Gladstone Land Corporation Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Real Estate and Intangibles Assets

Real Estate and Intangibles Assets

12 Months Ended

Dec. 31, 2017

Property, Plant and Equipment Disclosure

REAL ESTATE AND INTANGIBLE ASSETS

All of our properties are wholly-owned on a fee-simple basis, except where noted. The following table provides certain summary information about our 73 farms as of December 31, 2017 (dollars in thousands, except for footnotes):



Location	No. of Farms	Total Acres	Farm Acres	Net Cost Basis⁽¹⁾		Encumbrances⁽²⁾
California	28	8,080	7,308	$	208,774	$	152,860
Florida	16	11,006	8,846	114,225		73,264
Colorado	10	31,450	24,513	42,409		25,579
Arizona⁽³⁾	6	6,280	5,228	41,341		23,333
Oregon	4	2,313	2,003	19,806		12,978
Nebraska	2	2,559	2,101	10,626		6,602
Washington	1	746	417	9,386		5,412
Michigan	4	270	183	2,936		1,659
North Carolina	2	310	295	2,361		1,301
	73	63,014	50,894	$	451,864	$	302,988

⁽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 associated with the properties, and adjusted for accumulated depreciation and amortization. Includes Investments in real estate, net (excluding improvements paid for by the tenant) and Lease intangibles, net; plus net above-market lease values and lease incentives included in Other assets, net; and less net below-market lease values and deferred revenue included in Other liabilities, net, each as shown on the accompanying Consolidated Balance Sheet.


⁽²⁾	Excludes approximately $2.0 million of deferred financing costs related to mortgage notes and bonds payable included in Mortgage notes and bonds payable, net on the accompanying Consolidated Balance Sheet.

⁽³⁾

Includes two farms in which we own a leasehold interest via ground leases with the State of Arizona that expire in February 2022 and February 2025, respectively. In total, these two farms consist of 1,368 total acres and 1,221 farm acres and had a net cost basis of approximately $3.2 million as of December 31, 2017 (included in Lease intangibles, net on the accompanying Consolidated Balance Sheet).

Real Estate

The following table sets forth the components of our investments in tangible real estate assets as of December 31, 2017 and 2016 (dollars in thousands):



	December 31, 2017			December 31, 2016
Real estate:
Land and land improvements	$	356,316		$	265,985
Irrigation systems	50,282			33,969
Buildings	18,191			14,671
Horticulture	34,803			17,759
Other site improvements	6,551			4,993
Real estate, at cost	466,143			337,377
Accumulated depreciation	(16,657		)	(11,066		)
Real estate, net	$	449,486		$	326,311

Real estate depreciation expense on these tangible assets was approximately $6.2 million, $4.4 million, and $2.3 million for the years ended December 31, 2017, 2016, and 2015, respectively.

Included in the figures above are amounts related to improvements on certain of our properties paid for by our tenants but owned by us, or tenant improvements. As of December 31, 2017 and 2016, we recorded tenant improvements, net of accumulated depreciation, of approximately $2.4 million and $1.8 million, respectively. We recorded both depreciation expense and additional rental revenue related to these tenant improvements of approximately $220,000, $147,000, and $62,000 during the years ended December 31, 2017, 2016, and 2015, respectively.

Intangible Assets and Liabilities

The following table summarizes the carrying value of lease intangibles and the accumulated amortization for each intangible asset or liability class as of December 31, 2017 and 2016 (dollars in thousands):



	December 31, 2017			December 31, 2016
Lease intangibles:
Leasehold interests – land	$	3,498		$	—
In-place leases	1,451			1,481
Leasing costs	1,490			1,086
Tenant relationships	439			706
Lease intangibles, at cost	6,878			3,273
Accumulated amortization	(1,386		)	(1,273		)
Lease intangibles, net	$	5,492		$	2,000

Total amortization expense related to these lease intangible assets, including amounts charged to amortization expense due to early lease terminations, was approximately $1.1 million, $741,000, and $842,000 for the years ended December 31, 2017, 2016, and 2015, respectively. During the years ended December 31, 2017, 2016, and 2015, we charged approximately $102,000, $9,000, and $20,000, respectively, to amortization expense due to early lease terminations.

The following table summarizes the carrying values of certain lease intangible assets or liabilities included in Other assets and Other liabilities, respectively, on the accompanying Consolidated Balance Sheets and the related accumulated amortization or accretion, respectively, as of December 31, 2017, and 2016 (dollars in thousands).



	December 31, 2017						December 31, 2016
Intangible Asset or Liability	Deferred Rent Asset (Liability)			Accumulated (Amortization) Accretion			Deferred Rent Asset (Liability)			Accumulated (Amortization) Accretion
Above-market lease values and lease incentives⁽¹⁾	$	26		$	(5	)	$	19		$	(14	)
Below-market lease values and deferred revenue⁽²⁾	(823		)	125			(785		)	61
	$	(797	)	$	120		$	(766	)	$	47


⁽¹⁾	Net above-market lease values and lease incentives are included as part of Other assets, net on the accompanying Consolidated Balance Sheets, and the related amortization is recorded as a reduction of rental income.


⁽²⁾	Net below-market lease values and deferred revenue are included as a part of Other liabilities, net on the accompanying Consolidated Balance Sheets, and the related accretion is recorded as an increase to rental income.

Total amortization related to above-market lease values and lease incentives was approximately $10,000, $7,000 and $17,000 for the years ended December 31, 2017, 2016, and 2015, respectively. Total accretion related to below-market lease values and other deferred revenue was $63,000, $38,000 and $179,000 for the years ended December 31, 2017, 2016, and 2015, respectively.

The estimated aggregate amortization expense to be recorded related to in-place lease values, leasing costs, and tenant relationships and the estimated net impact on rental income from the amortization of above-market lease values and lease incentives or accretion of above-market lease values and deferred revenue for each of the five succeeding fiscal years and thereafter is as follows (dollars in thousands):



Period		Estimated Amortization Expense		Estimated Net Increase to Rental Income
For the fiscal years ending December 31:	2018	$	1,037	$	60
	2019	978		62
	2020	911		61
	2021	744		60
	2022	516		33
	Thereafter	1,306		401
		$	5,492	$	677

Acquisitions

Until our adoption of ASU 2017-01, which clarified the definition of a business, certain acquisitions during the prior-year periods presented were accounted for as business combinations in accordance with ASC 805, as there was a prior leasing history on the property. As such, the fair value of all assets acquired and liabilities assumed were determined in accordance with ASC 805, and all acquisition-related costs were expensed as incurred, other than those costs directly related to reviewing or assigning leases that we assumed upon acquisition, which were capitalized as part of leasing costs. Upon our early adoption of ASU 2017-01, effective October 1, 2016, most acquisitions, including those with a prior leasing history, are now generally treated as an asset acquisition under ASC 360. For acquisitions accounted for as asset acquisitions under ASC 360, all acquisition-related costs were capitalized and included as part of the fair value allocation of the identifiable tangible and intangible assets acquired, other than those costs that directly related to originating new leases we executed upon acquisition, which were capitalized as part of leasing costs.

In addition, total consideration for acquisitions may include a combination of cash and equity securities, such as OP Units. When OP Units are issued in connection with acquisitions, we determine the fair value of the OP Units issued based on the number of units issued multiplied by the closing price of the Company’s common stock on the date of acquisition.

2017 Acquisitions

During the year ended December 31, 2017, we acquired 16 new farms, which are summarized in the table below (dollars in thousands, except for footnotes).



Property Name	Property Location	Acquisition Date	Total Acreage	No. of Farms	Primary Crop(s)	Lease Term⁽¹⁾	Renewal Options	Total Purchase Price		Acquisition Costs⁽²⁾		Annualized Straight-line Rent⁽³⁾			New Long-term Debt Issued
Citrus Boulevard	Martin, FL	1/12/2017	3,748	1	Organic Vegetables	7.0 years	3 (5 years)	$	54,000	$	80	$	2,926		$	32,400
Spot Road⁽⁴⁾	Yuma, AZ	6/1/2017	3,280	4	Melons and Alfalfa Hay	8.6 years	1 (10 years) & 1 (2 years)	27,500		88		1,672			15,300
Poplar Street	Bladen, NC	6/2/2017	310	2	Organic Blueberries	9.6 years	1 (5 years)	2,169		49		122		⁽⁵⁾	1,301
Phelps Avenue	Fresno, CA	7/17/2017	847	4	Pistachios and Almonds	10.3 years	1 (5 years)	13,603		43		681		⁽⁵⁾	8,162
Parrot Avenue⁽⁶⁾	Okeechobee, FL	8/9/2017	1,910	1	Misc. Vegetables	0.5 years	None	9,700		67		488			5,820
Cat Canyon Road⁽⁷⁾	Santa Barbara, CA	8/30/2017	361	1	Wine Grapes	9.8 years	2 (5 years)	5,375		112		320			3,225
Oasis Road	Walla Walla, WA	9/8/2017	746	1	Apples, Cherries, and Wine Grapes	6.3 years	None	9,500		45		484		⁽⁵⁾	5,460
JJ Road	Baca, CO	10/2/2017	1,280	1	Grass Hay	4.3 years	1 (5 years)	900		26		52			540
Jayne Avenue	Fresno, CA	12/15/2017	159	1	Organic Almonds	19.9 years	2 (5 years)	5,925		44		364		⁽⁵⁾	3,555
			12,641	16				$	128,672	$	554	$	7,109		$	75,763


⁽¹⁾	Where more than one lease was assumed or executed, represents the weighted-average lease term on the property.


⁽²⁾	Unless noted otherwise, acquisitions were accounted for as asset acquisitions under ASC 360.


⁽³⁾	Annualized straight-line amount is based on the minimum cash rental payments guaranteed under the lease, as required under GAAP.

⁽⁴⁾

Includes two farms (1,368 total acres) acquired through a leasehold interest, with the State of Arizona as the lessor. These state leases expire in February 2022 (485 total acres) and February 2025 (883 total acres). In addition, in connection with the acquisition of this property, we assumed four in-place leases with us as the lessor or sublessor. Three of these leases are agricultural leases, with one lease expiring on June 30, 2019, and two leases expiring on September 15, 2026. The fourth lease is a residential lease that expires on September 30, 2019. If either of the state leases is not renewed upon its expiration, the subleases on the respective acreage shall terminate automatically.


⁽⁵⁾	Leases also provide for a variable rent component based on the gross crop revenues earned on the property. The figures above represent only the minimum cash rents guaranteed under the respective leases.

⁽⁶⁾

In connection with the acquisition of this property, we executed a 6-year, follow-on lease with a new tenant that begins upon the expiration of the 7-month lease assumed at acquisition. The follow-on lease includes two, 6-year extension options and provides for minimum annualized straight-line rents of approximately $542,000. In addition, in connection with the execution of the follow-on lease, we committed to providing up to $1.0 million of capital for certain irrigation and property improvements. As stipulated in the follow-on lease, we will earn additional rental income on the total cost of the improvements as disbursements are made by us at a rate commensurate with the annual yield on the farmland (as determined by each year's minimum cash rent per the follow-on lease).


⁽⁷⁾	In connection with the acquisition of this property, we committed up to $4.0 million of capital to fund the development of additional vineyard acreage on the property. As stipulated in the lease agreement, we will earn additional rental income on the total cost of the project as the capital is disbursed by us at rates specified in the lease.

During the year ended December 31, 2017, in the aggregate, we recognized operating revenues of approximately $4.5 million, and earnings of approximately $1.1 million, related to the above acquisitions.

2016 Acquisitions

During the year ended December 31, 2016, we acquired 15 new farms in nine separate transactions, which are summarized in the table below (dollars in thousands, except for footnotes).



Property Name	Property Location	Acquisition Date	Total Acreage	No. of Farms	Primary Crop(s)	Lease Term	Renewal Options	Total Purchase Price		Acquisition Costs			Annualized Straight-line Rent⁽¹⁾			New Long-term Debt Issued
Gunbarrel Road ⁽²⁾	Saguache, CO	3/3/2016	6,191	3	Organic Potatoes	5.0 years	1 (5 years)	$	25,736	$	119	⁽³⁾	$	1,591		$	15,531
Calaveras Avenue	Fresno, CA	4/5/2016	453	1	Pistachios	10.0 years	1 (5 years)	15,470		38		⁽⁴⁾	774		⁽⁵⁾	9,282
Orange Avenue	St. Lucie, FL	7/1/2016	401	1	Vegetables	7.0 years	2 (7 years)	5,100		38		⁽⁴⁾	291			3,120
Lithia Road	Hillsborough, FL	8/11/2016	72	1	Strawberries	5.0 years	None	1,700		38		⁽³⁾	97			1,020
Baca County⁽⁶⁾	Baca, CO	9/1/2016	7,384	5	Grass Hay and Alfalfa	4.0 years	1 (5 years)	6,323		73		⁽⁴⁾	384			—
Diego Ranch⁽⁷⁾	Stanislaus, CA	9/14/2016	1,357	1	Almonds	3.0 years	3 (5 years) & 1 (3 years)	13,996		64		⁽³⁾	621			—
Nevada Ranch	Merced, CA	9/14/2016	1,130	1	Almonds	3.0 years	3 (5 years) & 1 (3 years)	13,232		42		⁽³⁾	574			—
Central Avenue	Fresno, CA	10/13/2016	197	1	Almonds	10.0 years	2 (5 years)	6,500		29		⁽⁴⁾	325			3,900
Horse Creek⁽⁸⁾	Baca, CO	12/28/2016	16,595	1	Grass Hay and Alfalfa	4.0 years	1 (5 years)	11,665		55		⁽⁴⁾	717			—
			33,780	15				$	99,722	$	496		$	5,374		$	32,853


⁽¹⁾	Annualized straight-line amount is based on the minimum cash rental payments guaranteed under the lease, as required under GAAP.


⁽²⁾	As partial consideration for the acquisition of this property, we issued 745,879 OP Units, constituting an aggregate fair value of approximately $6.5 million as of the acquisition date. We incurred $25,500 of legal costs in connection with the issuance of these OP Units.


⁽³⁾	Acquisition accounted for as a business combination under ASC 805. In aggregate, $9,520 of these costs were direct leasing costs incurred in connection with these acquisitions.


⁽⁴⁾	Acquisition accounted for as an asset acquisition under ASC 360.


⁽⁵⁾	Lease also provides for a variable rent component based on the gross crop revenues earned on the property. The figure above represents only the minimum cash rents guaranteed under the lease.


⁽⁶⁾	As partial consideration for the acquisition of this property, we issued 125,677 OP Units, constituting an aggregate fair value of approximately $1.5 million as of the acquisition date. We incurred approximately $8,235 of legal costs in connection with the issuance of these OP Units.


⁽⁷⁾	As partial consideration for the acquisition of this property, we issued 343,750 OP Units, constituting an aggregate fair value of approximately $3.9 million as of the acquisition date. We incurred approximately $21,710 of legal costs in connection with the issuance of these OP Units.


⁽⁸⁾	As partial consideration for the acquisition of this property, we issued 233,952 OP Units, constituting as aggregate fair value of approximately $2.6 million as of the acquisition date. We incurred $7,675 of legal costs in connection with the issuance of these OP Units.

During the year ended December 31, 2016, in the aggregate, we recognized operating revenues of approximately $2.6 million, and earnings of approximately $196,000, related to the above acquisitions (which earnings figure includes approximately $206,000 of non-recurring acquisition-related costs).

Purchase Price Allocations

The allocation of the aggregate purchase price for the farms acquired during each of the years ended December 31, 2017 and 2016 is as follows (dollars in thousands):



Acquisition Period	Land and Land Improvements		Buildings		Irrigation Systems		Other Improvements		Horticulture		Leasehold Interest – Land		In-place Leases	Leasing Costs		Net Below-Market Leases			Total Purchase Price
2017 Acquisitions	$	92,516	$	2,805	$	11,844	$	835	$	16,213	$	3,488	486	$	508	$	(23	)	$	128,672
2016 Acquisitions	73,351		3,690		5,199		2,248		14,868		—		501	447		(582		)	99,722

Acquired Intangibles and Liabilities

The following table shows the weighted-average amortization period, in years, for the intangible assets acquired and liabilities assumed in connection with new real estate acquired during the years ended December 31, 2017 and 2016:



	Weighted-Average Amortization Period (in Years)
Intangible Assets and Liabilities	2017	2016
Leasehold interest – land	6.9	0
In-place leases	6.3	8.7
Leasing costs	8.8	11.6
Above-market lease values and lease incentives	5.4	0
Below-market lease values and deferred revenue	4.7	20.9
All intangible assets and liabilities	7.0	14.2

Pro-Forma Financials

During each of the years ended December 31, 2016 and 2015, we acquired six farms in transactions that qualified as business combinations. The following table reflects pro-forma consolidated financial information as if each of these farms was acquired on January 1 of the respective prior fiscal year. In addition, pro-forma earnings have been adjusted to assume that acquisition-related costs related to these farms were incurred at the beginning of the previous fiscal year. No farms were acquired during the year ended December 31, 2017, that were treated as business combinations.



	For the years ended
	December 31, 2016		December 31, 2015
(Dollars in thousands, except per-share amounts)	(Unaudited)		(Unaudited)
Operating Data:
Total operating revenue	$	18,206	$	13,552
Net income (loss) attributable to the company	901		(419		)
Share and Per-share Data:
Earnings (loss) per share of common stock – basic and diluted	$	0.09	$	(0.05	)
Weighted-average common shares outstanding – basic and diluted	10,007,350		8,639,397

The pro-forma consolidated results are prepared for informational purposes only. They are not necessarily indicative of what our consolidated financial condition or results of operations actually would have been assuming the acquisitions had occurred at the beginning of the respective previous periods, nor do they purport to represent our consolidated financial position or results of operations for future periods.

Property Dispositions

On November 30, 2017, we completed the sale of a 219-acre farm in Hillsborough County, Florida (“Colding Loop”), to the existing tenant for $3.9 million, recognizing a net gain on the sale (inclusive of closing costs) of approximately $85,000.

In addition, during the year ended December 31, 2017, we recorded an aggregate loss of approximately $106,000 due to: (i) the removal of certain blueberry bushes owned by us that were removed to allow for the planting of new varieties of blueberry bushes, and (ii) the abandonment on one well.

Significant Existing Real Estate Activity

Leasing Activity

During the year ended December 31, 2017, we executed ten separate leases on nine different farms in California and Florida that had leases expiring in either 2017 or 2018. In total, these leases were renewed for additional terms ranging between one and five years and for total annualized rents of approximately $2.2 million, representing a decrease of approximately $167,000 (approximately 7.0%) from that of the prior leases. These renewals were executed without incurring any downtime on the respective farms, and no leasing commissions or tenant improvements were incurred in connection with these renewals.

In addition, on December 31, 2017, we terminated the lease with the tenant occupying a farm in Santa Cruz County, California, and entered into a new lease with a new tenant to occupy the farm, beginning January 1, 2018. The prior lease was originally scheduled to expire on December 31, 2020, and in connection with its early termination, during the year ended December 31, 2017, we wrote off approximately $99,000 of deferred rent asset balance to bad debt expense, which is included in General and administrative expenses on the accompanying Consolidated Statements of Operations. The new lease is scheduled to expire on December 31, 2020, and provides for annualized straight-line rent of approximately $605,000, representing a 10.9% increase over that of the prior lease (before its termination). No downtime was incurred as a result of the early termination and re-leasing of this farm, nor were any leasing commissions or tenant improvements incurred in connection with the new lease.

Project Completion

In connection with the lease we executed upon our acquisition of an 854-acre farm in California in September 2015, we agreed to fund the development of the property into an almond orchard. The development included the removal of 274 acres of old grape vineyards, the installation of a new irrigation system, including the drilling of four new wells, and the planting of over 800 acres of new almond trees. As of December 31, 2017, the development project had been completed at a total cost of approximately $8.4 million, and, as a result, we expect to receive approximately $5.2 million of additional rent throughout the term of the lease, which expires January 9, 2031.

TRS Lease Assumption

On October 17, 2017, our TRS entered into an Assignment and Assumption of Agricultural Lease (the “Assigned TRS Lease”) with the previously-existing tenant on a 169-acre farm located in Ventura County, California. The Assigned TRS Lease was then amended to shorten the lease term by two years (the new expiration date is July 31, 2018) and to remove any tenant renewal options. All other terms of the lease remained unchanged, including the rental amounts. In addition, to fund the initial operations on the farm, on October 17, 2017, our TRS issued a $1.7 million unsecured promissory note to the Company that is scheduled to mature on July 31, 2018, and will bear interest at a rate equal to the prime rate plus a spread of 5.0% per annum. Repayment of the promissory note, along with interest accrued on the note, is expected to be funded by crop sales earned on the farm by our TRS.

As our wholly-owned TRS is operating the farm, the amount of rent and interest our TRS pays to us (as the parent-landlord and parent-lender) will not be qualifying income for purposes of certain of our REIT tests; however, we do not expect such amounts to be at a level where we would be at risk of not qualifying as a REIT.

Involuntary Conversions and Property and Casualty Recovery

In April 2014, two separate fires occurred on two of our properties, partially damaging a structure on each property. During the year ended December 31, 2015, we recovered approximately $97,000 of insurance proceeds, and, in accordance with ASC 450, “Contingencies,” such recovery is included in Property and casualty recovery on the accompanying Consolidated Statements of Operations. Repairs have been completed on each of these properties, and each of the insurance claims have been closed. No further recoveries are expected for either of these fires.

Future Rental Payments

Future operating rental payments owed from tenants under all non-cancelable leases (excluding tenant reimbursement of certain expenses) for each of the five succeeding fiscal years and thereafter as of December 31, 2017, are as follows (dollars in thousands):



Period		Tenant Rental Payments
For the fiscal years ending December 31:	2018	$	25,974
	2019	25,334
	2020	22,755
	2021	16,630
	2022	16,089
	Thereafter	56,572
		$	163,354

Portfolio Diversification and Concentrations

Diversification

The following unaudited table summarizes the geographic locations, by state, of our properties with leases in place as of December 31, 2017 and 2016 (dollars in thousands):



	As of and For the Year Ended December 31, 2017						As of and For the Year Ended December 31, 2016
State	No. of Farms	Total Acres	% of Total Acres	Rental Revenue		% of Total Rental Revenue	No. of Farms	Total Acres	% of Total Acres	Rental Revenue		% of Total Rental Revenue
California	28	8,080	12.8%	$	12,006	47.8%	22	6,713	13.3%	$	9,829	56.8%
Florida	16	11,006	17.5%	6,585		26.2%	15	5,567	11.0%	3,293		19.0%
Colorado	10	31,450	49.9%	2,704		10.8%	9	30,170	59.6%	1,453		8.4%
Arizona	6	6,280	10.0%	1,572		6.3%	2	3,000	5.9%	729		4.2%
Oregon	4	2,313	3.7%	1,189		4.7%	4	2,313	4.6%	1,172		6.8%
Nebraska	2	2,559	4.0%	580		2.3%	2	2,559	5.1%	580		3.4%
Michigan	4	270	0.4%	249		1.0%	4	270	0.5%	250		1.4%
Washington	1	746	1.2%	152		0.6%	—	—	—%	—		—%
North Carolina	2	310	0.5%	74		0.3%	—	—	—%	—		—%
	73	63,014	100.0%	$	25,111	100.0%	58	50,592	100.0%	$	17,306	100.0%

Concentrations

Credit Risk

As of December 31, 2017, our farms were leased to 52 different, third-party tenants (plus one related-party tenant), with certain tenants leasing more than one farm. One unrelated tenant (“Tenant A”) leases five of our farms, and aggregate rental revenue attributable to Tenant A accounted for approximately 4.3 million, or 17.3% of the rental revenue recorded during the year ended December 31, 2017. In addition, throughout 2017, Dole Food Company (“Dole”) leased two of our farms, and aggregate rental revenue attributable to Dole accounted for approximately $3.0 million, or 11.8% of the rental revenue recorded during the year ended December 31, 2017. Both of the leases with Dole were originally scheduled to expire in 2020; however, one of the leases was terminated on December 31, 2017, and re-leased to a new, third-party tenant, with the new lease commencing on January 1, 2018. Therefore, we do not expect rental revenues attributable to leases with Dole to make up more than 10.0% of our total rental revenues during 2018. However, if Tenant A fails to make rental payments, elects to terminate its leases prior to their expirations, or does not renew its leases, and we cannot re-lease the farms on satisfactory terms, there could be a material adverse effect on our financial performance and ability to continue operations. No other individual tenant represented greater than 10.0% of the total rental revenue recorded during the year ended December 31, 2017.

Geographic Risk

As of December 31, 2017, 28 of the 73 farms we owned were located in California, 16 farms were located in Florida, and 10 farms were located in Colorado. Further, our California, Florida, and Colorado farms accounted for approximately $12.0 million (47.8%), $6.6 million (26.2%), and $2.7 million (10.8%), respectively, of the rental revenue recorded during the year ended December 31, 2017. Our 28 California farms are spread across four of the many different growing regions within the state. Though we seek to continue to further diversify geographically, as may be desirable or feasible, 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. None of our farms in California or Florida were materially impacted by the recent wildfires or hurricanes in those respective areas. No other single state accounted for more than 10.0% of the total rental revenue recorded during the year ended December 31, 2017.