properties

Disposition Activity

In October 2024, we entered into agreements to sell 11 blueberry farms located in Allegan and Van Buren, Michigan, for total consideration of approximately $5.0 million, exclusive of closing costs.

We currently expect these sales to be completed during the three months ending December 31, 2024.

Leasing Activity

The following table summarizes certain leasing activity that has occurred on our existing properties since April 1, 2024, 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 July 1, 2024, through the date of this filing (dollars in thousands, except for footnotes):

PRIOR LEASES NEW LEASES (1)

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/ NN / N) (3)

CA, FL, MI, OR, & WA 11 2,265 $ 3,451 1 7 / 2 / 2 $ 3,929 5.7 2 7 / 4 / 0

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

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

CA, DE, FL, MD, MI, OR, TX, & WA 21 10,173 $ 13,550 4 13 / 4 / 4 $ 5,452 3.7 5 12 / 8 / 1

(1) In connection with certain of these leases, we committed to provide cash allowances or capital for certain operations and improvements on these farms, which are excluded in the figures above.

See Note 3, “ Real Estate and Intangible Assets—Intangible Assets and Liabilities ,” within the accompanying notes to our condensed consolidated financial statements and “ Liquidity and Capital Resources—Operating Commitments and Obligations—Operating Obligations ” below for additional information on these and other commitments.

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

In executing certain lease renewals, particularly those on certain western permanent crop farms, we reduced or eliminated the base rent component in exchange for significantly increasing the participation rent component, the results of which will not be known until the second half of 2025.

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

Vacant, Direct-operated, and Non-accrual Properties

During a portion of the six months ended June 30, 2024, we had 20 farms (5 in California, 14 in Michigan, and 1 in Washington) that were either vacant, direct-operated (via management agreements with unrelated third parties), or on which lease revenues were recognized on a cash basis (due to credit issues with two tenants leading us to determine that the full collectability of the remaining rental payments under the respective leases was not deemed to be probable).

During the six months ended June 30, 2024, we recorded lease revenue related to the aforementioned farms of approximately $561,000 (including no participation rents), as compared to approximately $1.8 million (including approximately $72,000 of participation rents) during the prior-year period.

In addition, subsequent to June 30, 2024, we terminated two leases with a tenant who operated two of our farms (one in California and one in Oregon) and entered into management agreements with unrelated third parties to operate these farms on our behalf.

During the six months ended June 30, 2024, we recorded aggregate lease revenue from these two farms of approximately $1.6 million.

Currently, 1 farm (in Washington) is vacant, 12 farms (1 in California, 10 in Michigan, and 1 in Oregon) are direct-operated, and 4 farms (in California remain) on non-accrual status.

During a portion of the nine months ended September 30, 2024, we had 20 farms (5 in California, 13 in Michigan, 1 in Oregon, and 1 in Washington) that were either vacant, direct-operated (via management agreements with unrelated third parties), or on which lease revenues were recognized on a cash basis (due to credit issues with two tenants leading us to determine that the full collectability of the remaining rental payments under the respective leases was not deemed to be probable).

During the nine months ended September 30, 2024, we recorded lease revenue related to the aforementioned farms of approximately $778,000 (including no participation rents), as compared to approximately $2.1 million (including approximately $195,000 of participation rents) during the prior-year period.

During the three months ended September 30, 2024, we entered into lease agreements with a new tenant on two farms in Michigan, and subsequent to September 30, 2024, we entered into agreements to sell the remaining 11 farms in Michigan, which we anticipate closing during the three months ending December 31, 2024.

Currently, 1 farm (in Washington) is vacant, 1 farm (in Oregon) is direct-operated, 5 farms (in California) are on non-accrual status, and 11 farms (in Michigan) are held for sale.

Regarding vacant and direct-operated farms, we are exploring both leasing and selling options, and we are in discussions with both potential tenants and potential buyers for these farms.

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Such agreement, if one can be reached, may include placing the tenant on a payment plan, deferring a portion of the rent owed to us, or agreeing to terminate the lease.

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

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

Water Asset Acquisitions

During the three months ended June 30, 2024, through multiple transactions in two different water districts in California, we obtained 4,899 net acre-feet of water assets at a total cost basis of approximately $1.5 million, or approximately $306 per net acre-foot.

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

In addition, on July 15, 2024, we purchased 1,985 gross acre-feet of water from Byron-Bethany Irrigation District (“BBID”), a multi-county water district located in Contra Costa County, California, for the 2024 water year for a total purchase price (including commissions and other closing costs) of approximately $801,000, or approximately $404 per gross acre-foot.

During the three months ended September 30, 2024, we purchased a total of 2,260 gross acre-feet of water from Byron-Bethany Irrigation District (“BBID”), a multi-county water district located in Contra Costa County, California, for the 2024 water year for a total purchase price (including commissions and other closing costs) of approximately $883,000, or approximately $391 per gross acre-foot.

This water was purchased pursuant to a water transfer agreement we entered into with BBID in October 2023, whereby we may elect to purchase up to 15,000 acre-feet of water per water year during years in which BBID has a surplus supply of water through February 28, 2031.

This water is expected to be recognized in our account with the local water district during the three months ending December 31, 2024, net of standard losses, as may be applicable.

This water is expected to be recognized in our account with the local water district within the next six months, net of standard losses, as may be applicable.

We currently own a total of 53,787 acre-feet of long-term water assets, and our investments in these long-term water assets have an aggregate carrying value of approximately $36.8 million.

Southeastern U.S.

In September and October 2024, Hurricanes Helene and Milton caused widespread destruction across many states in the Southeastern U.S., including areas where several of our farms are located.

As a result of Hurricane Helene in September 2024, one of our farms in Georgia suffered damage to certain permanent plantings on the farm, and we estimated the carrying value of such plantings to be approximately $275,000.

As such, during the three months ended September 30, 2024, we wrote down the carrying value of these plantings and also recorded a corresponding property and casualty loss, included within Property and casualty loss, net on our Condensed Consolidated Statements of Operations and Comprehensive Income.

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

As a result of Hurricane Milton in October 2024, a portion of a cooling facility located on one of our farms in Florida suffered minor water damage.

We are unable to estimate the extent of the damage at this time;

however, we do not expect the cost of repairs to be material, and we expect the damage to be fully covered by insurance.

We are still assessing the overall impact of Hurricane Milton.

While planting may be slightly delayed, we do not expect any material impact to our farms or our tenants’ operations as a result of Hurricane Milton.

Financing Activity

Debt Activity—Loan Repayments

From April 1, 2024, through the date of this filing, we repaid approximately $6.0 million of loans.

From July 1, 2024, through the date of this filing, we repaid approximately $13.3 million of loans that were scheduled to either mature or reprice.

On a weighted-average basis, these borrowings bore interest at a stated rate of 4.28% and an effective rate (after interest patronage, where applicable) of 3.33%.

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

The following table summarizes the sales of our Series E Preferred Stock that occurred from April 1, 2024, through the date of this filing (dollars in thousands):

The following table summarizes the sales of our Series E Preferred Stock that occurred from July 1, 2024, through the date of this filing (dollars in thousands):

Shares Sold Weighted-average

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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 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 July 1, 2024, through the date of this filing (dollars in thousands):

Number of Shares Sold Weighted-average

Offering Price

Per Share Gross Proceeds Net Proceeds (1)

346,216 $ 13.52 $ 4,680 $ 4,633

(1) Net of underwriting commissions.

Repurchase Program

On May 17, 2024, our Board of Directors approved a share repurchase program authorizing us to repurchase up to $20.0 million of our 6.00% Series B Cumulative Redeemable Preferred Stock, par value $0.001 per share (the “Series B Preferred Stock”) and up to $35.0 million of our Series C Preferred Stock (the “Repurchase Program”).

On May 17, 2024, our Board of Directors approved a share repurchase program authorizing us to repurchase up to $20.0 million of our 6.00% Series B Cumulative Redeemable Preferred Stock, par value $0.001 per share (the “Series B Preferred Stock”) and up to $35.0 million of our 6.00% Series C Cumulative Redeemable Preferred Stock, par value $0.01 per share (the “Series C Preferred Stock” and, collectively, the “Repurchase Program”).

The Board’s authorization of the Repurchase Program may be suspended or discontinued at any time, does not obligate us to acquire any particular amount of securities, and expires on May 17, 2025.

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Any repurchases will be made during applicable trading window periods or pursuant to applicable Rule 10b5-1 trading plans.

The following table summarizes repurchase activity under the Repurchase Program that occurred from April 1, 2024, through the date of this filing (dollars in thousands, except per-share amounts):

The following table summarizes repurchase activity under the Repurchase Program that occurred from July 1, 2024, through the date of this filing (dollars in thousands, except per-share amounts):

Series B Preferred Stock:

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According to the U.S.

Bureau of Labor Statistics, the consumer price index (“CPI”) grew at an annual rate of 3.0% through June 30, 2024, 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.

The increase in food prices has also slowed but has generally kept pace with the rate of inflation until the past few months, as the overall food segment increased at an annual rate of 2.2% through June 30, 2024.

In addition, according to the NCREIF Farmland Index, which, as of June 30, 2024, consisted of approximately $16.0 billion of farms across the U.S., the total return on U.S.

farmland (including appreciation and income) was 2.5% for the 12 months ended June 30, 2024.

Despite the slowdown of increased food prices in recent months, prices remain high, as the food segment has increased by 8.1% over the past two years, outpacing overall CPI of 6.0% over the same time period.

Although our farm operators have experienced increases in input costs, we believe such increases will be somewhat mitigated to the extent that food price increases continue to outpace or keep pace with the rate of inflation.

To combat inflation, the Federal Reserve raised its benchmark funds rate 11 times between March 2022 and July 2023, resulting in the highest target rate seen since January 2001.

Since that time, the Federal Reserve has held rates flat, stating its desire to see more evidence of inflation being on a sustainable path to its target rate of 2.0% and indicating a “higher-for-longer” stance.

Despite inflation continuing to run higher than the target rate, with evidence that economic growth is beginning to slow, including a weaker labor market, most now expect the Federal Reserve to begin cutting rates later this year, though the timing and extent of such rate cuts, if any, remains uncertain.

Bureau of Labor Statistics, the consumer price index (“CPI”) grew at an annual rate of 2.4% through September 30, 2024, 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.

In addition, according to the NCREIF Farmland Index, which, as of September 30, 2024, consisted of approximately $16.5 billion of farms across the U.S., the total return on U.S.

farmland (including appreciation and income) was 2.6% for the 12 months ended September 30, 2024.

Despite the slowdown of increased food prices in recent months, prices remain high, as the food segment has increased by 18.0% over the past three years, outpacing overall CPI of 14.9% over the

same time period.

Although our far m operators have experienced increases in input costs, we believe such increases will be somewhat mitigated to the extent that food price increases continue to outpace or keep pace with the rate of inflation.

After holding rates flat since July 2023, the Federal Reserve cut interest rates for the first time in four years in September 2024, reducing its benchmark funds rate by 50 basis points and marking what many believe to be the beginning of a new monetary easing policy.

This rate cut came on the heels of data indicating a slowing U.S.

economy, including cooling inflation and a weaker labor market.

However, since the September meeting, U.S.

Treasury yields have spiked amidst stronger-than-expected U.S.

macroeconomic data.

Despite this, most still expect the Federal Reserve to continue cutting rates throughout the remainder of 2024 and into 2025, though the timing and extent of such rate cuts, if any, remains uncertain.

As a result of this uncertainty, interest rates remain somewhat volatile.

The yield on the 10-year US Treasury Note has withdrawn from the 16-year high it achieved in October 2023 and recently fell to its lowest point of the year.

However, as it is still hovering near 4.0%, interest rates on long-term financing continue to be high, limiting our ability to finance new acquisitions on favorable terms.

The yield on the 10-year US Treasury Note still remains well above 4.0%, and, as a result, interest rates on long-term financing continue to be high, thus limiting our ability to finance new acquisitions on favorable terms.

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 3.40% for another 3.7 years.

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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 six months ended June 30, 2024.

There were no material changes to our critical accounting policies during the nine months ended September 30, 2024.

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 June 30, 2024 and 2023:

• Same-property basis represents farms owned as of March 31, 2023, which were not vacant or direct-operated 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 March 31, 2023.

From April 1, 2023, through June 30, 2024, we did not acquire any new farms and had one farm disposition;

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, 2024 and 2023:

• Same-property basis represents farms owned as of June 30, 2023, which were not vacant or direct-operated 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 June 30, 2023.

From July 1, 2023, through September 30, 2024, we did not acquire any new farms and had one farm disposition;

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

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◦ Farms with leases where revenue was recognized on a cash basis during either period presented (rather than a straight-line basis) due to full collectability of future rental payments under the respective leases deemed not to be probable as a result of tenant credit issues.

From April 1, 2023 through June 30, 2024, we had 22 farms which were either vacant, direct-operated, or placed on non-accrual during all or a portion of either period.

For the purposes of the following discussions on certain operating revenues and expenses with regard to the comparison between the six months ended June 30, 2024 and 2023:

From July 1, 2023 through September 30, 2024, we had 23 farms which were either vacant, direct-operated, or placed on non-accrual during all or a portion of either period.

For the purposes of the following discussions on certain operating revenues and expenses with regard to the comparison between the nine months ended September 30, 2024 and 2023:

• Same-property basis represents farms owned as of December 31, 2022, which were not vacant or direct-operated 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, 2022.

From January 1, 2023, through June 30, 2024, we did not acquire any new farms and had one farm disposition;

From January 1, 2023, through September 30, 2024, we did not acquire any new farms and had one farm disposition;

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

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From January 1, 2023 through June 30, 2024, we had 22 farms which were either vacant, direct-operated, or placed on non-accrual during all or a portion of either period.

A comparison of results of components comprising our operating income for the three and six months ended June 30, 2024 and 2023 is below (dollars in thousands):

For the Three Months Ended June 30,

From January 1, 2023 through September 30, 2024, we had 25 farms which were either vacant, direct-operated, or placed on non-accrual during all or a portion of either period.

A comparison of results of components comprising our operating income for the three and nine months ended September 30, 2024 and 2023 is below (dollars in thousands):

For the Three Months Ended September 30,

2024 2023 $ Change % Change

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Fixed lease payments $ 18,913 $ 21,102 $ (2,189) (10.4)%

Variable lease payments – participation rents 1,117 — 1,117 NM

Variable lease payments – participation rents 3,512 2,385 1,127 47.3%

Variable lease payments – tenant reimbursements and other 146 47 99 210.6%

Total lease revenue 21,270 21,210 60 0.3 %

Other operating revenue 27 — 27 NM

Total operating revenues 22,571 23,534 (963) (4.1)%

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Property operating expenses 1,380 729 651 89.3%

Base management and incentive fees 2,076 2,148 (72) (3.4) %

Base management and incentive fees, net of incentive fee waiver 2,070 2,939 (869) (29.6)%

Administration fee 683 619 64 10.3%

General and administrative expenses 655 605 50 8.3%

Impairment charge 2,106 — 2,106 NM

Total operating expenses 15,699 14,136 1,563 11.1%

Operating income $ 6,872 $ 9,398 $ (2,526) (26.9)%

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

2024 2023 $ Change % Change

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Variable lease payments – participation rents 4,625 2,580 2,045 79.3%

Variable lease payments – tenant reimbursements 318 139 179 128.8 %

Variable lease payments – tenant reimbursements and other 464 186 278 149.5%

Total lease revenues 63,667 65,946 (2,279) (3.5)%

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Property operating expenses 3,476 2,744 732 26.7%

Base management and incentive fees 4,233 4,296 (63) (1.5) %

Base management and incentive fees, net of incentive fee waiver 6,303 7,236 (933) (12.9)%

Administration fee 1,839 1,708 131 7.7%

General and administrative expenses 1,992 2,181 (189) (8.7)%

Impairment charge 2,106 — 2,106 NM

Total operating expenses 42,123 41,276 847 2.1%

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Lease revenue

The following table provides a summary of our lease revenues during the three and six months ended June 30, 2024 and 2023 (dollars in thousands):

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

The following table provides a summary of our lease revenues during the three and nine months ended September 30, 2024 and 2023 (dollars in thousands):

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

2024 2023 $ Change % Change 2024 2023 $ Change % Change

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Fixed lease payments $ 18,767 $ 19,528 $ (761) (3.9)% $ 57,140 $ 57,514 $ (374) (0.7)%

Participation rents 879 — 879 NM 874 123 751 610.6%

Participation rents 3,512 1,510 2,002 132.6% 4,387 1,511 2,876 190.3%

Total – Same-property basis 22,279 21,038 1,241 5.9% 61,527 59,025 2,502 4.2%

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Fixed lease payments 146 842 (696) (82.7)% 1,438 3,471 (2,033) (58.6)%

Participation rents 238 — 238 NM 238 72 166 230.6%

Participation rents — 875 (875) (100.0)% 238 1,069 (831) (77.7)%

Total – Vacant, direct-operated, or non-accrual properties 146 1,717 (1,571) (91.5)% 1,676 4,540 (2,864) (63.1)%

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Total Lease revenues $ 22,571 $ 23,534 $ (963) (4.1)% $ 63,667 $ 65,946 $ (2,279) (3.5)%

NM = Not Meaningful

(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.

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Same-property Basis – 2024 compared to 2023

Lease revenues from fixed lease payments increased primarily due to the accelerated recognition of certain deferred rent asset balances attributable to the shortening of the expected lease terms associated with leases on three of our farms.

Lease revenues from participation rents increased primarily due to additional information related to the 2023 harvest on certain of our farms not being made available to us until the three months ended June 30, 2024, thus allowing such amounts to be reasonably determinable and recorded.

Lease revenues from fixed lease payments decreased primarily due to the execution of certain lease agreements in 2024, pursuant to which we agreed to reduce the fixed base rent amounts in exchange for increasing the participation rent components in the leases, the majority of which will be realized in 2025.

This decrease was partially offset by an increase in fixed lease payments attributable to the accelerated recognition of certain deferred rent asset balances attributable to the shortening of the expected lease terms associated with leases on three of our farms, additional rents earned on capital improvements completed on certain of our farms, and recent lease renewals.

The amount of lease revenues from participation rents is largely dependent upon when certain information is made available to allow us to determine such amounts to be reasonably estimable and thus recorded.

Based on the participation rents recorded thus far, the increase was primarily driven by stronger production (i.e., pounds per acre) on certain pistachio farms, partly due to the alternate-bearing nature of such tree crops.

Other – 2024 compared to 2023

Lease revenue from properties acquired or disposed of decreased due to the sale of a 3,748-acre farm in Florida on January 11, 2024.

Fixed lease payments from vacant, direct-operated, or non-accrual properties decreased primarily due to revenue from certain of our leases being recognized on a cash basis during a portion of the current-year periods (rather than a straight-line basis), due to full collectability of future rental payments under the respective leases deemed not to be probable as a result of tenant credit issues.

In addition, certain of our farms were either direct-operated (on a temporary basis via management agreements with unrelated third-parties) or vacant for portions of each of the six months ended June 30, 2024 and 2023.

The decrease in lease revenue from vacant, direct-operated, or non-accrual properties was partially offset by cash collections (in part or in whole) from tenants occupying certain of these properties during the three and six months ended June 30, 2024.

Lease revenue from vacant, direct-operated, or non-accrual properties decreased primarily due to revenues from certain of our leases being recognized on a cash basis during a portion of the current-year periods (rather than a straight-line basis), due to full collectability of future rental payments under the respective leases deemed not to be probable as a result of tenant credit issues.

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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Other operating revenue consists of non-lease revenue generated as a result of activities performed on certain of our properties.

During the three and six months ended June 30, 2024, we recognized approximately $27,000 and $453,000, respectively, of non-cash revenue associated with the transfer and storing of surplus water on behalf of a government municipality using a groundwater recharge facility constructed on one of our farms.

During the three and nine months ended September 30, 2024, we recognized approximately $0 and $453,000, respectively, of non-cash revenue associated with the transfer and storing of surplus water on behalf of a government municipality using a groundwater recharge facility constructed on one of our farms.

See Note 3, “ Real Estate and Intangible Assets—Investments in Water Assets ,” within the accompanying notes to our condensed consolidated financial statements for further discussion.

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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 and six months ended June 30, 2024 and 2023 (dollars in thousands):

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

The following table provides a summary of the property-operating expenses recorded during the three and nine months ended September 30, 2024 and 2023 (dollars in thousands):

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

2024 2023 $ Change % Change 2024 2023 $ Change % Change

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Same-property Basis – 2024 compared to 2023

Property operating expenses increased primarily due to additional property taxes paid by us on behalf of one of our tenants who terminated their lease subsequent to June 30, 2024.

For the six months ended June 30, 2024, this increase was partially offset by a decrease in legal fees and other costs incurred in connection with protecting water rights on certain farms in California, as well as a decrease in repairs and maintenance expense incurred during the prior-year period as a result of minor damage at certain farms caused by natural disasters.

Property operating expenses increased primarily due to additional property taxes paid by us on behalf of one of our tenants who terminated their lease during the three months ended September 30, 2024.

For the nine months ended September 30, 2024, this increase was partially offset by a decrease in legal fees and other costs incurred in connection with protecting water rights on certain farms in California, as well as a decrease in repairs and maintenance expense incurred during the prior-year period as a result of minor damage at certain farms caused by natural disasters.

Other – 2024 compared to 2023

Property operating expenses on properties acquired or disposed of decreased due to the sale of one farm in Florida, as discussed elsewhere.

Property operating expenses attributable to vacant, direct-operated, or non-accrual properties increased primarily due to additional property management fees incurred on certain farms that were direct-operated for a portion of the current year-periods (via management agreements with unrelated third-parties) and additional property taxes incurred, including those paid on behalf of certain tenants leasing farms that were placed on non-accrual status.

This increase was partially offset by a decrease in legal fees incurred in connection with rent collection or lease termination efforts for those tenants on farms that were placed on non-accrual status.

For the three months ended September 30, 2024, this increase was also attributable to an increase in legal fees incurred in connection with rent collection or lease termination efforts on certain farms that were direct-operated or 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.

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Related-Party Fees

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 and six months ended June 30, 2024 and 2023 (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 and credits granted to us by our Adviser for the three and nine months ended September 30, 2024 and 2023 (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

March 31 June 30 September 30

2024 Fee Calculations:

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Total Incentive fee (3)

$ — $ — $ 109 $ 109

Incentive fee waiver 3)

— — (109) (109)

Incentive fee, net $ — $ — $ — $ —

Total fees due to Adviser $ 2,157 $ 2,076 $ 2,070 $ 6,303

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Total Incentive fee (3)

$ — $ — $ 789 $ 789

Total fees due to Adviser $ 2,149 $ 2,148 $ 2,939 $ 7,236

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The base management fee decreased due to the disposition of certain assets since December 31, 2022, largely driven by the sale of a 3,748-acre farm in Florida in the first quarter of 2024.

No incentive fee was earned by our Adviser during either of the three and six months ended June 30, 2024 or 2023, as our Pre-Incentive Fee FFO did not surpass the required hurdle rate in either period.

Our Adviser earned an incentive fee during each of the three months ended September 30, 2024 and 2023 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 third quarter of 2024 and 2023, respectively.

However, during the three months ended September 30, 2024, our Adviser granted us a non-contractual, unconditional, and irrevocable waiver to be applied against the entire incentive fee earned in the third quarter of 2024.

The administration fee paid to our Administrator increased primarily due to 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 decreased during the current-year periods, primarily due to a decrease in stockholder-related expenses related to the listing of the Series C Preferred Stock on Nasdaq in 2023.

The decrease was also attributable to a decrease in acquisition-related costs for investments no longer being pursued and lower professional fees.

A comparison of results of other components contributing to net loss attributable to common stockholders for the three and six months ended June 30, 2024 and 2023 is below (dollars in thousands):

For the Three Months Ended June 30,

General and administrative expenses decreased during the nine months ended September 30, 2024, primarily due to additional expenses incurred in the prior year related to the listing of the Series C Preferred Stock on Nasdaq and acquisition-related costs for investments no longer being pursued.

During the three months ended September 30, 2024 , we recognized an aggregate impairment charge of approximately $2.1 million on portions of 4 properties (encompassing a total of 11 farms) located in Allegan and Van Buren, Michigan, due to the estimated fair values being lower than the respective carrying values.

A comparison of results of other components contributing to net loss attributable to common stockholders for the three and nine months ended September 30, 2024 and 2023 is below (dollars in thousands):

For the Three Months Ended September 30,

2024 2023 $ Change % Change

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

(Loss) gain on dispositions of real estate assets, net (2,800) 6,394 (9,194) (143.8)%

Loss on dispositions of real estate assets, net (832) (4) (828) 20,700.0%

Property and casualty loss, net (275) — (275) NM

Loss from investments in unconsolidated entities (85) (33) (52) 157.6%

Total other (expense) income, net (8,687) 28 (8,715) (31,125.0)%

Net (loss) income (823) 7,855 (8,678) (110.5)%

Gain (loss) from investments in unconsolidated entities 28 (24) 52 (216.7)%

Total other expense, net (6,866) (6,257) (609) 9.7%

Net income 6 3,141 (3,135) (99.8)%

Net income attributable to non-controlling interests — — — NM

Net (loss) income attributable to the Company (823) 7,855 (8,678) (110.5)%

Net income attributable to the Company 6 3,141 (3,135) (99.8)%

Aggregate dividends declared on and gain (loss) recognized on extinguishment of cumulative redeemable preferred stock, net (5,793) (6,105) 312 (5.1)%

Net (loss) income attributable to common stockholders $ (6,654) $ 1,727 $ (8,381) (485.3)%

For the Six Months Ended June 30,

Net loss attributable to common stockholders $ (5,787) $ (2,964) $ (2,823) 95.2%

For the Nine Months Ended September 30,

2024 2023 $ Change % Change

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Aggregate dividends declared on and gain (loss) recognized on extinguishment of cumulative redeemable preferred stock, net (17,742) (18,303) 561 (3.1)%

Net income (loss) attributable to common stockholders $ 795 $ (2,593) $ 3,388 (130.7)%

Net loss attributable to common stockholders $ (4,992) $ (5,557) $ 565 (10.2)%

NM = Not Meaningful

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Other income 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.

Other income increased during the three months ended June 30, 2024, primarily due to additional income earned on short-term investments due to higher interest rates, but decreased slightly for the six months ended June 30, 2024, primarily due to less interest patronage received from Farm Credit (primarily due to decreased borrowings from Farm Credit).

Other income 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 additional interest earned on short-term investments due to higher interest rates.

During the three months ended March 31, 2024, we recorded approximately $1.9 million of interest patronage from Farm Credit related to interest accrued during 2023, as compared to approximately $2.3 million of interest patronage recorded during the prior-year period that related to interest accrued during 2022.

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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 and six months ended June 30, 2024, was approximately $553.5 million and $555.5 million, respectively, as compared to approximately $600.1 million and $606.1 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 weighted-average interest rate charged on our aggregate borrowings for the three and six months ended June 30, 2024, was 3.83% and 3.82%, respectively, as compared to 3.79% and 3.78% for the respective prior-year periods.

During the six months ended June 30, 2024, we recorded a net capital gain, driven by the sale of a 3,748-acre farm in Martin County, Florida, for approximately $65.7 million, which after accounting for closing costs, resulted in a net gain of approximately $10.4 million.

During the three and six months ended June 30, 2023, we recorded a net capital gain, driven by the sale of a 138-acre parcel of unfarmed land in Florida for $9.6 million, which, after accounting for closing costs, resulted in a net gain of approximately $6.4 million.

The net loss recorded during the three months ended June 30, 2024, related to the removal of some permanent plantings and the disposal of certain irrigation and other improvements on certain of our farms.

The weighted-average principal balance of our aggregate borrowings (excluding our cumulative term preferred stock) outstanding for the three and nine months ended

September 30, 2024, was approximately $540.9 million and $550.6 million, respectively, as compared to approximately $589.5 million and $600.5 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 weighted-average interest rate charged on our aggregate borrowings for the three and nine months ended September 30, 2024, was 3.83% and 3.82%, respectively, as compared to 3.81% and 3.79% for the respective prior-year periods.

During the nine months ended September 30, 2024, we recorded a net capital gain, driven by the sale of a 3,748-acre farm in Martin County, Florida, for approximately $65.7 million, which after accounting for closing costs, resulted in a net gain of approximately $10.4 million.

During the nine months ended September 30, 2023, we recorded a net capital gain, driven by the sale of a 138-acre parcel of unfarmed land in Florida for $9.6 million, which, after accounting for closing costs, resulted in a net gain of approximately $6.4 million.

The net losses recorded during the three months ended September 30, 2024 and 2023 related to the removal of some permanent plantings and the disposal of certain irrigation and other improvements on certain of our farms.

The net property and casualty loss relates 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 six months ended June 30, 2023, was primarily due to the heavy rainfall that occurred in California in early 2023 and the resulting flooding, which damaged certain structures located on one of our farms in the Central Valley.

The property and casualty loss recorded during three and nine months ended September 30, 2024, was primarily due to damage caused by Hurricane Helene to certain permanent plants on one of our farms in Georgia.

T he property and casualty loss recorded during the nine months ended September 30, 2023, was primarily due to the heavy rainfall that occurred in California in early 2023 and the resulting flooding, which damaged certain structures located on one of our farms in the Central Valley.

LIQUIDITY AND CAPITAL RESOURCES

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As such, with respect to our current borrowings, we have experienced minimal impact from increased interest rates in recent years, and we believe we are well-protected against a prolonged high rate environment.

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

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

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making distributions to common 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, repurchasing shares of preferred stock

under our Repurchase Program, and funding new farmland and farm-related acquisitions consistent with our investment strategy.

and, as capital is available, funding capital improvements on existing farms, repurchasing shares of preferred stock under our Repurchase Program, and funding 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 level of operating costs, pay dividends on our currently-designated preferred securities, and fund our distributions to common stockholders (including non-controlling OP Unitholders).

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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 June 30, 2024 (dollars in thousands):

Below is a summary of certain of those projects for which we have incurred or accrued costs as September 30, 2024 (dollars in thousands):

Location(s) Farm

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or Accrued as of

June 30, 2024

September 30, 2024

Columbia, OR 157 $ 1,800 (2) Q4 2024 $ 1,146

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

Napa, CA 270 1,635 (2) Q4 2029 1,338

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

Franklin & Grant, WA, & Umatilla, OR 1,126 3,265 (2) Q4 2032 2,474

Wicomico & Caroline, MD, and Sussex, DE 833 155 Q3 2034 78

Charlotte, FL 975 800 (2) Q3 2034 150

(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 June 30, 2024, are as follows (dollars in thousands):

Future minimum lease payments due under the remaining non-cancelable terms of these leases as of September 30, 2024, are as follows (dollars in thousands):

Period Future Lease Payments (1)

For the remaining six months ending December 31:

For the remaining three 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 of approximately $26,000 and $52,000 during the three and six months ended June 30, 2024 , respectively, and approximately $26,000 and $51,000 during the three and six months ended June 30, 2023 , respectively.

As a result of these ground leases, we recorded lease expense of approximately $27,000 and $79,000 during the three and nine months ended September 30, 2024 , respectively, and approximately $26,000 and $77,000 during the three and nine months ended September 30, 2023, respectively.

Cash Flow Resources

The following table summarizes total net cash flows from operating, investing, and financing activities for the six months ended June 30, 2024 and 2023 (dollars in thousands):

For the Six Months Ended June 30,

The following table summarizes total net cash flows from operating, investing, and financing activities for the nine months ended September 30, 2024 and 2023 (dollars in thousands):

For the Nine Months Ended September 30,

2024 2023 $ Change % Change

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Operating Activities

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 decreased, largely due to a decrease in fixed lease cash payments received (primarily due to the disposition of one farm in Florida, as well as due to the timing of when certain cash rental payments were received), partially offset by an increase in cash payments received toward participation rents and a decrease in interest payments made.

payments on our borrowings, management fees to our Adviser, administrative fees to our Administrator, and other corporate-level expenses.

Cash provided by operating activities decreased largely due to a decrease in fixed lease cash payments received (primarily due to the disposition of one farm in Florida, as well as reduced fixed lease payments attributable to those farms which were vacant, direct-operated, or on non-accrual basis during the current-year period), the payment of certain cash allowances provided for in three leases that were executed during the three months ended September 30, 2024, and an increase in cash payments made towards the acquisition of water assets.

This decrease was partially offset by an increase in cash payments received towards participation rent and a decrease in related party fees and interest payments made.

Investing Activities

The change in cash from investing activities was primarily due to proceeds received from the sale of a 3,748-acre farm in Florida for approximately $65.7 million during the six months ended June 30, 2024, which resulted in a net gain of approximately $10.4 million, and a decrease in the amount of cash paid for capital improvements on existing farms during the current-year period.

The change in cash from investing activities was primarily due to proceeds received from the sale of a 3,748-acre farm in Florida for approximately $65.7 million during the nine months ended September 30, 2024, which resulted in a net gain of approximately $10.4 million, and a decrease in the amount of cash paid for capital improvements on existing farms during the current-year period.

Financing Activities

The change in cash from financing activities was primarily due to a decrease in aggregate net cash proceeds received from preferred and common equity offerings of approximately $17.0 million, partially offset by a decrease in aggregate debt repayments of approximately $8.0 million.

The change in cash from financing activities was primarily due to a decrease in aggregate net cash proceeds received from preferred and common equity offerings of approximately $19.9 million, as well as increases in aggregate preferred stock repurchases of approximately $5.4 million and debt repayments of approximately $1.1 million.

MetLife Facility

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The revolving equity lines of credit mature on December 15, 2033, and 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.

We have been in discussions with MetLife to extend the draw periods for the term notes and currently expect to have an agreement finalized by the end of 2024.

Farmer Mac Facility

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Series E Preferred Stock 15,735 $ 24.98 $ 393 $ 354

Common Stock – ATM Program 346,216 13.52 4,680 4,633

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

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.

separate, concurrent offerings of two or more of such securities.

To date, we have issued approximately $4.4 million of Series E Preferred Stock and $6.8 million of common stock under the 2023 Registration Statement.

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Off-Balance Sheet Arrangements

As of June 30, 2024, we did not have any material off-balance sheet arrangements.

As of September 30, 2024, we did not have any material off-balance sheet arrangements.

NON-GAAP FINANCIAL INFORMATION

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This adjustment removes the effects of straight-lining rental income, as well as the amortization related to above-market lease values and certain non-cash lease incentives and accretion related to below-market lease values, certain other deferred revenue, and tenant improvements, resulting in rental income reflected on a modified accrual cash basis.

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.

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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 six months ended June 30, 2024 and 2023 to the most directly-comparable GAAP measure, net income, and a computation of diluted FFO, CFFO, and AFFO per share, using the weighted-average number of total shares (including shares of our common stock and OP Units held by non-controlling OP Unitholders) outstanding during the respective periods (dollars in thousands, except per-share amounts):

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

The following table provides a reconciliation of our FFO, CFFO, and AFFO for the three and nine months ended September 30, 2024 and 2023 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,

2024 2023 2024 2023

Net (loss) income $ (823) $ 7,855 $ 12,744 $ 9,605

Net income $ 6 $ 3,141 $ 12,750 $ 12,746

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

(5,793) (6,105) (17,742) (18,303)

Net (loss) income attributable to common stockholders and non-controlling OP Unitholders (6,654) 1,727 795 (2,593)

Net loss attributable to common stockholders and non-controlling OP Unitholders $ (5,787) $ (2,964) $ (4,992) $ (5,557)

Real estate and intangible depreciation and amortization 8,805 9,244 26,407 27,407

Losses (gains) on dispositions of real estate assets, net 832 4 (6,641) (5,910)

Impairment charges 2,106 — 2,106 —

Adjustments for unconsolidated entities (2)

FFO available to common stockholders and non-controlling OP Unitholders $ 5,970 $ 6,306 $ 16,932 $ 16,009

Acquisition- and disposition-related (credits) expenses, net (11) 74 (13) 92

Acquisition- and disposition-related expenses (credits), net 10 33 (3) 126

Other nonrecurring charges, net (3)

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Distributions declared per common share $ 0.14 $ 0.14 $ 0.42 $ 0.41

(1) Includes (i) cash dividends paid on our cumulative redeemable preferred stock, (ii) the value of additional shares of Series C Preferred Stock issued pursuant to the DRIP, and (iii) the net (gain) loss recognized as a result of shares of cumulative redeemable preferred stock that were redeemed during the respective periods.

(1) Includes (i) cash dividends paid on our cumulative redeemable preferred stock, (ii) the value of additional shares of Series C Preferred Stock issued pursuant to the dividend reinvestment plant (the “DRIP”), and (iii) the net (gain) loss recognized as a result of shares of cumulative redeemable 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.

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(ii) the valuation committee of the Board of Directors (the “Valuation Committee”), which is comprised entirely of independent directors, meets to review the valuation recommendations and supporting materials;

and (iii) after the Valuation Committee concludes its meeting, it and the chief valuation officer present the Valuation Committee’s findings to the entire Board of Directors so that the full Board of Directors may review and

approve the fair values of our properties in accordance with the Valuation Policy.

and (iii) after the Valuation Committee concludes its meeting, it and the chief valuation officer

present the Valuation Committee’s findings to the entire Board of Directors so that the full Board of Directors may review and approve the fair values of our properties in accordance with the Valuation Policy.

Further, on a quarterly basis, the Board of Directors reviews the Valuation Policy to determine if changes thereto are advisable and also reviews whether the Valuation Team has applied the Valuation Policy consistently.

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

A breakdown of the methodologies used to value our properties and the aggregate value as of June 30, 2024, determined by each method is shown in the table below (dollars in thousands, except in footnotes):

A breakdown of the methodologies used to value our properties and the aggregate value as of September 30, 2024, determined by each method is shown in the table below (dollars in thousands, except in footnotes):

Valuation Method Number

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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 June 2023 and June 2024.

Some of the significant assumptions used by appraisers and the Valuation Team in valuing our portfolio as of June 30, 2024, 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 September 2023 and September 2024.

Some of the significant assumptions used by appraisers and the Valuation Team in valuing our portfolio as of September 30, 2024, 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 as of June 30, 2024, is provided in the following table:

A summary of these significant assumptions as of September 30, 2024, 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 June 30, 2024, and, accordingly, did not make any adjustment to these values.

A quarterly roll-forward of the change in our portfolio value for the three months ended June 30, 2024, from the prior value basis as of March 31, 2024, is provided in the table below (dollars in thousands):

Total portfolio fair value as of March 31, 2024 $ 1,497,919

Acquisition of water assets during the three months ended June 30, 2024 1,499

Change in value of farms during the three months ended June 30, 2024

Farms valued via third-party appraisals $ (13,765)

Net change in value of farms during the three months ended June 30, 2024 (13,765)

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, 2024, 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, 2024, from the prior value basis as of June 30, 2024, is provided in the table below (dollars in thousands):

Total portfolio fair value as of June 30, 2024

Cumulative adjustment to cost basis of water assets acquired in prior periods.

Change in value of farms during the three months ended September 30, 2024

Farms valued via third-party appraisals $ (23,262)

Net change in value of farms during the three months ended September 30, 2024

Total portfolio fair value as of September 30, 2024

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 June 30, 2024, was approximately $503.0 million, as compared to a carrying value (excluding unamortized related debt issuance costs) of approximately $551.9 million.

The fair values of our Series B Preferred Stock, Series C Preferred Stock, and Series D Term Preferred Stock were determined using the closing stock prices as of June 30, 2024, of $21.08 per share, $21.05 per share, and $24.20 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 E Preferred Stock to be $25.00 per share as of June 30, 2024 (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 September 30, 2024, was approximately $500.0 million, as compared to a carrying value (excluding unamortized related debt issuance costs) of approximately $533.1 million.

The fair values of our Series B Preferred Stock, Series C Preferred Stock, and Series D Term Preferred Stock were determined using the closing stock prices as of September 30, 2024, of $22.77 per share, $21.80 per share, and $24.50 per share, respectively.

Finally, pursuant to Financial Industry Regulatory Authority Rule 2310(b)(5), with the assistance of a third-party valuation expert, we determined the estimated value of our Series E Preferred Stock to be $25.00 per share as of September 30, 2024 (see Exhibit 99.1 to this Form 10-Q).

Calculation of Estimated Net Asset Value

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

As of June 30, 2024, we estimate the NAV per common share to be $17.59.

As of September 30, 2024, we estimate the NAV per common share to be $15.57.

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

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

The Series D Term Preferred Stock was valued based on its closing stock price as of June 30, 2024.

(5) The Series B Preferred Stock and Series C Preferred Stock were valued based on their respective closing stock prices as of June 30, 2024, while the Series E 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 June 30, 2024, is provided below:

Estimated NAV per common share and non-controlling OP Unit as of March 31, 2024 $ 18.50

The Series D Term Preferred Stock was valued based on its closing stock price as of September 30, 2024.

(5) The Series B Preferred Stock and Series C Preferred Stock were valued based on their respective closing stock prices as of September 30, 2024, while the Series E 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, 2024, is provided below:

Estimated NAV per common share and non-controlling OP Unit as of June 30, 2024

Less net loss attributable to common stockholders and non-controlling OP Unitholders (0.16)

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Plus (less) net accretive (dilutive) effect of equity issuances and redemptions, net (0.08)

Estimated NAV per common share and non-controlling OP Unit as of June 30, 2024 $ 17.59

Estimated NAV per common share and non-controlling OP Unit as of September 30, 2024

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

(i) a decrease of $0.39 per share due to the net depreciation in value of the farms that were valued during the three months ended June 30, 2024, (ii) an increase of $0.25 per share due to the decrease in net book value of our real estate holdings as a result of the aggregate depreciation and amortization expense recorded during the three months ended June 30, 2024, and (iii) an increase of $0.02 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) a decrease of $0.65 per share due to the net depreciation in value of the farms that were valued during the three months ended September 30, 2024, (ii) an increase of $0.25 per share due to the decrease in net book value of our real estate holdings as a result of the aggregate depreciation and amortization expense recorded during the three months ended September 30, 2024, and (iii) a decrease of $0.30 per share due to capital improvements made on certain farms that have not yet been considered in the determination of the respective farms’ estimated fair values.

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 $17.59 as of June 30, 2024, based on the calculation above, the closing price of our common stock on June 30, 2024, was $13.69 per share.

For example, while we estimated our NAV per common share to be $15.57 as of September 30, 2024, based on the calculation above, the closing price of our common stock on September 30, 2024, was $13.90 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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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