Quarterly report pursuant to Section 13 or 15(d)

Borrowings

v3.21.1
Borrowings
 3 Months Ended
Mar. 31, 2021
Debt Disclosure [Abstract]  
BORROWINGS BORROWINGS
Our borrowings as of March 31, 2021, and December 31, 2020, are summarized below (dollars in thousands):
  Carrying Value as of   As of March 31, 2021
March 31, 2021   December 31, 2020
Stated Interest
Rates(1)
(Range; Wtd. Avg)
   Maturity Dates
(Range; Wtd. Avg)
Notes and bonds payable:
Fixed-rate notes payable $ 536,015  $ 492,182 
2.45%–5.70%; 3.72%
 2/14/2022–11/1/2045; December 2031
Variable-rate notes payable(2)
4,410  45,525 
2.11%–2.11%; 2.11%
 12/1/2022–12/1/2030; October 2029
Fixed-rate bonds payable 92,094  89,883 
2.13%–4.57%; 3.49%
 8/17/2021–10/31/2028; July 2024
Total notes and bonds payable 632,519  627,590 
Debt issuance costs – notes and bonds payable (3,607) (3,629) N/A N/A
Notes and bonds payable, net $ 628,912  $ 623,961 
Variable-rate revolving lines of credit $ 100  $ 100  2.50% 4/5/2024
Total borrowings, net $ 629,012  $ 624,061 
(1)Where applicable, stated interest rates are before interest patronage (as described below).
(2)Notes were fixed subsequent to March 31, 2021; see Note 11, “Subsequent Events.”
As of March 31, 2021, the above borrowings were collateralized by certain of our farms with an aggregate net book value of approximately $1.0 billion. 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 3.70% for the three months ended March 31, 2021, as compared to 3.98% for the three months ended March 31, 2020. In addition, 2020 interest patronage from our Farm Credit
Notes Payable (as defined below) resulted in a 28.7% reduction (approximately 135 basis points) to the stated interest rates on such borrowings. See below under “—Farm Credit Notes Payable—Interest Patronage“ for further discussion on interest patronage.
As of March 31, 2021, we were in compliance with all covenants applicable to the above borrowings.
New MetLife Facility
As of December 31, 2019, our facility with Metropolitan Life Insurance Company (“MetLife”) consisted of a total of $200.0 million of term notes (the “Prior MetLife Term Notes”) and $75.0 million of revolving equity lines of credit (the “MetLife Lines of Credit,” and together with the Prior MetLife Term Notes, the “Prior MetLife Facility”). The draw period for the Prior MetLife Term Notes expired on December 31, 2019, with approximately $21.5 million being left undrawn, and MetLife had no obligation to disburse the remaining funds under those notes.
On February 20, 2020, we entered into an agreement with MetLife to remove the MetLife Lines of Credit from the Prior MetLife Facility and create a new credit facility consisting of a new $75.0 million long-term note payable (the “New MetLife Term Note”) and the MetLife Lines of Credit (collectively, the “New MetLife Facility”).
The following table summarizes the pertinent terms of the New MetLife Facility as of March 31, 2021 (dollars in thousands, except for footnotes):
Issuance Aggregate
Commitment		 Maturity
Dates		 Principal
Outstanding		   Interest Rate Terms   Undrawn
Commitment		  
New MetLife Term Note $ 75,000 
(1)
 1/5/2030 $ 36,900 
2.75%, fixed through 1/4/2030
(2)
 38,100 
(3)
MetLife Lines of Credit 75,000  4/5/2024 100 
3-month LIBOR + 2.00%
(4)
 74,900 
(3)
Total principal outstanding $ 37,000    
(1)If the aggregate commitment under the New MetLife Term Note is not fully utilized by December 31, 2022, MetLife has the option to be relieved of its obligation to disburse the additional funds under the New MetLife Term Note.
(2)Interest rates on any disbursements under the New MetLife Term Note will be based on prevailing market rates at the time of such disbursements. In addition, through December 31, 2022, the New MetLife Term Note is also subject to an unused fee ranging from 0.10% to 0.20% on undrawn amounts (based on the balance drawn under the New MetLife Term Note).
(3)Based on the properties that were pledged as collateral under the New MetLife Facility, as of March 31, 2021, the maximum additional amount we could draw under the facility was approximately $24.2 million.
(4)The interest rate on the MetLife Lines of Credit is subject to a minimum annualized rate of 2.50%, plus an unused fee ranging from 0.10% to 0.20% on undrawn amounts (based on the balance drawn under each line of credit).
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 subsequently amended, the Bond Purchase Agreement provided for bond issuances up to an aggregate amount of $125.0 million (the “Prior Farmer Mac Facility”) through December 11, 2018, after which date the Bond Purchaser had the option to continue buying new bonds issued under the Farmer Mac Facility.
On December 10, 2020, we entered into an amended and restated bond purchase agreement (the “Amended and Restated Bond Purchase Agreement”) with Farmer Mac and the Bond Purchaser, increasing the secured note purchase facility to provide for bond issuances up to an aggregate principal amount of $225.0 million (the “New Farmer Mac Facility”). In addition, the Amended and Restated Bond Purchase Agreement extended the date through which we may issue new bonds to May 31, 2023, and the final maturity date for bonds issued under the Farmer Mac Facility to December 31, 2030.
During the three months ended March 31, 2021, we issued one new bond under the Farmer Mac Facility, the pertinent terms of which are summarized in the following table (dollars in thousands):
Date of Issuance Amount Maturity Date Principal Amortization Stated
Interest Rate		 Interest Rate Terms
2/4/2021 $ 2,460  10/31/2028 25.0 years 3.13% Fixed throughout term
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 (collectively, the “Farm Credit Notes Payable”) with 12 different Farm Credit associations (collectively, “Farm Credit”). During the three months ended March 31, 2021, we entered into the following loan agreements with Farm Credit (dollars in thousands):
Issuer Date of
Issuance		 Amount Maturity
Date		 Principal
Amortization
Stated Interest Rate(1)
Interest Rate Terms
Farm Credit West, FLCA(2)
1/28/2021 $2,073 11/1/2045 24.8 years 3.23% Fixed through December 31, 2027 (variable thereafter)
Mid Atlantic Farm Credit, ACA 3/3/2021 960  6/1/2045 24.4 years 3.80% Fixed through 1/31/2031 (variable thereafter)
(1)Stated rate is before interest patronage, as described below.
(2)Loan proceeds used to repay a previously-issued loan with a balance of approximately $1.4 million and a stated interest rate of 4.99%.
Interest Patronage
Interest patronage, or refunded interest, on our borrowings from Farm Credit is generally recorded upon receipt and is included within Other income on our Condensed Consolidated Statements of Operations and Comprehensive Income. Receipt of interest patronage typically occurs in the first half of the calendar year following the calendar year in which the respective interest expense is accrued. During the three months ended March 31, 2021, we recorded interest patronage of approximately $2.2 million related to interest accrued on the Farm Credit Notes Payable during the year ended December 31, 2020. In addition, during the three months ended September 30, 2020, we recorded approximately $306,000 of 2020 interest patronage, as certain Farm Credit associations prepaid a portion of the 2020 interest patronage (which related to interest accrued during 2020 but is typically received in 2021). In total, we recorded approximately $2.5 million of 2020 interest patronage related to our Farm Credit Notes Payable, which resulted in a 28.7% reduction (approximately 135 basis points) to the interest rates on such borrowings.
Other Borrowings
During the three months ended March 31, 2021, we entered into loan agreements with various other lenders, the terms of which are summarized in the following table (dollars in thousands):
Lender Date of Issuance Amount Maturity Date Principal Amortization Stated Interest Rate Interest Rate Terms
Rabo AgriFinance, LLC 3/11/2021 $ 3,780  12/1/2030 25.0 years 2.11%
1-month LIBOR + 2.00%(1)
Rabo AgriFinance, LLC 3/11/2021 630  12/1/2022 None
(interest only)		 2.11%
1-month LIBOR + 2.00%(1)
(1)Subsequent to March 31, 2021, we entered into fixed interest rate swap agreements for each of these loans. See Note 11, “Subsequent Events—Financing Activity—Borrowing Activity—Interest Rate Swap Agreements,” for additional information on these swap agreements.
Debt Service – Aggregate Maturities
Scheduled principal payments of our aggregate notes and bonds payable as of March 31, 2021, for the succeeding years are as follows (dollars in thousands):
Period Scheduled
Principal Payments
For the remaining nine months ending December 31: 2021 $ 16,335 
For the fiscal years ending December 31: 2022 51,928 
2023 44,003 
2024 40,123 
2025 37,133 
2026 16,255 
Thereafter 426,742 
$ 632,519 
Fair Value
ASC 820, “Fair Value Measurement (Subtopic 820)” (“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 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:
•Level 1 — inputs that are based upon quoted prices (unadjusted) for identical assets or liabilities in active markets;
•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
•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.
As of March 31, 2021, the aggregate fair value of our long-term notes and bonds payable was approximately $626.2 million, as compared to an aggregate carrying value (excluding unamortized related debt issuance costs) of approximately $632.5 million. The fair value of our long-term 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 and variable interest rates applicable to the MetLife Lines of Credit, their aggregate fair value as of March 31, 2021, is deemed to approximate their aggregate carrying value of $0.1 million.
Interest Rate Swap Agreements
In order to hedge our exposure to variable interest rates, we have entered into various interest rate swap agreements in connection with certain of our mortgage financings. In accordance with these swap agreements, we will pay our counterparty a fixed interest rate on a quarterly basis and receive payments from our counterparty equal to the respective stipulated floating rates. We have adopted the fair value measurement provision for these financial instruments, and the aggregate fair value of our interest rate swap agreements is recorded in Other assets, net or Other liabilities, net, as appropriate, on our accompanying Condensed Consolidated Balance Sheets. Generally, in the absence of observable market data, we will estimate the fair value of our interest rate swaps using estimates of certain data points, including estimated remaining life, counterparty credit risk, current market yield, and interest rate spreads of similar securities as of the measurement date. As of March 31, 2021, our interest rate swaps were valued using Level 2 inputs.
In addition, we have designated our interest rate swaps as cash flow hedges, and we record changes in the fair values of the interest rate swap agreements to accumulated other comprehensive income on the Condensed Consolidated Balance Sheets. We record changes in fair value on a quarterly basis, using current market valuations at quarter end. The following table summarizes our interest rate swap as of March 31, 2021, and December 31, 2020 (dollars in thousands):
Period Aggregate Notional Amount Aggregate Fair Value Asset Aggregate Fair Value Liability
As of March 31, 2021 $ 57,222  $ 561  $ (694)
As of December 31, 2020 14,077  —  (1,500)
The following table summarizes certain balance sheet information regarding our derivative instruments as of March 31, 2021, and December 31, 2020 (dollars in thousands):
Derivative Asset (Liability) Fair Value
Derivative Type Balance Sheet Location March 31, 2021 December 31, 2020
Derivatives Designated as Hedging Instruments:
Interest rate swaps Other assets, net $ 561  $ — 
Interest rate swaps Other liabilities, net (694) (1,500)
Total, net $ (133) $ (1,500)
The following table presents the amount of income (loss) recognized in comprehensive income within our condensed consolidated financial statements for the three months ended March 31, 2021 and 2020 (dollars in thousands):
Three Months Ended March 31, 2021 Three months ended March 31, 2020
Derivative in cash flow hedging relationship:
Interest rate swaps $ 1,367  $ (1,257)
Total $ 1,367  $ (1,257)