Real Estate and Intangible Assets (Tables)
|
3 Months Ended |
Mar. 31, 2018 |
|---|
| Real Estate [Abstract] |
|
| Summary Information of Farms |
The following table provides certain summary information about our 75 farms as of March 31, 2018 (dollars in thousands, except for footnotes):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Location |
|
No. of Farms |
|
Total Acres |
|
Farm Acres |
|
Net Cost Basis(1)
|
|
Encumbrances(2)
|
California |
|
29 |
|
8,241 |
|
7,465 |
|
$ |
211,816 |
|
|
$ |
146,767 |
|
Florida |
|
16 |
|
11,006 |
|
8,846 |
|
115,140 |
|
|
73,003 |
|
Arizona(3)
|
|
6 |
|
6,280 |
|
5,228 |
|
45,126 |
|
|
22,691 |
|
Colorado |
|
10 |
|
31,450 |
|
24,513 |
|
42,081 |
|
|
24,538 |
|
Oregon |
|
4 |
|
2,313 |
|
2,003 |
|
19,794 |
|
|
11,970 |
|
Nebraska |
|
2 |
|
2,559 |
|
2,101 |
|
10,585 |
|
|
6,602 |
|
Washington |
|
1 |
|
746 |
|
417 |
|
9,250 |
|
|
5,368 |
|
Michigan |
|
5 |
|
446 |
|
291 |
|
5,042 |
|
|
2,790 |
|
North Carolina |
|
2 |
|
310 |
|
295 |
|
2,352 |
|
|
1,301 |
|
|
|
75 |
|
63,351 |
|
51,159 |
|
$ |
461,186 |
|
|
$ |
295,030 |
|
|
|
(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 Condensed Consolidated Balance Sheet. |
|
|
(2) |
Excludes approximately $2.1 million of debt issuance costs related to mortgage notes and bonds payable, included in Mortgage notes and bonds payable, net on the accompanying Condensed 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 $3.1 million as of March 31, 2018 (included in Lease intangibles, net on the accompanying Condensed Consolidated Balance Sheet).
|
During the three months ended March 31, 2018, we acquired two new farms, which are summarized in the table below (dollars in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
Name
|
|
Property
Location
|
|
Acquisition
Date
|
|
Total
Acreage
|
|
No. of
Farms
|
|
Primary
Crop(s)
|
|
Lease
Term
|
|
Renewal
Options
|
|
Total
Purchase
Price
|
|
Acquisition
Costs(1)
|
|
Annualized
Straight-line
Rent(2)
|
|
New
Long-term
Debt
|
|
Taft Highway(3)
|
|
Kern, CA |
|
1/31/2018 |
|
161 |
|
1 |
|
Potatoes and Melons |
|
N/A |
|
N/A |
|
$ |
2,945 |
|
|
$ |
33 |
|
|
$ |
— |
|
|
$ |
— |
|
(4) |
Cemetery Road |
|
Van Buren, MI |
|
3/13/2018 |
|
176 |
|
1 |
|
Blueberries |
|
9.6 years |
|
N/A |
|
2,100 |
|
|
39 |
|
|
150 |
|
|
1,260 |
|
|
|
|
|
|
|
|
337 |
|
2 |
|
|
|
|
|
|
|
$ |
5,045 |
|
|
$ |
72 |
|
|
$ |
150 |
|
|
$ |
1,260 |
|
|
|
|
(1) |
Unless noted otherwise, acquisitions were accounted for as asset acquisitions under ASC 360. |
|
|
(2) |
Annualized straight-line rent is based on the minimum cash rental payments guaranteed under the lease, as required under GAAP. |
|
|
(3) |
Farm was purchased with no lease in place at the time of acquisition. |
|
|
(4) |
Subsequent to March 31, 2018, we entered into a loan agreement with an existing lender collateralized by this farm (see Note 10, “Subsequent Events” for additional information on the loan).
|
During the three months ended March 31, 2018, in the aggregate, we recognized operating revenues of approximately $8,000 and a net loss of approximately $5,000 related to the above acquisitions.
2017 Acquisitions
During the three months ended March 31, 2017, we acquired one new farm, which is summarized in the table below (dollars in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
Name |
|
Property
Location |
|
Acquisition
Date |
|
Total
Acreage |
|
No. of
Farms |
|
Primary
Crop(s) |
|
Lease
Term |
|
Renewal
Options |
|
Total
Purchase
Price |
|
Acquisition
Costs(1)
|
|
Annualized
Straight-line
Rent(2)
|
|
Net
Long-term
Debt |
Citrus Boulevard |
|
Martin, FL |
|
1/12/2017 |
|
3,748 |
|
1 |
|
Organic Vegetables |
|
7.0 years |
|
3 (5 years) |
|
$ |
54,000 |
|
|
$ |
80 |
|
(2) |
$ |
2,926 |
|
|
$ |
32,400 |
|
|
|
(1) |
Unless noted otherwise, acquisitions were accounted for as asset acquisitions under ASC 360. |
|
|
(2) |
Annualized straight-line rent is based on the minimum cash rental payments guaranteed under the lease, as required under GAAP. |
|
| Summary of Components of Investments in Real Estate |
The following table sets forth the components of our investments in tangible real estate assets as of March 31, 2018, and December 31, 2017 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2018 |
|
December 31, 2017 |
Real estate: |
|
|
|
|
Land and land improvements |
|
$ |
360,381 |
|
|
$ |
356,316 |
|
Irrigation systems |
|
56,234 |
|
|
50,282 |
|
Buildings |
|
18,429 |
|
|
18,191 |
|
Horticulture |
|
35,837 |
|
|
34,803 |
|
Other improvements |
|
6,584 |
|
|
6,551 |
|
Real estate, at cost |
|
477,465 |
|
|
466,143 |
|
Accumulated depreciation |
|
(18,550 |
) |
|
(16,657 |
) |
Real estate, net |
|
$ |
458,915 |
|
|
$ |
449,486 |
|
|
| Carrying Value of Lease Intangibles and Accumulated Amortization for Each Intangible Asset or Liability Class |
The following table summarizes the carrying values of certain lease intangible assets and the related accumulated amortization as of March 31, 2018, and December 31, 2017 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2018 |
|
December 31, 2017 |
Lease intangibles: |
|
|
|
|
Leasehold interest – land |
|
$ |
3,498 |
|
|
$ |
3,498 |
|
In-place leases |
|
1,404 |
|
|
1,451 |
|
Leasing costs |
|
1,523 |
|
|
1,490 |
|
Tenant relationships |
|
439 |
|
|
439 |
|
Lease intangibles, at cost |
|
6,864 |
|
|
6,878 |
|
Accumulated amortization |
|
(1,536 |
) |
|
(1,386 |
) |
Lease intangibles, net |
|
$ |
5,328 |
|
|
$ |
5,492 |
|
The following table summarizes the carrying values of certain lease intangible assets or liabilities included in Other assets, net and Other liabilities, net, respectively, on the accompanying Condensed Consolidated Balance Sheets and the related accumulated amortization or accretion, respectively, as of March 31, 2018, and December 31, 2017 (dollars in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2018 |
|
December 31, 2017 |
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 |
|
|
$ |
(7 |
) |
|
$ |
26 |
|
|
$ |
(5 |
) |
Below-market lease values and deferred revenue(2)
|
|
(823 |
) |
|
142 |
|
|
(823 |
) |
|
125 |
|
|
|
$ |
(797 |
) |
|
$ |
135 |
|
|
$ |
(797 |
) |
|
$ |
120 |
|
|
|
(1) |
Above-market lease values and lease incentives are included as part of Other assets, net on the accompanying Condensed Consolidated Balance Sheets, and the related amortization is recorded as a reduction of rental income. |
|
|
(2) |
Below-market lease values and deferred revenue are included as a part of Other liabilities, net on the accompanying Condensed Consolidated Balance Sheets, and the related accretion is recorded as an increase to rental income. |
|
| Fair Value of Assets Acquired and Liabilities Assumed Related to Property Acquired |
The allocation of the aggregate purchase price for the farms acquired during each of the three months ended March 31, 2018 and 2017 is as follows (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition Period |
|
Land and Land
Improvements
|
|
Buildings |
|
Irrigation &
Drainage Systems
|
|
Horticulture |
|
In-place
Leases
|
|
Leasing
Costs
|
|
Total
Purchase Price
|
2018 Acquisitions |
|
$ |
3,256 |
|
|
$ |
123 |
|
|
$ |
582 |
|
|
$ |
961 |
|
|
76 |
|
|
$ |
47 |
|
|
$ |
5,045 |
|
2017 Acquisitions |
|
52,375 |
|
|
178 |
|
|
1,447 |
|
|
— |
|
|
— |
|
|
— |
|
|
54,000 |
|
|
| Weighted Average Amortization Period for Intangible Assets Acquired and Liabilities Assumed |
The following table shows the weighted-average amortization periods (in years) for the intangible assets acquired and liabilities assumed in connection with new real estate acquired during the three months ended March 31, 2018. There were no intangible assets acquired or liabilities assumed in connection with new real estate acquired during the three months ended March 31, 2017
|
| Summary of Geographic Locations of Properties |
The following table summarizes the geographic locations, by state, of our farms with leases with third-party tenants in place as of March 31, 2018 and 2017 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of and For the Three Months Ended March 31, 2018 |
|
As of and For the Three Months Ended March 31, 2017 |
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 |
|
29 |
|
8,241 |
|
13.0% |
|
$ |
3,028 |
|
|
45.3% |
|
22 |
|
6,713 |
|
12.4% |
|
$ |
2,857 |
|
|
49.7% |
Florida |
|
16 |
|
11,006 |
|
17.4% |
|
1,754 |
|
|
26.2% |
|
16 |
|
9,315 |
|
17.1% |
|
1,531 |
|
|
26.6% |
Colorado |
|
10 |
|
31,450 |
|
49.6% |
|
686 |
|
|
10.3% |
|
9 |
|
30,170 |
|
55.5% |
|
673 |
|
|
11.7% |
Arizona |
|
6 |
|
6,280 |
|
9.9% |
|
528 |
|
|
7.9% |
|
2 |
|
3,000 |
|
5.5% |
|
186 |
|
|
3.2% |
Oregon |
|
4 |
|
2,313 |
|
3.7% |
|
307 |
|
|
4.6% |
|
4 |
|
2,313 |
|
4.3% |
|
294 |
|
|
5.1% |
Nebraska |
|
2 |
|
2,559 |
|
4.0% |
|
145 |
|
|
2.2% |
|
2 |
|
2,559 |
|
4.7% |
|
145 |
|
|
2.6% |
Washington |
|
1 |
|
746 |
|
1.2% |
|
121 |
|
|
1.8% |
|
— |
|
— |
|
—% |
|
— |
|
|
—% |
Michigan |
|
5 |
|
446 |
|
0.7% |
|
70 |
|
|
1.0% |
|
4 |
|
270 |
|
0.5% |
|
62 |
|
|
1.1% |
North Carolina |
|
2 |
|
310 |
|
0.5% |
|
49 |
|
|
0.7% |
|
— |
|
— |
|
—% |
|
— |
|
|
—% |
TOTALS |
|
75 |
|
63,351 |
|
100.0% |
|
$ |
6,688 |
|
|
100.0% |
|
59 |
|
54,340 |
|
100.0% |
|
$ |
5,748 |
|
|
100.0% |
|