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 (Tables)

REAL ESTATE AND INTANGIBLE ASSETS (Tables)

3 Months Ended

Mar. 31, 2022

The following table provides certain summary information about the 164 farms we owned as of March 31, 2022 (dollars in thousands, except for footnotes):


Location	No. of Farms	Total Acres	Farm Acres	Net Cost Basis(1)		Encumbrances(2)
California(3)(4)(5)	62	33,027	30,740	$	851,114	$	416,252
Florida	26	22,591	17,639	223,308		122,261
Arizona(6)	6	6,280	5,228	54,943		16,198
Colorado	12	32,773	25,577	47,094		29,063
Washington	3	1,384	1,001	37,055		24,868
Nebraska	9	7,782	7,050	30,833		12,173
Michigan	23	1,892	1,245	24,440		14,396
Oregon(7)	5	726	606	20,734		12,044
Texas	1	3,667	2,219	8,231		5,000
Maryland	6	987	863	7,943		4,526
South Carolina	3	597	447	3,700		2,215
Georgia	2	230	175	2,843		1,710
North Carolina	2	310	295	2,193		1,172
New Jersey	3	116	101	2,167		1,290
Delaware	1	180	140	1,272		726
	164	112,542	93,326	$	1,317,870	$	663,894

(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. Specifically, includes Total real estate, net (excluding improvements paid for by the tenant) and Lease intangibles, net; plus long-term water assets, net above-market lease values, lease incentives, and investments in special-purpose LLCs included in Other assets, net; and less net below-market lease values and other deferred revenue included in Other liabilities, net; each as shown on the accompanying Condensed Consolidated Balance Sheets.

(2)Excludes approximately $3.8 million of debt issuance costs related to notes and bonds payable, included in Notes and bonds payable, net on the accompanying Condensed Consolidated Balance Sheets.

(3)Includes ownership in a special-purpose LLC that owns a pipeline conveying water to certain of our properties. As of March 31, 2022, this investment had a net carrying value of approximately $1.1 million and is included within Other assets, net on the accompanying Condensed Consolidated Balance Sheets.

(4)Includes five acres in which we own a leasehold interest via a ground sublease with a California municipality that expires in December 2041. The ground sublease had a net cost basis of approximately $753,000 as of March 31, 2022 (included in Lease intangibles, net on the accompanying Condensed Consolidated Balance Sheets).

(5)Includes 45,000 acre-feet of water stored with Semitropic Water Storage District, located in Kern County, California. See “—Investments in Water Assets” below for additional information on this water.

(6)Includes two farms in which we own a leasehold interest via ground leases with the State of Arizona that expire in February 2025 and February 2032, respectively. In total, these two ground leases consist of 1,368 total acres and 1,221 farm acres and had an aggregate net cost basis of approximately $961,000 as of March 31, 2022 (included in Lease intangibles, net on the accompanying Condensed Consolidated Balance Sheets).

(7)Includes ownership in a special-purpose LLC that owns certain irrigation infrastructure that provides water to one of our farms. As of March 31, 2022, this investment had a net carrying value of approximately $2.0 million and is included within Other assets, net on the accompanying Condensed Consolidated Balance Sheets.

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, 2022, and December 31, 2021 (dollars in thousands):


	March 31, 2022		December 31, 2021
Real estate:
Land and land improvements	$	813,421	$	812,830
Permanent plantings	331,775		331,969
Irrigation and drainage systems	156,915		153,688
Farm-related facilities	46,967		46,804
Other site improvements	12,679		12,509
Real estate, at cost	1,361,757		1,357,800
Accumulated depreciation	(81,731)		(74,002)
Total real estate, net	$	1,280,026	$	1,283,798

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, 2022, and December 31, 2021 (dollars in thousands):


	March 31, 2022		December 31, 2021
Lease intangibles:
Leasehold interest – land	$	4,295	$	4,295
In-place lease values	2,174		2,174
Leasing costs	1,808		1,808
Other(1)	130		130
Lease intangibles, at cost	8,407		8,407
Accumulated amortization	(4,217)		(3,951)
Lease intangibles, net	$	4,190	$	4,456

(1)Other consists primarily of acquisition-related costs allocated to miscellaneous lease intangibles.

The following table summarizes the carrying values of certain lease intangible assets or liabilities included in Other assets, net or Other liabilities, net, respectively, on the accompanying Condensed Consolidated Balance Sheets and the related accumulated amortization or accretion, respectively, as of March 31, 2022, and December 31, 2021 (dollars in thousands):


	March 31, 2022				December 31, 2021
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)	$	625	$	(94)	$	65	$	(12)
Below-market lease values and other deferred revenue(2)	(2,010)		385		(2,010)		340
	$	(1,385)	$	291	$	(1,945)	$	328

(1)Net 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 Lease revenue on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income.

(2)Net below-market lease values and other 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 Lease revenue on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income.

Schedule of Asset Acquisitions

During the three months ended March 31, 2021, we acquired two new farms, which are summarized in the table below (dollars in thousands, except for footnotes):


Property Name	Property Location	Acquisition Date	Total Acres	No. of Farms	Primary Crop(s) / Use	Lease Term	Renewal Options	Total Purchase Price		Acquisition Costs(1)		Annualized Straight-line Rent(2)
Palmer Mill Road	Dorchester, MD	3/3/2021	228	2	Sod	10.0 years	2 (5 years)	$	1,600	$	56	$	89
Eight Mile Road – Port Facility	San Joaquin, CA	3/11/2021	5	—	Cooling facility and storage	9.8 years	3 (5 years)	3,977		50		189








			233	2				$	5,577	$	106	$	278

(1)Includes approximately $4,000 of external legal fees associated with negotiating and originating the leases associated with these acquisitions, which were expensed in the period incurred.

(2)Based on the minimum cash rental payments guaranteed under the respective leases, as required under GAAP, and excludes contingent rental payments, such as participation rents.

Recognized Identified Assets Acquired and Liabilities Assumed In Asset Acquisitions

The allocation of the aggregate purchase price for the farms acquired during the three months ended March 31, 2021, is as follows (dollars in thousands):


Assets (Liabilities) Acquired	2021 Acquisitions
Land and land improvements	$	1,341

Irrigation & drainage systems	209
Farm-related facilities	4,218
Other site improvements	88
Leasehold interest—land	787
In-place lease values	110
Leasing costs	145

Below-market lease values(1)	(1,321)


Total Purchase Price	$	5,577

(1)Included within Other liabilities, net on the accompanying Condensed Consolidated Balance Sheets.