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, 2016

The following table provides certain summary information about our 46 farms as of March 31, 2016:


			Number			Lease
		Date	of	Total	Farm	Expiration	Net Cost
Property Name	Location	Acquired	Farms	Acres	Acres	Date	Basis⁽¹⁾		Encumbrances⁽²⁾
San Andreas	Watsonville, CA	6/16/1997	1	307	238	12/31/2020	$	4,776,750	$	4,816,404
West Gonzales	Oxnard, CA	9/15/1998	1	653	502	6/30/2020		12,142,787		24,504,485
West Beach	Watsonville, CA	1/3/2011	3	196	195	12/31/2023		9,292,113		4,691,842
Dalton Lane	Watsonville, CA	7/7/2011	1	72	70	10/31/2020		2,681,288		1,554,536
Keysville Road	Plant City, FL	10/26/2011	2	61	56	6/30/2020		1,240,187		897,600
Colding Loop	Wimauma, FL	8/9/2012	1	219	181	6/14/2018		3,929,122		2,640,000
Trapnell Road	Plant City, FL	9/12/2012	3	124	110	6/30/2017		3,903,277		2,522,250
38th Avenue	Covert, MI	4/5/2013	1	119	89	4/4/2020		1,265,366		742,391
Sequoia Street	Brooks, OR	5/31/2013	1	218	206	5/31/2028		3,100,817		1,716,191
Natividad Road	Salinas, CA	10/21/2013	1	166	166	10/31/2024		8,846,432		3,875,268
20th Avenue	South Haven, MI	11/5/2013	3	151	94	11/4/2018		1,871,211		1,107,219
Broadway Road	Moorpark, CA	12/16/2013	1	60	46	12/15/2023		2,878,356		1,660,829
Oregon Trail	Echo, OR	12/27/2013	1	1,895	1,640	12/31/2023		13,898,699		7,750,535
East Shelton	Willcox, AZ	12/27/2013	1	1,761	1,320	2/29/2024		7,827,371		3,709,185
Collins Road	Clatskanie, OR	5/30/2014	2	200	157	9/30/2024		2,396,272		1,494,746
Spring Valley	Watsonville, CA	6/13/2014	1	145	110	9/30/2022		5,761,971		3,266,297
McIntosh Road	Dover, FL	6/20/2014	2	94	78	6/30/2019⁽³⁾		2,464,544		1,519,620
Naumann Road	Oxnard, CA	7/23/2014	1	68	66	7/31/2017		6,799,261		3,814,369
Sycamore Road	Arvin, CA	7/25/2014	1	326	322	10/31/2024		6,868,186		3,210,936
Wauchula Road	Duette, FL	9/29/2014	1	808	590	9/30/2024		13,713,300		7,639,575
Santa Clara Avenue	Oxnard, CA	10/29/2014	2	333	331	7/31/2017		24,206,436		13,840,241
Dufau Road	Oxnard, CA	11/4/2014	1	65	64	11/3/2017		6,046,279		3,675,000
Espinosa Road	Salinas, CA	1/5/2015	1	331	329	10/31/2016		16,450,268		10,178,000
Parrish Road	Duette, FL	3/10/2015	1	419	412	6/30/2025		4,235,980		2,374,680
Immokalee Exchange	Immokalee, FL	6/25/2015	2	2,678	1,644	6/30/2020		15,585,280		9,360,000
Holt County	Stuart, NE	8/20/2015	1	1,276	1,052	12/31/2018		5,460,180		3,301,000
Rock County	Bassett, NE	8/20/2015	1	1,283	1,049	12/31/2018		5,450,906		3,301,000
Bear Mountain	Arvin, CA	9/3/2015	3	854	841	1/9/2031		22,656,128		8,514,720
Corbitt Road	Immokalee, FL	11/2/2015	1	691	390	12/31/2021		3,800,181		3,760,000
Reagan Road	Willcox, AZ	12/22/2015	1	1,239	875	12/31/2025		5,708,898		3,807,000
Gunbarrel Road	Alamosa, CO	3/3/2016	3	6,191	4,730	2/28/2021		25,637,561		15,531,000

			46	23,003	17,953		$	250,895,407	$	160,776,919

⁽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 and Lease intangibles, net; plus net above-market lease values included in Other assets; and less net below- market lease values, deferred revenue and unamortized tenant improvements included in Other liabilities, each as shown on the accompanying Condensed Consolidated Balance Sheet.

⁽²⁾	Excludes approximately $1.0 million of deferred financing costs related to mortgage notes and bonds payable included in Mortgage notes and bonds payable, net on the accompanying Condensed Consolidated Balance Sheet .

⁽³⁾	There are two leases in place on this property, one expiring on June 30, 2017, and the other expiring on June 30, 2019.

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, 2016, and December 31, 2015:


	March 31, 2016			December 31, 2015
Real estate:
Land and land improvements	$	210,667,822		$	192,020,381
Irrigation systems		26,678,519			21,849,508
Buildings		14,623,118			11,184,647
Horticulture		1,490,695			1,490,695
Other improvements		3,957,643			1,872,606

Real estate, at cost		257,417,797			228,417,837
Accumulated depreciation		(7,434,397	)		(6,634,412	)

Real estate, net	$	249,983,400		$	221,783,425

Carrying Value of Lease Intangibles and Accumulated Amortization for Each Intangible Asset or Liability Class

The following table summarizes the carrying values of lease intangible assets and the related accumulated amortization as of March 31, 2016, and December 31, 2015:


	March 31, 2016			December 31, 2015
Lease intangibles:
In-place leases	$	1,607,932		$	1,225,955
Leasing costs		934,245			677,112
Tenant relationships		886,743			886,743

Lease intangibles, at cost		3,428,920			2,789,810
Accumulated amortization		(1,202,994	)		(1,026,269	)

Lease intangibles, net	$	2,225,926		$	1,763,541

Total amortization expense related to these lease intangible assets was $176,725 and $279,119 for the three months ended March 31, 2016 and 2015, respectively.

The following table summarizes the carrying values of certain lease intangible assets or liabilities included in Other assets and Other liabilities, respectively, on the accompanying Condensed Consolidated Balance Sheets and the related accumulated amortization or accretion, respectively, as of March 31, 2016, and December 31, 2015.


	As of March 31, 2016						As of December 31, 2015
	Deferred			Accumulated			Deferred			Accumulated
	Rent Asset			(Amortization)			Rent Asset			(Amortization)
Intangible Asset or Liability	(Liability)			Accretion			(Liability)			Accretion
Above-market lease values⁽¹⁾	$	19,528		$	(9,167	)	$	19,528		$	(7,540	)
Below-market lease values and deferred revenue⁽²⁾		(202,579	)		30,536			(202,579	)		23,205

	$	(183,051	)	$	21,369		$	(183,051	)	$	15,665

⁽¹⁾	Above-market lease values are included as part of Other assets in 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 in the accompanying Condensed Consolidated Balance Sheets, and the related accretion is recorded as an increase to rental income.

Weighted Average Amortization Period for Intangible Assets Acquired and Liabilities Assumed

The following table shows the weighted-average amortization period, in years, for the intangible assets acquired and liabilities assumed in connection with the new properties acquired during the three months ended March 31, 2016 and 2015:


	Weighted-Average
	Amortization Period (in Years)
Intangible Assets and Liabilities	2016		2015
In-place leases		5.1		3.4
Leasing costs		5.1		7.2
Tenant relationships		—		4.9

All intangible assets and liabilities		5.1		4.6

Pro-Forma Condensed Consolidated Statements of Operations as Properties Acquired


	For the Three Months Ended March 31,
	2016		2015
	*(Unaudited)*		*(Unaudited)*
Operating Data:
Total operating revenue	$	3,761,746	$	3,080,488

Net income attributable to the company	$	156,241	$	37,637

Share and Per-share Data:
Earnings per share of common stock – basic and diluted	$	0.01	$	0.00

Weighted-average common shares outstanding – basic and diluted		10,738,820		7,880,328

Summary of Geographic Locations of Properties

The following table summarizes the geographic locations, by state, of our properties with leases in place as of March 31, 2016 and 2015:


	As of and For the Three Months Ended March 31, 2016											As of and For the Three Months Ended March 31, 2015
	Number			% of					% of Total			Number				% of					% of Total
	of	Total		Total			Rental		Rental			of		Total		Total			Rental		Rental
State	Farms	Acres		Acres			Revenue		Revenue			Farms		Acres		Acres			Revenue		Revenue
California	18		3,576		15.6	%	$	2,140,166		58.2	%		15		2,722		31.0	%	$	1,839,707		70.2	%
Florida	13		5,094		22.1	%		743,087		20.2	%		10		1,723		19.6	%		349,488		13.3	%
Oregon	4		2,313		10.1	%		292,481		7.9	%		4		2,313		26.3	%		291,537		11.1	%
Arizona	2		3,000		13.0	%		172,461		4.7	%		1		1,761		20.0	%		79,916		3.0	%
Nebraska	2		2,559		11.1	%		144,907		3.9	%		—		—		0.0	%		—		0.0	%
Colorado	3		6,191		26.9	%		124,000		3.4	%		—		—		0.0	%		—		0.0	%
Michigan	4		270		1.2	%		62,372		1.7	%		4		270		3.1	%		61,679		2.4	%

	46		23,003		100.0	%	$	3,679,474		100.0	%		34		8,789		100.0	%	$	2,622,327		100.0	%

2016 New Real Estate Activity [Member]

Summary Information of Farms

During the three months ended March 31, 2016, we acquired three new farms in one transaction, which is summarized in the table below.

Number

Total

Annualized

Property

Acquisition

Total

Primary

Lease

Renewal

Purchase

Acquisition

Straight-line

Long-term

Name

Location

Date

Acreage

Farms

Crop(s)

Term

Options

Price

Costs

Cash Rent⁽¹⁾

Debt Issued

Gunbarrel Road ⁽²⁾

Alamosa, CO

3/3/2016

6,191

Potatoes

5 years

1 (5 years)

25,735,815

88,889

⁽³⁾

1,590,614

15,531,000

⁽¹⁾

Annualized straight-line amount is based on the minimum cash rental payments guaranteed under the lease.

⁽²⁾

As partial consideration for the acquisition of this property, we issued 745,879 OP Units, constituting an aggregate fair value of approximately $6.5 million as of the acquisition date.

⁽³⁾

Acquisition accounted for as a business combination under ASC 805. As such, all acquisition-related costs were expensed as incurred, other than direct leasing costs, which were capitalized. In aggregate, we incurred $4,670 of direct leasing costs in connection with this acquisition.

Fair Value of Assets Acquired and Liabilities Assumed Related to Property Acquired

We determined the fair value of assets acquired and liabilities assumed related to the property acquired during the three months ended March 31, 2016, to be as follows:


													Total
	Land and Land				Irrigation		Other		In-place		Leasing		Purchase
Property Name	Improvements		Buildings		Systems		Improvements		Leases		Costs		Price
Gunbarrel Road	$	16,755,814	$	3,438,291	$	2,830,738	$	2,079,102	$	381,977	$	249,893	$	25,735,815

Summary of Total Operating Revenues and Earnings Recognized on Properties Acquired

Below is a summary of the total operating revenues and earnings recognized on the property acquired during the three months ended March 31, 2016:

Acquisition

Operating

Property Name

Date

Revenues

Earnings ⁽¹⁾

Gunbarrel Road

3/3/2016

123,999

21,075

⁽¹⁾

Earnings are calculated as net income less interest expense and any acquisition-related costs that are required to be expensed if the acquisition is treated as a business combination under ASC 805.

2015 New Real Estate Activity [Member]

Summary Information of Farms

During the three months ended March 31, 2015, we acquired two new farms in two separate transactions, which are summarized in the table below.

Number

Total

Annualized

Property

Acquisition

Total

Primary

Lease

Renewal

Purchase

Acquisition

Straight-line

Long-term

Name

Location

Date

Acreage

Farms

Crop(s)

Term

Options

Price

Costs

Cash Rent⁽¹⁾

Debt Issued

Espinosa Road⁽²⁾

Salinas, CA

1/5/2015

331

Strawberries

1.8 years

None

16,905,500

89,885

⁽³⁾

778,342

10,178,000

Parrish Road

Duette, FL

3/10/2015

419

Strawberries

10.3 years

2 (5 years)

3,913,280

103,610

⁽³⁾

251,832

2,374,680

750

20,818,780

193,495

1,030,174

12,552,680

⁽¹⁾

Annualized straight-line amount is based on the minimum cash rental payments guaranteed under the lease.

⁽²⁾

In connection with this acquisition, our Adviser earned a finder’s fee of $320,905, which the Adviser fully credited back to us during the three months ended March 31, 2015. See Note 4, “Related-Party Transactions” for further discussion on this fee.

⁽³⁾

Acquisition accounted for as a business combination under ASC 805. As such, all acquisition-related costs were expensed as incurred, other than direct leasing costs, which were capitalized. In aggregate, we incurred $2,625 of direct leasing costs in connection with these acquisitions.

Fair Value of Assets Acquired and Liabilities Assumed Related to Property Acquired

We determined the fair value of assets acquired and liabilities assumed related to the properties acquired during the three months ended March 31, 2015, to be as follows:


													Total
	Land and Land		Buildings and		Irrigation		In-place		Leasing		Tenant		Purchase
Property Name	Improvements		Improvements		System		Leases		Costs		Relationships		Price
Espinosa Road	$	15,852,466	$	84,478	$	497,401	$	246,472	$	43,895	$	180,788	$	16,905,500
Parrish Road		2,403,064		42,619		1,299,851		54,405		77,449		35,892		3,913,280

	$	18,255,530	$	127,097	$	1,797,252	$	300,877	$	121,344	$	216,680	$	20,818,780

Summary of Total Operating Revenues and Earnings Recognized on Properties Acquired

Below is a summary of the total operating revenues and earnings recognized on the properties acquired during the three months ended March 31, 2015:


	Acquisition	Operating
Property Name	Date	Revenues		Earnings⁽¹⁾
Espinosa Road	1/5/2015	$	186,216	$	97,058
Parrish Road	3/10/2015		14,216		7,179

		$	200,432	$	104,237

⁽¹⁾

Earnings are calculated as net income less interest expense and any acquisition-related costs that are required to be expensed if the acquisition is treated as a business combination under ASC 805.