GLADSTONE LAND Corp 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS All statements contained herein, other than historical facts, may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements may relate to, among other things, future events or our future performance or financial condition. In some cases, you can identify forward-looking statements by terminology such as “may,” “might,” “believe,” “will,” “provided,” “anticipate,” “future,” “could,” “growth,” “plan,” “intend,” “expect,” “should,” “would,” “if,” “seek,” “possible,” “potential,” “likely,” or the negative of such terms or comparable terminology. 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/or our Annual Report on Form 10-K for the year ended December 31, 2024 (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. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Quarterly Report on Form 10-Q (the “Quarterly Report”), except as required by law. This Quarterly Report includes statistical and other industry and market data that we obtained from industry publications and research, surveys, and studies conducted by third parties. Industry publications and third-party research, surveys, and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. We have not independently verified the information contained in such sources All references to “we,” “our,” “us” and the “Company” in this Quarterly Report mean Gladstone Land Corporation and its consolidated subsidiaries, except where it is made clear that the term refers only to Gladstone Land Corporation. OVERVIEW General We are an externally-managed, agricultural real estate investment trust (“REIT”) that is primarily in the business of owning and leasing farmland, occasionally through lease structures that include a variable rent component based on the gross revenues generated from certain farms in lieu of fixed base rent. We are not generally a grower of crops, nor do we typically farm the properties we own; however, from time to time, and on a temporary basis, we may also directly operate certain of our farms via management agreements with third-party operators and/or through a taxable REIT subsidiary (“TRS”) of ours. We currently own 150 farms totaling 103,001 acres across 15 states in the U.S. and 55,350 acre-feet of water assets in California. We also own several farm-related facilities, such as cooling facilities, packinghouses, processing facilities, and various storage facilities. In addition, two of our properties (comprising four farms) are currently being directly operated. We conduct substantially all of our activities through, and all of our properties are held, directly or indirectly, by, Gladstone Land Limited Partnership (the “Operating Partnership”). Gladstone Land Corporation controls the sole general partner of the Operating Partnership and currently owns, directly or indirectly, 100.0% of the units of limited partnership interest in the Operating Partnership (“OP Units”). In addition, we have elected for Gladstone Land Advisers, Inc. (“Land Advisers”), an indirect wholly-owned subsidiary of ours, to be treated as a TRS. Gladstone Management Corporation (our “Adviser”) manages our real estate portfolio pursuant to an advisory agreement, and Gladstone Administration, LLC (our “Administrator”), provides administrative services to us pursuant to an administration agreement. Our Adviser and our Administrator collectively employ all of our personnel and directly pay their salaries, benefits, and general expenses. Portfolio Diversificatio n Our farmland portfolio currently consists of 150 farms leased to 84 d ifferent, unrelated third-party tenants who grow over 60 different types of crops on our farms. O ur 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 three months ended March 31, 2025 and 2024 (dollars in thousands): 23 As of and For the Three Months Ended March 31, 2025 As of and For the Three Months Ended March 31, 2024 State No. of Farms Total Acres % of Total Acres Lease Revenue % of Total Lease Revenue No. of Farms Total Acres % of Total Acres Lease Revenue % of Total Lease Revenue California (1) 63 34,845 33.8% $ 10,491 62.4% 63 34,844 31.2% $ 13,180 66.5% Florida 20 13,090 12.7% 2,574 15.3% 25 18,720 16.7% 3,086 15.6% Washington 6 2,520 2.4% 1,089 6.5% 6 2,520 2.2% 1,062 5.3% Colorado 12 32,773 31.8% 667 4.0% 12 32,773 29.3% 661 3.3% Arizona 6 6,320 6.1% 579 3.5% 6 6,320 5.6% 569 2.9% Oregon 6 898 0.9% 422 2.5% 6 898 0.8% 566 2.8% Nebraska 7 5,223 5.1% 289 1.7% 9 7,782 7.0% 25 0.1% Michigan 12 1,245 1.2% 276 1.6% 23 1,892 1.7% 240 1.2% Texas 1 3,667 3.6% 125 0.8% 1 3,667 3.3% 112 0.6% Maryland 6 987 1.0% 120 0.7% 6 987 0.9% 115 0.6% South Carolina 3 597 0.6% 61 0.4% 3 597 0.5% 61 0.3% Georgia 2 230 0.2% 56 0.3% 2 230 0.2% 56 0.3% New Jersey 3 116 0.1% 34 0.2% 3 116 0.1% 32 0.2% Delaware 1 180 0.2% 20 0.1% 1 180 0.2% 19 0.1% North Carolina 2 310 0.3% — —% 2 310 0.3% 42 0.2% TOTALS 150 103,001 100.0% $ 16,803 100.0% 168 111,836 100.0% $ 19,826 100.0% (1) According to the California Chapter of the American Society of Farm Managers and Rural Appraisers, there are eight distinct growing regions within California; our farms are spread across six of these growing regions. Leases General Most of our leases are on a triple-net basis, an arrangement under which, in addition to rent, the tenant is required to pay the related taxes, insurance costs, maintenance, and other operating costs. 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). Our lease agreements will generally include one of the following rental structures: (i) fixed base cash rents, (ii) fixed base cash rents, plus a variable component, referred to as “participation rents,” based on the gross revenues generated from the respective farms, or, to a lesser extent, (iii) no fixed base cash rents (or, in certain cases, a cash allowance to cover certain operating or capital costs), in exchange for a significantly higher share of participation rents. Fixed base cash 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, while participation rent is generally payable to us annually, often in the fourth quarter of each fiscal year. Currently, 92 of our farms are leased on a pure, triple-net basis, 46 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), 4 farms are direct-operated, and 5 farms are vacant. Additionally, 24 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 often include a guarantee of a minimum amount of rental income). Lease Expirations Agricultural leases are often shorter term in nature (relative to leases of other types of real estate assets), so in any given year, we may have multiple leases up for extension or renewal. The following table summarizes the lease expirations by year for the farms owned and with leases in place as of March 31, 2025 (dollars in thousands): 24 Year Number of Expiring Leases (1) Expiring / Expired Leased Acreage % of Total Acreage Lease Revenue for the Three Months Ended March 31, 2025 % of Total Lease Revenue 2025 16 17,740 17.2% $ (1,107) (2) (6.6)% 2026 8 9,445 9.2% 779 4.6% 2027 9 8,497 8.3% 2,358 14.0% 2028 12 4,982 4.8% 1,050 6.3% 2029 7 1,973 1.9% 796 4.7% Thereafter 40 53,750 52.2% 8,846 52.7% Other (3) 11 31 —% 127 0.8% Terminated/expired leases and sold properties (4) — 6,583 6.4% 3,954 23.5% Totals 103 103,001 100.0% $ 16,803 100.0% (1) Certain lease agreements encompass multiple farms. (2) Reflects the net impact of cash lease incentives we granted to tenants on certain of our farms in exchange for increasing the participation rent components in the respective leases, the results of which will not be known until the fourth quarter of 2025 or later. (3) Primarily consists of ancillary leases (e.g., renewable energy leases; oil, gas, and mineral leases; telecommunications leases; etc.) with varying expirations on certain of our farms. (4) Includes lease revenues of approximately $3.9 million from nine farms on which the respective leases expired and which are currently either direct-operated or vacant, and approximately $7,000 from seven farms sold during the three months ended March 31, 2025 . We are currently exploring a variety of options with certain of our 2025 lease expirations, including negotiating lease terms with existing and prospective new tenants and discussing sale options with prospective buyers. In addition, while we seek to lease all properties under traditional leases that involve a certain level of fixed base rent, with respect to expirations on certain western permanent crop farms, we may decide to continue with an adjusted lease structure that involves a reduced base rent amount (or none) and/or, in certain cases, a cash lease incentive, in exchange for increasing the participation rent components, or we may decide to continue to operate certain of these 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. Business Environment Impact of Inflation, Interest Rates, and Tariffs Inflation According to t he U.S. Bureau of Labor Statistics, the consumer price index (“CPI”) rose at an a nnual rate of 2.4% through March 31, 2025, continuing the downward trend from the inflation peak in mid-2022. Food price increases have also slowed but remain elevated, with the overall food category rising at an annual rate of 3.0% over the same period. Notably, over the past three years, food prices have risen by 14.2%, outpacing the overall CPI increase of 11.2%. While high input costs remain a concern for farm operators, we believe these costs will be somewhat offset if food prices continue to match or exceed the inflation rate . Interest Rates After holding rates steady since July 2023, the Federal Reserve initiated its first rate cut in over four years in September 2024, lowering the benchmark federal funds rate by 50 basis points and signaling a potential shift toward an easing of monetary policy. However, since that initial cut, the Federal Reserve has held off on further reductions, as stronger-than-anticipated economic data (particularly in the labor and consumer spending sectors), along with growing uncertainty around the duration and impact of newly-imposed tariffs, have renewed inflationary concerns. As a result, U.S. Treasury yields have remained elevated, with the 10-year Treasury consistently trading above 4.3% in recent months. Furthermore, despite earlier expectations of multiple rate cuts, the timing and pace of any future easing remains highly uncertain. The ongoing volatility in the interest rate environment continues to affect the cost of long-term financing, constraining our ability to pursue new farmland acquisitions at favorable terms . Currently, over 99.9% of our borrowings are at fixed rates, and on a weighted-average basis, these rates are fixed at an effective interest rate of 3.41% for another 3.4 years. As a result, our existing debt portfolio has been largely insulated from the sharp rise in interest rates over the past couple of years, and we believe we are well-protected against the potential for prolonged elevated interest rates or any future rate increases. Tariffs 25 Ongoing trade tensions and the recent implementation of new tariffs have introduced added uncertainty for many U.S. agricultural exports, including certain crops grown on some of our farms, including almonds and pistachios. While fresh produce, including berries and most vegetables, is more insulated due to strong domestic consumption, approximately 60%-70% of U.S.-grown almonds and pistachios are exported annually. As a result, these crops are more vulnerable to shifting trade dynamics and potential retaliatory tariffs. While the full impact on crop prices and grower economics remains uncertain, we continue to monitor developments closely, as any sustained disruption to export markets could influence lease structures and participation rent levels on the affected farms. Another factor influencing export demand is a weakening U.S. dollar. A weaker dollar makes U.S. exports more price-competitive in the global marketplace, which may help mitigate any negative effects of tariffs. California Water Outlook The 2024-2025 water year has aligned with a typical “La Niña” weather pattern, bringing increased precipitation to Northern California and drier conditions in the southern part of the state. Northern regions experienced significant rainfall and snow from multiple atmospheric river events during the winter, while portions of Southern California remain affected by varying levels of drought conditions. Overall, this marks the third consecutive year of average or above-average precipitation statewide. Notably, late-season rain and snow events have led to peak snowpack levels occurring after the April 1 historical average, supporting strong snowmelt runoff through the spring and into early summer. In addition, statewide reservoir levels remain above historical norms, which is expected to support favorable surface water allocations from both State and Federal water projects. During periods of abundant surface water flows, water purveyors often have surplus water supplies that can be acquired at lower prices. We continue to monitor these opportunities to strengthen our long-term water strategy. The extended wet period has also benefited our permanent crop assets by contributing to groundwater recharge and improving root zone moisture content. We are currently observing no signs of water stress in our permanent plantings that often occur during drought periods. As we move into the spring and early summer, our permanent crop assets appear healthy and well-positioned for the growing season. Meanwhile, the ongoing phased implementation of California’s Sustainable Groundwater Management Act (“SGMA”) continues to impose groundwater pumping restrictions across the state. In response, many farmland owners and operators have turned to supplemental water initiatives and projects that allow for the capture or importation of surplus surface water. Looking ahead, we continue to actively evaluate new projects and programs aimed at offsetting the effects of SGMA-related pumping curtailments, including floodwater capture and storage initiatives, fallowing programs, and investments in infrastructure to improve overall water management. Recent Developments Portfolio Activity—Existing Properties Property Sales In January 2025, we completed the sale of five farms in Florida totaling 5,630 gross acres for an aggregate sales price of approximately $52.5 million. Including closing costs, we recognized a net gain on the sale of approximately $14.1 million. In February 2025, we completed the sale of two farms in Nebraska totaling 2,559 gross acres for an aggregate sales price of $12.0 million. Including closing costs, we recognized an aggregate net gain on these sales of approximately $1.6 million. Leasing Activity The following table summarizes certain leasing activity that has occurred on our existing properties since January 1, 2025, through the date of this filing (dollars in thousands, except for footnotes): PRIOR LEASES NEW LEASES (1) Farm Locations Number of Leases Total Farm Acres Total Annualized Straight-line Rent (2) # of Leases with Participation Rents Lease Structures (# of NNN / NN / N) (3) Total Annualized Straight-line Rent (2) Wtd. Avg. Term (Years) # of Leases with Participation Rents Lease Structures (# of NNN / NN / N) (3) CA, CO, & OR 6 13,257 $ 2,438 2 4 / 2 / 0 $ 2,376 6.1 2 4 / 2 / 0 (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 or, in certain cases, provided the tenants with a cash lease incentive, in exchange for significantly increasing the participation rent component, the results of which will not be known until the second half of 2025 or later. 26 (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 three months ended March 31, 2025, we had 15 farms that were either vacant, direct-operated through third-party management agreements, or on which lease revenues were recognized on a cash basis (due to credit issues with certain tenants leading us to determine that full collectability of the remaining rental payments under the respective leases was not probable). During the three months ended March 31, 2025, we recorded lease revenue from these farms of approximately $3.7 million (including a lease termination fee of approximately $2.4 million and accelerated rental revenue of approximately $629,000 due to an early lease termination), as compared to approximately $1.7 million during the prior-year period. During and since the three months ended March 31, 2025, we have entered into new lease agreements on certain of these farms. As such, currently, five farms remain vacant, four farms are direct-operated, and five farms (leased to three different tenants) are on non-accrual status. For the vacant and direct-operated farms, we are exploring both leasing and sale options and are in discussions with both potential tenants and buyers; however, there can be no guarantee that we will be able to secure agreements at favorable terms, or at all. Regarding the farms currently on non-accrual status, we continue to work with each of the tenants to resolve the outstanding rent amounts and will seek to reach agreements on the remaining payments where possible. 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 a new tenant to lease these properties at market rental rates within 1 to 12 months. Financing Activity Debt Activity Loan Repayments From January 1, 2025, through the date of this filing, we repaid approximately $19.4 million of loans that were scheduled to reprice later this year. On a weighted-average basis, these borrowings bore interest at a stated rate of 5.38% and an effective rate (after interest patronage, where applicable) of 4.51%. 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, 2025, we recorded interest patronage of approximately $1.7 million related to interest accrued on the Farm Credit Notes Payable during the year ended December 31, 2024, and during the three months ended September 30, 2024, we received approximately $108,000 of interest patronage, as certain Farm Credit associations paid a portion of the 2024 interest patronage (which relates to interest accrued during 2024 but typically would be paid during the first half of 2025) early. In total, 2024 interest patronage resulted in a 21.9% reduction (approximately 101 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. 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 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. The base management and incentive fees are described below. For information on the termination fee, refer to Note 6, “ Related-Party Transactions—Our 27 Adviser and Administrator—Advisory Agreement ,” within the accompanying notes to our condensed consolidated financial statements. Base Management Fee 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 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. In addition, Total Adjusted Common Equity is defined as common stockholders’ equity plus non-controlling common interests in our Operating Partnership, if any (each as reported on our balance sheet), adjusted to exclude unrealized gains and losses and certain other one-time events and non-cash items. Our Adviser would receive: (i) no incentive Fee in any calendar quarter in which the Pre-Incentive Fee FFO did not exceed the hurdle rate; (ii) 100% of the Pre-Incentive Fee FFO with respect to that portion of such Pre-Incentive Fee FFO, if any, that exceeded the hurdle rate but was less than 2.1875% in any calendar quarter (8.75% annualized); and (iii) 20% of the amount of the Pre-Incentive Fee FFO, if any, that exceeds 2.1875% in any calendar quarter (8.75% annualized). Capital Gains Fee Pursuant to the Advisory Agreement, a capital gains-based incentive fee is calculated and payable in arrears at the end of each fiscal year (or upon termination of the Advisory Agreement). The capital gains fee shall equal: (i) 15% of the cumulative aggregate realized capital gains minus the cumulative aggregate realized capital losses, minus (ii) any aggregate capital gains fees paid in prior periods. For purposes of this calculation, realized capital gains and losses will be calculated as (x) the sales price of the property, minus (y) any costs to sell the property and the then-current gross value of the property (which includes the property’s original acquisition price plus any subsequent, non-reimbursed capital improvements). At the end of each fiscal year, if this figure is negative, no capital gains fee shall be paid. Administration Agreement Pursuant to the Administration Agreement, we pay for our allocable portion of the Administrator’s expenses incurred while performing its obligations to us, including, but not limited to, rent and the salaries and benefits expenses of our Administrator’s employees, including our chief financial officer, treasurer, chief compliance officer, general counsel and secretary (who also serves as our Administrator’s president, general counsel, and secretary), and their respective staffs. Our allocable portion of the Administrator’s expenses is generally derived by multiplying our Administrator’s total expenses by the approximate percentage of time the Administrator’s employees perform services for us in relation to their time spent performing services for all companies serviced by our Administrator under similar contractual agreements. Critical Accounting Policies The preparation of our financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) requires management to make judgments that are subjective in nature to make certain estimates and assumptions. Application of these accounting policies involves the exercise of judgment regarding the use of assumptions as to future uncertainties, and, as a result, actual results could materially differ from these estimates. A summary of our significant accounting policies is provided in Note 2 to our consolidated financial statements in our Form 10-K. There were no material changes to our critical accounting policies during the three months ended March 31, 2025. RESULTS OF OPERATIONS For the purposes of the following discussions on certain operating revenues and expenses, same-property basis represents properties we owned for the entirety of the comparative periods presented. With regard to the comparison between the three months ended March 31, 2025 and 2024: 28 • We owned 150 farms as of March 31, 2025, that are considered our same-property portfolio. Same-property occupancy (including farms that were direct-operated or on non-accrual status) decreased approximately 3.0% to 95.9% as of March 31, 2025, compared to 98.9% as of March 31, 2024. ◦ Included within our same-property portfolio are farms that were vacant, direct-operated, or on non-accrual status during all or a portion of the periods presented. For the three months ended March 31, 2025, we had 15 farms that were either vacant, direct-operated, or on non-accrual status, as compared to 9 farms in the prior-year period. • From January 1, 2024, through March 31, 2025, we did not acquire any new farms and disposed of 19 farms. A comparison of results of components comprising our operating income for the three months ended March 31, 2025 and 2024 is below (dollars in thousands): For the Three Months Ended March 31, 2025 2024 $ Change % Change Operating revenues: Lease revenues: Fixed lease payments $ 13,927 $ 19,593 $ (5,666) (28.9)% Variable lease payments – participation rents 465 — 465 NM Variable lease payments – tenant reimbursements and other 2,411 233 2,178 934.8% Total lease revenue 16,803 19,826 (3,023) (15.2)% Other operating revenue 1 426 (425) (99.8)% Total operating revenues 16,804 20,252 (3,448) (17.0)% Operating expenses: Depreciation and amortization 8,429 8,789 (360) (4.1)% Property operating expenses 1,128 877 251 28.6% Base management, incentive, and capital gains fees 2,246 2,156 90 4.2% Administration fee 642 603 39 6.5% General and administrative expenses 682 566 116 20.5% Total operating expenses 13,127 12,991 136 1.0% Operating income $ 3,677 $ 7,261 $ (3,584) (49.4)% NM = Not Meaningful Operating Revenues Lease revenue The following table provides a summary of our lease revenues during the three months ended March 31, 2025 and 2024 (dollars in thousands): For the Three Months Ended March 31, 2025 2024 $ Change % Change Same-property basis: Fixed lease payments $ 13,920 $ 19,385 $ (5,465) (28.2)% Participation rents 465 — 465 NM Lease termination and other income 2,380 — 2,380 NM Total – Same-property basis 16,765 19,385 (2,620) (13.5)% Properties acquired or disposed of: Fixed lease payments 7 208 (201) (96.6)% Total – Properties acquired or disposed of 7 208 (201) (96.6)% Tenant reimbursements and other (1) 31 233 (202) (86.7)% Total Lease revenues $ 16,803 $ 19,826 $ (3,023) (15.2)% (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. Similar amounts are also recorded as property operating expenses during the respective periods. Same-property Basis – 2025 compared to 2024 29 Lease revenues from fixed lease payments decreased primarily due to the execution of certain lease agreements pursuant to which we agreed to reduce or eliminate the fixed base rent amounts or, in certain cases, provide the tenant with a cash lease incentive, in exchange for significantly increasing the participation rent components in the leases, the majority of which is expected to be realized in the fourth quarter of 2025. The increase in lease revenues from participation rents was primarily attributable to additional cash collections from wine grape sales during the three months ended March 31, 2025. During the three months ended March 31, 2025, we received a lease termination payment from an outgoing tenant who leased three of our farms. After applying a portion of the amount towards certain outstanding receivables owed by the same tenant, we recognized additional lease revenue of approximately $2.4 million upon receipt. Other – 2025 compared to 2024 Lease revenue from properties acquired or disposed of decreased due to the sale of 19 farms subsequent to December 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. As such, the timing of tenant reimbursement revenue fluctuates as payments are made by our tenants. Amounts recorded during the current-year periods include increased reimbursements from certain tenants for costs to deliver water to their farms via a pipeline owned by an unconsolidated entity of ours. Other Operating Revenue Other operating revenue consists of non-lease revenue generated as a result of activities performed on certain of our properties. During the three months ended March 31, 2024, we recognized approximately $426,000 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. Operating Expenses Depreciation and amortization Depreciation and amortization expense decreased primarily due to the disposition of certain assets, including the sale of 19 farms subsequent to December 31, 2023, and certain other assets reaching the end of their useful lives. This decrease was partially offset by additional depreciation expense associated with new capital improvements made on certain of our farms. Property operating expenses 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, 2025 and 2024 (dollars in thousands): For the Three Months Ended March 31, 2025 2024 $ Change % Change Same-property basis $ 1,085 $ 608 $ 477 78.5% Properties acquired or disposed of 6 31 (25) (80.6)% Tenant-reimbursed property operating expenses (1) 37 238 (201) (84.5)% Total Property operating expenses $ 1,128 $ 877 $ 251 28.6% (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. Similar amounts are also recorded as lease revenue when earned in accordance with the lease. Same-property Basis – 2025 compared to 2024 Property operating expenses increased primarily due to additional costs incurred related to certain farms that were vacant, direct-operated, or on non-accrual status. These costs included additional property taxes (for which the prior tenants were previously responsible), legal fees incurred in connection with rent collection and lease termination efforts, and legal and other costs related to setting up direct farming operations on certain of our farms. During the three months ended March 31, 2025, we also incurred additional legal fees and other costs in connection with protecting water rights on certain farms in California. Other – 2025 compared to 2024 Property operating expenses on properties acquired or disposed of decreased due to the sale of 19 farms subsequent to December 31, 2023. 30 The fluctuations in tenant-reimbursed property operating expenses are primarily driven by miscellaneous property operating costs incurred by us in connection with our ownership interests in certain unconsolidated entities, for which our tenants are contractually obligated to reimburse us under the terms of the respective leases. Such expenses will fluctuate commensurate with the timing and amount of miscellaneous operating costs incurred by the underlying entities. Amounts recorded during the prior-year period include additional costs to deliver water to certain of our farms via a pipeline owned by an unconsolidated entity of ours, which costs were reimbursed to us by our tenants. Related-Party Fees The following table provides the calculations of the base management, incentive, and capital gains fees (as applicable) due to our Adviser pursuant to the Advisory Agreement for the three months ended March 31, 2025 and 2024 (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): 31 Quarter Ended Year to Date March 31 2025 Fee Calculations: Base Management Fee: Gross Tangible Real Estate (1)(2) $ 1,372,260 Quarterly rate 0.150 % Base management fee (3) $ 2,058 $ 2,058 Incentive Fee: Total Adjusted Common Equity (1)(2) $ 318,209 First hurdle quarterly rate 1.750 % First hurdle threshold $ 5,569 Second hurdle quarterly rate 2.1875 % Second hurdle threshold $ 6,961 Pre-Incentive Fee FFO (1) $ 2,139 100% of Pre-Incentive Fee FFO in excess of first hurdle threshold, up to second hurdle threshold $ — 20% of Pre-Incentive Fee FFO in excess of second hurdle threshold — Total Incentive fee (3) $ — $ — Capital Gains Fee: Aggregate net realized capital gains (1) $ 5,443 Capital gains fee rate 15.0 % Cumulative capital gains fee $ 816 Less capital gains fees recorded in prior periods (4) $ (628) Total Capital Gains Fee (3)(5) $ 188 $ 188 Total fees due to Adviser $ 2,246 $ 2,246 2024 Fee Calculations: Base Management Fee: Gross Tangible Real Estate (1)(2) $ 1,437,812 Quarterly rate 0.150 % Base management fee (3) $ 2,156 $ 2,156 Incentive Fee: Total Adjusted Common Equity (1)(2) $ 344,128 First hurdle quarterly rate 1.750 % First hurdle threshold $ 6,022 Second hurdle quarterly rate 2.1875 % Second hurdle threshold $ 7,528 Pre-Incentive Fee FFO (1) $ 5,988 100% of Pre-Incentive Fee FFO in excess of first hurdle threshold, up to second hurdle threshold $ — 20% of Pre-Incentive Fee FFO in excess of second hurdle threshold — Total Incentive fee (3) $ — $ — Total fees due to Adviser $ 2,156 $ 2,156 (1) As defined in the Advisory Agreement. (2) As of the end of the respective prior quarters. 32 (3) Reflected as a line item on our accompanying Condensed Consolidated Statements of Operations and Comprehensive Income. (4) Represents a capital gains fee earned during the year ended December 31, 2018; however, the full amount of the fee was credited back to us via a voluntary and irrevocable waiver granted to us by our Adviser. (5) The capital gains fee is due annually in arrears and is subject to further adjustment throughout the remainder of 2025 as additional assets are disposed of. The base management fee decreased primarily due to the disposition of 12 farms during 2024. No incentive fee was earned by our Adviser during either of the three months ended March 31, 2025 or 2024, as our Pre-Incentive Fee FFO did not surpass the required hurdle rate in either period. Our Adviser earned a capital gains fee during the three months ended March 31, 2025, driven by gains recognized on the sale of seven farms completed during the quarter (see “ Recent Developments—Portfolio Activity—Existing Properties—Property Sales ” above for further discussion on these sales). The capital gains fee, net of any credits that may be granted by our Adviser, is due in arrears at the end of each fiscal year and is subject to further adjustment throughout the remainder of 2025 as additional assets are disposed of. 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 affiliated companies serviced by our Administrator. Other Operating Expenses General and administrative expenses consist primarily of professional fees, director fees, stockholder-related expenses, overhead insurance, acquisition-related costs for investments no longer being pursued, and other miscellaneous expenses. General and administrative expenses increased during the three months ended March 31, 2025, primarily due to an increase in professional fees (driven by higher legal fees) and additional stockholder-related expenses related to the annual stockholders’ meeting. A comparison of results of other components contributing to net loss attributable to common stockholders for the three months ended March 31, 2025 and 2024 is below (dollars in thousands): For the Three Months Ended March 31, 2025 2024 $ Change % Change Operating income $ 3,677 $ 7,261 $ (3,584) (49.4)% Other income (expense): Other income 1,952 2,428 (476) (19.6)% Interest expense (5,177) (5,555) 378 (6.8)% Dividends declared on cumulative term preferred stock (755) (755) — —% Gain on dispositions of real estate assets, net 15,410 10,273 5,137 50.0% Property and casualty recovery, net 137 — 137 NM Loss from investments in unconsolidated entities (136) (85) (51) 60.0% Total other income, net 11,431 6,306 5,125 81.3% Net income 15,108 13,567 1,541 11.4% Aggregate dividends declared on cumulative redeemable preferred stock, net (6,002) (6,118) 116 (1.9)% Net income attributable to common stockholders $ 9,106 $ 7,449 $ 1,657 22.2% NM = Not Meaningful Other Income (Expense) 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 decreased primarily due to less interest earned on short-term investments and a decrease in interest patronage received from Farm Credit (primarily due to decreased borrowings from Farm Credit). During the three months ended March 31, 2025, we recorded approximately $1.7 million of interest patronage from Farm Credit related to interest accrued during 2024, as compared to approximately $1.9 million of interest patronage recorded during the prior-year period that related to interest accrued during 2023. In addition, during the three months ended September 30, 2024, we received approximately $108,000 of interest patronage related to interest accrued during 2024, as certain Farm Credit associations paid a portion of the 2024 interest patronage (which would typically be paid during the first half of 2025) early. In total, 2024 interest patronage resulted in a 21.9% reduction (approximately 101 basis points) to the interest rate of such borrowings. 33 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, 2025, was approximately $507.8 million as compared to approximately $557.6 million for the prior-year period. Excluding interest patronage received on certain of our Farm Credit borrowings and the impact of debt issuance costs, the weighted-average interest rate charged on our aggregate borrowings for the three months ended March 31, 2025, was 3.79% as compared to 3.81% for the prior-year period. During the three months ended March 31, 2025, we recorded a net capital gain, driven by the sale of five farms in Florida and two farms in Nebraska, which, after accounting for closing costs, resulted in an aggregate net gain of approximately $15.8 million. During the three months ended March 31, 2024, we recorded a net capital gain, driven by the sale of a large farm in Florida, which, after accounting for closing costs, resulted in a net gain of approximately $10.4 million. These net gains were partially offset by losses recorded in both periods related to the removal of some permanent plantings and the disposal of certain irrigation and other improvements on certain of our farms. The property and casualty recovery recorded during three months ended March 31, 2025, was the result of an adjustment to the original property and casualty loss recorded during the year ended December 31, 2024, due to damage caused to certain permanent plantings on a farm in Georgia due to Hurricane Helene. After further inspection of the property, it was determined that the damage was not as extensive as originally estimated, resulting in an adjustment to our original estimate. During both of the three months ended March 31, 2025 and 2024, we recognized a loss from investments in unconsolidated entities of ours that convey water to certain of our farms of approximately $136,000 and $85,000, respectively. The fluctuations in revenue and expense attributable to these unconsolidated entities is primarily driven by miscellaneous property operating costs incurred by these unconsolidated entities and the respective properties’ reimbursements of such costs incurred. LIQUIDITY AND CAPITAL RESOURCES Overview 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 $183.8 million, consisting of approximately $38.1 million in cash on hand and, based on the current level of collateral pledged, approximately $145.7 million of availability under our credit facility with MetLife (subject to compliance with covenants) and other undrawn lines of credit, notes, or bonds. In addition, we currently have certain properties recently valued at a total of approximately $147.8 million that are unencumbered and eligible to be pledged as collateral. 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 3.41% for another 3.4 years. In addition, the weighted-average remaining term of our notes and bonds payable is approximately 7.3 years. 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. We are in compliance with all of our debt covenants under our respective credit facilities and borrowings, and we believe we currently have adequate liquidity to cover all near- and long-term debt obligations and operating expenses. Future Capital Needs Our short- and long-term liquidity requirements consist primarily of making principal and interest payments on outstanding borrowings; funding our general operating costs; making dividend payments on our currently-designated preferred securities; 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 and, in certain situations, growing and operational costs on existing farms, repurchasing shares of preferred stock, 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 operating costs, pay dividends on our currently-designated preferred securities, and fund our distributions to common stockholders (including non-controlling OP Unitholders). We expect to meet our long-term liquidity requirements through various sources of capital, including capacity under current lines of credit, long-term mortgage indebtedness and bond issuances, future equity issuances (including, but not limited to, shares of our 5.00% Series E Cumulative Redeemable Preferred Stock, par value $0.001 per share (the “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 assets as opportunities arise. We continue to actively seek and evaluate acquisitions of additional farms and farm-related assets 34 that satisfy our investment criteria, and we have several properties that are in various stages of our due diligence process. However, all potential acquisitions will be subject to our due diligence investigation of such properties, and there can be no assurance that we will be successful in identifying or acquiring any properties in the future. Operating Commitments and Obligations Operating Obligations In connection with the execution of certain lease agreements, we have committed to provide capital improvements on certain of our farms. Below is a summary of certain of those projects for which we have incurred or accrued costs as of March 31, 2025 (dollars in thousands): Farm Location(s) Farm Acreage Total Commitment Obligated Completion Date (1) Net Amount Expended or Accrued as of March 31, 2025 St. Lucie, FL 549 $ 230 Q3 2025 $ 185 Monterey, CA 329 1,100 (2) Q4 2025 30 Ventura, CA 402 1,000 (2) Q4 2025 458 Hartley, TX 2,219 1,300 (2) Q4 2030 982 Franklin & Grant, WA, & Umatilla, OR 1,126 4,203 (2) Q4 2032 2,977 Wicomico & Caroline, MD, and Sussex, DE 833 155 Q3 2034 49 (1) Our obligation to provide capital to fund these improvements does not extend beyond these respective dates. (2) Pursuant to contractual agreements, we will earn additional rent on the cost of these capital improvements as the funds are disbursed by us. Ground Lease Obligations In connection with certain farms acquired through a leasehold interest, we assumed certain ground lease arrangements under which we are the lessee. Future minimum lease payments due under the remaining non-cancelable terms of these leases as of March 31, 2025, are as follows (dollars in thousands): Period Future Lease Payments (1) For the remaining nine months ending December 31: 2025 $ 40 For the fiscal years ending December 31: 2026 100 2027 100 2028 100 2029 100 Thereafter 756 Total undiscounted lease payments 1,196 Less: imputed interest (439) Present value of lease payments $ 757 (1) Certain annual lease payments are set at the beginning of each year to then-current market rates (as determined by the lessor). The amounts shown above represent estimated amounts based on the lease rates currently in place. As a result of these ground leases, we recorded lease expense (included within Property operating expenses on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income) of approximately $26,000 for each of the three months ended March 31, 2025 and 2024. Cash Flow Resources The following table summarizes total net cash flows from operating, investing, and financing activities for the three months ended March 31, 2025 and 2024 (dollars in thousands): For the Three Months Ended March 31, 2025 2024 $ Change % Change Net change in cash from: Operating activities $ 4,467 $ 3,420 $ 1,047 30.6 % Investing activities 60,216 62,519 (2,303) (3.7) % Financing activities (40,041) (32,955) (7,086) 21.5 % Net change in Cash and cash equivalents $ 24,642 $ 32,984 $ (8,342) (25.3) % 35 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 increased largely due to an increase in cash payments received for participation rents and receipt of a termination fee from an outgoing tenant on three of our farms, as well as decreases in cash payments made for the acquisition of water assets, related-party fees, and interest payments made. This increase was partially offset by a decrease in fixed lease cash payments received, primarily due to the disposition of a large farm in Florida in January 2025, as well as reduced fixed lease payments attributable to the execution of certain lease agreements in 2024, pursuant to which we agreed to reduce or eliminate the fixed base rent amounts or, in certain instances, provided certain cash allowances to tenants, in exchange for increasing the participation rent components in the leases, the results of which will not be known until the fourth quarter of 2025 or later. Investing Activities The change in cash from investing activities was primarily due to certain property sales in each period. During the three months ended March 31, 2025, we sold five farms in Florida and two farms in Nebraska for aggregate net proceeds (after closing costs) of approximately $62.0 million, resulting in an aggregate net gain of approximately $15.8 million. During the three months ended March 31, 2024, we sold one farm in Florida for aggregate net proceeds of approximately $64.0 million, resulting in a net gain of approximately $10.4 million. Financing Activities The change in cash from financing activities was primarily due to an increase in aggregate debt repayments of approximately $6.9 million. Debt Capital MetLife Facility As amended, our credit facility with MetLife currently consists of $75.0 million of revolving equity lines of credit and an aggregate of $175.0 million of term notes (the “MetLife Facility”). We currently have $200,000 outstanding under the lines of credit and $36.3 million outstanding on the term notes. While $213.5 million of the full commitment amount under the MetLife Facility remains undrawn, based on the level of collateral pledged, we currently have approximately $110.0 million of availability under the MetLife Facility. The revolving equity lines of credit mature on December 15, 2033, and the draw period for both term notes expires on December 31, 2026, after which MetLife has no obligation to disburse any additional undrawn funds under the term notes. Farmer Mac Facility As amended, our agreement with Federal Agricultural Mortgage Corporation (“Farmer Mac”) currently provides for bond issuances up to an aggregate amount of $225.0 million (the “Farmer Mac Facility”) by December 31, 2026, 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. Farm Credit and Other Lenders Since September 2014, we have closed on multiple loans with various different Farm Credit associations (for additional information on these associations, see Note 4, “ Borrowings ,” within the accompanying notes to our condensed consolidated financial statements). We also have borrowing relationships with several other agricultural lenders and are continuously reaching out to other lenders to establish prospective new relationships. As such, we expect to enter into additional borrowing agreements with existing and new lenders in connection with certain potential new acquisitions in the future. Equity Capital 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 $4.4 million of Series E Preferred Stock and $6.8 million of common stock under the 2023 Registration Statement. 36 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 March 31, 2025, we did not have any material off-balance sheet arrangements. NON-GAAP FINANCIAL INFORMATION Funds from Operations, Core Funds from Operations, and Adjusted Funds from Operations The National Association of Real Estate Investment Trusts (“NAREIT”) developed funds from operations (“FFO”) as a relative non-GAAP supplemental measure of operating performance of an equity REIT to recognize that income-producing real estate historically has not depreciated on the same basis as determined under GAAP. FFO, as defined by NAREIT, is net income (computed in accordance with GAAP), excluding gains or losses from sales of property and impairment losses on property, plus depreciation and amortization of real estate assets, and after adjustments for unconsolidated partnerships and joint ventures. We further present core FFO (“CFFO”) and adjusted FFO (“AFFO”) as additional non-GAAP financial measures of our operational performance, as we believe both CFFO and AFFO improve comparability on a period-over-period basis and are more useful supplemental metrics for investors to use in assessing our operational performance on a more sustainable basis than FFO. We believe that these additional performance metrics, along with the most directly-comparable GAAP measure, provide investors with helpful insight regarding how management measures our ongoing performance, as each of CFFO and AFFO (and their respective per-share amounts) are used by management and our board of directors, as appropriate, in assessing overall performance, as well as in certain decision-making analysis, including, but not limited to, the timing of acquisitions and potential equity raises (and the type of securities to offer in any such equity raises), the determination of any fee credits, and declarations of distributions on our common stock. The non-GAAP financial measures presented herein have limitations as analytical tools and should not be considered in isolation or as a substitute for an analysis of our results calculated in accordance with GAAP. We believe that net income is the most directly-comparable GAAP measure to each of FFO, CFFO, and AFFO. Specifically, we believe that FFO is helpful to investors in better understanding our operating performance, primarily because its calculation excludes depreciation and amortization expense on real estate assets, as we believe that GAAP historical cost depreciation of real estate assets is generally not correlated with changes in the value of those assets, particularly with farmland real estate, the value of which does not diminish in a predictable manner over time, as historical cost depreciation implies. Further, we believe that CFFO and AFFO are helpful in understanding our operating performance in that it removes certain items that, by their nature, are not comparable on a period-over-period basis and therefore tend to obscure actual operating performance. In addition, we believe that providing CFFO and AFFO as additional performance metrics allows investors to gauge our overall performance in a manner that is more similar to how our performance is measured by management (including their respective per-share amounts), as well as by analysts and the overall investment community. We calculate CFFO by adjusting FFO for the following items: • Acquisition- and disposition-related expenses. Acquisition- and disposition-related expenses (including due diligence costs on acquisitions not consummated and certain auditing and accounting fees incurred that were directly related to completed acquisitions or dispositions) are incurred for investment purposes and do not correlate with the ongoing operations of our existing portfolio. Further, certain auditing and accounting fees incurred vary depending on the number and complexity of acquisitions or dispositions completed during the period. Due to the inconsistency in which these costs are incurred and how they have historically been treated for accounting purposes, we believe the exclusion of these expenses improves comparability of our operating results on a period-to-period basis. • Other adjustments . We will adjust for certain non-recurring charges and receipts and will explain such adjustments accordingly. We believe the exclusion of these amounts improves comparability of our operating results on a period-to-period basis and will apply consistent definitions of CFFO for all prior-year periods presented to provide consistency and better comparability. Further, we calculate AFFO by adjusting CFFO for the following items: • Rent adjustments. 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. As a result, cash rents received during a particular 37 period may not necessarily be comparable to other periods or represent the cash rents indicative of a given lease year. Therefore, we further adjust AFFO to normalize the cash rent received pertaining to a lease year over that respective lease year on a straight-line basis, resulting in cash rent being recognized ratably over the period in which the cash rent is earned. • Amortization of debt issuance costs . The amortization of costs incurred to obtain financing is excluded from AFFO, as it is a non-cash expense item that is not directly related to the operating performance of our properties. • Other adjustments . 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 foregoing adjustments aid our investors’ understanding of our ongoing operational performance. FFO, CFFO and AFFO do not represent cash flows from operating activities in accordance with GAAP, which, unlike FFO, CFFO, and AFFO, generally reflects all cash effects of transactions and other events in the determination of net income, and should not be considered an alternative to net income as an indication of our performance or to cash flows from operations as a measure of liquidity or ability to make distributions. Comparisons of FFO, CFFO, and AFFO, using the NAREIT definition for FFO and the definitions above for CFFO and AFFO, to similarly-titled measures for other REITs may not necessarily be meaningful due to possible differences in the definitions used by such REITs. Diluted funds from operations (“Diluted FFO”), diluted core funds from operations (“Diluted CFFO”), and diluted adjusted funds from operations (“Diluted AFFO”) per share are FFO, CFFO, and AFFO, respectively, divided by the weighted-average number of total shares (including shares of our common stock and OP Units held by non-controlling limited partners) outstanding on a fully-diluted basis during a period. We believe that diluted earnings per share is the most directly-comparable GAAP measure to each of Diluted FFO, CFFO, and AFFO per share. Because many REITs provide Diluted FFO, CFFO, and AFFO per share information to the investment community, we believe these are useful supplemental measures when comparing us to other REITs. We believe that FFO, CFFO, and AFFO and Diluted FFO, CFFO, and AFFO per share are useful to investors because they provide investors with a further context for evaluating our FFO, CFFO, and AFFO results in the same manner that investors use net income and EPS in evaluating net income. The following table provides a reconciliation of our FFO, CFFO, and AFFO for the three months ended March 31, 2025 and 2024 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): 38 For the Three Months Ended March 31, 2025 2024 Net income $ 15,108 $ 13,567 Less: Aggregate dividends declared on and gains on or charges related to extinguishment of cumulative redeemable preferred stock, net (1) (6,002) (6,118) Net income attributable to common stockholders and non-controlling OP Unitholders $ 9,106 $ 7,449 Plus: Real estate and intangible depreciation and amortization 8,429 8,789 Less: Gains on dispositions of real estate assets, net (15,410) (10,273) Adjustments for unconsolidated entities (2) 14 23 FFO available to common stockholders and non-controlling OP Unitholders $ 2,139 $ 5,988 Plus: Acquisition- and disposition-related expenses, net 21 — Plus: Other nonrecurring charges, net (3) 173 11 CFFO available to common stockholders and non-controlling OP Unitholders $ 2,333 $ 5,999 Net rent adjustment (792) (547) Plus: Amortization of debt issuance costs 365 243 Plus (less): Other non-cash charges (receipts), net (4) 129 (565) AFFO available to common stockholders and non-controlling OP Unitholders $ 2,035 $ 5,130 Weighted-average shares of common stock outstanding 36,184,658 35,838,442 Weighted-average common non-controlling OP Units outstanding — — Weighted-average shares of common shares outstanding, fully diluted 36,184,658 35,838,442 Diluted FFO per weighted-average common share $ 0.06 $ 0.17 Diluted CFFO per weighted-average common share $ 0.06 $ 0.17 Diluted AFFO per weighted-average common share $ 0.06 $ 0.14 Distributions declared per common share $ 0.14 $ 0.14 (1) Includes (i) cash dividends paid on our cumulative redeemable preferred stock and (ii) 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. (3) Consists primarily of (i) net property and casualty losses (recoveries) recorded and the cost of related repairs expensed as a result of damage to improvements on certain of our farms caused by certain non-recurring events, (ii) one-time legal costs incurred related to certain corporate organizational matters, and (iii) the capital gains fee recorded during the three months ended March 31, 2025, which is not due until after the end of the fiscal year and is subject to further adjustment throughout the remainder of the year. (4) Consists of (i) the net (gain) loss recognized as a result of shares of cumulative redeemable preferred stock that were redeemed, which were non-cash (gains) charges, (ii) our remaining pro-rata share of (income) loss recorded from investments in unconsolidated entities, and (iii) plus (less) net non-cash expense (income) recorded as a result of additional water assets used (received) in certain transactions. 39