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, 2023

The following table provides certain summary information about the 169 farms we owned as of March 31, 2023 (dollars in thousands, except for footnotes):


Location	No. of Farms	Total Acres	Farm Acres	Acre-feet of Water	Net Cost Basis(1)		Encumbrances(2)
California(3)(4)(5)	63	34,844	32,321	45,000	$	862,632	$	399,914
Florida	26	22,606	17,639	0	222,844		101,171
Washington	6	2,529	1,997	0	63,332		21,005
Arizona(6)	6	6,320	5,333	0	53,760		12,544
Colorado	12	32,773	25,577	0	46,302		15,086
Nebraska	9	7,782	7,050	0	30,718		11,897
Oregon(7)	6	898	736	0	29,724		11,647
Michigan	23	1,892	1,245	0	23,704		14,036
Texas	1	3,667	2,219	0	8,157		4,878
Maryland	6	987	863	0	8,082		4,406
South Carolina	3	597	447	0	3,610		2,170
Georgia	2	230	175	0	2,709		1,667
North Carolina	2	310	295	0	2,151		—
New Jersey	3	116	101	0	2,110		1,256
Delaware	1	180	140	0	1,306		707
	169	115,731	96,138	45,000	$	1,361,141	$	602,384

(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 $3.3 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, 2023, this investment had a net carrying value of approximately $1.0 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 $715,000 as of March 31, 2023 (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 $627,000 as of March 31, 2023 (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 two of our farms. As of March 31, 2023, this investment had a net carrying value of approximately $4.8 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, 2023, and December 31, 2022 (dollars in thousands):


	March 31, 2023		December 31, 2022
Real estate:
Land and land improvements	$	845,684	$	845,779
Permanent plantings	358,259		358,249
Irrigation and drainage systems	165,673		165,438
Farm-related facilities	48,760		48,690
Other site improvements	13,385		14,238
Real estate, at cost	1,431,761		1,432,394
Accumulated depreciation	(115,578)		(106,966)
Total real estate, net	$	1,316,183	$	1,325,428

Schedule of 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, 2023, and December 31, 2022 (dollars in thousands):


	March 31, 2023		December 31, 2022
Lease intangibles:
Leasehold interest – land	$	4,295	$	4,295
In-place lease values	2,763		2,763
Leasing costs	3,144		3,088
Other(1)	141		133
Lease intangibles, at cost	10,343		10,279
Accumulated amortization	(4,825)		(4,577)
Lease intangibles, net	$	5,518	$	5,702

(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, 2023, and December 31, 2022 (dollars in thousands):


	March 31, 2023				December 31, 2022
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)	$	4,691	$	(734)	$	4,702	$	(585)
Below-market lease values and other deferred revenue(2)	(2,010)		562		(2,010)		518
	$	2,681	$	(172)	$	2,692	$	(67)

(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.