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

Annual report pursuant to Section 13 and 15(d)

Subsequent Events

Subsequent Events

12 Months Ended

Dec. 31, 2019

Subsequent Events [Abstract]

Subsequent Events

SUBSEQUENT EVENTS

Portfolio Activity

Acquisition Activity

Subsequent to December 31, 2019, through the date of this filing, we have acquired two 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	Renewal Options	Total Purchase Price		Acquisition Costs⁽¹⁾		Annualized Straight-line Rent⁽²⁾
County Road 18	Phillips, CO	1/15/2020	1,325	2	Sugar beets, edible beans, potatoes, & corn	6.0 years	None	$	7,500	$	27	$	417
			1,325	2				$	7,500	$	27	$	417


⁽¹⁾	Acquisition will be accounted for as an asset acquisition in accordance with ASC 360. The figures above represent only costs paid or accrued for as of the date of this filing.


⁽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.

Leasing Activity

The following table summarizes the leasing activity that occurred on our existing properties subsequent to December 31, 2019, through the date of this filing (dollars in thousands):

PRIOR LEASES

NEW LEASES

Farm
Locations

Number

Leases

Total

Farm

Acres

Total

Annualized

Straight-line

Rent⁽¹⁾

# of Leases

with

Participation

Rents

Lease

Structures

(# of NNN

/ NN / N)⁽²⁾

Total
Annualized
Straight-line
Rent⁽¹⁾

Wtd. Avg.

Term
(Years)

# of Leases
with
Participation
Rents

Lease
Structures
(# of NNN
/ NN / N)⁽²⁾

AZ, CA, NC, & NE

6,452

3,687

5 / 0 / 2

3,556

6.7

5 / 2 / 0


⁽¹⁾	Annualized straight-line rent is based on the minimum cash rental payments guaranteed under the leases (presented on an annualized basis), as required under GAAP, and excludes contingent rental payments, such as participation rents.


⁽²⁾	“NNN” refers to leases under triple-net lease arrangements, “NN” refers to leases under partial-net lease arrangements, and “N” refers to leases under single-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.”

Lease Termination

On February 10, 2020, we reached an agreement with a tenant occupying four of our farms in Arizona to terminate the existing leases encompassing those four farms effective February 10, 2020. As part of the termination agreement, the outgoing tenant made a one-time termination payment to us of approximately $3.0 million, which will be recognized as additional lease revenue by us during the three months ending March 31, 2020. The prior leases were scheduled to expire on September 15, 2026 (with two of the farms subject to the renewal of certain state leases currently scheduled to expire on February 14, 2022, and February 14, 2025), and in connection with the early termination of these leases, we will write off an aggregate net deferred rent balance of approximately $104,000, which will also be written off during the three months ending March 31, 2020. In addition, upon termination of these leases, we entered into a new, seven-year lease with a new tenant effective immediately. These leases are included in the Leasing Activity table above.

Financing Activity

Debt Activity—New Borrowings

Borrowing Activity

On January 10, 2020, we amended and restated a 2.80% fixed-rate bond for $8.1 million that was previously issued under the Farmer Mac Facility and was originally scheduled to mature on January 10, 2020. The amended bond is for an equal amount and will bear interest at a fixed rate of 2.66% through its maturity on January 12, 2024. All other material items of the amended and restated bond remained unchanged.

Equity Activity

The following table provides information on equity sales that have occurred subsequent to December 31, 2019 (dollars in thousands, except per-share amounts):



Type of Issuance	Number of Shares Sold	Weighted Average Offering Price Per Share		Gross Proceeds		Net Proceeds⁽¹⁾
Series B Preferred Stock	911,383	$	24.53	$	22,353	$	20,506
Common Stock – ATM Program	409,800	13.28		5,441		5,386


⁽¹⁾	Net of Selling Commissions and Dealer-Manager Fees or underwriting commissions and discounts (in each case, as applicable)

In addition, subsequent to December 31, 2019, 5,753 shares of the Series B Preferred Stock were redeemed at a weighted-average cash redemption price of $24.41 per share. As a result, we paid a total redemption cost of approximately $140,000 to redeem and retire these shares.

Distributions

On January 14, 2020, our Board of Directors declared the following monthly cash distributions to holders of our preferred and common stock:



Issuance	Record Date	Payment Date	Distribution per Share
Series A Term Preferred Stock:	January 24, 2020	January 31, 2020	$	0.1328125
	February 19, 2020	February 28, 2020	0.1328125
	March 20, 2020	March 31, 2020	0.1328125
Total Series A Term Preferred Stock Distributions:			$	0.3984375

Series B Preferred Stock:	January 22, 2020	January 31, 2020	$	0.125
	February 26, 2020	March 4, 2020	0.125
	March 25, 2020	April 1, 2020	0.125
Total Series B Preferred Stock Distributions:			$	0.375

Common Stock:	January 24, 2020	January 31, 2020	$	0.04465
	February 19, 2020	February 28, 2020	0.04465
	March 20, 2020	March 31, 2020	0.04465
Total Common Stock Distributions:			$	0.13395

The same amounts paid to common stockholders will be paid as distributions on each OP Unit held by non-controlling OP Unitholders as of the above record dates.

Amendment to 2019 Advisory Agreement

On January 14, 2020, we amended the 2019 Advisory Agreement (as amended, the “2020 Advisory Agreement”), which was approved unanimously by our board of directors, including our independent directors. The 2020 Advisory Agreement revised the calculation of the Base Management Fee, which was previously based on “Total Adjusted Common Equity” (as defined in the 2019 Advisory Agreement), with a calculation based on “Gross Tangible Real Estate,” effective beginning with the three months ending March 31, 2020. The revised Base Management Fee will be payable quarterly in arrears and shall be calculated at an annual rate of 0.50% (0.125% per quarter) of the prior calendar quarter’s “Gross Tangible Real Estate,” defined in the 2020 Advisory Agreement as the gross cost of tangible real estate owned by us (including land and land improvements, irrigation and drainage systems, horticulture, farm-related facilities, and other tangible site improvements), prior to any accumulated depreciation, and as shown on our balance sheet or the notes thereto for the applicable quarter. All other terms of the 2019 Advisory Agreement, including the calculations of the other fees, remain unchanged in the 2020 Advisory Agreement.