Gladstone Land Corporation Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Real Estate and Intangible Assets

Real Estate and Intangible Assets

12 Months Ended

Dec. 31, 2019

REAL ESTATE AND INTANGIBLE ASSETS

All of our properties are wholly-owned on a fee-simple basis, except where noted. The following table provides certain summary information about the 111 farms we owned as of December 31, 2019 (dollars in thousands, except for footnotes):



Location	No. of Farms	Total Acres	Farm Acres	Net Cost Basis⁽¹⁾		Encumbrances⁽²⁾
California⁽³⁾	42	14,830	13,610	$	420,537	$	261,957
Florida	23	20,770	16,256	211,132		133,327
Arizona⁽⁴⁾	6	6,280	5,228	55,941		22,427
Colorado	10	31,448	24,513	42,125		27,089
Nebraska	8	7,104	6,402	27,439		17,246
Michigan	15	962	682	12,408		7,646
Texas	1	3,667	2,219	8,335		5,227
Washington	1	746	417	8,302		5,052
Oregon	3	418	363	6,266		3,840
North Carolina	2	310	295	2,284		1,238
	111	86,535	69,985	$	794,769	$	485,049

⁽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 Investments in real estate, net (excluding improvements paid for by the tenant) and Lease intangibles, net; plus net above-market lease values, lease incentives, and net 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 Consolidated Balance Sheets.


⁽²⁾	Excludes approximately $3.1 million of debt issuance costs related to notes and bonds payable, included in Notes and bonds payable, net on the accompanying Consolidated Balance Sheets.


⁽³⁾	Includes ownership in a special-purpose LLC that owns a pipeline conveying water to one of our properties. As of December 31, 2019, this investment had a carrying value of approximately $587,000 and is included within Other assets, net on the accompanying Consolidated Balance Sheet.

⁽⁴⁾

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 an aggregate net cost basis of approximately $2.1 million as of December 31, 2019 (included in Lease intangibles, net on the accompanying Consolidated Balance Sheet).

Real Estate

The following table sets forth the components of our investments in tangible real estate assets as of December 31, 2019 and 2018 (dollars in thousands):



	December 31, 2019			December 31, 2018
Real estate:
Land and land improvements	$	583,247		$	417,310
Irrigation and drainage systems	108,222			71,583
Horticulture	107,941			48,894
Farm-related facilities	20,665			18,510
Other site improvements	7,180			6,707
Real estate, at gross cost	827,255			563,004
Accumulated depreciation	(35,174		)	(24,051		)
Real estate, net	$	792,081		$	538,953

Real estate depreciation expense on these tangible assets was approximately $11.2 million and $8.2 million for the years ended December 31, 2019 and 2018, respectively.

Included in the figures above are amounts related to improvements made on certain of our properties paid for by our tenants but owned by us, or tenant improvements. As of December 31, 2019 and 2018, we recorded tenant improvements, net of accumulated depreciation, of approximately $2.2 million and $2.4 million, respectively. We recorded both depreciation expense and additional lease revenue related to these tenant improvements of approximately $292,000 and $334,000 during the years ended December 31, 2019 and 2018, respectively.

Intangible Assets and Liabilities

The following table summarizes the carrying value of certain lease intangible assets and the related accumulated amortization as of December 31, 2019 and 2018 (dollars in thousands):



	December 31, 2019			December 31, 2018
Lease intangibles:
Leasehold interest – land	$	3,498		$	3,498
In-place leases	2,293			2,046
Leasing costs	2,066			1,963
Tenant relationships	414			414
Lease intangibles, at gross cost	8,271			7,921
Accumulated amortization	(3,444		)	(2,235		)
Lease intangibles, net	$	4,827		$	5,686

Total amortization expense related to these lease intangible assets was approximately $1.6 million and $1.1 million for the years ended December 31, 2019 and 2018, respectively.

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 Consolidated Balance Sheets and the related accumulated amortization or accretion, respectively, as of December 31, 2019 and 2018 (dollars in thousands):



	December 31, 2019						December 31, 2018
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⁾	$	111		$	(41	)	$	126		$	(18	)
Below-market lease values and other deferred revenues⁽²⁾	(886		)	257			(917		)	202
	$	(775	)	$	216		$	(791	)	$	184


⁽¹⁾	Net above-market lease values and lease incentives are included as part of Other assets, net on the accompanying Consolidated Balance Sheets, and the related amortization is recorded as a reduction of Lease revenue on the accompanying 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 Consolidated Balance Sheets, and the related accretion is recorded as an increase to Lease revenue on the accompanying Consolidated Statements of Operations and Comprehensive Income.

Total amortization related to above-market lease values and lease incentives was approximately $128,000 and $13,000 for the years ended December 31, 2019 and 2018, respectively. Total accretion related to below-market lease values and other deferred revenues was approximately $172,000 and $77,000 for the years ended December 31, 2019 and 2018, respectively. In addition, we wrote off approximately $105,000 and $117,000 of deferred rent assets and deferred rent liabilities, respectively, during the year ended December 31, 2019, due to expiration of their respective amortization or accretion periods.

The estimated aggregate amortization expense to be recorded related to in-place lease values, leasing costs, and tenant relationships and the estimated net impact on lease revenue from the amortization of above-market lease values and lease incentives or accretion of above-market lease values and other deferred revenues for each of the five succeeding fiscal years and thereafter is as follows (dollars in thousands):



Period		Estimated Amortization Expense		Estimated Net Increase (Decrease) to Lease Revenue
For the fiscal years ending December 31:	2020	$	1,374	$	137
	2021	1,062		113
	2022	780		115
	2023	692		108
	2024	624		89
	Thereafter	295		(3		)
		$	4,827	$	559

Acquisitions

Upon our adoption of ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business,” on October 1, 2016, most acquisitions, including those with a prior leasing history, are generally treated as an asset acquisition under ASC 360. For acquisitions accounted for as asset acquisitions under ASC 360, all acquisition-related costs, other than those costs that directly related to either originating new leases we execute upon acquisition or reviewing in-place leases we assumed upon acquisition, are capitalized and included as part of the fair value allocation of the identifiable tangible and intangible assets acquired or liabilities assumed. Upon our adoption of ASU 2016-02 on January 1, 2019, costs that directly related to either negotiating and originating new leases or reviewing assumed leases (generally, external legal costs) are expensed as incurred, whereas these costs were generally capitalized as part of leasing costs under the previous leasing standard. In addition, total consideration for acquisitions may include a combination of cash and equity securities, such as OP Units. When OP Units are issued in connection with acquisitions, we determine the fair value of the OP Units issued based on the number of units issued multiplied by the closing price of the Company’s common stock on the date of acquisition. Unless otherwise noted, all properties acquired during 2019 and 2018 were accounted for as asset acquisitions under ASC 360.

2019 Acquisitions

During the year ended December 31, 2019, we acquired 26 new farms, which are summarized in the table below (dollars in thousands, except for footnotes).



Property Name	Property Location	Acquisition Date	Total Acreage	No. of Farms	Primary Crop(s) / Use	Lease Term	Renewal Options	Total Purchase Price		Acquisition Costs⁽¹⁾		Annualized Straight-line Rent⁽²⁾		New Long-term Debt
Somerset Road	Lincoln, NE	1/22/2019	695	1	Popcorn & edible beans	4.9 years	1 (5 years)	$	2,400	$	33	$	126	$	1,440
Greenhills Boulevard⁽³⁾	Madera, CA	4/9/2019	928	1	Pistachios	10.6 years	2 (5 years)	28,550		141		1,721		17,130
Van Buren Trail	Van Buren, MI	5/29/2019	159	2	Blueberries & cranberries	10.6 years	2 (5 years)	2,682		26		206		1,609
Blue Star Highway	Allegran & Van Buren, MI	6/4/2019	357	8	Blueberries	10.6 years	2 (5 years)	5,100		30		390		3,060
Yolo County Line Road	Yolo, CA	6/13/2019	542	1	Olives for olive oil	14.6 years	1 (5 years)	9,190		68		624		5,514
San Juan Grade Road⁽⁴⁾	Monterey, CA	7/11/2019	324	1	Strawberries & vegetables	0.3 years	None	9,000		68		632		5,400
West Citrus Boulevard⁽⁵⁾	Martin, FL	7/22/2019	3,586	1	Water retention	8.4 years	2 (10 years)	57,790		516		3,696		37,700
Sutter Avenue I⁽³⁾⁽⁶⁾	Fresno, CA	8/16/2019	1,011	1	Pistachios	8.2 years	2 (5 years)	33,000		146		2,106		16,500
Las Posas Road⁽⁷⁾	Ventura, CA	8/28/2019	413	3	Sod & vegetables	3.3 years	1 (2 years)	21,320		111		1,283		12,792
Withers Road⁽⁸⁾	Napa, CA	8/29/2019	366	1	Wine grapes	10.3 years	2 (10 years)	32,000		84		2,256		19,254
Highway 17⁽⁹⁾	Hayes, NE	10/7/2019	2,561	3	Corn, soybeans, & edible beans	0.2 years	None	9,690		44		489		5,739
Indian Highway⁽¹⁰⁾	Hayes & Hitchcock, NE	10/7/2019	1,289	2	Corn, soybeans, & edible beans	0.3 years	None	5,000		36		788		3,045
Sutter Avenue II⁽³⁾⁽⁶⁾	Fresno, CA	11/1/2019	1,099	1	Pistachios	8.0 years	2 (5 years)	37,000		73		2,365		25,500
			13,330	26				$	252,722	$	1,376	$	16,682	$	154,683


⁽¹⁾	Includes approximately $76,000 of aggregate external legal fees associated with negotiating and originating the leases associated with these acquisitions, which were expensed in the period incurred.


⁽²⁾	Annualized straight-line rent is 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.


⁽³⁾	Leases provide for a participation rent component based on the gross crop revenues earned on the respective farms. The rent figures above represent only the minimum cash guaranteed under the respective leases.

⁽⁴⁾

In connection with the acquisition of this property, we executed a six-year, follow-on lease with a new tenant that will commence upon the expiration of the four-month lease executed on the date of acquisition. The follow-on lease includes one, four-year extension option and provides for minimum annualized straight-line rents of approximately 606,000. In connection with the follow-on lease, we committed to provide up to $100,000 for certain irrigation improvements on the property.


⁽⁵⁾	As partial consideration for the acquisition of this property, we issued 288,303 OP Units, constituting an aggregate fair value of approximately $3.3 million as of the acquisition date.

⁽⁶⁾

In connection with the acquisition of Sutter Avenue (which occurred in two phases), we also acquired an ownership in a related LLC, the sole purpose of which is to own and maintain a pipeline conveying water to this and other neighboring properties. On August 16, 2019, we acquired an 11.75% ownership interest in the LLC that was valued at approximately $280,000 at the time of acquisition. On November 1, 2019, we acquired an additional 13.25% interest in the LLC that was valued at approximately $307,000 at the time of acquisition. As our investment in the LLC is deemed to constitute “significant influence,” we have accounted for this investment under the equity method. From the commencement of our ownership in the LLC through December 31, 2019, there was no material income or loss recognized by the LLC; thus, no net income or loss was recorded by us during the year ended December 31, 2019. Our combined 25.0% ownership interest in the LLC, which had an aggregate carrying value of approximately $587,000 as of December 31, 2019, is included within Other assets, net on the accompanying Consolidated Balance Sheet.


⁽⁷⁾	In connection with this acquisition, we executed two separate lease agreements with two different, unrelated third-party tenants. The lease term of 3.3 years represents the weighted-average term of the two leases. In addition, pursuant to one of these lease agreements, we committed to provide up to $1.0 million for certain irrigation improvements on the property.

⁽⁸⁾

In connection with the acquisition of this property, we committed to provide up to approximately $4.0 million as additional compensation, contingent upon the County of Napa approving the planting of additional vineyards on up to 47 acres of the property by February 25, 2020. We are currently unable to estimate when this approval will be obtained, if at all. If approval is obtained, we have also committed to contribute up to 40,000 per approved acre for the development of such vineyards. As provided for in the lease, we will earn additional rent on all of the aforementioned costs, if any, incurred by us.

⁽⁹⁾

In connection with the acquisition of this property, we executed a 10-year, follow-on lease with a new, unrelated third-party tenant that will commence upon the expiration of the three-month lease executed on the date of acquisition. The follow-on lease provides for minimum annualized straight-line rents of approximately $630,000, plus a participation rent component based on the gross revenues earned on the farm. The farm is expected to be converted to organic farmland by the second half of 2021. In addition, the incoming tenant intends to construct a building on a portion of the property to act as its headquarters, and pursuant to the follow-on lease, we are obligated to purchase the building from the tenant at a price approximately equal to the total construction cost. Construction of this building has not yet begun, and we are unable to estimate the total cost of the building at this time. As stipulated in the follow-on lease, we will earn additional rent on the total construction cost of the building as disbursements are made by us

⁽¹⁰⁾

In connection with this acquisition, we executed a four-month leaseback agreement with the seller that provides for a fixed rental payment of $250,000. In addition, we also executed a 10-year, follow-on lease with a new, unrelated third-party tenant that will commence upon the expiration of the four-month leaseback agreement. The follow-on lease provides for minimum annualized straight-line rents of approximately $372,000, plus a participation rent component based on the gross revenues earned on the farm. In addition, the farm is expected to be converted to organic farmland by the second half of 2021.

During the year ended December 31, 2019, in the aggregate, we recognized operating revenues of approximately $6.8 million and net income of approximately $2.4 million related to the above acquisitions.

2018 Acquisitions

During the year ended December 31, 2018, we acquired 13 new farms, which are summarized in the table below (dollars in thousands, except for footnotes).



Property Name	Property Location	Acquisition Date	Total Acreage	No. of Farms	Primary Crop(s)	Lease Term⁽¹⁾	Renewal Options	Total Purchase Price		Acquisition Costs		Annualized Straight-line Rent⁽¹⁾		New Long-term Debt
Taft Highway⁽²⁾	Kern, CA	1/31/2018	161	1	Potatoes and Melons	N/A	N/A	$	2,945	$	32	$	—	$	1,473
Cemetery Road	Van Buren, MI	3/13/2018	176	1	Blueberries	9.6 years	None	2,100		39		150		1,260
Owl Hammock⁽³⁾	Collier & Hendry, FL	7/12/2018	5,630	5	Vegetables and Melons	7.0 years	2 (5 years)	37,350		197		2,148		22,410
Plantation Road	Jackson, FL	9/6/2018	574	1	Peanuts and Melons	2.3 years	None	2,600		35		142		1,560
Flint Avenue	Kings, CA	9/13/2018	194	2	Cherries	15.3 years	1 (5 years)	6,850		61		523		4,110
Sunnyside Avenue⁽⁴⁾	Madera, CA	11/1/2018	951	1	Figs and Pistachios	8.0 years	2 (5 years)	23,000		65		1,237		13,800
Bunker Hill⁽⁵⁾	Hartley, TX	11/20/2018	3,667	1	Chip Potatoes	1.1 years	None	8,400		37		356		5,280
Olsen Road⁽⁴⁾⁽⁶⁾	Merced, CA	12/6/2018	761	1	Almonds	0.9 years	3 (5 years) & 1 (3 years)	8,181		45		25		—
			12,114	13				$	91,426	$	511	$	4,581	$	49,893


⁽¹⁾	Annualized straight-line rent is 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.


⁽²⁾	Farm was purchased with no lease in place at the time of acquisition.

⁽³⁾

In connection with the acquisition of this property, we committed to provide up to $2.0 million of capital for certain irrigation and property improvements. As stipulated in the lease, we will earn additional rental income on the total cost of the improvements as disbursements are made by us at a rate commensurate with the annual yield on the farmland (as determined by each year's minimum cash rent per the lease).


⁽⁴⁾	Leases provide for a participation rent component based on the gross crop revenues earned on the respective farms. The rent figures above represent only the minimum cash guaranteed under the respective leases.


⁽⁵⁾	Purchase price is net of a $100,000 credit provided to us by the seller.

⁽⁶⁾

Lease provided for an initial rent payment of approximately $471,000 to be paid upon commencement of the lease, with all subsequent annual rent payments to be participation rents based on the gross revenues earned on the farm. In accordance with GAAP, the initial rent payment (which represents the only cash rental payment guaranteed under the lease) is being recognized over the full term of the lease, including all tenant renewal options (which management believes to represent the minimum lease term, as defined by GAAP).

During the year ended December 31, 2018, in the aggregate, we recognized operating revenues of approximately $1.6 million, and net income of approximately $290,000, related to the above acquisitions.

Purchase Price Allocations

The allocation of the aggregate purchase price for the farms acquired during each of the years ended December 31, 2019 and 2018 is as follows (dollars in thousands):



Acquisition Period	Land and Land Improvements		Irrigation & drainage Systems		Horticulture		Farm-related Facilities		Other Site Improvements		In-place Leases	Leasing Costs		Below-Market Leases⁽¹⁾			Investment in LLC⁽²⁾		Total Purchase Price
2019 Acquisitions	$	164,681	$	26,184	$	58,240	$	2,080	$	358	560	$	117	$	(85	)	$	587	$	252,722
2018 Acquisitions	72,508		4,313		13,288		123		—		763	526		(95		)	—		91,426


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


⁽²⁾	Included within Other assets, net on the accompanying Consolidated Balance Sheets.

Acquired Intangibles and Liabilities

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 years ended December 31, 2019 and 2018:



	Weighted-Average Amortization Period (in Years)
Intangible Assets and Liabilities	2019	2018
In-place leases	1.9	5.9
Leasing costs	3.0	6.9
Below-market lease values and other deferred revenue	2.5	1.1
All intangible assets and liabilities	2.1	6.0

Significant Existing Real Estate Activity

Leasing Activity

The following table summarizes certain leasing activity that occurred on our existing properties during the year ended December 31, 2019 (dollars in thousands, except footnotes):

PRIOR LEASES

NEW LEASES⁽¹⁾

Farm
Locations

Number

Leases

Total

Farm

Acres

Total

Annualized

Straight-line

Rent⁽²⁾

# of Leases

with

Participation

Rents

Lease

Structures

(# of NNN

/ NN)⁽³⁾

Total
Annualized
Straight-line
Rent⁽²⁾

Wtd. Avg.

Term
(Years)

# of Leases
with
Participation
Rents

Lease

Structures

(# of NNN

/ NN)⁽³⁾

AZ, CA, FL, MI, NE, TX

16,955

9,543

14 / 10

10,795

6.4

11 / 13


⁽¹⁾	In connection with certain of these leases, we committed to provide capital for certain improvements on these farms. See Note 7, “Commitments and Contingencies—Operating Obligations” for additional information on certain of these commitments.


⁽²⁾	Annualized straight-line rent is based on the minimum cash rental payments guaranteed under the applicable leases (presented on an annualized basis), as required under GAAP, and excludes contingent rental payments, such as participation rents.


⁽³⁾	“NNN” refers to leases under triple-net lease arrangements, and “NN” refers to leases under partial-net lease arrangements. For a description of each of these types of lease arrangements, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview—Leases—General.”

See Note 11, “Subsequent Events—Leasing Activity” for additional leasing activity that occurred subsequent to December 31, 2019.

Project Completion

During 2018 and 2019, we replaced a total of 40 irrigation pivots on one of our properties in Colorado at an aggregate cost of approximately $2.6 million. Pursuant to lease amendments executed during the year ended December 31, 2019, in connection with this project, we will earn additional straight-line rental income of approximately $196,000 per year throughout the remaining term of the lease, which expires on February 28, 2021.

Future Minimum Lease Payments

We account for all of our leasing arrangements in which we are the lessor as operating leases. The majority of our leases are subject to fixed rental increases, and a small subset of our lease portfolio includes lease payments based on an index, such as the consumer price index (“CPI”). In addition, several of our leases contain participation rent components based on the gross revenues earned on the respective farms. Most of our leases also include tenant renewal options; however, these renewal options are generally based on then-current market rental rates and are therefore typically excluded from the determination of the minimum lease term. Our leases do not generally include tenant termination options.

The following tables summarize the future lease payments to be received under non-cancelable leases as of December 31, 2019 and 2018 (dollars in thousands):



As of December 31, 2019				As of December 31, 2018
Period		Tenant Lease Revenue		Period		Tenant Lease Revenue
For the fiscal years ending December 31,	2020	$	46,483	For the fiscal years ending December 31,	2019	$	30,290
	2021	40,799			2020	26,917
	2022	38,793			2021	20,980
	2023	39,351			2022	19,775
	2024	34,080			2023	19,413
	Thereafter	125,137			Thereafter	59,934
		$	324,643			$	177,309

Portfolio Diversification and Concentrations

Diversification

The following table summarizes the geographic locations (by state) of our farms owned and with leases in place as of December 31, 2019 and 2018 (dollars in thousands):



	As of and For the Year Ended December 31, 2019						As of and For the Year Ended December 31, 2018
State	Number of Farms	Total Acres	% of Total Acres	Lease Revenue		% of Total Lease Revenue	Number of Farms	Total Acres	% of Total Acres	Lease Revenue		% of Total Lease Revenue
California⁽¹⁾	42	14,830	17.1%	$	21,701	53.3%	33	10,147	13.8%	$	13,672	46.6%
Florida	23	20,770	24.0%	11,115		27.3%	22	17,184	23.5%	8,133		27.7%
Colorado	10	31,448	36.3%	2,857		7.0%	10	31,448	42.9%	2,743		9.3%
Arizona	6	6,280	7.3%	2,219		5.5%	6	6,280	8.6%	2,045		7.0%
Nebraska	8	7,104	8.2%	665		1.6%	2	2,559	3.5%	580		2.0%
Texas	1	3,667	4.2%	527		1.3%	1	3,667	5.0%	60		0.2%
Oregon	3	418	0.5%	515		1.3%	3	418	0.6%	893		3.0%
Washington	1	746	0.9%	506		1.2%	1	746	1.1%	718		2.4%
Michigan	15	962	1.1%	429		1.1%	5	446	0.6%	370		1.3%
North Carolina	2	310	0.4%	158		0.4%	2	310	0.4%	148		0.5%
	111	86,535	100.0%	$	40,692	100.0%	85	73,205	100.0%	$	29,362	100.0%


⁽¹⁾	According to the California Chapter of the American Society of Farm Managers and Rural Appraisers, there are eight distinct growing regions within California; our farms are spread across six of these growing regions.

Concentrations

Credit Risk

As of December 31, 2019, our farms were leased to 72 different, unrelated third-party tenants, with certain tenants leasing more than one farm. One unrelated third-party tenant (“Tenant A”) leases five of our farms, and aggregate lease revenue attributable to Tenant A accounted for approximately $4.5 million, or 10.9% of the total lease revenue recorded during the year ended December 31, 2019. If Tenant A fails to make rental payments, elects to terminate its leases prior to their expirations, or does not renew its leases (and we cannot re-lease the farms on satisfactory terms), there could be a material adverse effect on our financial performance and ability to continue operations. No other individual tenant represented greater than 10.0% of the total lease revenue recorded during the year ended December 31, 2019.

Geographic Risk

Farms located in California and Florida accounted for approximately $21.7 million (53.3%) and $11.1 million (27.3%), respectively, of the total lease revenue recorded during the year ended December 31, 2019. Though we seek to continue to further diversify geographically, as may be desirable or feasible, should an unexpected natural disaster occur where our properties are located, there could be a material adverse effect on our financial performance and ability to continue operations. None of our farms in California were materially impacted by the wildfires that occurred there during the year ended December 31, 2019. No other single state accounted for more than 10.0% of the total rental revenue recorded during the year ended December 31, 2019.