Gladstone Land Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Real Estate and Intangible Assets

Real Estate and Intangible Assets

3 Months Ended

Mar. 31, 2013

Real Estate and Intangible Assets [Abstract]

NOTE 5. REAL ESTATE AND INTANGIBLE ASSETS

All of our properties are wholly-owned on a fee-simple basis. The following table provides certain summary information about our 12 farm properties as of March 31, 2013.


Property Name	Location	Date Acquired		Encumbrances			Acquisition Price⁽¹⁾		Number of Farms		Number of Leases		Farmable Acres		Total Acres		Lease Expiration Date
San Andreas	Watsonville, CA		6/16/1997	$	100,000	⁽²⁾	$	4,929,307		1		1		237		306		12/31/2014
West Gonzales	Oxnard, CA		9/15/1998		13,473,792			15,185,928		1		2		501		653		12/31/2013
West Beach	Watsonville, CA		1/3/2011		5,068,800			8,472,073		3		1		195		198		10/31/2013
Dalton Lane	Watsonville, CA		7/7/2011		2,587,853			2,808,000		1		1		70		72		10/31/2015
Keysville Road	Plant City, FL		10/26/2011		1,152,000			1,227,816		2		1		50		59		7/1/2016
Colding Loop	Wimauma, FL		8/9/2012		3,366,720			3,499,644		1		1		181		219		6/14/2013
Trapnell Road	Plant City, FL		9/12/2012		3,840,000			4,000,000		3		1		110		124		6/30/2017

				$	29,589,165		$	40,122,768		12		8		1,344		1,631

⁽¹⁾

Consists of the initial acquisition price (including the costs allocated to both tangible and intangible assets) plus subsequent improvements on the properties

⁽²⁾

Represents borrowings outstanding as of March 31, 2013, on our line of credit with MetLife, under which the San Andreas Farm is pledgd as collateral

Real Estate

The following table sets forth the components of our investments in real estate as of March 31, 2013, and December 31, 2012:


	As of March 31, 2013			As of December 31, 2012
Real estate:
Land	$	30,828,325		$	30,828,325
Building		1,311,027			1,311,027
Cooler		4,963,243			4,963,243
Drain system		2,576,373			2,576,373

Real estate, gross		39,678,968			39,678,968
Accumulated depreciation		(2,670,139	)		(2,535,084	)

Real estate, net	$	37,008,829		$	37,143,884

Future operating lease payments from tenants under all non-cancelable leases, excluding tenant reimbursement of expenses, for the remainder of 2013 and each of the five succeeding fiscal years and thereafter as of March 31, 2013, are as follows:


Period		Tenant Lease Payments
For the remaining nine months ending December 31:	2013	$	2,298,560
For the fiscal years ending December 31:	2014		875,113
	2015		379,210
	2016		320,109
	2017		126,599
	2018		—
	Thereafter		—

In accordance with the lease terms, substantially all operating expenses are required to be paid by the tenant; however, we would be required to pay real estate property taxes on the respective parcels of land in the event the tenants fail to pay them. The aggregate annual real estate property taxes for all parcels of land owned by us as of March 31, 2013, are approximately $304,000.

Intangible Assets

The following table summarizes the carrying value of intangible assets and the accumulated amortization for each intangible asset class as of March 31, 2013, and December 31, 2012:


	March 31, 2013					December 31, 2012
	Lease Intangibles		Accumulated Amortization			Lease Intangibles		Accumulated Amortization
In-place leases	$	286,975	$	(204,880	)	$	286,975	$	(186,843	)
Leasing commissions		63,638		(20,710	)		63,638		(17,627	)
Customer relationships		93,187		(35,131	)		93,187		(31,270	)

	$	443,800	$	(260,721	)	$	443,800	$	(235,740	)

The estimated aggregate amortization expense for the remainder of 2013 each of the five succeeding fiscal years and thereafter is as follows:


Period		Estimated Amortization Expense
For the remaining nine months ending December 31:	2013	$	48,531
For the fiscal years ending December 31:	2014		39,223
	2015		37,021
	2016		26,014
	2017		14,935
	2018		3,857
	Thereafter		13,498

Portfolio Diversification and Concentrations

Diversification

The following table summarizes the geographic locations of our properties with leases in place as of March 31, 2013, and December 31, 2012:


	As of and for the Three Months Ended March 31, 2013												As of and for the Three Months Ended March 31, 2012
State	Number of Farms		Total Acres		% of Total Acres			Rental Revenue		% of Total Rental Revenue			Number of Farms		Total Acres		% of Total Acres			Rental Revenue		% of Total Rental Revenue
California		6		1,229		75.4	%	$	795,541		87.0	%		6		1,229		95.4	%	$	796,391		97.9	%
Florida		6		402		24.6	%		119,042		13.0	%		2		59		4.6	%		17,084		2.1	%

		12		1,631		100.0	%	$	914,583		100.0	%		8		1,288		100.0	%	$	813,475		100.0	%

Concentrations

Credit Risk

Two of our eight leases are with a single tenant, Dole Food Company (“Dole”), which accounted for $647,080, or 70.8%, of the rental income recorded by us during the three months ended March 31, 2013. Rental income from Dole accounted for 79.5% of the total rental income recorded by us during the three months ended March 31, 2012. If Dole fails to make rental payments to us or elects to terminate any of its leases, and the land cannot be re-leased on satisfactory terms, there would be a material adverse effect on our financial performance and ability to continue operations. However, the parent company of Dole has guaranteed both of its leases. The financial statements of Dole can be found on the Securities and Exchange Commission’s (the “SEC”) website.

Geographic Risk

Six of our twelve farms are located in California. Rental income from our farms in California accounted for $795,541, or 87.0%, of the rental income recorded by us during the three months ended March 31, 2013. Rental income from our farms in California accounted for 97.9% of the total rental income recorded by us during the three months ended March 31, 2012. Our other farms, located in Florida, were purchased in October 2011 and August and September of 2012. Should an unexpected natural disaster occur where our properties are located, there could be a material adverse effect on our financial performance and ability to continue operations.

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

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