| BORROWINGS |
BORROWINGS
Our borrowings as of March 31, 2018, and December 31, 2017 are summarized below (dollars in thousands):
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Carrying Value as of |
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As of March 31, 2018 |
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March 31, 2018 |
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December 31, 2017 |
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Stated Interest
Rates(1)
(Range; Wtd Avg)
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Maturity Dates
(Range; Wtd Avg)
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Mortgage notes and bonds payable: |
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Fixed-rate mortgage notes payable |
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$ |
205,579 |
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$ |
208,469 |
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3.16%–4.70%; 3.62%
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6/1/2020–11/1/2041; May 2029
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Fixed-rate bonds payable |
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85,551 |
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84,519 |
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2.38%–4.47%; 3.15%
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7/30/2018–3/13/2028; August 2021
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Total mortgage notes and bonds payable |
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291,130 |
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292,988 |
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Debt issuance costs – mortgage notes and bonds payable |
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(2,080 |
) |
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(1,986 |
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N/A |
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N/A |
Mortgage notes and bonds payable, net |
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$ |
289,050 |
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$ |
291,002 |
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Variable-rate revolving lines of credit |
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$ |
3,900 |
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$ |
10,000 |
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3.95% |
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4/5/2024 |
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Total borrowings, net |
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$ |
292,950 |
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$ |
301,002 |
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(1) |
Where applicable, stated interest rates are before interest patronage (as described below). |
The weighted-average interest rate charged on the above borrowings, excluding the impact of debt issuance costs and before any interest patronage, or refunded interest, was 3.52% for the three months ended March 31, 2018, as compared to 3.25% for the prior-year period. In addition, 2017 interest patronage from our Farm Credit Notes Payable (as defined below), which we received prior to the filing of this Form 10-Q and recorded during the three months ended March 31, 2018, resulted in a 18.0% reduction (approximately 71 basis points) to the stated interest rates on such borrowings. We are unable to estimate the amount of interest patronage to be received, if any, related to interest accrued during 2018 on our Farm Credit Notes Payable.
MetLife Borrowings
MetLife Facility
On May 9, 2014, we closed on a credit facility (the “MetLife Facility”) with Metropolitan Life Insurance Company (“MetLife”). As a result of subsequent amendments, the MetLife Facility currently consists of an aggregate of $200.0 million of term notes (the “MetLife Term Notes”) and $75.0 million of revolving equity lines of credit (the “MetLife Lines of Credit”). The following table summarizes the pertinent terms of the MetLife Facility as of March 31, 2018 (dollars in thousands, except for footnotes):
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Issuance |
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Aggregate
Commitment
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Maturity
Dates
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Principal
Outstanding
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Interest Rate Terms |
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Undrawn
Commitment
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MetLife Term Notes |
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$ |
200,000 |
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(1) |
1/5/2029 |
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$ |
128,914 |
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3.30%, fixed through 1/4/2027 |
(2) |
$ |
63,530 |
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(3)(4) |
MetLife Lines of Credit |
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75,000 |
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4/5/2024 |
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3,900 |
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3-month LIBOR + 2.25% |
(5) |
71,100 |
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(3) |
Total principal outstanding |
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$ |
132,814 |
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(1) |
If the aggregate commitment under the MetLife Facility is not fully utilized by December 31, 2019, MetLife has the option to be relieved of its obligation to disburse the additional funds under the MetLife Term Notes.
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(2) |
Represents the blended interest rate as of March 31, 2018. Interest rates for subsequent disbursements will be based on then-prevailing market rates. The interest rate on all then-outstanding disbursements will be subject to adjustment on January 5, 2027. Through December 31, 2019, the MetLife Term Notes are also subject to an unused fee from 0.10% to 0.20% on undrawn amounts (based on the balance drawn under the MetLife Term Notes).
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(3) |
Based on the properties that were pledged as collateral under the MetLife Facility, as of March 31, 2018, the maximum additional amount we could draw under the facility was approximately $16.5 million.
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(4) |
Net of amortizing principal payments of approximately $7.6 million.
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(5) |
The interest rate on the MetLife Lines of Credit is subject to a minimum annualized rate of 2.50%, plus an unused fee from 0.10% to 0.20% on undrawn amounts (based on the balance drawn under each line of credit). The interest rate spread will be subject to adjustment on October 5, 2019. As of March 31, 2018, the interest rate on the MetLife Lines of Credit was 3.95%.
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Individual MetLife Notes
The following table summarizes, in the aggregate, the terms of two additional loan agreements entered into with MetLife (collectively, the “Individual MetLife Notes”) as of March 31, 2018 (dollars in thousands):
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Date of Issuance |
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Principal Outstanding |
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Maturity Date |
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Principal Amortization |
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Interest Rate Terms |
5/31/2017 |
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$ |
15,032 |
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2/14/2022 & 2/14/2025 |
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28.6 years |
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3.55% & 3.85%, fixed throughout their respective terms |
As of March 31, 2018, we were in compliance with all covenants applicable to the MetLife Borrowings.
Farm Credit Notes Payable
From time to time since September 2014, we, through certain subsidiaries of our Operating Partnership, have entered into various loan agreements with certain Farm Credit associations, including Farm Credit of Central Florida, FLCA (“Farm Credit CFL”), Farm Credit West, FLCA (“Farm Credit West”), Cape Fear Farm Credit, ACA (“CF Farm Credit”), Farm Credit of Florida, ACA (“Farm Credit FL”), and Northwest Farm Credit Services, FLCA (“NW Farm Credit,” and, collectively, with the other Farm Credit associations, “Farm Credit”). The following table summarizes, in the aggregate, the pertinent terms of the loans outstanding from Farm Credit (collectively, the “Farm Credit Notes Payable”) as of March 31, 2018 (dollars in thousands, except for footnotes):
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Issuer |
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# of Loans
Outstanding
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Dates of Issuance |
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Maturity Dates |
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Principal
Outstanding
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Stated Interest
Rate(1)
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Farm Credit CFL |
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7 |
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9/19/2014 – 7/13/2017 |
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6/1/2020 – 10/1/2040 |
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$ |
24,496 |
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4.29% |
(2) |
Farm Credit West |
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4 |
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4/4/2016 – 12/20/2017 |
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5/1/2037 – 11/1/2041 |
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24,222 |
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4.02% |
(3) |
CF Farm Credit |
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1 |
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6/14/2017 |
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7/1/2022 |
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1,301 |
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4.41% |
(4) |
Farm Credit FL |
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1 |
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8/9/2017 |
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3/1/2037 |
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5,727 |
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4.70% |
(5) |
NW Farm Credit |
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1 |
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9/8/2017 |
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9/1/2024 |
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5,368 |
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4.41% |
(6) |
Total |
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14 |
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$ |
61,114 |
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(1) |
Represents the weighted-average, blended rate (before interest patronage, as discussed below) on the respective borrowings as of March 31, 2018.
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(2) |
In April 2018, we received interest patronage of approximately $142,000 related to interest accrued on loans from Farm Credit CFL during the year ended December 31, 2017, which resulted in a 15.1% reduction (approximately 58 basis points) to the stated interest rates on such borrowings. In April 2017, we received interest patronage related to loans from Farm Credit CFL of approximately $124,000.
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(3) |
In February 2018, we received interest patronage of approximately $126,000 related to interest accrued on loans from Farm Credit West during the year ended December 31, 2017, which resulted in a 19.7% reduction (approximately 75 basis points) to the stated interest rates on such borrowings. In February 2017, we received interest patronage related to loans from Farm Credit West of approximately $59,000.
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(4) |
In April 2018, we received interest patronage of approximately $11,000 related to interest accrued on loans from CF Farm Credit during the year ended December 31, 2017, which resulted in a 36.6% reduction (approximately 161 basis points) to the stated interest rates on such borrowings. We did not receive any interest patronage related to loans from CF Farm Credit prior to 2018.
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(5) |
In April 2018, we received interest patronage of approximately $27,000 related to interest accrued on loans from Farm Credit FL during the year ended December 31, 2017, which resulted in a 24.6% reduction (approximately 115 basis points) to the stated interest rates on such borrowings. We did not receive any interest patronage related to loans from Farm Credit FL prior to 2018.
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(6) |
In February 2018, we received interest patronage of approximately $17,000 related to interest accrued on loans from NW Farm Credit during the year ended December 31, 2017, which resulted in a 22.7% reduction (approximately 100 basis points) to the stated interest rates on such borrowings. We did not receive any patronage related to loans from NW Farm Credit prior to 2018.
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Interest patronage, or refunded interest, on our borrowings from the various Farm Credit associations is generally recorded upon receipt and is included in Other income on our Condensed Consolidated Statements of Operations. Receipt of interest patronage typically occurs in the first half of the calendar year following the year in which the respective interest payments are made.
As of March 31, 2018, we were in compliance with all covenants applicable to the Farm Credit Notes Payable.
Farmer Mac Facility
On December 5, 2014, we, through certain subsidiaries of our Operating Partnership, entered into a bond purchase agreement (the “Bond Purchase Agreement”) with Federal Agricultural Mortgage Corporation (“Farmer Mac”) and Farmer Mac Mortgage Securities Corporation (the “Bond Purchaser”) for a secured note purchase facility. As amended, the Bond Purchase Agreement provides for bond issuances up to an aggregate principal amount of $125.0 million (the “Farmer Mac Facility”) through December 11, 2018.
During the three months ended March 31, 2018, we issued one bond for gross proceeds of approximately $1.3 million, the terms of which are summarized in the table below (dollars in thousands):
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Date of Issuance |
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Gross
Proceeds(1)
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Maturity Dates |
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Principal Amortization |
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Interest Rate Terms |
3/13/2018 |
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$ |
1,260 |
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(1) |
3/13/2028 |
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None |
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4.47%, fixed throughout its respective term |
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(1) |
Proceeds from these bonds were used for the acquisitions of a new farm. |
The following table summarizes, in the aggregate, the terms of the 15 bonds outstanding under the Farmer Mac Facility as of March 31, 2018 (dollars in thousands):
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Dates of Issuance |
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Initial Commitment |
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Maturity Dates |
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Principal Outstanding |
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Stated
Interest
Rate(1)
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Undrawn Commitment |
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12/11/2014–3/13/2018 |
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$ |
125,000 |
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(2) |
7/30/2018–3/13/2028 |
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$ |
85,551 |
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3.15% |
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$ |
37,858 |
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(3) |
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(1) |
Represents the weighted-average interest rate as of March 31, 2018.
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(2) |
If the balance of the Farmer Mac Facility is not fully utilized by December 11, 2018, Farmer Mac has the option to be relieved of its obligations to purchase additional bonds under the facility.
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(3) |
As of March 31, 2018, there was no additional availability to draw under the Farmer Mac Facility, as no additional properties had been pledged as collateral.
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As of March 31, 2018, we were in compliance with all covenants under the Farmer Mac Facility.
Rabo Note Payable
On October 13, 2017, in connection with the acquisition of a farm, we closed on a term loan from Rabo AgriFinance, LLC (“Rabo”). The following table summarizes the terms of our loan agreement with Rabo (the “Rabo Note Payable”) as of March 31, 2018 (dollars in thousands):
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Date of Issuance |
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Maturity Date |
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Principal Outstanding |
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Principal Amortization |
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Stated Interest Rate |
10/13/2017 |
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10/1/2022 |
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$ |
518 |
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25.0 years |
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4.59% |
As of March 31, 2018, we were in compliance with all covenants under the Rabo Note Payable.
Debt Service – Aggregate Maturities
Scheduled principal payments of our aggregate mortgage notes and bonds payable as of March 31, 2018, for the succeeding years are as follows (dollars in thousands):
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Period |
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Scheduled
Principal Payments
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For the remaining nine months ending December 31: |
2018 |
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$ |
20,315 |
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For the fiscal years ending December 31: |
2019 |
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11,066 |
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2020 |
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26,495 |
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2021 |
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7,259 |
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2022 |
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36,541 |
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2023 |
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41,322 |
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Thereafter |
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148,132 |
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$ |
291,130 |
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Fair Value
ASC 820 provides a definition of fair value that focuses on the exchange (exit) price of an asset or liability in the principal, or most advantageous, market and prioritizes the use of market-based inputs to the valuation. ASC 820-10, “Fair Value Measurements and Disclosures,” establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:
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Level 1 — inputs that are based upon quoted prices (unadjusted) for identical assets or liabilities in active markets;
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Level 2 — inputs are based upon quoted prices for similar assets or liabilities in active or inactive markets or model-based valuation techniques, for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
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Level 3 — inputs are generally unobservable and significant to the fair value measurement. These unobservable inputs are generally supported by little or no market activity and are based upon management’s estimates of assumptions that market participants would use in pricing the asset or liability.
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As of March 31, 2018, the aggregate fair value of our long-term, fixed-rate mortgage notes and bonds payable was approximately $278.8 million, as compared to an aggregate carrying value (excluding unamortized related debt issuance costs) of approximately $291.1 million. The fair value of our long-term, fixed-rate mortgage notes and bonds payable is valued using Level 3 inputs under the hierarchy established by ASC 820-10 and is calculated based on a discounted cash flow analysis, using discount rates based on management’s estimates of market interest rates on long-term debt with comparable terms. Further, due to the revolving nature of the MetLife Lines of Credit and the lack of changes in market credit spreads, their aggregate fair value as of March 31, 2018, is deemed to approximate their aggregate carrying value of $3.9 million.
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