Gladstone Land Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Borrowings

Borrowings

9 Months Ended

Sep. 30, 2016

Our borrowings as of September 30, 2016, and December 31, 2015, are summarized below:



							As of September 30, 2016								As of December 31, 2015
Issuer	Type of Issuance	Date(s) of Issuance	Initial Commitment		Maturity Date(s)		Principal Outstanding			Stated Interest Rate⁽¹⁾		Undrawn Commitment			Principal Outstanding			Stated Interest Rate⁽¹⁾		Undrawn Commitment
MetLife⁽²⁾	Mortgage Note Payable	5/9/2014	$	100,000,000	1/5/2029	⁽³⁾	$	85,939,466		3.35%		$	12,529,806	⁽⁴⁾	$	87,470,194		3.35%		$	12,529,806
MetLife⁽²⁾	Line of Credit	5/9/2014	25,000,000		4/5/2024		22,500,000			2.90%		2,500,000		⁽⁴⁾	100,000			2.58%		24,900,000
Farm Credit⁽⁵⁾	Mortgage Notes Payable	9/19/2014-7/1/2016	34,587,880		11/1/2017-11/1/2040		33,263,161			3.50%	⁽⁶⁾	—			21,456,963			3.42%	⁽⁶⁾	—
Farmer Mac	Bonds Payable	12/11/2014-8/22/2016	125,000,000		12/22/2016-8/22/2023	⁽⁷⁾	49,777,500			2.94%		74,743,000		⁽⁸⁾	33,706,000			2.87%		41,294,000
Total outstanding principal							191,480,127								142,733,157
Debt issuance costs							(1,100,503		)						(1,054,222		)
Total mortgage notes and bonds payable, net							$	190,379,624							$	141,678,935


⁽¹⁾	Where applicable, represents the weighted-average, blended rate on the respective borrowings as of each September 30, 2016, and December 31, 2015.


⁽²⁾	The MetLife Facility (as defined below) was amended subsequent to September 30, 2016. See Note 10, "Subsequent Events," for further discussion on the amendment.


⁽³⁾	As of September 30, 2016, if the facility was not fully utilized by December 31, 2017, MetLife had the option to be relieved of its obligations to disburse the additional funds under the loan. Subsequent to September 30, 2016, our ability to draw under this facility was extended to December 31, 2018. See Note 10, "Subsequent Events," for further discussion.


⁽⁴⁾	Based on the properties that were pledged as collateral under the MetLife Facility, as of September 30, 2016, the maximum additional amount we could draw under the facility was approximately $0.6 million. Our availability under this facility was increased by approximately $28.3 million subsequent to September 30, 2016. See Note 10, "Subsequent Events," for further discussion.


⁽⁵⁾	Includes borrowings from Farm Credit CFL and Farm Credit West, each as defined below.


⁽⁶⁾	Rate is before interest patronage. 2015 interest patronage (as described below) received resulted in a 16.1% reduction to the stated interest rate on such borrowings.


⁽⁷⁾	If facility is not fully utilized by December 11, 2018, Farmer Mac has the option to be relieved of its obligations to purchase additional bonds under the facility.


⁽⁸⁾	As of September 30, 2016, there was no additional availability to draw under this facility, as no additional properties had been pledged as collateral.

The weighted-average interest rate charged on all of our borrowings, excluding the impact of deferred financing costs and before any interest patronage, or refunded interest, was 3.29% and 3.08% for the three and nine months ended September 30, 2016, respectively, and 3.41% and 3.51% for the three and nine months ended September 30, 2015, respectively. 2015 interest patronage from all Farm Credit Notes Payable (as defined below), which patronage was received during the three months ended March 31, 2016, resulted in a 16.1% reduction to the stated interest rates on such borrowings. We are unable to estimate the amount of patronage to be received, if any, related to interest accrued during 2016 on our Farm Credit Notes Payable.

MetLife Facility

On May 9, 2014, we closed on a facility with Metropolitan Life Insurance Company (“MetLife”) that consists of a $100.0 million long-term note payable that is scheduled to mature on January 5, 2029 (the “2015 MetLife Term Note”), and a $25.0 million revolving equity line of credit that is scheduled to mature on April 5, 2024 (the “2015 MetLife Line of Credit” and, together with the 2015 MetLife Term Note, the “MetLife Facility”). As amended on September 3, 2015, advances under the 2015 MetLife Term Note bear interest at a fixed rate of 3.35% per annum, plus an unused line fee of 0.20% on undrawn amounts, and interest rates for subsequent disbursements will be based on prevailing market rates at the time of such disbursements. The interest rates on advances and subsequent disbursements will be subject to adjustment every five years, with the next interest rate adjustment date scheduled to occur on August 31, 2020. If the full commitment amount of $100.0 million is not drawn by December 31, 2017, MetLife has the option to be relieved of its obligation to disburse the additional funds under this loan. Advances under the 2015 MetLife Line of Credit bear interest at a variable rate equal to the three-month LIBOR plus a spread of 2.25%, with a minimum annualized rate of 2.50%, plus an unused fee of 0.20% on undrawn amounts. The interest rate spread on borrowings under the 2015 MetLife Line of Credit will be subject to adjustment on April 5, 2017. As of September 30, 2016, we were in compliance with all covenants under the MetLife Facility.

Subsequent to September 30, 2016, we amended the MetLife Facility. See Note 10, "Subsequent Events," for further discussion of this amendment.

Farm Credit Notes Payable

Farm Credit CFL Notes Payable

From time to time since September 19, 2014, we, through certain subsidiaries of our Operating Partnership, have entered into various loan agreements with Farm Credit of Central Florida, FLCA ("Farm Credit CFL"). During the nine months ended September 30, 2016, we entered into the following loan agreement with Farm Credit CFL:

Date of
Issuance

Amount

Maturity
Date

Principal
Amortization

Interest Rate Terms⁽¹⁾

Use of Proceeds

7/1/2016

3,120,000

6/1/2023

36.0 years

3.78

fixed throughout term

⁽²⁾

⁽¹⁾ Rate represents the stated interest rate, before interest patronage.

⁽²⁾ Proceeds from this note were used in the acquisition of Orange Avenue.

As of September 30, 2016, we have approximately $24.0 million of aggregate borrowings outstanding to Farm Credit CFL that bear interest (before interest patronage) at a weighted-average rate of 3.49% per annum. 2015 interest patronage from Farm Credit CFL borrowings resulted in a 16.1% reduction to the stated interest rates on such borrowings. As of September 30, 2016, we were in compliance with all covenants applicable to these borrowings.

Farm Credit West Note Payable

During the nine months ended September 30, 2016, we entered into the following loan agreement with Farm Credit West, FLCA ("Farm Credit West"):

Date of
Issuance

Amount

Maturity
Date

Principal
Amortization

Interest Rate Terms⁽¹⁾

Use of Proceeds

4/4/2016

9,282,000

11/1/2040

24.5 years

3.54

fixed through 4/30/2021, variable thereafter

⁽²⁾

⁽¹⁾ Rate represents the stated interest rate, before interest patronage.


⁽²⁾	Proceeds from this note were used in the acquisition of Calaveras Avenue.

As of September 30, 2016, we have approximately $9.3 million of aggregate borrowings outstanding to Farm Credit West that bear interest (before interest patronage) at a rate of 3.54% per annum. As of September 30, 2016, we were in compliance with all covenants applicable to these borrowings.

Subsequent to September 30, 2016, we closed on an additional loan from Farm Credit West for approximately $3.9 million. See Note 10, "Subsequent Events," for further discussion of this loan.

Farmer Mac Facility

On December 5, 2014, we, through certain subsidiaries of our Operating Partnership, entered into a bond purchase agreement (the “Bond Purchase Agreement”) with Federal Agricultural Mortgage Corporation (“Farmer Mac”) and Farmer Mac Mortgage Securities Corporation (the “Bond Purchaser”), for a secured note purchase facility that provides for bond issuances up to an aggregate principal amount of $75.0 million (the “Farmer Mac Facility”). On June 16, 2016, we amended the facility to increase the maximum borrowing capacity from $75.0 million to $125.0 million and extend the term of the Bond Purchase Agreement by two years, to December 11, 2018.

During the nine months ended September 30, 2016, we issued the following bonds under the Farmer Mac Facility:

Date of
Issuance

Amount

Maturity
Date

Principal
Amortization

Interest Rate Terms

Use of Proceeds

3/3/2016

11,100,000

2/24/2023

None

3.08%

fixed throughout term

⁽¹⁾

3/3/2016

4,431,000

2/24/2023

9.7 years

2.98%

fixed throughout term

⁽¹⁾

8/22/2016

1,020,000

8/22/2023

None

2.87%

fixed throughout term

⁽²⁾

⁽¹⁾ Proceeds from this bond were used in the acquisition of Gunbarrel Road.


⁽²⁾	Proceeds from this note were used in the acquisition of Lithia Road.

As of September 30, 2016, the aggregate amount of bonds issued under the Farmer Mac Facility was approximately $49.8 million. As of September 30, 2016, we were in compliance with all covenants under the Farmer Mac Facility.

Debt Service – Aggregate Maturities

Scheduled principal payments of our aggregate mortgage notes and bonds payable as of September 30, 2016, for the succeeding years are as follows:



		Scheduled
Period		Principal Payments
For the remaining three months ending December 31:	2016	$	717,096
For the fiscal years ending December 31:	2017	5,981,018
	2018	20,480,231
	2019	8,105,632
	2020	17,796,920
	Thereafter	115,899,230
		$	168,980,127

Fair Value

As of September 30, 2016, the aggregate fair value of our long-term, fixed-rate mortgage notes and bonds payable was approximately $170.1 million, as compared to an aggregate carrying value of $167.0 million. The fair value of our long-term, fixed-rate mortgage notes and bonds payable is valued using Level 3 inputs under the hierarchy established by ASC 820-10, “Fair Value Measurements and Disclosures,” and is calculated based on a discounted cash flow analysis, using discount rates based on management’s estimates of market interest rates on long-term debt with comparable terms. Due to their short-term nature and the lack of changes in market credit spreads, the aggregate fair value of our short-term, variable-rate mortgage notes and bonds payable as of September 30, 2016, is deemed to approximate their aggregate carrying value of approximately $1.9 million. Further, due to the revolving nature of the 2015 MetLife Line of Credit and the lack of changes in market credit spreads, its fair value as of September 30, 2016, is deemed to approximate its carrying value of $22.5 million.