Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q 
(Mark One)
ýQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 20182019
or
¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission file number: 001-35795  
GLADSTONE LAND CORPORATION
(Exact name of registrant as specified in its charter)
MARYLAND 54-1892552
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer Identification No.)
   
1521 WESTBRANCH DRIVE, SUITE 100
MCLEAN, VIRGINIA
 22102
(Address of principal executive offices) (Zip Code)
(703) 287-5800
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, $0.001 par value per shareLANDThe Nasdaq Stock Market, LLC
6.375% Series A Cumulative Term Preferred Stock, $0.001 par value per shareLANDPThe Nasdaq Stock Market, LLC
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer¨   Accelerated filer
x 
Non-accelerated filer¨
(Do not check if a
smaller reporting company)
  Smaller reporting company¨
x
   Emerging growth company
x¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  ¨    No  ý.
The number of shares of the registrant’s Common Stock, $0.001 par value per share, outstanding as of May 7, 2018,6, 2019, was 15,381,199.18,462,219.

GLADSTONE LAND CORPORATION
FORM 10-Q FOR THE QUARTER ENDED
MARCH 31, 20182019
TABLE OF CONTENTS 
  PAGE
 
   
 
   
 
   
 
   
 
   
 
   
 
   
   
   
   
 
   
   
   
   
   
   
   
  

PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GLADSTONE LAND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per-share data)
(Unaudited)
 
March 31, 2018 December 31, 2017March 31, 2019 December 31, 2018
ASSETS      
Investments in real estate, net$458,915
 $449,486
$541,451
 $538,953
Lease intangibles, net5,328
 5,492
5,364
 5,686
Cash and cash equivalents2,679
 2,938
23,108
 14,730
Crop inventory2,059
 1,528
Other assets, net3,935
 2,834
6,026
 5,750
TOTAL ASSETS$472,916
 $462,278
$575,949
 $565,119
      
LIABILITIES AND EQUITY      
LIABILITIES:      
Borrowings under lines of credit$3,900
 $10,000
$100
 $100
Mortgage notes and bonds payable, net289,050
 291,002
Series A cumulative term preferred stock, par value $0.001 per share; $25.00 per share liquidation preference; 2,000,000 shares authorized, 1,150,000 shares issued and outstanding as of March 31, 2018, and December 31, 2017, net27,948
 27,890
Notes and bonds payable, net333,835
 335,788
Series A cumulative term preferred stock, $0.001 par value; $25.00 per share liquidation preference; 2,000,000 shares authorized, 1,150,000 shares issued and outstanding as of March 31, 2019, and December 31, 2018, net28,183
 28,124
Accounts payable and accrued expenses8,575
 7,398
6,715
 9,152
Due to related parties, net(1)
950
 940
Due to related parties, net676
 945
Other liabilities, net10,525
 7,097
11,671
 9,957
Total liabilities340,948
 344,327
381,180
 384,066
Commitments and contingencies(2)

 
Commitments and contingencies (Note 7)
 
   
EQUITY:      
Stockholders’ equity:      
Series B cumulative redeemable preferred stock, $0.001 par value; 6,500,000 shares authorized, no shares issued and outstanding as of March 31, 2018; no shares authorized, issued, or outstanding as of December 31, 2017
 
Common stock, $0.001 par value; 91,500,000 shares authorized, 15,216,199 shares issued and outstanding as of March 31, 2018; 98,000,000 shares authorized, 13,791,574 shares issued and outstanding as of December 31, 201715
 14
Series B cumulative redeemable preferred stock, $0.001 par value; $25.00 per share liquidation preference; 6,500,000 shares authorized; 1,891,709 shares issued and outstanding as of March 31, 2019; 1,144,393 shares issued and outstanding as of December 31, 20182
 1
Common stock, $0.001 par value; 91,500,000 shares authorized; 18,462,219 shares issued and outstanding as of March 31, 2019; 17,891,340 shares issued and outstanding as of December 31, 201818
 18
Additional paid-in capital145,990
 129,705
223,480
 202,053
Distributions in excess of accumulated earnings(21,950) (19,802)(28,731) (25,826)
Total stockholders’ equity124,055
 109,917
194,769
 176,246
Non-controlling interests in Operating Partnership7,913
 8,034

 4,807
Total equity131,968
 117,951
194,769
 181,053
   
TOTAL LIABILITIES AND EQUITY$472,916
 $462,278
$575,949
 $565,119

(1)
Refer to Note 6, “Related-Party Transactions,” for additional information.
(2)
Refer to Note 8, “Commitments and Contingencies,” for additional information.
The accompanying notes are an integral part of these condensed consolidated financial statements.

GLADSTONE LAND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per-share data)
(Unaudited)
For the Three Months Ended March 31,For the Three Months Ended March 31,
2018 20172019 2018
OPERATING REVENUES:      
Rental revenue$6,688
 $5,748
Tenant recovery revenue6
 2
Lease revenue$7,830
 $6,694
Other operating revenues2,551
 

 2,551
Total operating revenues9,245
 5,750
7,830
 9,245
OPERATING EXPENSES:      
Depreciation and amortization2,189
 1,472
2,597
 2,189
Property operating expenses428
 284
816
 428
Acquisition-related expenses134
 9
Management fee(1)
656
 394
Incentive fee(1)

 350
Administration fee(1)
274
 227
Base management fee905
 656
Administration fee306
 274
General and administrative expenses419
 410
550
 553
Other operating expenses2,359
 

 2,359
Total operating expenses6,459
 3,146
5,174
 6,459
OPERATING INCOME2,786
 2,604
   
Credits to fees from Adviser(569) 
Total operating expenses, net of credits to fees4,605
 6,459
OTHER INCOME (EXPENSE):      
Other income315
 184
826
 315
Interest expense(2,832) (2,157)(3,453) (2,832)
Distributions attributable to mandatorily-redeemable preferred stock(458) (458)
Dividends declared on Series A cumulative term preferred stock(458) (458)
Loss on dispositions of real estate assets, net(32) 
Property and casualty loss(129) 

 (129)
Total other expense(3,104) (2,431)
NET (LOSS) INCOME(318) 173
Net loss (income) attributable to non-controlling interests21
 (21)
NET (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY$(297) $152
Total other expense, net(3,117) (3,104)
NET INCOME (LOSS)108
 (318)
Net (income) loss attributable to non-controlling interests(3) 21
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY105
 (297)
Dividends declared on Series B cumulative redeemable preferred stock(601) 
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS$(496) $(297)
      
(LOSS) EARNINGS PER COMMON SHARE:   
LOSS PER COMMON SHARE:   
Basic and diluted$(0.02) $0.01
$(0.03) $(0.02)
WEIGHTED-AVERAGE SHARES OF COMMON STOCK OUTSTANDING:      
Basic and diluted13,957,732
 10,395,736
18,028,826
 13,957,732

(1)
Refer to Note 6, “Related-Party Transactions,” for additional information.
The accompanying notes are an integral part of these condensed consolidated financial statements.


GLADSTONE LAND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(In thousands, except share data)
(Unaudited)
 
Common Stock Additional
Paid-in 
Capital
 Distributions in Excess of Accumulated Earnings Total Stockholders’ Equity Non-
Controlling
Interests
  Series B Preferred Stock Common Stock 
Additional
Paid-in 
Capital
 
Distributions
in Excess of
Accumulated
Earnings
 
Total
Stockholders’
Equity
 
Non-
Controlling
Interests
 
Total
Equity
Number
of Shares
 
Par
Value
 
Total
Equity
Number
of Shares
 Par
Value
 
Number
of Shares
 
Par
Value
 
                              
Balance at December 31, 201610,024,875
 $10
 $90,082
 $(13,402) $76,690
 $11,087
 $87,777
Net income
 
 
 152
 152
 21
 173
Balance at December 31, 2017
 $
 13,791,574
 $14
 $129,705
 $(19,802) $109,917
 $8,034
 $117,951
Redemption of OP Units
 
 7,700
 
 63
 
 63
 (463) (400)
Issuance of common stock, net1,825,749
 2
 19,553
 
 19,555
 
 19,555

 
 1,416,925
 1
 16,714
 
 16,715
 
 16,715
Distributions
 
 
 (1,371) (1,371) (187) (1,558)
Issuance of OP Units as consideration in real estate acquisitions, net
 
 
 
 
 1
 1
Adjustment to non-controlling interests resulting from changes in ownership of the Operating Partnership
 
 (623) 
 (623) 623
 
Balance at March 31, 201711,850,624
 $12
 $109,012
 $(14,621) $94,403
 $11,545
 $105,948
             
Balance at December 31, 201713,791,574
 $14
 $129,705
 $(19,802) $109,917
 $8,034
 $117,951
Net loss
 
 
 (297) (297) (21) (318)
 
 
 
 
 (297) (297) (21) (318)
Issuance of common stock, net1,416,925
 1
 16,714
 
 16,715
 
 16,715
Distributions
 
 
 (1,851) (1,851) (129) (1,980)
Redemption of OP Units7,700
 
 63
 
 63
 (463) (400)
Distributions—OP Units and common stock
 
 
 
 
 (1,851) (1,851) (129) (1,980)
Adjustment to non-controlling interests resulting from changes in ownership of the Operating Partnership
 
 (492) 
 (492) 492
 

 
 
 
 (492) 
 (492) 492
 
Balance at March 31, 201815,216,199
 $15
 $145,990
 $(21,950) $124,055
 $7,913
 $131,968

 $
 15,216,199
 $15
 $145,990
 $(21,950) $124,055
 $7,913
 $131,968
                 
Balance at December 31, 20181,144,393
 $1
 17,891,340
 $18
 $202,053
 (25,826) $176,246
 $4,807
 $181,053
Issuance of preferred stock, net747,916
 1
 
 
 16,703
 
 16,704
 
 16,704
Redemptions of preferred stock(600) 
 
 
 (13) 
 (13) 
 (13)
Redemption of OP Units
 
 570,879
 
 4,714
 
 4,714
 (4,714) 
Common stock issuance costs
 
 
 
 (20) 
 (20) 
 (20)
Net income
 
 
 
 
 105
 105
 3
 108
Dividends—Series B Preferred Stock
 
 
 
 
 (601) (601) 
 (601)
Distributions—OP Units and common stock
 
 
 
 
 (2,409) (2,409) (53) (2,462)
Adjustment to non-controlling interests resulting from changes in ownership of the Operating Partnership
 
 
 
 43
 
 43
 (43) 
Balance at March 31, 20191,891,709
 $2
 18,462,219
 $18
 $223,480
 $(28,731) $194,769
 $
 $194,769

The accompanying notes are an integral part of these condensed consolidated financial statements.


GLADSTONE LAND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
  For the Three Months Ended March 31,
  2018 2017
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net (loss) income $(318) $173
Adjustments to reconcile net (loss) income to net cash provided by operating activities:    
Depreciation and amortization 2,189
 1,472
Amortization of debt issuance costs 143
 116
Amortization of deferred rent assets and liabilities, net (90) (50)
Bad debt expense 1
 
Property and casualty loss 129
 
Changes in operating assets and liabilities:    
Crop inventory and Other assets, net (1,659) (150)
Accounts payable and accrued expenses and Due to related parties, net (1,132) (187)
Other liabilities, net 3,488
 1,372
Net cash provided by operating activities 2,751
 2,746
CASH FLOWS FROM INVESTING ACTIVITIES:    
Acquisition of new real estate (5,032) (53,532)
Capital expenditures on existing real estate (4,478) (468)
Change in deposits on real estate acquisitions and investments, net 200
 (215)
Net cash used in investing activities (9,310) (54,215)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from issuance of equity 17,486
 20,722
Offering costs (685) (1,054)
Payments for redemption of OP Units (400) 
Borrowings from mortgage notes and bonds payable 1,260
 32,400
Repayments of mortgage notes and bonds payable (3,118) (2,231)
Borrowings from lines of credit 7,500
 23,000
Repayments of lines of credit (13,600) (19,500)
Payments of financing fees (163) (274)
Distributions paid on common stock (1,851) (1,372)
Distributions paid to non-controlling interests in Operating Partnership (129) (187)
Net cash provided by financing activities 6,300
 51,504
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (259) 35
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,938
 2,438
CASH AND CASH EQUIVALENTS AT END OF PERIOD $2,679
 $2,473
     
NON-CASH INVESTING AND FINANCING INFORMATION:    
Real estate additions included in Accounts payable and accrued expenses and Due to related parties, net 4,621
 199
Real estate additions included in Other liabilities, net 33
 
Stock offering and OP Unit issuance costs included in Accounts payable and accrued expenses and Due to related parties, net 109
 171
Financing fees included in Accounts payable and accrued expenses and Due to related parties, net 48
 22
  For the Three Months Ended March 31,
  2019 2018
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net income (loss) $108
 $(318)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:    
Depreciation and amortization 2,597
 2,189
Amortization of debt issuance costs 150
 143
Amortization of deferred rent assets and liabilities, net (80) (90)
Bad debt expense 6
 1
Loss on dispositions of real estate assets, net 32
 
Property and casualty loss 
 129
Changes in operating assets and liabilities:    
Other assets, net (136) (1,659)
Accounts payable and accrued expenses and Due to related parties, net (2,277) (1,132)
Other liabilities, net 2,032
 3,488
Net cash provided by operating activities 2,432
 2,751
CASH FLOWS FROM INVESTING ACTIVITIES:    
Acquisition of new real estate assets (2,304) (5,032)
Capital expenditures on existing real estate assets (3,063) (4,478)
Change in deposits on real estate acquisitions and investments, net (350) 200
Net cash used in investing activities (5,717) (9,310)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from issuance of preferred and common equity 18,482
 17,486
Offering costs (1,729) (685)
Payments for redemptions of OP Units 
 (400)
Redemption of Series B Preferred Stock (13) 
Borrowings from mortgage notes and bonds payable 1,440
 1,260
Repayments of mortgage notes and bonds payable (3,450) (3,118)
Borrowings from lines of credit 
 7,500
Repayments of lines of credit 
 (13,600)
Payments of financing fees (4) (163)
Dividends paid on Series B cumulative redeemable preferred stock (601) 
Distributions paid on common stock (2,409) (1,851)
Distributions paid to non-controlling interests in Operating Partnership (53) (129)
Net cash provided by financing activities 11,663
 6,300
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 8,378
 (259)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 14,730
 2,938
CASH AND CASH EQUIVALENTS AT END OF PERIOD $23,108
 $2,679


The accompanying notes are an integral part of these condensed consolidated financial statements.

GLADSTONE LAND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In thousands)
(Unaudited)

  For the Three Months Ended March 31,
  2019 2018
NON-CASH OPERATING, INVESTING, AND FINANCING INFORMATION:    
Operating lease right-of-use assets included in Other assets, net $208
 $
Operating lease liabilities included in Other liabilities, net 167
 
Real estate additions included in Accounts payable and accrued expenses and Due to related parties, net 1,428
 4,621
Real estate additions included in Other liabilities, net 
 33
Stock offering and OP Unit issuance costs included in Accounts payable and accrued expenses and Due to related parties, net 58
 109
Financing fees included in Accounts payable and accrued expenses and Due to related parties, net 11
 48


The accompanying notes are an integral part of these condensed consolidated financial statements.

GLADSTONE LAND CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. BUSINESS AND ORGANIZATION
Business and Organization
Gladstone Land Corporation (the “Company”) is an agricultural real estate investment trust (“REIT”) that was re-incorporated in Maryland on March 24, 2011, having been previously re-incorporatedoriginally incorporated in DelawareCalifornia on May 25, 2004.June 14, 1997. Upon the pricing of our initial public offering on January 29, 2013, our shares of common stock began trading on the Nasdaq Global Market (“Nasdaq”) under the symbol “LAND.” We are primarily in the business of owning and leasing farmland, and we conduct substantially all of our operations through a subsidiary, Gladstone Land Limited Partnership (the “Operating Partnership”), a Delaware limited partnership. As we currently control the sole general partner of the Operating Partnership and own, directly or indirectly, a majorityall of the units of limited partnership interestsinterest in the Operating Partnership (“OP Units”), the financial position and results of operations of the Operating Partnership are consolidated within our financial statements. As of March 31, 2018,2019, and December 31, 2017,2018, the Company owned 94.0%100.0% and 93.2%approximately 96.9%, respectively, of the outstanding OP Units (see Note 7, “Equity,8, “Equity,” for additional discussion regarding OP Units).
Gladstone Land Advisers, Inc. (“Land Advisers”), a Delaware corporation and a subsidiary of ours, was created to collect any non-qualifying income related to our real estate portfolio and to perform certain small-scale farming business operations. We have elected for Land Advisers to be treated as a taxable REIT subsidiary (“TRS”) of ours. On October 17, 2017 Land Advisers began farming a 169-acre farm located in Ventura County, California, under a short-term lease that will expire on July 31, 2018. Since we currently own 100% of the voting securities of Land Advisers, its financial position and results of operations are consolidated within our financial statements.
Subject to certain restrictions and limitations, and pursuant to contractual agreements, our business is managed by Gladstone Management Corporation (the “Adviser”), a Delaware corporation, and administrative services are provided to us by Gladstone Administration, LLC (the “Administrator”), a Delaware limited liability company. Our Adviser and Administrator are both affiliates of ours (see Note 6, “Related-PartyRelated-Party Transactions,” for additional discussion regarding our Adviser and Administrator).
All further references herein to “we,” “us,” “our,” and the “Company” refer, collectively, to Gladstone Land Corporation and its consolidated subsidiaries, except where indicated otherwise.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Interim Financial Information
Our interim financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q in accordance with Article 10 of Regulation S-X. Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with GAAP are omitted. In the opinion of our management, all adjustments (consisting solely of normal recurring accruals) necessary for the fair statement of financial statements for the interim period have been included. The interim financial statements and accompanying notes should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2017,2018, as filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 20, 201826, 2019 (the “Form 10-K”). The results of operations for the three months ended March 31, 2018,2019, are not necessarily indicative of the results that may be expected for other interim periods or for the full fiscal year.
Use of Estimates
The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could materially differ from those estimates.
Impairment of Real Estate Assets
We account for the impairment of our tangible and identifiable intangible real estate assets in accordance with Accounting Standards Codification (“ASC”) 360, “Property, Plant, and Equipment” (“ASC 360”), which requires us to periodically review the carrying value of each property to determine whether indicators of impairment exist. If circumstances support the

possibility of impairment, we prepare a projection of the total undiscounted future cash flows of the specific property (without interest charges), including

proceeds from disposition, without interest charges, and compare them to the net book value of the property to determine whether the carrying value of the property is recoverable. If the carrying amount is more than the aggregate undiscounted future cash flows, we would recognize an impairment loss to the extent the carrying value exceeds the estimated fair value of the property.
We evaluate our entire property portfolio each quarter for any impairment indicators and perform an impairment analysis on those select properties that have an indication of impairment. During the three months endedAs of March 31, 2018, a lightning strike damaged certain irrigation infrastructure on one of our properties in Arizona; however, we determined no indicator of impairment existed,2019, and no impairment loss was recorded. See “—Property and Casualty Loss” within Note 3, “Real Estate and Intangible Assets,” for additional details on this event.
As of MarchDecember 31, 2018, we concluded that none of our properties were impaired. There have been no impairments recognized on our real estate assets since our inception.
Crop Inventory and Crop Sales
Crop Inventory
From October 17, 2017, through July 31, 2018, Land Advisers operated a 169-acre farm located in Ventura County, California, under a short-term lease (see Note 6, “Related-Party Transactions—TRS Lease Assumption” for further discussion on this lease assignment). Costs incurred by Land Advisers to grow cropsin operating the farm generally consisted primarily of growing costs (including the costs of land preparation, plants, fertilizers and pesticides, and labor costs), harvesting and selling costs (including labor costs for harvesting, packaging and cooling costs, and sales commissions), and certain overhead costs (including management/oversight costs). These costs are accumulated and deferred until the related crops are harvested and sold and are recorded in Crop inventory on the accompanying Condensed Consolidated Balance Sheets at the lower of cost or market value.
Crop inventory consisted of the following (dollars in thousands, except for footnotes):
  March 31, 2018 December 31, 2017
Growing costs $1,770
 $1,335
Harvesting and selling costs 160
 
Overhead costs(1)
 129
 193
Total Crop inventory $2,059
 $1,528
(1)
Includes approximately $80,000 and $71,000 of unallocated fees earned by our Adviser from Land Advisers as of March 31, 2018, and December 31, 2017, respectively (see Note 6, “Related-Party Transactions—TRS Fee Arrangements” for further discussion on this fee).
Crop Sales
RevenuesRevenue from the sale of harvested crops arewere recognized when the harvested crops havehad been delivered to the facility and title hashad transferred and arewere recorded using the market price on the date of delivery. Accumulated costs arewere charged to cost of products sold (based on percentage of gross revenuesrevenue from sales) as the related crops arewere harvested and sold.
RevenuesRevenue from the sale of harvested crops and accumulated costs allocated to the crops sold during the three months ended March 31, 2018, are shown in the following table (dollars in thousands, except for footnotes):
 For the Three Months Ended March 31, 2018 For the Three Months Ended March 31, 2018
Sales revenues(1)
 $2,546
Sales revenue(1)
 $2,546
Cost of sales(2)(3)(4)
 (2,359) (2,359)
(1) 
Included within Other operating revenues on the accompanying Condensed Consolidated Statement of Operations.
(2) 
Included within Other operating expenses on the accompanying Condensed Consolidated Statement of Operations.
(3) 
Excludes rent expense owed to the Company and interest expense owed on a loan from the Company to Land Advisers, both of which expenses were eliminated in consolidation.
(4) 
Excludes the allocation of a fee earned by our Adviser from Land Advisers of approximately $66,000 during the three months ended March 31, 2018, which is included within Management Fee on the accompanying Condensed Consolidated StatementStatements of Operations (see Note 6, “Related-PartyRelated-Party Transactions—TRS Fee Arrangements—TRS Expense Sharing Agreement”Agreement for further discussion on this fee).
There was minimal harvesting and sales activityThe lease to Land Advisers expired on July 31, 2018, after which we leased the farm operated by Land Advisers prior to Januarya new, unrelated third-party tenant under a 10-year lease that commenced on August 1, 2018.
Income Taxes
We have operated and intend to continue to operate in a manner that will allow us to qualify as a REIT under the Sections 856-860 of the Internal Revenue Code of 1986, as amended (the “Code”). As a REIT, we generally are not subject to federal corporate income taxes on amounts that we distribute to our stockholders (except income from any foreclosure property), provided that, on an annual basis, we distribute at least 90% of our REIT taxable income (excluding net capital gains) to our

stockholders and meet certain other conditions. As such, in general, as long as we qualify as a REIT, no provision for federal income taxes will be necessary, except for taxes on undistributed REIT taxable income and taxes on the income generated by a TRS (such as Land Advisers), if any. From October 17, 2017, through July 31, 2018, Land Advisers, which is subject to federal and state income taxes, assumed the operations on one of our farms in California (see Note 6, “Related-Party Transactions—TRS Lease Assumption”). There was no taxable income or loss from Land Advisers for the tax year ended December 31, 2018, nor was there any for the three months ended March 31, 2019.
Should we have aany taxable income or loss in the future, we will account for any income taxes in accordance with the provisions of ASC 740, “Income Taxes,” using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized based on differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases (including for operating loss, capital loss, and tax credit carryforwards) and are calculated using the enacted tax rates and laws expected to be in effect when such amounts are realized or settled. In addition, we will establish valuation allowances for tax benefits when we believe it is more-likely-than-not (defined as a likelihood of more than 50%) that such assets will not be realized.
Reclassifications

On October 17, 2017, Land Advisers, our wholly-owned TRS, which is subject to federal and state income taxes, took over the operations on one of our farms in California. There was no taxable income from Land Advisers for the year ended December 31, 2017. As of the three months ended March 31, 2018, we estimated a tax benefit of approximately $34,000 based on the taxable loss recorded at Land Advisers during the three months ended March 31, 2018. However, as the lease with Land Advisers expires on July 31, 2018 (and we do not believe the likelihood of conducting additional farming operations through Land Advisers to be greater than 50%), we do not believe it probable that this loss carryforward will be realized. As such, we established a valuation allowance against the deferred tax asset for the full amount and did not recognize any tax benefit from this taxable loss in theaccompanying Condensed Consolidated Statement of Operations for the three months ended March 31, 2018.
Reclassifications
Certain line items2019, operating rental revenue has been reclassified to be displayed in accordance with ASU 2016-02 (as defined below), which was adopted on the accompanying Condensed Consolidated Statement of OperationsJanuary 1, 2019, and Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2017,acquisition-related expenses have been reclassified to conform to the current period’s presentation. On the Condensed Consolidated Statement of Operations, certain property-specific costs have been reclassified frombe included within general and administrative expenses to property operating expenses. In addition, on the Condensed Consolidated Statement of Cash Flows, deposits on future acquisitions, deposits applied against real estate investments, and deposits refunded are presented on a net basis as a single line item within the “Cash Flows From Investing Activities” section; and borrowings from and repayments on lines of credit (previously reported on a net basis) have been separated, and each are presented on a gross basis within the “Cash Flows from Financing Activities” section. These reclassifications had no impact on previously-reported net income (loss), equity, or net change in cash and cash equivalents.
Significant Accounting Policies
The preparation of financial statements in accordance with GAAP requires management to make judgments that are subjective in order to make certain estimates and assumptions, and our application of these accounting policies involves the exercise of judgment regarding the use of assumptions as to future uncertainties. A summary of our significant accounting policies is provided in Note 2 to our consolidated financial statements included in our Form 10-K. There were no material changes to our significant accounting policies during the three months ended March 31, 2018.
Recently-Issued Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”), which was amended in each of March, April, May, and December of 2016. ASU 2014-09, as amended, supersedes or replaces nearly all GAAP revenue recognition guidance and establishes a new, control-based revenue recognition model, changes the basis for deciding when revenue is recognized over time or at a point in time and will expand disclosures about revenue. We adopted ASU 2014-09 was adopted beginning with the three months ended March 31,on January 1, 2018, using the modified retrospective method, (underunder which the cumulative effect of initially applying the guidance was recognized at the date of initial application).application. Our adoption of ASU 2014-09 did not (and is not expected to) have a material impact on our results of operations or financial condition, as the primary impact of this update is related to common area maintenance and other material tenant reimbursements, whereas the majority of our revenue is from rental income pursuant to net-lease agreements, with very little being attributed to tenant recoveries. The impact of ASU 2014-09 willdid not take effect until the new leasing standard (ASU 2016-02, as defined below) becomesbecame effective on January 1, 2019.
In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842): An Amendment of the FASB Accounting Standards Codification” (“ASU 2016-02”)., which supersedes the previous leasing standard, ASC 840, “Leases.” The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee, which classification determines whether lease expense is recognized based on an effective interest method or on a straight-line basis, respectively, over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all

leases with a term of greater than 12 months, regardless of the classification. Leases with a term of 12 months or less will be accounted for similarsimilarly to existing guidance for operating leases.leases under the previous leasing standard. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidancethat under the previous standard for sales-type leases, direct financing leases, and operating leases. We adopted ASU 2016-02 supersedes the previous leasing standard, ASC 840, “Leases,” and is effective on January 1, 2019, with early adoption permitted. We expect our legal expenses (included in General and administrative expenses on our Condensed Consolidated Statementsusing the modified retrospective method, under which we recorded the cumulative effect of Operations) to increase marginally, asapplying the new standard requiresguidance as of the adoption date. We also elected the package of practical expedients permitted under the transition guidance (which included that: (i) an entity need not reassess whether any expired or existing contracts are or contain leases, (ii) an entity need not reassess the lease classification for any expired or existing leases, and (iii) an entity need not reassess initial direct costs for any existing leases), the land easement practical expedient to carry forward existing accounting treatment on existing land easements, and the lease and non-lease component combined practical expedient. In addition, we elected the short-term lease exception, which allows us to expense indirect leasing costs that were previously capitalized; however, we do not expect ASU 2016-02account for leases with a term of 12 months or less similar to materially impact our condensed consolidated financial statements, as weexisting operating leases. We currently only have two operating ground lease arrangements with terms greater than one year for which we are the lessee.
In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts See Note 7, “Commitments and Cash Payments” (“ASU 2016-15”)Contingencies—Ground Lease Obligations, which provides guidance on certain cash flow classification issues, with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified” for further discussion on the statementimpact of cash flows.our adoption of ASU 2016-15 was adopted beginning with the three months ended March 31, 2018, and did not have a material impact on our condensed consolidated financial statements.
In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted cash (a consensus of the FASB Emerging Issues Task Force)” (“ASU 2016-18”), which requires the statement of cash flows to explain the change during the period in the total of cash, cash equivalents, and amounts described as restricted cash or restricted cash equivalents. Under ASU 2016-18, amounts described as restricted cash and restricted cash equivalents will be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This guidance became effective beginning with the three months ended March 31, 2018, and did not have a material impact on our condensed consolidated financial statements.
In February 2017, the FASB issued ASU 2017-05, “Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets” (“ASU 2017-05”), which provides guidance for recognizing gains and losses from the transfer of nonfinancial assets and in-substance nonfinancial assets in contracts with non-customers (unless other specific guidance applies). ASU 2017-05 requires derecognition once control of a distinct nonfinancial asset or in-substance nonfinancial asset is transferred. Additionally, when a company transfers its controlling interest in a nonfinancial asset but retains a non-controlling ownership interest, any non-controlling interest received is required to be measured at fair value,2016-02 and the company is required to recognize a full gain or loss onassumptions used in determine the transaction. As a result of ASU 2017-05, the guidance specific to real estate sales in ASC 360-20 will be eliminated,related right-of-use asset and partial sales of real estate assets will now be subject to the same derecognition model as all other nonfinancial assets. ASU 2017-05 was adopted beginning with the three months ended March 31, 2018, utilizing the modified retrospective approach, and its adoption did not (and is not expected to) have a material impact on our condensed consolidated financial statements.lease liability.
NOTE 3. 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 our 75the 86 farms we owned as of March 31, 20182019 (dollars in thousands, except for footnotes):
Location No. of Farms Total Acres Farm Acres 
Net Cost Basis(1)
 
Encumbrances(2)
 No. of Farms Total Acres Farm Acres 
Net Cost Basis(1)
 
Encumbrances(2)
California 29 8,241 7,465 $211,816
 $146,767
 33 10,147 9,336 $249,319
 $166,109
Florida 16 11,006 8,846 115,140
 73,003
 22 17,184 12,981 154,297
 96,772
Arizona(3)
 6 6,280 5,228 45,126
 22,691
 6 6,280 5,228 55,340
 22,008
Colorado 10 31,450 24,513 42,081
 24,538
 10 31,448 24,513 41,790
 25,046
Oregon 4 2,313 2,003 19,794
 11,970
Nebraska 2 2,559 2,101 10,585
 6,602
 3 3,254 2,701 12,847
 8,490
Washington 1 746 417 9,250
 5,368
 1 746 417 8,709
 5,190
Texas 1 3,667 2,219 8,393
 5,280
Oregon 3 418 363 6,003
 3,312
Michigan 5 446 291 5,042
 2,790
 5 446 291 4,990
 2,740
North Carolina 2 310 295 2,352
 1,301
 2 310 295 2,313
 1,270
 75 63,351 51,159 $461,186
 $295,030
 86 73,900 58,344 $544,001
 $336,217

(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 (excluding improvements paid for by the tenant) and Lease intangibles, net; plus net above-market lease values and lease incentives 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 Sheet.Sheets.

(2) 
Excludes approximately $2.1$2.3 million of debt issuance costs related to mortgage notes and bonds payable, included in Mortgage notes and bonds payable, net on the accompanying Condensed Consolidated Balance Sheet.
(3) 
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 aan aggregate net cost basis of approximately $3.1$2.5 million as of March 31, 20182019 (included in Lease intangibles, net on the accompanying Condensed Consolidated Balance Sheet).
Real Estate
The following table sets forth the components of our investments in tangible real estate assets as of March 31, 2018,2019, and December 31, 20172018 (dollars in thousands):
 March 31, 2018 December 31, 2017March 31, 2019 December 31, 2018
Real estate:       
Land and land improvements $360,381
 $356,316
$419,602
 $417,310
Irrigation systems 56,234
 50,282
Buildings 18,429
 18,191
Irrigation and drainage systems73,864
 71,583
Horticulture 35,837
 34,803
49,057
 48,894
Other improvements 6,584
 6,551
Real estate, at cost 477,465
 466,143
Farm-related facilities18,534
 18,510
Other site improvements6,717
 6,707
Real estate, at gross cost567,774
 563,004
Accumulated depreciation (18,550) (16,657)(26,323) (24,051)
Real estate, net $458,915
 $449,486
$541,451
 $538,953
Real estate depreciation expense on these tangible assets was approximately $1.9$2.3 million and $1.3$1.9 million for the three months ended March 31, 20182019 and 2017,2018, respectively.
Included in the figures above are amounts related to tenant improvements, which are improvements made on certain of our properties paid for by our tenants but owned by us.us, or tenant improvements. As of each of March 31, 2018,2019, and December 31, 2017,2018, we recorded tenant improvements, net of accumulated depreciation, of approximately $2.3 million and $2.4 million.million, respectively. We recorded both depreciation expense and additional rentallease revenue related to these tenant improvements of approximately $76,000$74,000 and $37,000$76,000 during the three months ended March 31, 20182019 and 2017,2018, respectively.
Intangible Assets and Liabilities
The following table summarizes the carrying values of certain lease intangible assets and the related accumulated amortization as of March 31, 2018,2019, and December 31, 20172018 (dollars in thousands):
 March 31, 2018 December 31, 2017 March 31, 2019 December 31, 2018
Lease intangibles:        
Leasehold interest – land $3,498
 $3,498
 $3,498
 $3,498
In-place leases 1,404
 1,451
 2,046
 2,046
Leasing costs 1,523
 1,490
 1,965
 1,963
Tenant relationships 439
 439
 414
 414
Lease intangibles, at cost 6,864
 6,878
 7,923
 7,921
Accumulated amortization (1,536) (1,386) (2,559) (2,235)
Lease intangibles, net $5,328
 $5,492
 $5,364
 $5,686
Total amortization expense related to these lease intangible assets was approximately $293,000$324,000 and $139,000$293,000 for the three months ended March 31, 20182019 and 2017,2018, respectively.
The following table summarizes the carrying values of certain lease intangible assets or liabilities included in Other assets, net andor Other liabilities, net, respectively, on the accompanying Condensed Consolidated Balance Sheets and the related accumulated amortization or accretion, respectively, as of March 31, 2018,2019, and December 31, 20172018 (dollars in thousands).:

 March 31, 2018 December 31, 2017 March 31, 2019 December 31, 2018
Intangible Asset or Liability 
Deferred
Rent Asset
(Liability)
 
Accumulated
(Amortization)
Accretion
 
Deferred
Rent Asset
(Liability)
 
Accumulated
(Amortization)
Accretion
 
Deferred
Rent Asset
(Liability)
 
Accumulated
(Amortization)
Accretion
 
Deferred
Rent Asset
(Liability)
 
Accumulated
(Amortization)
Accretion
Above-market lease values and lease incentives(1)
 $26
 $(7) $26
 $(5) $216
 $(51) $126
 $(18)
Below-market lease values and deferred revenue(2)
 (823) 142
 (823) 125
Below-market lease values and other deferred revenue(2)
 (917) 240
 (917) 202
 $(797) $135
 $(797) $120
 $(701) $189
 $(791) $184
(1) 
Above-marketNet 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 rental income.Lease revenue on the accompanying Condensed Consolidated Statements of Operations.
(2) 
Below-marketNet 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 rental income.Lease revenue on the accompanying Condensed Consolidated Statements of Operations.
Total amortization related to above-market lease values and lease incentives was approximately $33,000 and $2,000 for each of the three months ended March 31, 2019 and 2018, and 2017.respectively. Total accretion related to below-market lease values and other deferred revenue was approximately $17,000$38,000 and $15,000$17,000 for the three months ended March 31, 20182019 and 2017,2018, respectively.
Acquisitions
Upon our adoption of ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business,” during the three months ended December 31,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 other than thoseor liabilities assumed. Upon our adoption of ASU 2016-02 on January 1, 2019, costs that directly related to either negotiating and originating new leases we execute upon acquisition, whichor reviewing assumed leases (generally, external legal costs) are expensed as incurred, whereas these costs were generally capitalized as part of leasing costs.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.
20182019 Acquisitions
During the three months ended March 31, 2018,2019, we acquired twoone new farms,farm, which areis summarized in the table below (dollars in thousands).
:
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)
 
New
Long-term
Debt
 
Taft Highway(3)
 Kern, CA 1/31/2018 161 1 Potatoes and Melons N/A N/A $2,945
 $33
 $
 $
(4) 
Cemetery Road Van Buren, MI 3/13/2018 176 1 Blueberries 9.6 years N/A 2,100
 39
 150
 1,260
 
      337 2       $5,045
 $72
 $150
 $1,260
 
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)
 New
Long-term
Debt
Somerset Road Lincoln, NE 1/22/2019 695 1 Popcorn and edible beans 4.9 years 1 (5 years) $2,400
 $31
 $126
 $1,440
      695 1       $2,400
 $31
 $126
 $1,440
(1) 
Unless noted otherwise, acquisitionsIncludes approximately $4,000 of aggregate external legal fees associated with negotiating and originating the lease associated with this acquisition, which costs were accounted for as asset acquisitions under ASC 360.expensed in the period incurred.
(2) 
Annualized straight-line rent is based on the minimum cash rental payments guaranteed under the lease, as required under GAAP.GAAP, and excludes contingent rental payments, such as participation rents.
During the three months ended March 31, 2019, we recognized operating revenues of approximately $24,000 and net income of approximately $2,000 related to the above acquisition.
2018 Acquisitions
During the three months ended March 31, 2018, we acquired two 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
 
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
      337 2       $5,045
 $71
 $150
 $2,733
(3)(1)
Annualized straight-line rent is based on the minimum cash rental payments guaranteed under the lease, 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.
(4)
Subsequent to March 31, 2018, we entered into a loan agreement with an existing lender collateralized by this farm (see Note 10, “Subsequent Events” for additional information on the loan).
During the three months ended March 31, 2018, in the aggregate, we recognized operating revenues of approximately $8,000 and a net loss of approximately $5,000 related to the above acquisitions.
2017 Acquisitions
During the three months ended March 31, 2017, we acquired one new farm, which is summarized in the table below (dollars in thousands).
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)
 Net
Long-term
Debt
Citrus Boulevard Martin, FL 1/12/2017 3,748 1 Organic Vegetables 7.0 years 3 (5 years) $54,000
 $80
(2) 
$2,926
 $32,400
(1)
Unless noted otherwise, acquisitions were accounted for as asset acquisitions under ASC 360.
(2)
Annualized straight-line rent is based on the minimum cash rental payments guaranteed under the lease, as required under GAAP.
During the three months ended March 31, 2017, in the aggregate, we recognized operating revenues of approximately $645,000 and earnings of approximately $380,000 related to the above acquisition.

Purchase Price Allocations
The allocation of the aggregate purchase price for the farms acquired during each of the three months ended March 31, 20182019 and 20172018 is as follows (dollars in thousands):
Acquisition Period 
Land and Land
Improvements
 Buildings 
Irrigation &
Drainage Systems
 Horticulture 
In-place
Leases
 
Leasing
Costs
 
Total
Purchase Price
 
Land and Land
Improvements
 Irrigation &
Drainage Systems
 Horticulture 
Farm-related
Facilities
 
In-place
Leases
 
Leasing
Costs
 
Total
Purchase
Price
2019 Acquisitions $2,090
 $310
 $
 $
 $
 $
 $2,400
2018 Acquisitions $3,256
 $123
 $582
 $961
 76
 $47
 $5,045
 3,256
 582
 961
 123
 76
 47
 5,045
2017 Acquisitions 52,375
 178
 1,447
 
 
 
 54,000
Acquired Intangibles and LiabilitiesSignificant Existing Real Estate Activity
Leasing Activity
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 acquiredsummarizes certain leasing activity that occurred on our existing properties during the three months ended March 31, 2018. There were no intangible assets acquired or liabilities assumed2019 (dollars in connection with new real estate acquiredthousands, except footnotes):
    
PRIOR LEASES(1)
 
NEW LEASES(2)
Farm
Locations
Number
of
Leases
Total
Farm
Acres
 
Total
Annualized
Straight-line
Rent(3)
# of Leases
with
Participation
Rents
Lease
Structures
(# of NNN
/ NN)(4)
 
Total
Annualized
Straight-line
Rent
(3)
Wtd. Avg.
Term
(Years)
# of Leases
with
Participation
Rents
Lease
Structures
(# of NNN
/ NN)
(4)
AZ, CA, FL,
MI, & NE
114,375 $2,143
18 / 4 $2,127
3.238 / 3
(1)
Includes a farm that was previously vacant.
(2)
In connection with certain of these leases, we committed to provide aggregate capital of up to $420,000 for certain improvements on these farms.
(3)
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.
(4)
“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 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview—Leases—General.”
See Note 10, “Subsequent Events—Leasing Activity” for additional leasing activity that occurred subsequent to March 31, 2019.
Project Completion
During the year ended December 31, 2018, we replaced 23 irrigation pivots on one of our properties in Colorado at a total cost of approximately $1.4 million. Pursuant to a lease amendment executed during the three months ended March 31, 2017.
Intangible Assets and Liabilities
Weighted-Average
Amortization Period (in Years)
In-place leases9.6
Leasing costs9.6
All intangible assets and liabilities9.6
Significant Existing Real Estate Activity
Lease Renewals
During the three months ended March 31, 2018, we terminated the leases on two of our farms in Cochise County, Arizona, early and entered into two new lease agreements with a new tenant. Each of the new leases is for a term of one year and provides for aggregate minimum rents of approximately $480,000, which represents a decrease of approximately $203,000 (approximately 29.7%) from that of the prior leases (before each of their terminations). However, each of the new leases also contains a variable rent component based on the total gross revenues earned by the tenants on the respective farms, whereas the prior leases were both fixed-rent leases. In addition, both of the new leases are pure, triple-net lease agreements, whereas one of the prior leases was a partial-net lease (with us responsible for the property taxes on the farm). In connection with one of the early lease terminations, on the termination date, the lease had a deferred rent liability balance of approximately $84,000. In accordance with ASC 360-10, we recognized this balance as additional rental income during the three months ended March 31, 2018 (on the lease termination date). In connection with the other early lease termination, a full allowance of the respective lease’s deferred rent asset balance (which was approximately $50,000) was recorded to bad debt expense during the three months ended December 31, 2017. No downtime was incurred as a result of the early terminations and re-leasing of these farms, nor were any leasing commissions or tenant improvements incurred2019, in connection with the new leases.
Project Completion
In connection with a lease amendment executed on one of our Florida properties in June 2017,this project, we committed to providingwill earn additional capital to expand and upgrade the existing cooler on the property. These improvements were completed during the three months ended March 31, 2018, at a total coststraight-line rental income of approximately $748,000. As a result of these improvements (and pursuant to$117,000 per year throughout the lease amendment), we expect to receive approximately $302,000 of additional rental income throughout theremaining term of the lease, which expires on June 30, 2022.February 28, 2021.
Property and Casualty LossFuture Minimum Lease Payments
In January 2018, a lightning strike damaged the power plant that supplies power to oneWe account for all of our Arizona properties, causing damageleasing arrangements in which we are the lessor as operating leases. The majority of our leases are subject to certain irrigation improvementsfixed 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 property. We estimatedleases contain participation rent components based on the carrying valuegross 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 rates and are therefore typically excluded from the determination of the improvements damaged byminimum lease term. Our leases do not generally include tenant termination options.
The following table summarizes the lightning strikefuture lease payments to be approximately $129,000. During the three months ended March 31, 2018, we wrote down the carrying values of the damaged improvements by approximately $129,000, and, in accordance with ASC 610-30, “Revenue Recognition—Other Income—Gains and Losses on Involuntary Conversions,” recorded a corresponding property and casualty loss on the accompanying Condensed Consolidated Statement of Operations.
Repairs were completed on the damaged irrigation improvements during the three months ended March 31, 2018. During the three months ended March 31, 2018, we incurred approximately $81,000 to repair the damaged improvements, of which

approximately $34,000 was capitalized as real estate additions and $47,000 was recorded as repairs and maintenance expense, which is included within Property operating expenses on the accompanying Condensed Consolidated Statements of Operations.
All of the improvements damaged on this property were insured, either by us or the tenant, at the time of the lightning strike, and we believe at least partial recovery of the damage-related costs incurred is probable. However, we are still in the process of assessing the amount expected to be recovered, as well as the collectability of such amounts; thus, no offset to the loss has been recordedreceived under non-cancelable leases as of March 31, 2018.2019, and December 31, 2018 (dollars in thousands):

  
Future Lease Payments(1)
Period March 31, 2019 December 31, 2018
2019 $20,546
 $30,290
2020 28,179
 26,917
2021 21,131
 20,980
2022 20,285
 19,775
2023 19,718
 19,413
Thereafter 62,793
 59,934
  $172,652
 $177,309
(1)
Excludes variable rent payments, such as potential rent increases that are based on CPI or future contingent rents based on a percentage of the gross revenues earned on the respective farms.
Portfolio Diversification and Concentrations
Diversification
The following table summarizes the geographic locations by state,(by state) of our farms owned and with leases with third-party tenants in place as of and for the three months ended March 31, 20182019 and 20172018 (dollars in thousands):
 As of and For the Three Months Ended March 31, 2018 As of and For the Three Months Ended March 31, 2017 As of and For the Three Months Ended March 31, 2019 As of and For the Three Months Ended March 31, 2018
State 
Number
of
Farms
 
Total
Acres
 
% of
Total
Acres
 
Rental
Revenue
 
% of Total
Rental
Revenue
 Number
of
Farms
 Total
Acres
 % of
Total
Acres
 Rental
Revenue
 % of Total
Rental
Revenue
 
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) 29 8,241 13.0% $3,028
 45.3% 22 6,713 12.4% $2,857
 49.7% 33 10,147 13.7% $3,734
 47.7% 29 8,241 13.0% $3,030
 45.3%
Florida 16 11,006 17.4% 1,754
 26.2% 16 9,315 17.1% 1,531
 26.6% 22 17,184 23.2% 2,339
 29.9% 16 11,006 17.4% 1,754
 26.2%
Colorado 10 31,450 49.6% 686
 10.3% 9 30,170 55.5% 673
 11.7% 10 31,448 42.6% 696
 8.9% 10 31,450 49.6% 686
 10.3%
Arizona 6 6,280 9.9% 528
 7.9% 2 3,000 5.5% 186
 3.2% 6 6,280 8.5% 539
 6.9% 6 6,280 9.9% 532
 7.9%
Texas 1 3,667 5.0% 131
 1.7%   —% 
 —%
Oregon 4 2,313 3.7% 307
 4.6% 4 2,313 4.3% 294
 5.1% 3 418 0.6% 128
 1.6% 4 2,313 3.7% 307
 4.6%
Washington 1 746 1.0% 122
 1.5% 1 746 1.2% 121
 1.8%
North Carolina 2 310 0.4% 60
 0.8% 2 310 0.5% 49
 0.7%
Nebraska 2 2,559 4.0% 145
 2.2% 2 2,559 4.7% 145
 2.6% 3 3,254 4.4% 60
 0.8% 2 2,559 4.0% 145
 2.2%
Washington 1 746 1.2% 121
 1.8%   —% 
 —%
Michigan 5 446 0.7% 70
 1.0% 4 270 0.5% 62
 1.1% 5 446 0.6% 21
 0.2% 5 446 0.7% 70
 1.0%
North Carolina 2 310 0.5% 49
 0.7%   —% 
 —%
TOTALS 75 63,351 100.0% $6,688
 100.0% 59 54,340 100.0% $5,748
 100.0% 86 73,900 100.0% $7,830
 100.0% 75 63,351 100.0% $6,694
 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 four of these growing regions.
Concentrations
Credit Risk
As of March 31, 2018,2019, our farms were leased to 5264 different, unrelated third-party tenants, (plus one related-party tenant), with certain tenants leasing more than one farm. One unrelated third-party tenant (“Tenant A”) leases five of our farms, and aggregate rentallease revenue attributable to Tenant A accounted for approximately $1.1 million, or 16.6%14.1%, of the rentaltotal lease revenue recorded during the three months ended March 31, 2018.2019. 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 rentallease revenue recorded during the three months ended March 31, 2018.2019.
Geographic Risk
As of March 31, 2018, 29 of the 75 farms we owned wereFarms located in California 16 farms were located inand Florida and 10 farms were located in Colorado. Further, our California, Florida, and Colorado farms accounted for approximately $3.0$3.7 million (45.3%(47.7%), $1.8 and $2.3 million (26.2%), and $0.7 million (10.3%(29.9%), respectively, of the rentaltotal lease revenue recorded during the three months ended March 31, 2018. Our 29 California farms are spread across four of the many different growing regions within the state.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 or Florida were materially impacted by the recent wildfires or hurricanes in those respective areas. No other single state accounted for more than 10.0% of theour total rentallease revenue recorded during the three months ended March 31, 2018.2019.

NOTE 4. BORROWINGS
Our borrowings as of March 31, 2018,2019, and December 31, 20172018, are summarized below (dollars in thousands):
  Carrying Value as of As of March 31, 2018
  March 31, 2018 December 31, 2017 
Stated Interest
Rates(1)
(Range; Wtd Avg)
 
Maturity Dates
(Range; Wtd Avg)
Mortgage notes and bonds payable:        
Fixed-rate mortgage notes payable $205,579
 $208,469
 3.16%–4.70%; 3.62% 6/1/2020–11/1/2041; May 2029
Fixed-rate bonds payable 85,551
 84,519
 2.38%–4.47%; 3.15% 7/30/2018–3/13/2028; August 2021
Total mortgage notes and bonds payable 291,130
 292,988
    
Debt issuance costs – mortgage notes and bonds payable (2,080) (1,986) N/A N/A
Mortgage notes and bonds payable, net $289,050
 $291,002
    
         
Variable-rate revolving lines of credit $3,900
 $10,000
 3.95% 4/5/2024
         
Total borrowings, net $292,950
 $301,002
    
 Carrying Value as of As of March 31, 2019
 March 31, 2019 December 31, 2018 
Stated Interest
Rates(1)
(Range; Wtd Avg)
 
Maturity Dates
(Range; Wtd Avg)
Notes and bonds payable:       
Fixed-rate notes payable$245,488
 $247,249
 3.16%–5.70%; 3.97% 6/1/2020–12/1/2043; January 2032
Fixed-rate bonds payable90,629
 90,877
 2.80%–4.57%; 3.55% 12/11/2019–9/13/2028; November 2022
Total notes and bonds payable336,117
 338,126
    
Debt issuance costs – notes and bonds payable(2,282) (2,338) N/A N/A
Notes and bonds payable, net$333,835
 $335,788
    
        
Variable-rate revolving lines of credit$100
 $100
 5.05% 4/5/2024
        
Total borrowings, net$333,935
 $335,888
    
 
(1) 
Where applicable, stated interest rates are before interest patronage (as described below).
As of March 31, 2019, the above borrowings were collateralized by 86 farms with an aggregate net book value of approximately $544.0 million. The weighted-average interest rate charged on the above borrowings excluding(excluding the impact of debt issuance costs and before any interest patronage, or refunded interest,interest) was 3.93% and 3.52% for the three months ended March 31, 2019, and 2018, as compared to 3.25% for the prior-year period.respectively. In addition, 20172018 interest patronage from our Farm Credit Notes Payable (as defined below), which we received prior to the filing of this Form 10-Q and recorded during the three months ended March 31, 2018,2019, resulted in a 18.0%21.2% reduction (approximately 7195 basis points) to the stated interest rates on such borrowings. We are unable to estimate the amount of interest patronage to be received, if any, related to interest accrued during 20182019 on our Farm Credit Notes Payable.
As of March 31, 2019, we were in compliance with all covenants applicable to the above borrowings.
MetLife Borrowings
MetLife Facility
On May 9, 2014, we closed on a credit facility (the “MetLife Facility”) with Metropolitan Life Insurance Company (“MetLife”). As a result of subsequent amendments, the MetLife Facility currently consists of an aggregate of $200.0 million of term notes (the “MetLife Term Notes”) and $75.0 million of revolving equity lines of credit (the “MetLife Lines of Credit”). The following table summarizes the pertinent terms of the MetLife Facility as of March 31, 20182019 (dollars in thousands, except for footnotes):
Issuance 
Aggregate
Commitment
 
Maturity
Dates
 
Principal
Outstanding
 Interest Rate Terms 
Undrawn
Commitment
  
Aggregate
Commitment
 
Maturity
Dates
 
Principal
Outstanding
 Interest Rate Terms 
Undrawn
Commitment
 
MetLife Term Notes $200,000
(1) 
1/5/2029 $128,914
 3.30%, fixed through 1/4/2027
(2) 
$63,530
(3)(4) 
 $200,000
(1) 
1/5/2029 $124,283
 3.30%, fixed through 1/4/2027
(2) 
$64,374
(3) 
MetLife Lines of Credit 75,000
 4/5/2024 3,900
 3-month LIBOR + 2.25%
(5) 
71,100
(3) 
 75,000
 4/5/2024 100
 3-month LIBOR + 2.25%
(4) 
74,900
(3) 
Total principal outstandingTotal principal outstanding $132,814
    Total principal outstanding $124,383
    
 
(1) 
If the aggregate commitment under the MetLife Facilitythis facility is not fully utilized by December 31, 2019, MetLife has the option to be relieved of its obligation to disburse the additional funds under the MetLife Term Notes.
(2) 
Represents the blended interest rate as of March 31, 2018.2019. Interest rates for subsequent disbursements will be based on then-prevailing market rates. The interest rate on all then-outstanding disbursements will be subject to adjustment on January 5, 2027. Through December 31, 2019, the MetLife Term Notes are also subject to an unused fee ranging from 0.10% to 0.20% on undrawn amounts (based on the balance drawn under the MetLife Term Notes).
(3) 
Based on the properties that were pledged as collateral under the MetLife Facility, as of March 31, 2018,2019, the maximum additional amount we could draw under the facility was approximately $16.5$20.4 million.
(4)
Net of amortizing principal payments of approximately $7.6 million.
(5) 
The interest rate on the MetLife Lines of Credit is subject to a minimum annualized rate of 2.50%, plus an unused fee ranging from 0.10% to 0.20% on undrawn amounts (based on the balance drawn under each line of credit). The interest rate spread will be subject to adjustment on October 5, 2019. As of March 31, 2018,2019, the interest rate on the MetLife Lines of Credit was 3.95%5.05%.
Individual MetLife Notes
The following table summarizes, in the aggregate, the terms of two additional loan agreements entered into with MetLife (collectively, the “Individual MetLife Notes”) as of March 31, 2018 (dollars in thousands):

Date of Issuance Principal Outstanding Maturity Date Principal Amortization Interest Rate Terms
5/31/2017 $15,032
 2/14/2022 & 2/14/2025 28.6 years 3.55% & 3.85%, fixed throughout their respective terms
As of March 31, 2018, we were in compliance with all covenants applicable to the MetLife Borrowings.
Farm Credit Notes Payable
From time to time since September 2014, we, through certain subsidiaries of our Operating Partnership, have entered into various loan agreements with certain Farm Credit associations, including Farm Credit of Central Florida, FLCA (“Farm Credit CFL”), Farm Credit West, FLCA (“Farm Credit West”), Cape Fear Farm Credit, ACA (“CF Farm Credit”), Farm Credit of Florida, ACA (“Farm Credit FL”), and Northwest Farm Credit Services, FLCA (“NW Farm Credit,” and, collectively, with the other Farm Credit associations, “Farm Credit”). The following table summarizes, in the aggregate, the pertinent terms of the loans outstanding from Farm Credit (collectively, the “Farm Credit Notes Payable”) as ofwith eight different Farm Credit associations

(collectively, “Farm Credit”). During the three months ended March 31, 20182019, we entered into the following loan agreement with Farm Credit (dollars in thousands, except for footnotes)thousands):
Issuer 
# of Loans
Outstanding
 Dates of Issuance Maturity Dates 
Principal
Outstanding
 
Stated Interest
Rate(1)
 
Farm Credit CFL 7 9/19/2014 – 7/13/2017 6/1/2020 – 10/1/2040 $24,496
 4.29%
(2) 
Farm Credit West 4 4/4/2016 – 12/20/2017 5/1/2037 – 11/1/2041 24,222
 4.02%
(3) 
CF Farm Credit 1 6/14/2017 7/1/2022 1,301
 4.41%
(4) 
Farm Credit FL 1 8/9/2017 3/1/2037 5,727
 4.70%
(5) 
NW Farm Credit 1 9/8/2017 9/1/2024 5,368
 4.41%
(6) 
Total 14     $61,114
   
Issuer 
Date of
Issuance
 Amount 
Maturity
Date
 
Principal
Amortization
 
Interest Rate Terms(1)
Premier Farm Credit, FLCA 2/7/2019 $1,440
 11/1/2043 25.0 years 5.45%, fixed through October 31, 2023 (variable thereafter)
 
(1) 
Represents the weighted-average, blendedStated rate (beforeis before interest patronage, as discussed below) on the respective borrowings as of March 31, 2018.
(2)
In April 2018, we received interest patronage of approximately $142,000 related to interest accrued on loans from Farm Credit CFL during the year ended December 31, 2017, which resulted in a 15.1% reduction (approximately 58 basis points) to the stated interest rates on such borrowings. In April 2017, we received interest patronage related to loans from Farm Credit CFL of approximately $124,000.
(3)
In February 2018, we received interest patronage of approximately $126,000 related to interest accrued on loans from Farm Credit West during the year ended December 31, 2017, which resulted in a 19.7% reduction (approximately 75 basis points) to the stated interest rates on such borrowings. In February 2017, we received interest patronage related to loans from Farm Credit West of approximately $59,000.
(4)
In April 2018, we received interest patronage of approximately $11,000 related to interest accrued on loans from CF Farm Credit during the year ended December 31, 2017, which resulted in a 36.6% reduction (approximately 161 basis points) to the stated interest rates on such borrowings. We did not receive any interest patronage related to loans from CF Farm Credit prior to 2018.
(5)
In April 2018, we received interest patronage of approximately $27,000 related to interest accrued on loans from Farm Credit FL during the year ended December 31, 2017, which resulted in a 24.6% reduction (approximately 115 basis points) to the stated interest rates on such borrowings. We did not receive any interest patronage related to loans from Farm Credit FL prior to 2018.
(6)
In February 2018, we received interest patronage of approximately $17,000 related to interest accrued on loans from NW Farm Credit during the year ended December 31, 2017, which resulted in a 22.7% reduction (approximately 100 basis points) to the stated interest rates on such borrowings. We did not receive any patronage related to loans from NW Farm Credit prior to 2018.described below.
Interest patronage, or refunded interest, on our borrowings from the various Farm Credit associations is generally recorded upon receipt and is included inwithin Other income on our Condensed Consolidated Statements of Operations. Receipt of interest patronage typically occurs in the first half of the calendar year following the calendar year in which the respective interest payments are made.
As of March 31, 2018, we were in compliance with all covenants applicable to the Farm Credit Notes Payable.
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. As amended, the Bond Purchase Agreement provides for bond issuances up to an aggregate principal amount of $125.0 million (the “Farmer Mac Facility”) through December 11, 2018.
During the three months ended March 31, 2018,2019, we issued one bond for gross proceedsrecorded interest patronage of approximately $1.3 million,$700,000 related to interest accrued on loans from Farm Credit during the terms of which are summarized in the table below (dollars in thousands):
Date of Issuance 
Gross
Proceeds(1)
 Maturity Dates Principal Amortization Interest Rate Terms
3/13/2018 $1,260
(1) 
3/13/2028 None 4.47%, fixed throughout its respective term
(1)
Proceeds from these bonds were used for the acquisitions of a new farm.

The following table summarizes, in the aggregate, the terms of the 15 bonds outstanding under the Farmer Mac Facility as of Marchyear ended December 31, 2018, (dollarswhich resulted in thousands):
Dates of Issuance Initial Commitment Maturity Dates Principal Outstanding 
Stated
Interest
Rate(1)
 Undrawn Commitment 
12/11/2014–3/13/2018 $125,000
(2) 
7/30/2018–3/13/2028 $85,551
 3.15% $37,858
(3) 
(1)
Represents the weighted-average interest rate as of March 31, 2018.
(2)
If the balance of the Farmer Mac Facility is not fully utilized by December 11, 2018, Farmer Mac has the optiona 21.2% reduction (approximately 95 basis points) to be relieved of its obligations to purchase additional bonds under the facility.
(3)
As of March 31, 2018, there was no additional availability to draw under the Farmer Mac Facility, as no additional properties had been pledged as collateral.
As of March 31, 2018, we were in compliance with all covenants under the Farmer Mac Facility.
Rabo Note Payable
On October 13, 2017, in connection with the acquisition of a farm, we closedstated interest rates on a term loan from Rabo AgriFinance, LLC (“Rabo”). The following table summarizes the terms of our loan agreement with Rabo (the “Rabo Note Payable”) as of March 31, 2018 (dollars in thousands):
Date of Issuance Maturity Date Principal Outstanding Principal Amortization Stated Interest Rate
10/13/2017 10/1/2022 $518
 25.0 years 4.59%
As of March 31, 2018, we were in compliance with all covenants under the Rabo Note Payable.such borrowings.
Debt Service – Aggregate Maturities
Scheduled principal payments of our aggregate mortgage notes and bonds payable as of March 31, 2018,2019, for the succeeding years are as follows (dollars in thousands):
PeriodPeriod 
Scheduled
Principal Payments
Period 
Scheduled
Principal Payments
For the remaining nine months ending December 31:2018 $20,315
2019 $8,953
For the fiscal years ending December 31:2019 11,066
2020 28,181
2020 26,495
2021 16,205
2021 7,259
2022 38,645
2022 36,541
2023 32,420
2023 41,322
2024 23,508
Thereafter 148,132
Thereafter 188,205
 $291,130
 $336,117
Fair Value
ASC 820 provides a definition of fair value that focuses on the exchange (exit) price of an asset or liability in the principal, or most advantageous, market and prioritizes the use of market-based inputs to the valuation. ASC 820-10, “Fair Value Measurements and Disclosures,” establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:
Level 1 — inputs that are based upon quoted prices (unadjusted) for identical assets or liabilities in active markets;
Level 2 — inputs are based upon quoted prices for similar assets or liabilities in active or inactive markets or model-based valuation techniques, for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
Level 3 — inputs are generally unobservable and significant to the fair value measurement. These unobservable inputs are generally supported by little or no market activity and are based upon management’s estimates of assumptions that market participants would use in pricing the asset or liability.
As of March 31, 2018,2019, the aggregate fair value of our long-term, fixed-rate mortgage notes and bonds payable was approximately $278.8$332.1 million, as compared to an aggregate carrying value (excluding unamortized related debt issuance costs)

of approximately $291.1$336.1 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 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. Further, due to the revolving nature of the MetLife Lines of Credit and the lack of changes in market credit spreads, their aggregate fair value as of March 31, 2018,2019, is deemed to approximate their aggregate carrying value of $3.9 million.$100,000. 
NOTE 5. MANDATORILY-REDEEMABLESERIES A TERM PREFERRED STOCK
In August 2016, we completed a public offering of 6.375% Series A Cumulative Term Preferred Stock, par value $0.001 per share (the “Series A Term Preferred Stock”), at a public offering price of $25.00 per share. As a result of this offering (including

(including the underwriters’ exercise of their option to purchase additional shares to cover over-allotments), we issued a total of 1,150,000 shares of the Series A Term Preferred Stock for gross proceeds of approximately $28.8 million and net proceeds, after deducting underwriting discounts and offering expenses borne by us, of approximately $27.6 million. The Series A Term Preferred Stock is traded under the ticker symbol “LANDP,”“LANDP” on the Nasdaq Global Market.Nasdaq.
Generally, we maywere not permitted to redeem shares of the Series A Term Preferred Stock prior to September 30, 2018, except in limited circumstances to preserve our qualification as a REIT. On or afterBeginning on September 30, 2018, we maywere permitted to redeem the shares at a redemption price of $25.00 per share, plus any accumulated and unpaid dividends up to, but excluding, the date of redemption. The shares of the Series A Term Preferred Stock have a mandatory redemption date of September 30, 2021, and are not convertible into our common stock or any other securities. As of March 31, 2019, no shares of Series A Term Preferred Stock have been redeemed.
We incurred approximately $1.2 million in total offering costs related to this issuance, which have been recorded net of the Series A Term Preferred Stock as presented on the accompanying Condensed Consolidated Balance Sheet,Sheets and we will amortize these costsare being amortized over the mandatory redemption period.
period as a component of interest expense on the accompanying Condensed Consolidated Statements of Operations. The Series A Term Preferred Stock is recorded as a liability on our accompanying Condensed Consolidated Balance Sheets in accordance with ASC 480, “Distinguishing Liabilities from Equity,” which states that mandatorily-redeemable financial instruments should be classified as liabilities. In addition, the related dividend payments are treated similarsimilarly to interest expense inon the accompanying Condensed Consolidated Statements of Operations.
As of March 31, 2018,2019, the fair value of our Series A Term Preferred Stock was approximately $29.6 million, as compared to the carrying value exclusive(exclusive of unamortized offering costs,costs) of approximately $28.8 million. The fair value of our Series A Term Preferred Stock is valued using Level 1 inputs under the hierarchy established by ASC 820-10, “Fair Value Measurements and Disclosures,” and is calculated based on the closing per-share price as of March 31, 2018,2019, of $25.74.$25.73.
TheFor information on the dividends to preferred stockholders declared by our Board of Directors and paid by us on the Series A Term Preferred Stock during the three months ended March 31, 2019 and 2018, and 2017 are reflected in the table below.
Fiscal Year Declaration Date Record Date Payment Date Dividend per
Preferred Share
 
2018 January 9, 2018 January 22, 2018 January 31, 2018 $0.1328125
 
  January 9, 2018 February 16, 2018 February 28, 2018 0.1328125
 
  January 9, 2018 March 20, 2018 March 30, 2018 0.1328125
 
  Three Months Ended March 31, 2018 $0.3984375
 
          
2017 January 10, 2017 January 20, 2017 January 31, 2017 $0.1328125
 
  January 10, 2017 February 16, 2017 February 28, 2017 0.1328125
 
  January 10, 2017 March 22, 2017 March 31, 2017 0.1328125
 
          
  Three Months Ended March 31, 2017 $0.3984375
 
see Note 8, “
Equity—Distributions.”
NOTE 6. RELATED-PARTY TRANSACTIONS
Our Adviser and Administrator
We are externally managed pursuant to contractual arrangements with our Adviser and our Administrator, which collectively employ all of our personnel and pay their salaries, benefits, and general expenses directly. Both our Adviser and Administrator are affiliates of ours, as their parent company is owned and controlled by David Gladstone, our chairman, chief executive officer, and president. In addition, two of our executive officers, Mr. Gladstone and Terry Brubaker (our vice chairman and

chief operating officer), serve as directors and executive officers of each of our Adviser and Administrator, and Michael LiCalsi, our general counsel and secretary, serves as our Administrator’s president, general counsel, and secretary.
The We have entered into an investment advisory agreement with our Adviser, as amended from time to time (the “Advisory Agreement”), and thean administration agreement with our Administrator (the “Administration Agreement”) each became effective February 1, 2013. On April 11, 2017, we entered into a Second Amended and Restated Investment Advisory Agreement (the “Amended Advisory Agreement”) with our Adviser that became effective beginning with the three months ended June 30, 2017. Our entrance into the Amended Advisory Agreement was approved unanimously by our board of directors, including, specifically, our independent directors.
. A summary of the compensation terms for each of the investment advisory agreement with our Adviser that was in effect through March 31, 2017 (the “Prior Advisory Agreement”), the Amended Advisory Agreement and the Administration Agreement is below.
Prior Advisory Agreement
Pursuant to the Prior Advisory Agreement, that was in effect through March 31, 2017, our Adviser was compensated in the form of a base management fee and, as applicable, an incentive fee. Each of these fees is described below.
Base Management Fee
We paid an annual base management fee equal to 2.0% of our adjusted stockholders’ equity, which was defined as our total stockholders’ equity at the end of each quarter less the recorded value of any preferred stock we may have issued.
Incentive Fee
We also paid an additional quarterly incentive fee based on funds from operations (as defined in the Prior Advisory Agreement). For purposes of calculating the incentive fee, our funds from operations, before giving effect to any incentive fee (our “Pre-Incentive Fee FFO”), included any realized capital gains or losses, less any distributions paid on our preferred stock, but did not include any unrealized capital gains or losses. The incentive fee rewarded our Adviser if our Pre-Incentive Fee FFO for a particular calendar quarter exceeded a hurdle rate of 1.75% (7.0% annualized) of our total stockholders’ equity (as shown on the balance sheet) at the end of the quarter. Our Adviser received 100% of the amount of the Pre-Incentive Fee FFO for the quarter that exceeded the hurdle rate but was less than 2.1875% of our total stockholders’ equity at the end of the quarter (8.75% annualized) and 20% of the amount of our Pre-Incentive Fee FFO that exceeded 2.1875% for the quarter.
Amended Advisory Agreement
Pursuant to the Amended Advisory Agreement, effective beginning with the three months ended June 30, 2017, our Adviser has been compensated in the form of a base management fee and, each as applicable, an incentive fee, a capital gains fee, and a termination fee. Each of these fees is described below.
Base Management Fee
A base management fee is paid quarterly and will beis calculated as 2.0% per annum (0.50% per quarter) of the prior calendar quarter’s total adjusted equity, which is defined as total equity plus total mezzanine equity, if any each(each as reported on our balance sheet,sheet), adjusted to exclude unrealized gains and losses and certain other one-time events and non-cash items (“Total Adjusted Equity”). During the three months ended March 31, 2019, our Adviser granted us a non-contractual, unconditional, and irrevocable waiver of approximately $568,700, which was applied as a credit against the base management fee for the three months ended March 31, 2019.
Incentive Fee
An incentive fee is calculated and payable quarterly in arrears if the Pre-Incentive Fee FFO for a particular quarter exceeds a hurdle rate of 1.75% (7.0% annualized) of the prior calendar quarter’s Total Adjusted Equity. For purposes of this calculation, Pre-Incentive Fee FFO is defined in the Amended Advisory Agreement as FFO (also as defined in the Amended Advisory Agreement) accrued by the Company during the current calendar quarter (prior to any incentive fee calculation for the current calendar quarter), less any dividends paid on preferred stock securities that are not treated as a liability for GAAP purposes. Our Adviser will receive:

(i) no Incentive Feeincentive fee in any calendar quarter in which the Pre-Incentive Fee FFO does not exceed the hurdle rate; (ii) 100% of the Pre-Incentive Fee FFO with respect to that portion of such Pre-Incentive Fee FFO, if any, that exceeds the hurdle rate but is less than 2.1875% in any calendar quarter (8.75% annualized); and (iii) 20% of the amount of the Pre-Incentive Fee FFO, if any, that exceeds 2.1875% in any calendar quarter (8.75% annualized).
Capital Gains Fee
A capital gains-based incentive fee will be calculated and payable in arrears at the end of each fiscal year (or upon termination of the Amended Advisory Agreement). The capital gains fee shall equal: (i) 15% of the cumulative aggregate realized capital gains minus the cumulative aggregate realized capital losses, minus (ii) any aggregate capital gains fees paid in prior periods. For purposes of this calculation, realized capital gains and losses will be calculated as (x) the sales price of the property, minus (y) any costs to sell the property and the then-current gross value of the property (which includes the property’s original

acquisition price plus any subsequent, non-reimbursed capital improvements). At the end of each fiscal year, if this figure is negative, no capital gains fee shall be paid. To date, no capital gains fee has been earned by our Advisor.
Termination Fee
In the event of our termination of the Amended Advisory Agreement for any reason, (with 120 days’ prior written notice and the vote of at least two-thirds of our independent directors), a termination fee would be payable to the Adviser equal to three times the sum of the average annual base management fee and incentive fee earned by the Adviser during the 24-month period prior to such termination.
Administration Agreement
Pursuant to the Administration Agreement, we pay for our allocable portion of the Administrator’s expenses incurred while performing services to us, including, but not limited to, rent and the salaries and benefits expenses of our Administrator’s employees, including our chief financial officer, treasurer, chief compliance officer, general counsel and secretary (who also serves as our Administrator’s president, general counsel, and secretary), and their respective staffs. As approved by our Board of Directors, our allocable portion of the Administrator’s expenses is generally derived by multiplying our Administrator’s total expenses by the approximate percentage of time the Administrator’s employees perform services for us in relation to their time spent performing services for all companies serviced by our Administrator under similar contractual agreements.
TRS Lease Assumption
On October 17, 2017, Land Advisers entered into an Assignment and Assumption of Agricultural Lease (the “Assigned TRS Lease”) with the then-existing leasepreviously-existing tenant on onea 169-acre farm located in Ventura County, California. The Assigned TRS Lease, as amended, expired on July 13, 2018. In addition, in connection with the initial operations on the farm, on October 17, 2017, Land Advisers issued a $1.7 million unsecured promissory note to the Company that matured in July 31, 2018, and bore interest at a rate equal to the prime rate plus a spread of our farms5.0% per annum. All inter-company amounts related to the Assigned TRS Lease and the promissory note were eliminated in consolidation, and, as a result, no rental or interest income from Land Advisers was assignedrecorded by us on the Consolidated Statement of Operations during the three months ended March 31, 2018. Effective August 1, 2018, this farm was leased to a new, unrelated third-party tenant to Land Advisers. under a 10-year lease.
TRS Fee Arrangements
In connection with this transaction, on October 23, 2017,the assumption of the Assigned TRS Lease, in exchange for services provided by our Adviser to Land Advisers, our Adviser and Land Advisers entered into an Expense Sharing Agreement (the “TRS Expense Sharing Agreement”). In addition, during the three months ended December 31, 2017, to account for the time our Administrator’s staff spends on activities related to Land Advisers, we adopted a policy wherein a portion of the fee paid by the Company to our Administrator pursuant to the Administration Agreement would be allocated to Land Advisers (the “TRS Administration Fee Allocation, and together withAllocation”). No such fees were incurred during the TRS Expense Sharing Agreement, the “TRS Fee Arrangements”).
TRS Fee Arrangementsthree months ended March 31, 2019.
TRS Expense Sharing Agreement
Pursuant to the TRS Expense Sharing Agreement, our Adviser iswas responsible for maintaining the day-to-day operations on the farm leased to Land Advisers.Advisers from October 17, 2017, through July 31, 2018. In exchange for such services, Land Advisers compensatescompensated our Adviser through reimbursement of certain expenses incurred by our Adviser, including Land Advisers’ pro-rata share of our Adviser’s payroll and related benefits (based on the percentage of each employee’s time devoted to matters related to Land Advisers in relation to the time such employees devoted to all affiliated funds, collectively, advised by our Adviser) and general overhead expenses (based on the total general overhead expenses incurred by our Adviser multiplied by the ratio of hours worked by our Adviser’s employees on matters related to Land Advisers to the total hours worked by our Adviser’s employees).
Through March 31, 2018,Costs incurred by our Adviser, had incurred approximately $146,000 of costs related to services provided to Land Advisers (approximately $75,000 of which were incurred during the three months ended March 31, 2018). Such costs, while payable by Land Advisers, arewere initially accumulated and deferred (included within Crop inventory on the accompanying Condensed Consolidated Balance Sheets) and then allocated to costcosts of sales as the related crops arewere harvested and sold. During the three months ended March 31, 2018, approximately $66,000

$66,000 of the total accumulated costs incurred by our Adviser was allocated to the costcosts of crops sold and is included within Management FeeBase management fee on the accompanying Condensed Consolidated Statement of Operations for the three months ended March 31, 2018. As of March 31, 2018, the amount of accumulated costs incurred by our Adviser that remain unallocated and deferred within crop inventory was approximately $80,000.
TRS Administration Fee Allocation
Under to the TRS Administration Fee Allocation, a portion of the fee owed by us to our Administrator under the Administration Agreement iswas allocated to Land Advisers based on the percentage of each employee’s time devoted to matters related to Land Advisers in relation to the total time such employees devoted to the Company.
During the three months ended March 31, 2018, approximately $12,000 of the administration fee that would have otherwise been owedpaid by us to our Administrator was allocated to Land AdvisersAdvisers. This administration fee is payable by Land Advisers andallocation is included within Administration Feefee on the accompanying Condensed Consolidated Statement of Operations for the three months ended March 31, 2018.
Gladstone Securities
On April 11, 2017, we entered into an agreement with Gladstone Securities LLC, (“Gladstone Securities”), effective beginning with the three months ended June 30, 2017, for it to act as our non-exclusive agent to assist us with arranging financing for our properties (the “Financing Arrangement Agreement”). Gladstone Securities is a privately-held broker-dealer and a member of

the Financial Industry Regulatory Authority and the Securities Investor Protection Corporation. Gladstone Securities is an affiliate of ours, as its parent company is owned and controlled by Mr. Gladstone, who also serves on the board of managers of Gladstone Securities.
Financing Arrangement Agreement
We pay Gladstone Securities a financing fee in connection with the services it provides to us for securing financing on our properties. Depending on the size of the financing obtained, the maximum amount of the financing fee, which will beis payable upon closing of the respective financing, will rangeranges from 0.5% to 1.0% of the amount of financing obtained. The amount of the financing fee may be reduced or eliminated as determined by us and Gladstone Securities after taking into consideration various factors, including, but not limited to, the involvement of any unrelated third-party brokers and general market conditions. During the three months ended March 31, 2019, we paid total financing fees to Gladstone Securities of approximately $2,000. No financing fees were paid to Gladstone Securities during the three months ended March 31, 2018. Through March 31, 2018,2019, the total amount of financing fees paid to Gladstone Securities represented approximately 0.12% of the total financings secured since the Financing Arrangement Agreement has been in place.
Dealer-Manager Agreement
On January 10, 2018, we entered into a dealer-manager agreement, which was amended and restated on May 31, 2018 (the “Dealer-Manager Agreement”), with Gladstone Securities, whereby Gladstone Securities will serveserves as our exclusive dealer-manager in connection with the Primary Offeringprimary offering of our Series B Preferred Stock (each as defined in Note 7, “Equity,” under “Series8, “Equity—Series B Preferred Stock”). UnderPursuant to the Dealer-Manager Agreement, Gladstone Securities will provideprovides certain sales, promotional, and marketing services to us in connection with the offering of the Series B Preferred Stock, and we generally will pay the Gladstone SecuritiesSecurities: (i) selling commissions of up to 7.0% of the gross proceeds from sales of Series B Preferred Stock in the Primary Offering (the “Selling Commissions”), and (ii) a dealer-manager fee of 3.0% of the gross proceeds from sales of Series B Preferred Stock in the Primary Offering (the “Dealer-Manager Fee”).  No Selling Commissions or Dealer-Manager Fee shall be paid with respect to shares of the Series B Preferred Stock sold pursuant to the DRIP (as defined in Note 7, “Equity,” under “Series B Preferred Stock”). Gladstone Securities may, in its sole discretion, remit all or a portion of the Selling Commissions and may also reallow all or a portion of the Dealer-Manager FeeFees to participating broker-dealers and wholesalers in support of the Primary Offering.offering. The terms of the Dealer-Manager Agreement were approved by our board of directors, including all of its independent directors. There have been noDuring the three months ended March 31, 2019, we paid total selling commissions orand dealer-manager fees paid to Gladstone Securities in connection with sales of the Series B Preferred Stock of approximately $1.7 million (of which approximately $1.6 million were then remitted by Gladstone Securities to date.unrelated third-parties involved in the offering, including participating broker-dealers and wholesalers). Such fees are netted against the gross proceeds received from sales of the Series B Preferred Stock and are included within Additional paid-in capital on the accompanying Condensed Consolidated Balance Sheets. No selling commissions or dealer-manager fees were paid to Gladstone Securities during the three months ended March 31, 2018. Through March 31, 2019, approximately 93.9% of the total selling commissions and dealer-manager fees paid to Gladstone Securities have been remitted to unrelated third-parties involved in the offering.

Related-Party Fees
The following table summarizes related-party fees paid or accrued for and reflected in our accompanying Condensed Consolidated Statements of Operationscondensed consolidated financial statements (dollars in thousands):
 For the Three Months Ended March 31,
 2018 2017
Management fee(1)(2)
$656
(3) 
$394
Incentive fee(1)(2)

 350
Total fees to our Adviser$656
 $744
Administration fee(1)(2)
$274
(4) 
$227
 For the Three Months Ended March 31, 
 2019 2018 
Base management fee(1)(2)
$905
 $656
(3) 
Credits from non-contractual, unconditional, and irrevocable waiver granted by Adviser’s board of directors(2)
(569) 
 
Total fees to our Adviser, net$336
 $656
 
     
Administration fee(1)(2)
$306
 $274
(4) 
     
Selling Commissions and Dealer-Manager Fees(1)(5)
$1,654
 $
 
Financing fees(1)(6)
2
 
 
Total fees to Gladstone Securities$1,656
 $
 
(1) 
Pursuant to the agreements with our Adviser and Administratorthe respective related-party entities, as discussed above.
(2) 
Reflected as a line item on our accompanying Condensed Consolidated Statements of Operations.
(3) 
Includes the allocation of approximately $66,000 of the total accumulated costs incurred by our Adviser as a result of the crops harvested and sold on the farm operated by Land Advisers during the three months ended March 31, 2018, as further described above under “TRS Expense Sharing Agreement.” Excludes an additional $80,000 of accumulated costs incurred by our Adviser pursuant to the TRS Expense Sharing Agreement that continues to be deferred and included within Crop inventory on the accompanying Condensed Consolidated Balance Sheet.
(4) 
Includes the portion of administration fee that was allocated to Land Advisers (approximately $12,000), as further described above under “TRS Administration Fee Allocation.”
(5)
Included within Additional paid-in capital on the accompanying Condensed Consolidated Balance Sheets. Gladstone Securities remitted approximately $1.6 million of these fees to unrelated third-parties involved in the offering (including participating broker-dealers and wholesalers) during the three months ended March 31, 2019.
(6)
Included within Notes and bonds payable, net on the Condensed Consolidated Balance Sheets and amortized into Interest expense on the Condensed Consolidated Statements of Operations. Financing fees paid to Gladstone Securities during the three months ended March 31, 2019 represented approximately 0.15% of the total financings secured during the period.
Related-Party Fees Due
Amounts due to related parties on our accompanying Condensed Consolidated Balance Sheets as of March 31, 2018,2019, and December 31, 2017,2018, were as follows (dollars in thousands):

  March 31, 2018  December 31, 2017
Management fee due to Adviser $665
(1) 
 $666
Other due to Adviser(2)
 11
  16
Total due to Adviser 676
  682
Administration fee due to Administrator 274
(3) 
 258
Total due to Administrator 274
  258
Total due to related parties(4)
 $950
  $940
 March 31, 2019 December 31, 2018 
Due from Gladstone Securities(1)
$
 $20
 
     
Base management fee905
 736
 
Capital gains fee(2)

 (150) 
Credits to fees(3)
(569) (44) 
Other(4)
(4) 63
 
Total due to Adviser332
 605
 
Administration fee306
 340
(5) 
Total due to Administrator306
 340
 
Selling Commissions and Dealer-Manager Fees58
 

 
Other(1)
(20) 

 
Due to Gladstone Securities38
 
 
Total due to related parties(6)
$676
 $945
 
(1) 
Includes approximately $75,000 owed by Land Advisers to our Advisor, pursuantOther amounts due from Gladstone Securities represent costs for certain sales, promotional, or marketing services related to the TRS Expense Sharing Agreement, as discussed above.offering of the Series B Preferred Stock paid for by us on behalf of Gladstone Securities. At March 31, 2019, such amounts are netted against other amounts owed to Gladstone Securities and included within Due to related parties, net; at December 31, 2018, such amounts are included within Other assets, net on our accompanying Condensed Consolidated Balance Sheets.
(2) 
Other fees dueThe credit to or from related parties primarily relate to miscellaneous general and administrative expenses paid by our Adviser or Administrator on our behalf or by us on our Adviser’s or Administrator’s behalf.the capital gains fee as of December 31, 2018, was a result of capital losses recorded in connection with dispositions of certain real estate assets during year ended December 31, 2018, which resulted in a reduction of the capital gains fee accrued for earlier in fiscal year 2018.
(3) 
The credits received from our Adviser during the three months ended March 31, 2019, and December 31, 2018, were granted as non-contractual, unconditional, and irrevocable waivers to be applied as credits against the base management fee.
(4)
Other amounts due to or from our Adviser primarily relate to miscellaneous general and administrative expenses either paid by our Adviser on our behalf or by us on our Adviser’s behalf. The balance owed to our Adviser as of December 31, 2018, includes premium payments for certain insurance policies made by our Adviser on our behalf.
(5)
Includes approximately $12,000$9,000 owed by Land Advisers to our Administrator as of December 31, 2018, in accordance with the TRS Administration Fee Allocation, as discussed above.
(4)(6) 
Reflected as a line item on our accompanying Condensed Consolidated Balance Sheets.
NOTE 7. EQUITY
Amendment to Articles of Incorporation
On January 10, 2018, we filed with the Maryland Department of Assessments and Taxation Articles Supplementary to reclassify and designate 6,500,000 shares of our authorized and unissued shares of capital stock as shares of Series B Preferred Stock (as defined below). The reclassification decreased the number of shares classified as common stock from 98,000,000 shares immediately prior to the reclassification to 91,500,000 shares immediately after the reclassification.
Stockholders’ Equity
As of March 31, 2018, there were 6,500,000 shares of Series B Preferred Stock (as defined below), par value $0.001 per share, authorized, with zero shares issued and outstanding and 91,500,000 shares of common stock, par value $0.001 per share, authorized, with 15,216,199 shares issued and outstanding. As of December 31, 2017, there were 98,000,000 shares of common stock, par value $0.001 per share, authorized, with 13,791,574 shares issued and outstanding.
Non-Controlling Interests in Operating Partnership
We consolidate our Operating Partnership, which is a majority-owned partnership.  As of March 31, 2018, and December 31, 2017, we owned approximately 94.0% and 93.2%, respectively, of the outstanding OP Units.
On or after 12 months after becoming a holder of OP Units, each limited partner, other than the Company, has the right, subject to the terms and conditions set forth in the partnership agreement of the Operating Partnership, to require the Operating Partnership to redeem all or a portion of such units in exchange for cash or, at the Company’s option, shares of our common stock on a one-for-one basis.  The cash redemption per OP Unit would be based on the market price of our common stock at the time of redemption.  A limited partner will not be entitled to exercise redemption rights if the delivery of common stock to the redeeming limited partner would breach restrictions on the ownership of common stock imposed under our charter and other limitations thereof.
On January 16, 2018, 37,500 OP Units were tendered for redemption, and on January 17, 2018, we issued 7,700 shares of common stock in exchange for 7,700 OP Units, and we satisfied the redemption of the remaining 29,800 OP Units with a cash payment of approximately $400,000 (approximately $13.42 per OP Unit).
Regardless of the rights described above, the Operating Partnership will not have an obligation to issue cash to a unitholder upon a redemption request if the Company elects to redeem the OP Units for shares of its common stock.  When a non-Company unitholder redeems an OP Unit, non-controlling interest in the Operating Partnership is reduced, and stockholders’ equity is increased.
The Operating Partnership is required to make distributions on each OP Unit in the same amount as those paid on each share of the Company’s common stock, with the distributions on the OP Units held by the Company being utilized to make distributions to the Company’s common stockholders.
As of March 31, 2018, and December 31, 2017, there were 970,605 and 1,008,105 OP Units held by non-controlling limited partners outstanding, respectively. As of March 31, 2018, 970,605 OP Units were eligible to be tendered for redemption.

Registration Statement
On March 30, 2017, we filed a universal registration statement on Form S-3 (File No. 333-217042) with the SEC (the “2017 Registration Statement”) to replace our previous registration statement, which expired on April 1, 2017. The 2017 Registration Statement, which was declared effective by the SEC on April 12, 2017, permits us to issue up to an aggregate of $300.0 million in securities, consisting of common stock, preferred stock, warrants, debt securities, depository shares, subscription rights, and units, including through separate, concurrent offerings of two or more of such securities. As of March 31, 2018, we have issued a total of 3,111,000 shares of common stock (excluding 254,575 shares of common stock issued in exchange for certain OP Units that were tendered for redemption) for gross proceeds of approximately $38.7 million under the 2017 Registration Statement.
2018 Equity Issuances
Secondary Offerings
On March 27, 2018, we completed a public offering of 1,100,000 shares of our common stock at a public offering price of $12.15 per share (the “March 2018 Offering”). The March 2018 Offering settled on March 29, 2018, and resulted in gross proceeds of approximately $13.4 million and net proceeds, after deducting underwriting discounts and direct offering expenses borne by us, of approximately $12.7 million. On April 4, 2018, the underwriters exercised the over-allotment option in connection with the March 2018 Offering, and, as a result, we issued an additional 165,000 shares. The over-allotment settled on April 9, 2018, and resulted in gross proceeds of approximately $2.0 million and net proceeds (after deducting underwriting discounts and direct offering expenses borne by us) of approximately $1.9 million. We used the proceeds received from this offering to repay existing indebtedness and for other general corporate purposes.
At-the-Market Program
On August 7, 2015, we entered into equity distribution agreements (commonly referred to as “at-the-market agreements,” or our “Sales Agreements”) with Cantor Fitzgerald & Co. and Ladenburg Thalmann & Co., Inc. (each a “Sales Agent”), under which we may issue and sell, from time to time and through the Sales Agents, shares of our common stock having an aggregate offering price of up to $30.0 million (the “ATM Program”). During the three months ended March 31, 2018, we issued and sold 316,925 shares of our common stock at an average sales price of $13.00 per share under the ATM Program for both gross and net proceeds of approximately $4.1 million. Through March 31, 2018, we have issued and sold a total of 925,561 shares of our common stock at an average sales price of $12.83 per share for gross proceeds of approximately $11.9 million and net proceeds of approximately $11.7 million.
Series B Preferred Stock
On January 10, 2018, we filed a prospectus supplement with the SEC for a continuous public offering of up to 6,000,000 shares (the “Primary Offering”) of our newly-designated 6.00% Series B Cumulative Redeemable Preferred Stock (the “Series B Preferred Stock”) at an offering price of $25.00 per share for gross proceeds of up to $150.0 million and net proceeds, after deducting dealer-manager fees, selling commissions, and estimated expenses of the offering payable by us, of up to approximately $131.3 million, assuming all shares of the Series B Preferred Stock are sold in the Primary Offering. We are also offering up to 500,000 additional shares of the Series B Preferred Stock pursuant to our dividend reinvestment plan (the “DRIP”) to those holders of the Series B Preferred Stock who elect to participate in the DRIP. The Series B Preferred Stock is being offered on a continuous, “reasonable best efforts” basis by Gladstone Securities, the dealer-manager for the Primary Offering. See “Gladstone Securities—Dealer-Manager Agreement” in Note 6, “Related Party Transactions,” for a discussion of the fees and commissions to be paid to Gladstone Securities in connection with the offering of the Series B Preferred Stock.
The offering of the Series B Preferred Stock will terminate on the date (the “Termination Date”) that is the earlier of either January 10, 2023 (unless terminated earlier or extended by our Board of Directors), or the date on which all 6,000,000 shares offered in the Primary Offering are sold.
There is currently no public market for shares of the Series B Preferred Stock; however, we intend to apply to list the Series B Preferred Stock on Nasdaq or another national securities exchange within one calendar year after the offering’s Termination Date, though there can be no assurance that a listing will be achieved in such timeframe, or at all.
As of March 31, 2018, no sales of the Series B Preferred Stock have been made, and we had incurred approximately $279,000 of costs related to this offering, which have been recorded as deferred offering costs and are included in Other assets on the accompanying Condensed Consolidated Balance Sheet.
Distributions

The distributions to common stockholders declared by our Board of Directors and paid by us during the three months ended March 31, 2018 and 2017 are reflected in the table below.
Fiscal Year Declaration Date Record Date Payment Date 
Distributions per
Common Share
2018 January 9, 2018 January 22, 2018 January 31, 2018 $0.04425
  January 9, 2018 February 16, 2018 February 28, 2018 0.04425
  January 9, 2018 March 20, 2018 March 30, 2018 0.04425
    Three Months Ended March 31, 2018 $0.13275
         
2017 January 10, 2017 January 20, 2017 January 31, 2017 $0.04300
  January 10, 2017 February 16, 2017 February 28, 2017 0.04300
  January 10, 2017 March 22, 2017 March 31, 2017 0.04300
    Three Months Ended March 31, 2017 $0.12900
The same amounts were paid as distributions on each OP Unit held by non-controlling limited partners of the Operating Partnership as of the above record dates.
NOTE 8.7. COMMITMENTS AND CONTINGENCIES
Operating Obligations
In connection with a lease amendment we executed on one of our Oregon farms in May 2017, we committed to providingprovide up to $1.8 million of capital for anticipated improvements on the farm, including irrigation upgrades and the planting of new blueberry bushes, which improvements are expected to be completed by December 31, 2020. As stipulated in the lease amendment, we will begin earning additional rent on the cost of the improvements as the funds are disbursed by us at an initial annual rate of 6.5%, which rate is subject to annual escalations and market resets. As a result of this project, and assuming full deployment of the capital commitment amount, we expect to receive approximately $718,000 of additional rent throughout the term of the lease, which expires September 30, 2024. As of March 31, 2018,2019, we have expended or accrued approximately $829,000$1.0 million related to this project.
In connection with the lease we executed upon our acquisition of our two North Carolina farms in June 2017, we committed to providingprovide up to $300,000 of capital over the first two years to support additional plantings and infrastructure on the farm, which improvements are expected to be completed by June 30, 2019.2020. As stipulated in the lease agreement, we will earn additional rent 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). As a result of this project, and assuming full deployment of the capital commitment amount, we expect to receive approximately $157,000 of additional rent throughout the term of the lease, which expires December 31, 2026. As of March 31, 2018,2019, we have expended or accrued approximately $166,000 related to this project.
In connection with the follow-on lease we executed upon our acquisition of a 1,910-acre361-acre farm in FloridaCalifornia in August 2017, (which hadwe committed to provide up to $4.0 million of capital to fund the development of additional vineyard acreage on the farm, which development is expected to be completed by March 31, 2020. As stipulated in the lease agreement, we will earn additional rent on the total cost of the improvements as the funds are disbursed by us at an initial annual rate of 6.0%, which is subject to annual escalations. As of March 31, 2019, we have expended or accrued approximately $1.6 million related to this project.
In connection with a commencement datelease amendment we executed on one of February 24, 2018), and as amended on March 23,our Oregon farms in May 2018, we committed to providingprovide up to $2.5 millionapproximately $250,000 of capital in the first year of the lease to support additional plantings and infrastructurefor certain irrigation improvements on the farm, which improvements are expected to be completed duringby May 1, 2019. As a result of this project, the three months endinglease amendment provides for additional, fixed rental payments that are subject to annual escalations. As of March 31, 2019, we have expended or accrued approximately $18,000 related to this project.
In connection with the lease we executed upon our acquisition of five farms totaling 5,630 acres in Collier and Hendry Counties, Florida, in July 2018, we committed to provide up to $2.0 million of capital for certain irrigation improvements on

the farms throughout the term of the lease, which expires on June 30, 2018. As2025. While no specific plans for such improvements have been developed yet, if and when any capital is deployed by us, as stipulated in the follow-on lease agreement, we will earn additional rent 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). As a result of this project, and assuming full deployment of the capital commitment amount,To date, we expect to receive approximately $820,000 of additional rent throughout the term of the lease, which expires February 23, 2024. As of March 31, 2018, we have not expended or accrued approximately $1.7 millionanything related to this project.
In connection with the lease we executed upon our acquisition of a 361-acre farm in California in August 2017, we committed to providing up to $4.0 million of capital over the first two years to fund the development of additional vineyard acreage on the farm, which development is expected to be completed by August 30, 2019. As stipulated in the lease agreement, we will earn additional rent on the total cost of the improvements as the funds are disbursed by us at an initial annual rate of 6.0%, which is subject to annual escalations. As a result of this project, and assuming full deployment of the capital commitment amount, we expect to receive approximately $2.3 million of additional rent throughout the term of the lease, which expires May 31, 2027. As of March 31, 2018, we have expended or accrued approximately $710,000 related to this project.

Ground Lease Obligations
In connection with two farms acquired on June 1, 2017, through a leasehold interest, we assumed two ground leaseslease arrangements under which we are the lessee (with the State of Arizona as the lessor). DuringThese two operating ground leases expire in February 2022 and February 2025, and neither lease contains any extension, renewal, or termination options. Upon our adoption of ASU 2016-02 on January 1, 2019, we recognized an operating lease right-of-use asset of approximately $218,000 and an operating lease liability of approximately $213,000 as a result of these ground leases. These values were determined by discounting the respective future minimum lease payments using a discount rate equivalent to treasury rates with similar terms plus a spread ranging from 2.47% to 2.53%.
As of March 31, 2019, we had recorded the following as a result of these operating ground leases (dollars in thousands, except for footnotes):
Operating lease right-of-use assets(1)
 $208
Operating lease liabilities(2)
 167
   
Weighted-average remaining lease term (years) 5.3
Weighted-average discount rate 4.20%
(1)
Operating lease right-of-use assets are shown net of accrued lease payments of approximately $41,000 and are included within Other assets, net on the accompanying Condensed Consolidated Balance Sheet.
(2)
Included within Other liabilities, net on the accompanying Condensed Consolidated Balance Sheet.
As a result of these ground leases, during each of the three months ended March 31, 2019 and 2018, we recorded approximately $12,000 of lease expense (included as part ofwithin Property operating expenses on the accompanying Condensed Consolidated Statement of Operations) as a result of these ground leases.approximately $12,000. Future minimum lease payments due under the remaining non-cancelable terms of these leases as of March 31, 2019, and December 31, 2018, are as follows (dollars in thousands):
Period 
Estimated Minimum
Lease Payments Due(1)
For the remaining nine months ending December 31:2018 $36
For the fiscal years ending December 31:2019 47
 2020 47
 2021 47
 2022 30
 2023 30
 Thereafter 30
   $267
  
Future Lease Payments(1)
Period March 31, 2019 December 31, 2018
2019 $
 $47
2020 47
 47
2021 47
 47
2022 30
 30
2023 30
 30
Thereafter 31
 31
Total undiscounted lease payments 185
 232
Less: imputed interest (18) 
Present value of lease payments $167
 $232
(1) 
Annual lease payments are set at the beginning of each year to then-current market rates (as determined by the State of Arizona). The amounts shown above represent estimated amounts based on the lease rates currently in place.
Litigation
In the ordinary course of business, we may be involved in legal proceedings from time to time. We are not currently subject to any material known or threatened litigation.
NOTE 8. EQUITY
Amendment to Articles of Incorporation
On January 10, 2018, we filed with the Maryland Department of Assessments and Taxation Articles Supplementary to reclassify and designate 6,500,000 shares of our authorized and unissued shares of capital stock as shares of Series B Preferred

Stock (as defined below). The reclassification decreased the number of shares classified as common stock from 98,000,000 to 91,500,000.
Stockholders’ Equity
As of March 31, 2019, there were 6,500,000 shares of Series B Preferred Stock (as defined below), par value $0.001 per share, authorized, with 1,891,709 shares issued and outstanding worth an aggregate liquidation value of approximately $47.3 million; and 91,500,000 shares of common stock, par value $0.001 per share, authorized, with 18,462,219 shares issued and outstanding. As of December 31, 2018, there were 6,500,000 shares of Series B Preferred Stock (as defined below), par value $0.001 per share, authorized, with $1,144,393 shares issued and outstanding worth an aggregate liquidation value of approximately $28.6 million; and 91,500,000 shares of common stock, par value $0.001 per share, authorized, with 17,891,340 shares issued and outstanding.
Non-Controlling Interests in Operating Partnership
We consolidate our Operating Partnership, which is a majority-owned partnership.  As of March 31, 2019, and December 31, 2018, we owned 100.0% and approximately 96.9%, respectively, of the outstanding OP Units.
On or after 12 months after becoming a holder of OP Units, each limited partner, other than the Company, has the right, subject to the terms and conditions set forth in the partnership agreement of the Operating Partnership, to require the Operating Partnership to redeem all or a portion of such units in exchange for cash or, at the Company’s option, shares of our common stock on a one-for-one basis. The cash redemption per OP Unit would be based on the market price of our common stock at the time of redemption. A limited partner will not be entitled to exercise redemption rights if the delivery of common stock to the redeeming limited partner would breach restrictions on the ownership of common stock imposed under our charter and other limitations thereof.
Information related to OP Units tendered for redemption during the three months ended March 31, 2019 and 2018 is provided in the table below (dollars in thousands, except per-share amounts):
Period 
OP Units
Tendered for
Redemption
 
Shares of
Common
Stock Issued
 
OP Units
Redeemed
with Cash
 
Aggregate
Cash
Payment
 
Aggregate
Cash Paid
per OP Unit
Three Months Ended March 31, 2019 570,879 570,879 0 $
 $
Three Months Ended March 31, 2018 37,500 7,700 29,800 400
 13.42
Regardless of the rights described above, the Operating Partnership will not have an obligation to issue cash to a unitholder upon a redemption request if the Company elects to redeem the OP Units for shares of its common stock. When a non-Company unitholder redeems OP Units and the Company elects to satisfy that redemption through the issuance of common stock, non-controlling interest in the Operating Partnership is reduced, and stockholders’ equity is increased.
The Operating Partnership is required to make distributions on each OP Unit in the same amount as those paid on each share of the Company’s common stock, with the distributions on the OP Units held by the Company being utilized to make distributions to the Company’s common stockholders.
As of March 31, 2019, and December 31, 2018, there were 0 and 570,879 OP Units held by non-controlling limited partners outstanding, respectively.
Registration Statement
On March 30, 2017, we filed a universal registration statement on Form S-3 (File No. 333-217042) with the SEC (the “2017 Registration Statement”) to replace our previous registration statement, which expired on April 1, 2017. The 2017 Registration Statement, which was declared effective by the SEC on April 12, 2017, permits us to issue up to an aggregate of $300.0 million in securities, consisting of common stock, preferred stock, warrants, debt securities, depository shares, subscription rights, and units, including through separate, concurrent offerings of two or more of such securities. Through March 31, 2019, we have issued a total of 5,396,030 shares of common stock (excluding 1,215,565 shares of common stock issued in exchange for certain OP Units that were tendered for redemption) for gross proceeds of approximately $67.5 million, and 1,892,309 shares of Series B Preferred Stock (as defined below) for gross proceeds of approximately $46.6 million under the 2017 Registration Statement.
2018 Equity Issuances
Series B Preferred Stock

On May 31, 2018, we filed a prospectus supplement with the SEC for a continuous public offering of up to 6,000,000 shares (the “Primary Offering”) of our newly-designated 6.00% Series B Cumulative Redeemable Preferred Stock (the “Series B Preferred Stock”) at an offering price of $25.00 per share for gross proceeds of up to $150.0 million and expected net proceeds, after deducting dealer-manager fees, selling commissions, and estimated expenses of the offering payable by us, of up to approximately $131.3 million, assuming all shares of the Series B Preferred Stock are sold in the Primary Offering. The Series B Preferred Stock is being offered on a continuous, “reasonable best efforts” basis by Gladstone Securities, the dealer-manager for the Primary Offering. See Note 6, “Related-Party Transactions—Gladstone Securities—Dealer-Manager Agreement,” for a discussion of the fees and commissions to be paid to Gladstone Securities in connection with the offering of the Series B Preferred Stock.
During the three months ended March 31, 2019, we sold 747,916 shares of the Series B Preferred Stock for gross proceeds of approximately $18.5 million and net proceeds (after deducting selling commissions and dealer-manager fees borne by us) of approximately $16.8 million. In addition, 600 shares of the Series B Preferred Stock were tendered for redemption at a cash redemption price of $22.50 per share. As a result, we paid a total redemption price of approximately $13,000 to redeem and retire these shares. As of March 31, 2019, excluding selling commissions and dealer-manager fees, we have incurred approximately $861,000 of total costs related to this offering, which are initially recorded as deferred offering costs (included within Other assets, net on the accompanying Condensed Consolidated Balance Sheets) and are applied against the gross proceeds received from the offering through additional paid-in capital as shares of the Series B Preferred Stock are sold. See Note 10, “Subsequent Events,” for sales of Series B Preferred Stock completed subsequent to March 31, 2019.
The offering of the Series B Preferred Stock will terminate on the date that is the earlier of either June 1, 2023 (unless terminated earlier or extended by our Board of Directors), or the date on which all 6,000,000 shares offered in the Primary Offering are sold (the “Termination Date”). There is currently no public market for shares of the Series B Preferred Stock; however, we intend to apply to list the Series B Preferred Stock on Nasdaq or another national securities exchange within one calendar year after the offering’s Termination Date, though there can be no assurance that a listing will be achieved in such timeframe, or at all.
Common Stock
At-the-Market Program
On August 7, 2015, we entered into equity distribution agreements (commonly referred to as “at-the-market agreements,” or our “Sales Agreements”) with Cantor Fitzgerald & Co. and Ladenburg Thalmann & Co., Inc. (each a “Sales Agent”), under which we may issue and sell, from time to time and through the Sales Agents, shares of our common stock having an aggregate offering price of up to $30.0 million (the “ATM Program”). During the three months ended March 31, 2019, there were no shares issued under the ATM Program. Through March 31, 2019, we have issued and sold a total of 1,595,591 shares of our common stock at an average sales price of $12.87 per share for gross proceeds of approximately $20.5 million and net proceeds of approximately $20.2 million.
Distributions
The per-share distributions to preferred and common stockholders declared by our Board of Directors and paid by us (except as noted) during the three months ended March 31, 2019 and 2018 are reflected in the table below.
  For the Three Months Ended March 31,
Issuance 2019 2018
Series A Term Preferred Stock(1)
 $0.3984375
 $0.3984375
Series B Preferred Stock(2)
 0.375
 
Common Stock(3)
 0.13335
 0.13275
(1)
Treated similar to interest expense on the accompanying Condensed Consolidated Statements of Operations.
(2)
Of the dividends declared on the Series B Preferred Stock by our Board of Directors on January 8, 2019, approximately $236,000 was paid (as scheduled) by us on April 4, 2019. The resulting dividend payable is included within Accounts payable and accrued expenses on the accompanying Condensed Consolidated Balance Sheets as of March 31, 2019.
(3)
The same amounts were paid as distributions on each OP Unit held by non-controlling limited partners of the Operating Partnership.
NOTE 9. (LOSS) EARNINGSLOSS PER SHARE OF COMMON STOCK
The following table sets forth the computation of basic and diluted (loss) earningsloss per common share for the three months ended March 31, 20182019 and 2017,2018, computed using the weighted average number of shares outstanding during the respective periods. Net (loss) incomeloss figures are presented net of non-controlling interests in the earnings per share calculations. The non-controlling

limited partners’ outstanding OP Units (which may be redeemed for shares of common stock) have been excluded from the diluted (loss) earningsloss per share calculation, as there would be no effect on the amounts since the non-controlling limited partners’ share of (loss) incomeloss would also be added back to net (loss) income.loss.
  For the Three Months Ended March 31,
  2018 2017
  (Dollars in thousands, except per-share amounts)
Net (loss) income attributable to the Company $(297) $152
Weighted average shares of common shares outstanding – basic and diluted 13,957,732
 10,395,736
(Loss) earnings per common share – basic and diluted $(0.02) $0.01
  Three months ended March 31,
  2019 2018
  (Dollars in thousands, except per-share amounts)
Net loss attributable to common stockholders $(496) $(297)
Weighted average shares of common shares outstanding – basic and diluted 18,028,826
 13,957,732
Loss per common share – basic and diluted $(0.03) $(0.02)
The weighted-average number of OP Units held by non-controlling limited partners was 977,272433,393 and 1,449,258977,272, for the three months ended March 31, 20182019 and 2017,2018, respectively.
NOTE 10. SUBSEQUENT EVENTS
FinancingAcquisition Activity
On April 11, 2018,9, 2019, we closed onacquired a loan from Farm Credit West928-acre farm in Madera County, California, that grows pistachios for approximately $1.5$28.6 million. At closing, we entered into a 10.6-year, triple-net lease agreement with an unrelated third-party tenant that also includes two, 5-year extension options. The mortgage note is scheduled to mature on May 1, 2038, and will bear interest (before interest patronage) atlease, which consists of a fixed rate of 4.99% per annum through April 30, 2023, thereafter converting tocash rent component plus a variable rate determinedrent component based on the gross crop revenues earned on the farm, provides for minimum annualized, straight-line rents of approximately $1.7 million. We will account for this acquisition as an asset acquisition in accordance with ASC 360.
On April 19, 2019, we entered into two separate purchase agreements with an unrelated third-party for the purchase of multiple parcels of irrigated farmland located in Fresno County, California. The aggregate purchase price is expected to be approximately $70.0 million and is expected to close in two phases, with the first phase expected to be completed during the three months ending September 30, 2019, and the second phase to be completed during the three months ending December 31, 2019. However, the acquisition of this property is subject to customary terms and conditions and termination rights for transactions of this type, including a due diligence inspection period for us, and there can be no assurance that this prospective acquisition will be consummated by Farm Credit West unless another fixed rate is established.a certain time, or at all.
Leasing Activity
The following table summarizes the leasing activity that occurred on our existing properties subsequent to March 31, 2019 (dollars in thousands):
    PRIOR LEASE NEW LEASES
Farm
Locations
Number
of
Leases
Total
Farm
Acres
 
Total
Annualized
Straight-line
Rent(1)
# of Leases
with
Participation
Rents
Lease
Structures
(# of NNN
/ NN)
 
Total
Annualized
Straight-line
Rent
(1)
Wtd. Avg.
Term
(Years)
# of Leases
with
Participation
Rents
Lease
Structures
(# of NNN
/ NN)
FL156 $15
00 / 1 $63
3.000 / 1
(1)
Annualized straight-line rent is based on the minimum cash rental payments guaranteed under the lease, as required under GAAP, and excludes contingent rental payments, such as participation rents.
Equity Activity
On April 4, 2018,Sales of Series B Preferred Stock
Subsequent to March 31, 2019, through the underwriters exerciseddate of this filing, we have sold 345,031 shares of the over-allotment option in connection with the March 2018 Offering, and, as a result, we issued an additional 165,000 shares. The over-allotment settled on April 9, 2018, and resulted inSeries B Preferred Stock for gross proceeds of approximately $2.0$8.5 million and net proceeds (after deducting underwriting discounts and direct offering expenses borne by us)

of approximately $1.9$7.8 million. We usedTotal Selling Commissions and Dealer-Manager Fees earned by Gladstone Securities as a result of these sales were approximately $767,000 (of which approximately $725,000 was remitted by Gladstone Securities to unrelated third-parties involved in the proceeds received from this offering, to repay existing indebtednesssuch as participating broker-dealers and for other general corporate purposes.wholesalers).
Distributions
On April 10, 2018,9, 2019, our Board of Directors declared the following monthly cash distributions to common stockholders and holders of our Term Preferred Stock:preferred and common stock:

Record Date Payment Date 
Distribution per
Common Share
 
Dividend per share of
Term Preferred Stock
April 20, 2018 April 30, 2018 $0.0443
 $0.1328125
May 22, 2018 May 31, 2018 0.0443
 0.1328125
June 20, 2018 June 29, 2018 0.0443
 0.1328125
Total:   $0.1329
 $0.3984375
The same amounts paid to common stockholders will be paid as distributions on each OP Unit held by non-controlling limited partners of the Operating Partnership as of the above record dates.
Issuance Record Date Payment Date Distribution per Share
Series A Term Preferred Stock: April 22, 2019 April 30, 2019 $0.1328125
  May 22, 2019 May 31, 2019 0.1328125
  June 19, 2019 June 28, 2019 0.1328125
Total Series A Term Preferred Stock Distributions: $0.3984375
       
Series B Preferred Stock: April 24, 2019 May 3, 2019 $0.125
  May 22, 2019 May 31, 2019 0.125
  June 26, 2019 July 5, 2019 0.125
Total Series B Preferred Stock Distributions: $0.375
       
Common Stock: April 22, 2019 April 30, 2019 $0.04450
  May 22, 2019 May 31, 2019 0.04450
  June 19, 2019 June 28, 2019 0.04450
Total Common Stock Distributions: $0.13350

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
All statements contained herein, other than historical facts, may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements may relate to, among other things, future events or our future performance or financial condition. In some cases, you can identify forward-looking statements by terminology such as “may,” “might,” “believe,” “will,” “provided,” “anticipate,” “future,” “could,” “growth,” “plan,” “intend,” “expect,” “should,” “would,” “if,” “seek,” “possible,” “potential,” “likely,” or the negative of such terms or comparable terminology. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our business, financial condition, liquidity, results of operations, funds from operations or prospects to be materially different from any future business, financial condition, liquidity, results of operations, funds from operations or prospects expressed or implied by such forward-looking statements. For further information about these and other factors that could affect our future results, please see the captions titled “Forward-Looking Statements” and “Risk Factors” in this report and our Annual Report on Form 10-K for the year ended December 31, 20172018 (the “Form 10-K”). We caution readers not to place undue reliance on any such forward-looking statements, which are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Quarterly Report on Form 10-Q (the “Quarterly Report”), except as required by law.
All references to “we,” “our,” “us” and the “Company” in this Quarterly Report mean Gladstone Land Corporation and its consolidated subsidiaries, except where it is made clear that the term refers only to Gladstone Land Corporation.
OVERVIEW
General
We are an externally-managed, agricultural real estate investment trust (“REIT”) that is engaged primarily in the business of owning and leasing farmland. With the exception of one farm in California, which is currently leased (on a temporary basis) to a wholly-owned subsidiary of ours, weWe are not a grower of crops, nor do we typically farm the properties we own. We currently own 7587 farms comprised of 63,35174,828 acres located across 910 states in the U.S. (Arizona, California, Colorado, Florida, Michigan, Nebraska, North Carolina, Oregon, and Washington). We also own several farm-related facilities, such as cooling facilities, packinghouses, processing facilities, and various storage facilities.
We conduct substantially all of our investment activities through, and all of our properties are held, directly or indirectly, by, Gladstone Land Limited Partnership (the “Operating Partnership”). Gladstone Land Corporation controls the sole general partner of the Operating Partnership and currently owns, directly or indirectly, approximately 94.1%100.0% of the units of limited partnership interest in the Operating Partnership (“OP Units”). In addition, we have elected for Gladstone Land Advisers, Inc. (“Land Advisers”), a wholly-owned subsidiary of ours, to be treated as a taxable REIT subsidiary (“TRS”).
Gladstone Management Corporation (our “Adviser”) manages our real estate portfolio pursuant to an advisory agreement, and Gladstone Administration, LLC (our “Administrator”), provides administrative services to us pursuant to an administration agreement.  Our Adviser and our Administrator collectively employ all of our personnel and pay directly their salaries, benefits, and general expenses.
Portfolio Diversity
Since our initial public offering in January 2013 (the “IPO”), we have expanded our portfolio from 12 farms leased to 7 different, unrelated tenants to a current portfolio of 7587 farms leased to 5264 different, unrelated tenants (plus one related-party tenant).tenants. While our focus remains in farmland suitable for growing fresh produce annual row crops, we have also diversified our portfolio into farmland suitable for other crop types, including permanent crops (e.g., almonds, blueberries, pistachios, and wine grapes) and, to a lesser extent, certain commodity crops (e.g., cornbeans and beans)corn). The following table summarizes the different sourcesgeographic locations (by state) of revenues for our propertiesfarms owned and with leases in place as of and for the three months ended March 31, 20182019 and 20172018 (dollars in thousands):

  As of and For the As of and For the Annualized Straight-line Rent as of
  Three Months Ended March 31, 2018 Three Months Ended March 31, 2017 
March 31, 2018(1)
Revenue Source 
Total
Farmable
Acres
 
% of 
Total
Farmable
Acres
 
Rental
Revenue
 
% of 
Total Rental
Revenue
 
Total
Farmable
Acres
 
% of 
Total
Farmable
Acres
 
Rental
Revenue
 
% of 
Total Rental
Revenue
 
Total Rental
Revenue
 
% of 
Total Rental
Revenue
Annual row crops – fresh produce(2)
 14,851 29.0% $3,553
 53.1% 13,516 31.0% $3,593
 62.5% $14,383
 53.5%
Annual row crops – commodity crops(3)
 30,150 59.0% 1,043
 15.6% 25,874 59.3% 681
 11.9% 4,097
 15.2%
Subtotal – Total annual row crops 45,001 88.0% 4,596
 68.7% 39,390 90.3% 4,274
 74.4% 18,480
 68.7%
Permanent crops(4)
 6,158 12.0% 1,555
 23.3% 4,253 9.7% 1,007
 17.5% 6,282
 23.3%
Subtotal – Total crops 51,159 100.0% 6,151
 92.0% 43,643 100.0% 5,281
 91.9% 24,762
 92.0%
Facilities and other(5)
   537
 8.0%   467
 8.1% 2,146
 8.0%
Total 51,159 100.0% $6,688
 100.0% 43,643 100.0% $5,748
 100.0% $26,908
 100.0%
  As of and For the Three Months Ended March 31, 2019 As of and For the Three Months Ended March 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)
 33 10,147 13.7% $3,734
 47.7% 29 8,241 13.0% $3,030
 45.3%
Florida 22 17,184 23.2% 2,339
 29.9% 16 11,006 17.4% 1,754
 26.2%
Colorado 10 31,448 42.6% 696
 8.9% 10 31,450 49.6% 686
 10.3%
Arizona 6 6,280 8.5% 539
 6.9% 6 6,280 9.9% 532
 7.9%
Texas 1 3,667 5.0% 131
 1.7%   —% 
 —%
Oregon 3 418 0.6% 128
 1.6% 4 2,313 3.7% 307
 4.6%
Washington 1 746 1.0% 122
 1.5% 1 746 1.2% 121
 1.8%
North Carolina 2 310 0.4% 60
 0.8% 2 310 0.5% 49
 0.7%
Nebraska 3 3,254 4.4% 60
 0.8% 2 2,559 4.0% 145
 2.2%
Michigan 5 446 0.6% 21
 0.2% 5 446 0.7% 70
 1.0%
TOTALS 86 73,900 100.0% $7,830
 100.0% 75 63,351 100.0% $6,694
 100.0%
(1)
Annualized straight-line rent amount is based on the minimum rental payments guaranteed under the lease, as required under GAAP. Excludes contingent rental payments, such as crop-share proceeds, and excludes rent owed to us by Land Advisers.
(2)
Includes berries and other fruits, such as blackberries, melons, raspberries, and strawberries; and vegetables, such as arugula, broccoli, cabbage, carrots, celery, cilantro, cucumbers, edamame, green beans, kale, lettuce, mint, onions, peas, peppers, potatoes, radicchio, spinach, and tomatoes.
(3)
Includes alfalfa, barley, corn, edible beans, grass, popcorn, soybeans, and wheat.
(4)
Includes almonds, apples, avocados, blueberries, cherries, lemons, pistachios, and wine grapes.
(5)
Consists primarily of rental revenue from: (i) farm-related facilities, such as cooling facilities, packinghouses, distribution centers, residential houses for tenant farmers, and other farm-related buildings; (ii) two oil and gas surface area leases on small parcels of two of our properties; and (iii) unimproved or non-farmable acreage on certain of our farms.
Our acquisition of 64 farms since our IPO has also allowed us to further diversify our portfolio geographically. The following table summarizes the different geographic locations of our properties owned and with leases in place as of and for the three months ended March 31, 2018 and 2017 (dollars in thousands):
  As of and For the As of and For the Annualized Straight-line Rent as of
  Three Months Ended March 31, 2018 Three Months Ended March 31, 2017 
March 31, 2018(1)
State 
Total
Acres
 
% of
Total
Acres
 
Total Rental
Revenue
 
% of 
Total
Rental
Revenue
 
Total
Acres
 
% of
Total
Acres
 
Rental
Revenue
 
% of 
Total
Rental
Revenue
 
Total
Rental
Revenue
 
% of 
Total
Rental
Revenue
California(2)
 8,241 13.0% $3,028
 45.3% 6,713 12.4% $2,857
 49.7% $12,113
 45.0%
Florida 11,006 17.4% 1,754
 26.2% 9,315 17.1% 1,531
 26.6% 7,069
 26.3%
Colorado 31,450 49.6% 686
 10.3% 30,170 55.5% 673
 11.7% 2,743
 10.2%
Arizona 6,280 9.9% 528
 7.9% 3,000 5.5% 186
 3.2% 2,152
 8.0%
Oregon 2,313 3.7% 307
 4.6% 2,313 4.3% 294
 5.1% 1,237
 4.6%
Nebraska 2,559 4.0% 145
 2.2% 2,559 4.7% 145
 2.6% 580
 2.1%
Washington 746 1.2% 121
 1.8%  —% 
 —% 399
 1.5%
Michigan 446 0.7% 70
 1.0% 270 0.5% 62
 1.1% 131
 0.5%
North Carolina 310 0.5% 49
 0.7%  —% 
 —% 484
 1.8%
  63,351 100.0% $6,688
 100.0% 54,340 100.0% $5,748
 100.0% $26,908
 100.0%
(1)
Annualized straight-line amount is based on the minimum rental payments guaranteed under the lease, as required under GAAP. Excludes contingent rental payments, such as crop-share proceeds, and excludes rent owed to us by Land Advisers.
(2) 
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 four of these growing regions.
Leases
General
Our farms and facilities are currently leased to 52 different, third-party tenants that are either independent or corporate farming operations, and, as of October 17, 2017, one farm is leased to Land Advisers. Most of our leases are on a triple-net basis, (anan arrangement under which, in addition to rent, the tenant is required to pay the related taxes, insurance costs, (including drought insurance if we were to acquire properties that depend upon rainwater for irrigation), maintenance, and other operating costs) andcosts. Our leases generally have original terms ranging from 3 to 10 years for farms growing row crops and 5 to 15 years for farms growing permanent crops (in each case, often with options to extend the lease further). Rent is generally payable to us in advance on either an annual or semi-annual basis, andwith such rent amount is typically subject to certain periodic escalationsescalation clauses provided for inwithin the lease. Currently, 64 of our 75 farms are leased under agricultural leases with original terms ranging from 1 to 20 years, with 50 farms leased on a pure, triple-net basis, 2219 farms are leased on a partial-net basis (with us, as landlord, responsible for all or a portion of the related property taxes), and 24 farms leased on a gross basis (with the landlord responsible for the related

property taxes, insurance, and maintenance on the property). One of our farms is currently vacant. Additionally, 1523 of our farms are leased under agreements that include a variableparticipation rent component.component based on the gross revenues earned on the respective farms.
Lease Expirations
FarmAgricultural leases are often short-term in nature, so in any given year, we may have multiple leases up for renewalextension or extension.renewal. The following table summarizes the lease expirations by year for the propertiesfarms owned and with leases in place as of March 31, 20182019 (dollars in thousands):
Year Number of Expiring Leases Expiring Leased Acreage % of Total Acreage Rental Revenue for the Three Months Ended March 31, 2018 % of Total Rental Revenue 
Number of
Expiring
Leases
 
Expiring
Leased
Acreage
 
% of Total
Acreage
 
Lease Revenue for the
Three Months Ended
March 31, 2019
 
% of Total
Lease
Revenue
2018 6
(1) 
4,118 6.5% $234
 3.5%
2019 6
(2) 
1,918 3.0% 222
 3.3% 3
(1) 
4,967 6.7% $183
 2.3%
2020 12  28,497 45.1% 1,849
 27.6% 12 32,975 44.6% 1,801
 23.0%
2021 6  8,234 13.0% 498
 7.4% 11 8,921 12.1% 616
 7.9%
2022 3  269 0.4% 172
 2.6% 4  325 0.4% 233
 3.0%
2023 6  7,046 11.2% 1,315
 19.7% 6  5,846 7.9% 1,148
 14.7%
2024 4  2,576 3.5% 456
 5.8%
Thereafter 19  13,108 20.8% 2,398
 35.9% 21  18,283 24.8% 3,353
 42.8%
Other(2)
 7 7 —% 40
 0.5%
Totals 58  63,190 100.0% $6,688
 100.0% 68  73,900 100.0% $7,830
 100.0%
(1) 
Includes (i) one oil and gas lease that continues on a year-to-year basis,was renewed for which we recorded rental revenuean additional period of approximately $8,000 during the three months endedyears subsequent to March 31, 2018,2019 (see “Recent Developments—Portfolio Activity—Existing Properties—Leasing Activity” below for additional information on this and (ii) one farm currently leased (on a temporary basis) to Land Advisers, which rental revenue was eliminated upon consolidation.other recent leasing activities).
(2) 
Includes one communications services leaseConsists of ancillary leases (e.g., oil, gas, and one residential lease, for which we recorded aggregate rental revenuesmineral leases, telecommunications leases, etc.) on certain of approximately $3,000 during the three months ended March 31, 2018.our farms.
Recent Developments
Investment, Leasing and Other Portfolio Activity

Property Acquisitions
Since January 1, 2018,2019, 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)
Taft Highway(3)
 Kern, CA 1/31/2018 161 1 Potatoes and Melons N/A N/A $2,945
 $33
 $
Cemetery Road Van Buren, MI 3/13/2018 176 1 Blueberries 9.6 years N/A 2,100
 39
 150
      337 2       $5,045
 $72
 $150
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)
 
Somerset Road Lincoln, NE 1/22/2019 695 1 Popcorn and edible beans 4.9 years 1 (5 years) $2,400
 $31
 $126
 
Greenhills Boulevard Madera, CA 4/9/2019 928 1 Pistachios 10.6 years 2 (5 years) 28,550
 137
 1,721
(3) 
      1,623 2       $30,950
 $168
 $1,847
 
(1) 
Unless noted otherwise, acquisitionsAcquisitions were accounted for as an asset acquisition under ASC 360.acquisitions in accordance with Accounting Standards Codification 360, “Property, Plant, and Equipment.” As such, all acquisition-related costs (other than external legal fees associated with negotiating and originating the leases associated with the acquisitions, which costs were expensed in the period incurred) were capitalized and allocated among the identifiable assets acquired. The figures above represent only costs paid or accrued for as of the date of this filing.
(2) 
Annualized straight-line amountrent is based on the minimum cash rental payments guaranteed under the lease, as required under GAAP.GAAP, and excludes contingent rental payments, such as participation rents.
(3) 
Property was purchased with no lease atLease provides for a participation rent component based on the time of acquisition.gross crop revenues earned on the farm. The rent figure above represents only the minimum cash guaranteed under the lease.
Existing Properties
Lease Renewals
During the three months ended March 31, 2018, we terminated the leases on two of our farms in Cochise County, Arizona, early and entered into two new lease agreements with a new tenant. Each of the new leases is for a term of one year and provides for aggregate minimum rents of approximately $480,000, which represents a total decrease of approximately $203,000 (approximately 29.7%) from that of the prior leases (before each of their terminations). However, each of the new leases also contains a variable rent component based on the total gross revenues earned on the respective farms, whereas the prior leases were both fixed-rent leases. In addition, both of the new leases are pure, triple-net lease agreements, whereas one of the prior leases was a partial-net lease (with us responsible for the property taxes on the farm).In connection with one of the early lease terminations, on the termination date, the lease had a deferred rent liability balance of approximately $84,000. In accordance with ASC 360-10, we recognized this balance as additional rental income during the three months ending March 31, 2018 (on the lease termination date). In connection with the other early lease termination, a full allowance of the respective lease’s deferred rent asset balance (which was approximately $50,000) was recorded to bad debt expense during the

three months ended December 31, 2017. No downtime was incurred as a result of the early terminations and re-leasing of these farms, nor were any leasing commissions or tenant improvements incurred in connection with the new leases.
Project Completion
In connection with a lease amendment executed on one of our Florida properties in June 2017, we committed to providing additional capital to expand and upgrade the existing cooler on the property. These improvements were completed during the three months ended March 31, 2018, at a total cost of approximately $748,000. As a result of these improvements (and pursuant to the lease amendment), we expect to receive approximately $302,000 of additional rent throughout the term of the lease, which expires on June 30, 2022.
TRS Lease Assumption
On October 17, 2017, Land Advisers entered into an Assignment and Assumption of Agricultural Lease (the “Assigned TRS Lease”) with the previously-existing tenant on one of our farms located in Ventura County, California. The Assigned TRS Lease, as amended, is scheduled to expire on July 31, 2018. In addition, in connection with the initial operations on the farm, on October 17, 2017, Land Advisers issued a $1.7 million unsecured promissory note to the Company that is scheduled to mature on July 31, 2018, and will bear interest at a rate equal to the prime rate plus a spread of 5.0% per annum.
During the three months ended March 31, 2018, revenues from the sale of harvested crops was approximately $2.5 million, and costs allocated to these sales totaled approximately $2.4 million (including the allocation of a fee earned by our Adviser from Land Advisers of approximately $66,000, which is included within Management fee on the accompanying Condensed Consolidated Statement of Operations). These amounts (excluding the portion of the fee earned by our Adviser from Land Advisers) are included within Other operating revenues and Other operating expenses, respectively, on the accompanying Condensed Consolidated Statement of Operations.Leasing Activity
The amount of rent and interest Land Advisers pays to us (asfollowing table summarizes the parent-landlord) will not be qualifying income for purposes of certain ofleasing activity that has occurred on our REIT tests; however, we do not expect such amounts to be at a level where we are at risk of not qualifying as a REIT. In addition, any taxable income generated by Land Advisers (whose operations are consolidated within our financial statements) will be subject to corporate-level income taxes without the benefit of the deduction for dividends paid.
Property and Casualty Loss
In January 2018, a lightning strike damaged the power plant that supplies power to one of our Arizonaexisting properties damaging certain irrigation improvements on the property. We estimated the carrying value of the improvements damaged by the lightning strike to be approximately $129,000. During the three months ended March 31, 2018, we wrote down the carrying values of the damaged improvements by approximately $129,000, and we also recorded a corresponding property and casualty loss on the accompanying Condensed Consolidated Statement of Operations.
Repairs were completed on the damaged irrigation improvements during the three months ended March 31, 2018. During the three months ended March 31, 2018, we incurred approximately $81,000 to repair the damaged improvements, of which approximately $34,000 was capitalized as real estate additions and $47,000 was recorded as repairs and maintenance expense, which is included within Property operating expenses on the accompanying Condensed Consolidated Statements of Operations.
All of the improvements damaged on these farms were insured, either by us or the tenant, at the time of the lightning strike, and we believe at least partial recovery of the damage-related costs incurred is probable. However, we are still in the process of assessing the amount expected to be recovered, as well as the collectability of such amounts; thus, no offset to the loss has been recorded as of March 31, 2018.
Financing Activity
Debt Activity
Sincesince January 1, 2018, through the date of this filing, we have incurred the following new, long-term borrowings2019 (dollars in thousands)thousands, except footnotes):
Lender(1)
 
Aggregate
Principal Amount
 Maturity Date 
Stated Interest
Rates
(2)
 Interest Rate Terms
Farmer Mac $1,260
 March 2028 4.47% Fixed throughout term
Farm Credit West 1,473
 May 2038 4.24%
(3) 
Fixed through April 2023 (variable thereafter)
  $2,733
      
    
PRIOR LEASES(1)
 
NEW LEASES(2)
Farm
Locations
Number
of
Leases
Total
Farm
Acres
 
Total
Annualized
Straight-line
Rent(3)
# of Leases
with
Participation
Rents
Lease
Structures
(# of NNN
/ NN)
 
Total
Annualized
Straight-line
Rent
(3)
Wtd. Avg.
Term
(Years)
# of Leases
with
Participation
Rents
Lease
Structures
(# of NNN
/ NN)
AZ, CA, FL,
MI, & NE
124,431 $2,158
18 / 4 $2,189
3.238 / 4
(1) 
For further discussion on borrowings from each of these lenders, refer to Note 4, “Borrowings,” in the notes to our accompanying condensed consolidated financial statements.Includes a farm that was previously vacant.
(2) 
Where applicable, rate is before interest patronage, or refunded interest.In connection with certain of these leases, we committed to provide aggregate capital of up to $420,000 for certain improvements on these farms.

(3) 
In February 2018, we received interest patronage of approximately $126,000 related to interest accruedAnnualized straight-line rent is based on loans from Farm Credit West during the year ended December 31, 2017, which resulted in a 19.7% reduction (approximately 75 basis points) tominimum cash rental payments guaranteed under the stated interest ratesleases (presented on an annualized basis), as required under GAAP, and excludes contingent rental payments, such borrowings.as participation rents.
Equity ActivityProject Completions
Secondary Offerings
In MarchDuring the year ended December 31, 2018, we completed an overnight public offeringreplaced 23 irrigation pivots on one of our common stock, resultingproperties in the issuance of 1,100,000 shares of our common stock for gross proceedsColorado at a total cost of approximately $13.4 million and net proceeds (after deducting underwriting discounts and direct offering expenses borne by us) of approximately $12.7$1.4 million. In addition, in April 2018,Pursuant to a lease amendment executed during the underwriters exercised the over-allotment optionthree months ended March 31, 2019, in connection with this offering, and, as a result,project, we issued anwill earn additional 165,000 shares for gross proceedsstraight-line rental income of approximately $2.0 million$117,000 per year throughout the remaining term of the lease, which is currently set to expire on February 28, 2021.
For information on certain other ongoing capital improvement projects, see Note 7, “Commitments and net proceedsContingencies—Operating Obligations,” in the accompanying notes to our consolidated financial statements.
Financing Activity
Debt Activity
Issuer 
Date of
Issuance
 Amount 
Maturity
Date
 
Principal
Amortization
 
Interest Rate Terms(1)
Premier Farm Credit, FLCA 2/7/2019 $1,440
 11/1/2043 25.0 years 5.45%, fixed through October 31, 2023 (variable thereafter)
(1)
Stated rate is before refunded interest, or interest patronage (as described further in Note 4, “Borrowings,” in the accompanying notes to our condensed consolidated financial statements).
Gladstone Securities, LLC, (“Gladstone Securities”), an affiliate of ours, earned total financing fees of approximately $1.9 million.$2,000 in connection with securing this financing.
At-the-Market Program
On August 7, 2015, we entered into equity distribution agreements (“Sales Agreements”) with Cantor Fitzgerald & Co. and Ladenburg Thalmann & Co., Inc. (each a “Sales Agent”), under which we may issue and sell, from time to time and through the Sales Agents, shares of our common stock having an aggregate offering price of up to $30.0 million (the “ATM Program”).
Since January 1, 2018, through the date of this filing, we sold 316,925 shares of our common stock under the ATM Program at an average sales price of $13.00 per share for both gross and net proceeds of approximately $4.1 million. To date, we have sold 925,561 shares of our common stock at an average sales price of $12.83 per share under the ATM Program for gross proceeds of approximately $11.9 million and net proceeds (after deducting offering expenses borne by us) of approximately $11.7 million.
OP Unit Redemptions
Since January 1, 2018, through the date of this filing, a total of 37,500 OP Units were tendered for redemption. As a result, we issued 7,700 shares of common stock (in exchange for 7,700 of the tendered OP Units), and we satisfied the redemption of the remaining 29,800 of the tendered OP Units with a cash payment of approximately $400,000 (approximately $13.42 per OP Unit). Currently, there are 970,605 OP Units held by non-controlling limited partners outstanding and eligible to be tendered for redemption.Equity Activity
Series B Preferred Stock

On January 10,May 31, 2018, we filed a prospectus supplement with the U.S. Securities and Exchange Commission (the “SEC”) for a continuous public offering of up to 6,000,000 shares (the “Primary Offering”) of our newly-designated 6.00% Series B Cumulative Redeemable Preferred Stock (the “Series B Preferred Stock”) at an offering price of $25.00 per share for gross proceeds of up to $150.0 million and expected net proceeds after(after deducting dealer-manager fees, selling commissions, and estimated expenses of the offering payable by us,us) of up to approximately $131.3 million, assuming all shares of the Series B Preferred Stock are sold in the Primary Offering. We are also offering up to 500,000 additional shares of the Series B Preferred Stock pursuant to our dividend reinvestment plan (the “DRIP”) to those holders of the Series B Preferred Stock who elect to participate in the DRIP. The Series B Preferred Stock is being offered on a continuous, “reasonable best efforts” basis by Gladstone Securities, LLC, (“Gladstone Securities”), our dealer-manager for the Primary Offering. Gladstone Securities, an affiliate of ours, is a privately-held broker-dealer and a member of the Financial Industry Regulatory Authority and the Securities Investor Protection Corporation. See Note 6, “Related-partyRelated-Party Transactions—Gladstone Securities—Dealer-Manager Agreement,” within the accompanying notes to our accompanying condensed consolidated financial statements for more details on the Dealer ManagerDealer-Manager Agreement.
From January 1, 2019, through the date of this filing, we sold 1,092,947 shares of the Series B Preferred Stock for gross proceeds of approximately $27.0 million and net proceeds (after deducting selling commissions and dealer-manager fees borne by us) of approximately $24.6 million. Aggregate selling commissions and dealer-manager fees paid to Gladstone Securities as a result of these sales were approximately $2.4 million (of which approximately $2.3 million was remitted by Gladstone Securities to unrelated third-parties involved in the offering, such as participating broker-dealers and wholesalers). In addition, to date, 600 shares of the Series B Preferred Stock have been tendered for redemption at a cash redemption price of $22.50 per share. As such, we paid a total redemption price of approximately$13,500 to redeem and retire these shares.
The offering of the Series B Preferred Stock will terminate on the date (the “Termination Date”) that is the earlier of either January 10,June 1, 2023 (unless terminated earlier or extended by our Board of Directors), or on the date on which all 6,000,000 shares offered in the Primary Offering are sold.
sold (the “Termination Date”). There is currently no public market for shares of the Series B Preferred Stock; however, we intend to apply to list the Series B Preferred Stock on Nasdaq or another national securities exchange within one calendar year after the offering’s Termination Date, though there can be no assurance that a listing will be achieved in such timeframe, or at all.
We intend to use the net proceeds from the Series B Offering to repay existing indebtedness, to fund future acquisitions, and for other general corporate purposes. No sales of the Series B Preferred Stock have been madeOP Unit Redemptions
From January 1, 2019, through the date of this filing.filing, a total of 570,879 OP Units were tendered for redemption by non-controlling OP Unitholders, and we satisfied the redemption by issuing 570,879 shares of common stock in exchange for the tendered OP Units. Currently, there are no outstanding OP Units held by non-controlling OP Unitholders.
Our Adviser and Administrator
We are externally managed pursuant to contractual arrangements with our Adviser and our Administrator (both affiliates of ours), which collectively employ all of our personnel and pay their salaries, benefits, and general expenses directly. The

investment advisory agreement with our Adviser, that was in effect through March 31, 2017as amended (the “Prior Advisory“Advisory Agreement”), and the current administration agreement with our Administrator (the “Administration Agreement”) each became effective February 1, 2013. On April 11, 2017, we entered into the Amended Advisory Agreement with our Adviser that became effective beginning with the three months ended June 30, 2017 (the “Amended Advisory Agreement”).
A summary of the compensation terms for each of the Prior Advisory Agreement and the Amended Advisory Agreement is provided in Note 6, “Related-PartyRelated-Party Transactions,” within the accompanying notes to our condensed consolidated financial statements.
Critical Accounting Policies
The preparation of our financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) requires management to make judgments that are subjective in nature to make certain estimates and assumptions. Application of these accounting policies involves the exercise of judgment regarding the use of assumptions as to future uncertainties, and, as a result, actual results could materially differ from these estimates. A summary of our significant accounting policies is provided in Note 2 to our consolidated financial statements in our Form 10-K. There were no material changes to our critical accounting policies during the three months ended March 31, 2018.2019.
Smaller Reporting Company Status
We currently qualify as a “smaller reporting company” under Rule 12b-2 of the Exchange Act, which is defined as a company with a public equity float of less than $250 million or less than $100 million in annual revenues for the previous year and no public float. Companies can also qualify as a smaller reporting company if they have annual revenues of less than $100 million for the previous year and a public float of less than $700 million. As a smaller reporting company, we have reduced disclosure requirements for our public filings, including the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.
RESULTS OF OPERATIONS

For the purposes of the following discussions on certain operating revenues and expenses:
Withexpenses with regard to the comparison between the three months ended March 31, 2019 and 2018:
Same-property basis represents properties owned as of December 31, 2017, and were not vacant at any point during either period presented;
Properties acquired during the prior-year period are properties acquired during the three months ended March 31, 2018 versus 2017:(including one farm that we purchased without a lease in place and was mostly vacant during a majority of the period);
Same-property basis represents properties owned as of December 31, 2016, and were not vacant at any point during either period presented;
Properties acquired during the prior-year period are properties acquired during the three months ended March 31, 2017;
Properties acquired subsequent to prior-year period are properties acquired subsequent to March 31, 2017 (including one farm acquired during the three months ended March 31, 2018, which was purchased without a lease and remained vacant throughout the period); and
Disposed of, vacant, or self-operated farms represent properties that were either (i) disposed of during either period presented, (ii) vacant at any point during either period presented, or (iii) operated by a wholly-owned subsidiary of ours (in which case no rental revenue would have been recognized on our consolidated statements of operations). We did not have any vacancies on any properties included in the same-property analysis during either of the three months ended March 31, 2018 or 2017; however, we did sell one property during the three months ended December 31, 2017. In addition, one of our farms was leased to Land Advisers during the three months ended March 31, 2018.
Properties acquired subsequent to prior-year period are properties acquired subsequent to March 31, 2018; and
Disposed of, vacant, or self-operated farms represent properties that were either (i) disposed of during either period presented, (ii) vacant (either wholly or partially) at any point during either period presented, or (iii) operated by a wholly-owned subsidiary of ours (in which case no rental revenue would have been recognized on our consolidated statements of operations). We sold one farm during the three months ended September 30, 2018, and we had two farms that were vacant for a portion of the three months ended March 31, 2019. In addition, one of our farms was leased to Land Advisers during a portion of the three months ended March 31, 2018.
A comparison of our operating results for the three months ended March 31, 20182019 and 20172018 is below (dollars in thousands):

 For the Three Months Ended March 31,    For the Three Months Ended March 31,    
 2018 2017 $ Change % Change2019 2018 $ Change % Change
Operating revenues:             
Rental revenue $6,688
 $5,748
 $940
 16.4%
Tenant recovery revenue 6
 2
 4
 200.0%
Lease revenue:      
Fixed base rents, net$7,773
 $6,672
 $1,101
 16.5%
Variable rents57
 22
 35
 159.1%
Total lease revenue7,830
 6,694
 1,136
 17.0%
Other operating revenues 2,551
 
 2,551
 NM
 2,551
 (2,551) NM
Total operating revenues 9,245
 5,750
 3,495
 60.8%7,830
 9,245
 (1,415) (15.3)%
Operating expenses:             
Depreciation and amortization 2,189
 1,472
 717
 48.7%2,597
 2,189
 408
 18.6%
Property operating expenses 428
 284
 144
 50.7%816
 428
 388
 90.7%
Acquisition-related expenses 134
 9
 125
 1,388.9%
Management and incentive fees, net of fee credits 656
 744
 (88) (11.8)%
Base management fee, net of credits336
 656
 (320) (48.8)%
Administration fee 274
 227
 47
 20.7%306
 274
 32
 11.7%
General and administrative expenses 419
 410
 9
 2.2%550
 553
 (3) (0.5)%
Other operating expenses 2,359
 
 2,359
 NM
 2,359
 (2,359) NM
Total operating expenses 6,459
 3,146
 3,313
 105.3%
Total operating expenses, net of credits4,605
 6,459
 (1,854) (28.7)%
Operating income 2,786
 2,604
 182
 7.0%3,225
 2,786
 439
 15.8%
Other income (expense)       
Other income (expense):      
Other income 315
 184
 131
 71.2%826
 315
 511
 162.2%
Interest expense (2,832) (2,157) (675) 31.3%(3,453) (2,832) (621) 21.9%
Distributions on Series A Term Preferred Stock (458) (458) 
 —%
Dividends declared on Series A Term Preferred Stock(458) (458) 
 —%
Loss on dispositions of real estate assets, net(32) 
 (32) NM
Property and casualty loss (129) 
 (129) NM
 (129) 129
 NM
Total other expense (3,104) (2,431) (673) 27.7%
Net (loss) income (318) 173
 (491) (283.8)%
Net loss (income) attributable to non-controlling interests 21
 (21) 42
 (200.0)%
Net (loss) income attributable to the Company $(297) $152
 $(449) (295.4)%
Total other expense, net(3,117) (3,104) (13) 0.4%
Net income (loss)108
 (318) 426
 NM
Net (income) loss attributable to non-controlling interests(3) 21
 (24) NM
Net income (loss) attributable to the Company105
 (297) 402
 NM
Dividends declared on Series B Preferred Stock(601) 
 (601) NM
Net loss attributable to common stockholders$(496) $(297) $(199) 67.0%
NM = Not Meaningful
Operating Revenues
Same-property Analysis (dollars in thousands)
Rental Revenue:For the Three Months Ended March 31,
2018 2017 $ Change % Change
Same-property Analysis (dollars in thousands)For the Three Months Ended March 31,
Lease revenue—Fixed base rents, net:2019 2018 $ Change % Change
Same-property basis$4,981
 $4,904
 $77
 1.6%$6,302
 $6,328
 $(26) (0.4)%
Properties acquired during prior-year period732
 645
 87
 13.5%80
 8
 72
 900.0%
Properties acquired subsequent to prior-year period975
 
 975
 1,175
 
 1,175
 —%
Disposed of, vacant, or self-operated properties
 199
 (199) 216
 336
 (120) (35.7)%
$6,688
 $5,748
 $940
 16.4%
Total fixed base rents, net$7,773
 $6,672
 $1,101
 16.5%
Rental revenues onOn a same-property basis, increasedfixed base rents for the three months ended March 31, 2018, as compared to2019, decreased by 0.4% from the prior-year period, by 1.6%. This increase was primarily due to approximately $84,000decreases in the fixed base rent component of certain of our recent lease renewals, partially offset by additional rental income recognized during the three months ended March 31, 2018, in connection with an early lease termination. Rental revenuesrevenue earned on recent capital improvements completed on certain of our properties. Fixed base rents from acquired properties increased for the three months ended March 31, 2018,2019, as compared to the prior-year period, due to the additional revenues recorded from owning the one farmtwo farms we acquired during the three months ended March 31, 2017,2018, for the full three-month period ended March 31, 2018,2019, coupled with additional revenues earned fromon the 1712 new farms we acquired subsequentSubsequent to March 31, 2017. In addition, during the three months ended March 31, 2018, we received a variable rent payment of approximately $17,000 from a property in North Carolina that was acquired during the three months ended June 30, 2017, which was recorded as additional rental revenue upon receipt. No variable rent revenues were recorded during the prior-year period. Rental revenues2018. Fixed base rents from disposed of, vacant, or self-operated properties decreased for the three months ended March 31, 2018,2019, as compared to the prior-year period, due primarily to the loss of rental income on a farm sold in July 2018, coupled with vacancies on two of our farms in Nebraska during a portion of the onethree months ended March 31, 2019. This decrease was partially offset by the rental revenue earned on a 169-acre farm in California that is

currently being farmedwas previously operated by Land Advisers, (revenueas revenue from rents owed to us by Land Advisers iswas eliminated upon consolidation).consolidation. Effective August 1, 2018, this farm was leased to a new, unrelated third-party tenant under a 10-year lease.
Variable rents consist of participation rents earned on certain of our farms (which amounts are based on the gross revenues earned on the respective farms) and tenant-reimbursed property-operating expenses on certain of our farms (including property taxes, insurance premiums, and other property-related expenses), or tenant recovery revenue. During the three months ended March 31, 2019 and 2018, as a resultwe earned approximately $27,000 and $16,000, respectively, of Land Advisers operating this farm,participation rents from two blueberry farms located in North Carolina. In addition, during the three months ended March 31, 2019 and 2018, we recognized additional net earningsrecorded tenant recovery revenue of approximately $108,000, as compared to approximately $181,000 of rental income earned on this farm during the prior-year period.
Other Operating Revenues
Tenant recovery revenue represents real estate taxes, insurance premiums,$30,000 and other property-operating expenses paid on certain of our properties that, per the respective leases, are required to be reimbursed to us by the tenant. Corresponding$6,000, respectively, which amounts were also recorded as property operating expenses during the period.respective periods. The increase in tenant recovery revenue for the three months ended March 31, 2019, as compared to the prior-year period, was due to additional contractual reimbursements of property taxes on certain of our farms.
Other operating revenues primarily represent revenuesrevenue earned from sales of harvested crops on thea farm that was operated by Land Advisers from October 17, 2017, until July 31, 2018, at which began operatingtime the farm on October 17, 2017.was leased to a new, unrelated third-party tenant under a 10-year lease.
Operating Expenses
Same-property Analysis (dollars in thousands)
Same-property Analysis (dollars in thousands)For the Three Months Ended March 31,
Depreciation and amortization:For the Three Months Ended March 31,2019 2018 $ Change % Change
2018 2017 $ Change % Change
Same-property basis$1,463
 $1,431
 $32
 2.2%$2,308
 $2,103
 $205
 9.7%
Properties acquired during prior-year period17
 14
 3
 21.4%30
 8
 22
 275.0%
Properties acquired subsequent to prior-year period709
 
 709
 202
 
 202
 —%
Disposed of, vacant, or self-operated properties
 27
 (27) 57
 78
 (21) (26.9)%
$2,189
 $1,472
 $717
 48.7%$2,597
 $2,189
 $408
 18.6%
Depreciation and amortization expense on a same-property basis increased for the three months ended March 31, 2018,2019, as compared to the prior-year period, primarily as a result of additional depreciation on site improvements completed on certain properties subsequent to MarchDecember 31, 2017, partially offset by the expiration of certain lease intangible amortization periods subsequent to December 31, 2017. Depreciation and amortization expense on acquired properties increased for the three months ended March 31, 2018,2019, as compared to the prior-year period, due to the additional depreciation and amortization expense recorded from owning the one farmtwo farms we acquired during the three months ended March 31, 2017, for the full, three-month period ended March 31, 2018, coupled with the additional depreciation and amortization expense incurred on the 1712 new farms we acquired subsequent to March 31, 2017.2018. Depreciation and amortization expenses fromexpense on disposed of, vacant, or self-operated properties decreased for the three months ended March 31, 2018,2019, as compared to the prior-year period, primarily as a result of the propertya farm sold during the three months ended December 31, 2017.in July 2018.

Same-property Analysis (dollars in thousands)For the Three Months Ended March 31,
Property operating expenses:For the Three Months Ended March 31,2019 2018 $ Change % Change
2018 2017 $ Change % Change
Same-property basis$245
 $266
 $(21) (7.9)%$711
 $387
 $324
 83.7%
Properties acquired during prior-year period43
 15
 28
 186.7%25
 2
 23
 1,150.0%
Properties acquired subsequent to prior-year period140
 
 140
 15
 
 15
 —%
Disposed of, vacant, or self-operated properties
 3
 (3) 35
 33
 2
 6.1%
Tenant-reimbursed property operating expenses(1)
30
 6
 24
 400.0%
$428
 $284
 $144
 50.7%$816
 $428
 $388
 90.7%
(1)
Represents certain operating expenses (real estate taxes, insurance premiums, and other property-operating expenses) paid by us that, per the respective leases, are required to be reimbursed to us by the tenant. Corresponding amounts were also recorded as lease revenue during the respective periods.
Property operating expenses consist primarily of real estate taxes, repair and maintenance expense, insurance premiums, and other miscellaneous operating expenses paid for certain of our properties. Property operating expenses on a same-property basis decreasedincreased by approximately $324,000 for the three months ended March 31, 2018,2019, as compared to the prior-year period,period. This increase was primarily due todriven by temporary generator rental costs for newly-drilled wells on one of our properties, as well as additional expenses incurred in the prior-year period related to obtaining certain permits on twoone of our California properties. We expect the generator rental expense to continue into the second quarter of 2019 at a reduced level and concluding by June 30, 2019. Property operating expenses on acquired properties increased for the three months ended March 31, 2018,2019, as compared to the prior-year period, primarily due to additional property taxes and othermiscellaneous property-operating expenses (particularly repairs and maintenance expenses) incurred on certain of the new farms we acquired subsequent to MarchDecember 31, 2017, as two2017. Property operating expenses on disposed of, the leases acquired were gross leases. On our overall portfolio,vacant, or self-operated properties for the three months ended March 31, 2018, we accrued approximately $212,000 of aggregate real estate taxes related to certain of our farms,2019, remained relatively flat as compared to approximately $161,000 for the prior-year period.
Other Operating Expenses
Acquisition-related The increase in tenant-reimbursed property operating expenses generally consist of legal fees and fees incurred for third-party reports prepared in connection with potential acquisitions and the related due diligence analyses. Acquisition-related expenses increased for the three months ended March 31, 2018,2019, as compared to the prior-year period, was due to additional property taxes paid by us on certain of our properties, for which the tenant is contractually obligated to reimburse us per the respective leases.
The base management fee to our Adviser, net of any credits, decreased for the three months ended March 31, 2019, as compared to the prior-year period, primarily due to a larger number of transactions currently in our

due diligence process, as well as a couple of properties that were under signed purchase and sale agreements not being consummated, which resulted in the related due diligence costs being expensed (rather than capitalized, as they would have been had the respective properties been acquired). As of March 31, 2018, we have capitalized approximately $13,000 of acquisition-related costs (which costs were incurredan increased fee credit during the three months ended March 31, 2018) related to farms we expect to acquire during the six months ending September 30, 2018, as these acquisitions are reasonably assured to be completed and are expected to be treated as asset acquisitions. These costs are included in Other assets, net on the accompanying Condensed Consolidated Balance Sheet as of March 31, 2018.
The aggregate net fees to our Adviser, including both the management and incentive fees and any credits to those fees, decreased for the three months ended March 31, 2018, as compared to the prior-yearcurrent-year period. For the three months ended March 31, 2018,2019, the gross base management fee (inclusive of the allocation of a fee earned by our Adviser from Land Advisers of approximately $66,000) increased by approximately $262,000,$249,000 from the prior-year period, primarily due to additional common equity raised since January 1, 2017.2018. From January 1, 2017,2018, through March 31, 2018,2019, we have raised approximately $56.6$86.7 million of net proceeds (net of both direct costs and allocated indirect costs) through sales of our Series B Preferred Stock, follow-on common stock offerings, and our ATM Program, increasingall of which increased the base on which the base management fee is calculated, which, until March 31, 2017, was the book value of our common stockholders’ equity, as stipulated in the Prior Advisory Agreement. Pursuant to the Amended Advisory Agreement, which became effective beginning with the three months ended June 30, 2017, the base on which the management fee is calculated was adjusted to include, among other items, the balance of non-controlling interests in our operating partnership, which further increased the management fee recorded for the three months ended March 31, 2018. The increase to the management feecalculated. In addition, during the three months ended March 31, 2018, was offset by a decrease in the incentive fee earned by our Adviser. During the prior-year period,2019, our Adviser earned an incentive feegranted us a non-contractual, unconditional, and irrevocable waiver of approximately $350,000 due$569,000 to our Pre-Incentive Fee FFO exceedingbe applied against the required hurdle rate of the applicable equity base (which, through March 31, 2017, was total stockholders’ equity, as stipulated in the Prior Advisory Agreement; beginning with the three months ended June 30, 2017, the applicable equity base was Total Adjusted Equity (which includes non-controlling interests in the Operating Partnership), as stipulated in the Amended Advisory Agreement). No incentive fee was earned by our Adviser during the three months ended March 31, 2018. See “Our Adviser and Administrator” within Note 6, “Related-Party Transactions,” in the accompanying notes to our condensed consolidated financial statements for further discussion on the compensation terms stipulated in each of the Prior Advisory Agreement and the Amended Advisory Agreement.management fee.
The administration fee paid to our Administrator increased for the three months ended March 31, 2018,2019, as compared to the prior-year period, primarily due to higher overall costs incurred by our Administrator and usour using a higher share of our Administrator’s resources in relation to those used by other funds and affiliated companies serviced by our Administrator during the three months ended March 31, 2018.Administrator.
General and administrative expenses, which consist primarily of professional fees, director fees, stockholder-related expenses, overhead insurance, acquisition-related costs for investments no longer being pursued, and certain other general and administrativemiscellaneous expenses, remained relatively flat for the three months ended March 31, 2018,2019, as compared to the prior-year period.
Other operating expenses represent the portion of growing costs, harvesting and selling costs, and certain overhead costs allocated to the costs of crops sold on thea farm that was operated by Land Advisers.Advisers from October 17, 2017, until July 31, 2018. During the three months ended March 31, 2018, we allocated approximately $2.4 million of costs to the crops sold during the period (excluding the allocation of a feefees earned by our Adviser from Land Advisers of approximately $66,000). Land Advisers began operatingEffective August 1, 2018, the farm on October 17, 2017.was leased to a new, unrelated third-party tenant under a 10-year lease.
Other Income (Expense)
Other income, which consists primarily of interest patronage received from Farm Credit (as defined in Note 4, “Borrowings,Borrowings,” in the accompanying notes to our accompanying condensed consolidated financial statements) and interest earned on short-term investments, increased for the three months ended March 31, 2018,2019, as compared to the prior-year period, primarily driven by additional interest patronage received from Farm Credit (due to increased borrowings from Farm Credit). During the three months ended March 31, 2018,2019, we recorded approximately $314,000$700,000 of interest patronage from Farm Credit related to interest accrued during 2017,2018, compared to $183,000approximately $314,000 of interest patronage recorded during the prior-year period. The receipt of interest patronage received from Farm Credit during 20182019 resulted in a 18.0%21.2% decrease (approximately 7195 basis points) in our effective interest rate on our aggregate borrowings from Farm Credit during the year ended December 31, 2017.
The property and casualty loss incurred2018. In addition, during the three months ended March 31, 2018,2019, we recognized $110,000 of income as a result of accumulated deferred revenue related to

a lightning strike that damaged the power plant supplying power tosale agreement for one of our Arizona properties, causing damage to certain irrigation improvements on our property. As of March 31, 2018, we estimatedfarms that was terminated. Payments received from the carrying valuepotential buyer of the improvements damaged by the lightning strike to be approximately $129,000,farm were initially deferred and we recognized the write-down in the carrying valueas income upon termination of the assets as a property and casualty loss during the three months ended March 31, 2018.agreement.
Interest expense increased for the three months ended March 31, 2018,2019, as compared to the prior-year period, primarily due to increased overall borrowings. The weighted-average principal balance of our aggregate borrowings (excluding our Series A

Term Preferred Stock) outstanding for the three months ended March 31, 2018,2019, was approximately $305.3$336.3 million, as compared to approximately $251.0$305.3 million for the prior-year period. Including interest patronage received on certain of our Farm Credit borrowings, the overall effective interest rate charged on our aggregate borrowings (excluding the impact of debt issuance costs) was 3.10% for each of the three months ended March 31, 2019 and 2018.
During each of three months ended March 31, 2019 and 2018, we paid aggregate distributions on our Series A Term Preferred Stock (which distributions are treated similar to interest expense) of approximately $458,000.
During the three months ended March 31, 2019, we recorded a net loss of approximately $32,000 related to the disposal of certain irrigation improvements on one of our farms.
The property and casualty loss incurred during the three months ended March 31, 2018, related to a natural disaster that damaged certain irrigation improvements on one of our properties. We estimated the aggregate carrying value of the damaged improvements to be approximately $129,000, and we recognized the write-down in the carrying value of the assets as compared to 2.96%, fora property and casualty loss during the prior-year period.three months ended March 31, 2018.
LIQUIDITY AND CAPITAL RESOURCES
Overview
Since our IPO in January 2013, we have invested approximately $417.9$541.5 million into 64in 77 new farms, and we have expended or accrued an additional $28.2$26.5 million for capital improvements on existing properties. Our current short- and long-term sources of funds include cash and cash equivalents, cash flows from operations, borrowings (including the undrawn commitments available under the MetLife Facility, and the Farmer Mac Facility, each as defined below under “—Debt Capital”Capital), and issuances of additional equity securities. Our current available liquidity is approximately $18.7$20.7 million, consisting of approximately $2.2$5.6 million in cash on hand and, based on the current level of collateral pledged, $16.5$15.1 million of availability under the MetLife Facility subject(subject to compliance with covenants.covenants).
As of March 31, 2018,2019, our total-debt-to-total-capitalization ratio (including our Series A Term Preferred Stock as debt), at book value, was 70.9%65.0%, which is down from 73.6%66.8% as of December 31, 2017.2018. However, on a fair value basis, our total-debt-to-total capitalization ratio (including our Series A Term Preferred Stock as debt) as of March 31, 2018,2019, was 58.7%56.9%, which is down from 61.1%57.4% as of December 31, 20172018 (see “Non-GAAPNon-GAAP Financial Information—Net Asset Value”Value below for an explanation of our fair value process).
Future Capital Needs
Our short- and long-term liquidity requirements consist primarily of making distributions to stockholders (including to non-controlling OP Unitholders)Unitholders, if any) to maintain our qualification as a REIT, funding our general operating costs, making principal and interest payments on outstanding borrowings, making dividend payments on our Series A Term Preferred Stock (and on ourand Series B Preferred Stock, if and when shares are sold), and, as capital is available, funding new farmland and farm-related acquisitions consistent with our investment strategy.
We believe that our current and short-term cash resources will be sufficient to fund our distributions to stockholders (including non-controlling OP Unitholders), service our debt, pay dividends on our Series A Term Preferred Stock (and on ourand Series B Preferred Stock, if and when shares are sold), and fund our current operating costs in the near term. We expect to meet our long-term liquidity requirements through various sources of capital, including future equity issuances (including, but not limited to, shares of common stock through our ATM Program, OP Units through our Operating Partnership as consideration for future acquisitions, and shares of our Series B Preferred Stock), long-term mortgage indebtedness and bond issuances, and other secured and unsecured borrowings.
We intend to use a significant portion of any current and future available liquidity to purchase additional farms and farm-related properties.facilities. We continue to actively seek and evaluate acquisitions of additional farms and farm-related propertiesfacilities that satisfy our investment criteria, and our pipeline of potential acquisitions remains healthy. We currently have oneseveral properties under a signed purchase and sale agreement for a proposed purchase price of approximately $37.2 million, whichagreements that we expecthope to be consummatedconsummate during the six months ending September 30, 2018. We currently have access to the capital required to complete these transactions for the proposed purchase price amounts; however, we continue to explore various options for access to additional capital, as evidenced by our recent launch of a continuous offering of the Series B Preferred Stock.2019. We also have many other properties that are in various other stages of our due diligence process, including several properties under signed, non-binding letters of intent. However, all potential acquisitions will be subject to our due diligence investigation of such properties, and there can be no assurance that we will be successful in identifying or acquiring any properties in the future.

Cash Flow Resources
The following table summarizes total net cash flows from operating, investing, and financing activities for the three months ended March 31, 20182019 and 20172018 (dollars in thousands):

For the Three Months Ended March 31,    For the Three Months Ended March 31,    
2018 2017 $ Change % Change2019 2018 $ Change % Change
Net change in cash from:             
Operating activities$2,751
 $2,746
 $5
 0.2%$2,432
 $2,751
 $(319) (11.6)%
Investing activities(9,310) (54,215) 44,905
 (82.8)%(5,717) (9,310) 3,593
 (38.6)%
Financing activities6,300
 51,504
 (45,204) (87.8)%11,663
 6,300
 5,363
 85.1 %
Net change in Cash and cash equivalents$(259) $35
 $(294) (840.0)%$8,378
 $(259) $8,637
 (3,334.7)%
Operating Activities
The majority of cash from operating activities is generated from the rental payments we receive from our tenants, which is first used to fund our property-level operating expenses, with any excess cash being primarily used for principal and interest payments on our borrowings, management fees to our Adviser, administrative fees to our Administrator, and other corporate-level expenses. Cash provided by operating activities remained relatively flatdecreased for the three months ended March 31, 2018,2019, as compared to the prior-year period, asprimarily due to the timing of certain rental receipts from crop sales and additional rental payments received during the three months ended March 31, 2018, were largely offset by the additional costs incurred in connection with the operations on the farm leased to Land Advisers and increased interest payments made during the three months ended March 31, 2018, as compared to the prior-year period.2019.
Investing Activities
The decrease in cash used in investing activities during the three months ended March 31, 2018,2019, as compared to the prior-year period, was primarily due to a decrease in aggregate cash paid for acquisitions of new farms and capital improvements on existing farms during the three months ended March 31, 2018,2019, which was approximately $48.5$4.1 million less than the prior-year period. This decrease was partially offset by an increase of approximately $4.0 million in cash paid for capital improvements made on existing properties during the three months ended March 31, 2018, as compared to the prior-year period.
Financing Activities
The decreaseincrease in cash provided by financing activities during the three months ended March 31, 2018,2019, as compared to the prior-year period, was primarily due to decreaseda decrease in net repayments of borrowings, as our net repayments of borrowings for the three months ended March 31, 2018,2019, decreased by approximately $41.6$5.9 million from that of the prior-year period. In addition, aggregate net cash proceeds received from issuances of newPartially offsetting this was an increase in distributions paid on certain equity securities, including our Series B Preferred Stock, common stock, (including through overnight public offerings and sales under our ATM Program) during the three months ended March 31, 2018, were approximately $2.9 million less than that of the prior-year period.OP Units.
Debt Capital
MetLife
As amended on December 15, 2017, our facility with Metropolitan Life Insurance Company (“MetLife”) consists of a total of $200.0 million of term notes and $75.0 million of revolving equity lines of credit (the “MetLife Facility”). In aggregate, we currently have approximately $128.9$124.3 million outstanding under the term notes that bearbears interest at a fixed rate of 3.30% per annum (which rate is fixed until January 5, 2027) and $3.9$5.4 million outstanding under the lines of credit that currently bearbears interest at a weighted-average rate of 4.57%4.59% (which rate isrates are variable). While approximately $134.6$134.0 million of the full commitment amount under the MetLife Facility remains undrawn (including approximately $7.6 million of aggregate amortizing principal payments made on the term notes), based on the level of collateral pledged, we currently have approximately $16.5$15.1 million of availability under the MetLife Facility.
Farmer Mac
As amended on June 16, 2016, our agreement with Federal Agricultural Mortgage Corporation (“Farmer Mac”) providesprovided for bond issuances up to an aggregate amount of $125.0 million (the “Farmer Mac Facility”). To date, by December 11, 2018, after which Farmer Mac had the option to be relieved of its obligation to purchase additional bonds under this facility. As of December 11, 2018, we havehad issued aggregate bonds of approximately $87.1$108.7 million under the Farmer Mac Facility, and Farmer Mac is not obligated to purchase the remaining unissued bonds. We are currently in discussions with Farmer Mac to both expand the size of the facility and extend the borrowing period; however, there is no guarantee that we will be able to reach terms favorable to us, if at all. We currently have $85.6$90.6 million of bonds outstanding under the facility that bearsbear interest at a weighted-average

interest rate of 3.15%3.55% (which rates are fixed throughout the bonds’ respective terms) and have a weighted-average maturity date of August 2021. While approximately $37.9 million of the full commitment balance remains undrawn, we currently have no additional availability under the Farmer Mac Facility based on the level of collateral pledged. However, we expect to pledge certain additional potential new property acquisitions as collateral under the Farmer Mac Facility to utilize some or all of this remaining commitment balance. If we have not issued bonds such that the aggregate bond issuances total $125.0 million by December 11, 2018, Farmer Mac has the option to be relieved of its obligation to

purchase additional bonds under this facility. We are currently in discussions with Farmer Mac to both expand the size of the Farmer Mac Facility and extend the borrowing period thereunder.November 2022.
Farm Credit
Since September 19, 2014, we have closed on 1723 separate loans with fiveeight different Farm Credit associations (including Farm Credit CFL, Farm Credit West, CF Farm Credit, Farm Credit FL, and NW Farm Credit, each as defined in(for additional information, see Note 4, “Borrowings,Borrowings,” in the accompanying notes to our accompanying condensed consolidated financial statements) for an aggregate amount of approximately $69.7$114.2 million (the “Farm Credit Notes Payable”). We currently have approximately $62.1$104.3 million outstanding under the Farm Credit Notes Payable that bear interest at an expected weighted-average effective interest rate (net of expected interest patronage) of 3.46%3.83% (which rates are fixed, on a weighted-average basis, until July 2023)September 2024) and have a weighted-average maturity date of July 2031.September 2036. While we do not have any additional availability under any of our Farm Credit programs based on the properties currently pledged as collateral, we expect to enter into additional borrowing agreements with existing and new Farm Credit associations in connection with certain potential new acquisitions in the future.
Equity Capital
SinceThe following table provides information on equity sales that have occurred since January 1, 2018, through the date of this filing, we have completed one overnight common stock offering and have also issued shares of common stock through our ATM Program. In the aggregate, through these transactions, we have issued and sold a total of 1,581,925 shares of our common stock for gross proceeds of approximately $19.5 million and net proceeds (after deducting underwriting discounts and direct offering expenses borne by us) of approximately $18.7 million. In addition, on January 10, 2018, we launched a continuous public offering of up to (including the Primary Offering and the DRIP) $162.5 million of newly-designated Series B Preferred Stock, which will be offered on a continuous, “reasonable best efforts” basis by Gladstone Securities. However, as of the date of this filing, no shares of our Series B Preferred Stock have been sold, and there can be no guarantee with regard to how many shares will be sold, if any.2019 (dollars in thousands, except per-share amounts):
The
Type of Issuance 
Number of
Shares Sold
 
Weighted-average
Offering Price
Per Share
 Gross Proceeds Net Proceeds
Series B Preferred Stock(1)
 1,092,947 $24.71
 $27,012
 $24,591
(1)
Includes 600 shares that were redeemed by us during the three months ended March 31, 2019.
Our 2017 Registration Statement (as defined in Note 8, “Equity—Registration Statement”) permits us to issue up to an aggregate of $300.0 million in securities (including approximately $29.3 million originally reserved for issuance under our ATM Program and up to $162.5$150.0 million reserved for issuance of shares of ourthe Series B Preferred Stock), consisting of common stock, preferred stock, warrants, debt securities, depository shares, subscription rights, and units, including through separate, concurrent offerings of two or more of such securities. To date, we have issued approximately $40.7$67.5 million of common stock (including approximately $11.2$19.9 million through our ATM Program) and have registered $162.5approximately $55.1 million of Series B Preferred Stock under the 2017 Registration Statement.
In addition, we have the ability to, and expect to in the future, issue additional OP Units to third parties as consideration in future property acquisitions.
Contractual Obligations and Off-Balance Sheet Arrangements
Contractual Obligations
The following table reflects our material contractual obligations as of March 31, 2018 (dollars in thousands):
    Payments Due During the
    Remaining Nine
Months of
 Fiscal Years Ending December 31,
Contractual Obligation Total 2018 2019 – 2020 2021 – 2022 2023+
Debt obligations(1)
 $295,030
 $20,315
 $37,561
 $43,800
 $193,354
Interest on debt obligations(2)
 76,746
 6,435
 19,121
 16,563
 34,627
Term Preferred Stock(3)
 28,750
 
 
 28,750
 
Term Preferred Stock dividends(3)
 6,426
 1,377
 3,672
 1,377
 
Operating obligations(4)
 5,234
 2,884
 2,350
 
 
Operating lease obligations(5)
 267
 36
 94
 77
 60
Total $412,453
 $31,047
 $62,798
 $90,567
 $228,041
(1)
Debt obligations include all borrowings (consisting of mortgage notes and bonds payable and our lines of credit) outstanding as of March 31, 2018. Maturity dates of these debt obligations range from July 2018 to November 2041.
(2)
Interest on debt obligations includes estimated interest on our revolving equity lines of credit within the MetLife Facility. The balances and interest rates on such revolving equity lines of credit are variable, thus the amounts of interest calculated for purposes of this table were based upon the balances and interest rates in place as of March 31, 2018.
(3)
Our Series A Term Preferred Stock has a mandatory redemption date of September 30, 2021, and the related dividend payments are treated similar to interest expense on the accompanying Condensed Consolidated Statements of Operations.

(4)
Operating obligations represent commitments outstanding as of March 31, 2018. See Note 8, “Commitments and Contingencies,” in the notes to our accompanying condensed consolidated financial statements for further discussion on each of these operating obligations.
(5)
Operating lease obligations represent ground lease payments due on two of our Arizona farms (1,368 total acres), which are leased from the State of Arizona under leases expiring in February 2022 and February 2025, respectively.
Off-Balance Sheet Arrangements
As of March 31, 2018,2019, we did not have any material off-balance sheet arrangements.
NON-GAAP FINANCIAL INFORMATION
Funds from Operations, Core Funds from Operations and Adjusted Funds from Operations
The National Association of Real Estate Investment Trusts (“NAREIT”) developed funds from operations (“FFO”) as a relative non-GAAP supplemental measure of operating performance of an equity REIT to recognize that income-producing real estate historically has not depreciated on the same basis as determined under GAAP. FFO, as defined by NAREIT, is net income (computed in accordance with GAAP), excluding gains or losses from sales of property and impairment losses on property, plus depreciation and amortization of real estate assets, and after adjustments for unconsolidated partnerships and joint ventures. We further present core FFO (“CFFO”) and adjusted FFO (“AFFO”) as additional non-GAAP financial measures of our operational performance, as we believe both CFFO and AFFO improve comparability on a period-over-period basis and are more useful supplemental metrics for investors to use in assessing our operational performance on a more sustainable basis than FFO. We believe that these additional performance metrics provide investors with additional insight to how management measures our ongoing performance, as each of CFFO and AFFO (and their respective per-share amounts) are used by management and our board of directors, as appropriate, in assessing overall performance, as well as in certain decision-making analysis, including, but not limited to, the timing of acquisitions and potential equity raises (and the type of securities to offer in any such equity raises), the determination of any fee credits, and declarations of distributions on our common stock. We believe that net income is the most directly-comparable GAAP measure to each of FFO, CFFO, and AFFO.
Specifically, we believe that FFO is helpful to investors in better understanding our operating performance, primarily because its calculation excludes depreciation and amortization expense on real estate assets, as we believe that GAAP historical cost

depreciation of real estate assets is generally not correlated with changes in the value of those assets, particularly with farmland real estate, the value of which does not diminish in a predictable manner over time, as historical cost depreciation implies. Further, we believe that CFFO and AFFO are helpful in understanding our operating performance in that it removes certain items that, by their nature, are not comparable on a period-over-period basis and therefore tend to obscure actual operating performance. In addition, we believe that providing CFFO and AFFO as additional performance metrics allows investors to gauge our overall performance in a manner that is more similar to how our performance is measured by management (including their respective per-share amounts), as well as by analysts and the overall investment community.
We calculate CFFO by adjusting FFO for the following items:
 
Acquisition-relatedAcquisition- and disposition-related expenses. Acquisition-relatedAcquisition- and disposition-related expenses (i.e.,(including due diligence costs)costs on acquisitions not consummated and certain auditing and accounting fees incurred directly related to completed acquisitions or dispositions) are incurred for investment purposes and do not correlate with the ongoing operations of our existing portfolio. Further, duecertain auditing and accounting fees incurred vary depending on the number and complexity of acquisitions or dispositions completed during a period. Due to the inconsistency in which these costs are incurred and how they have historically been treated for accounting purposes, we believe the exclusion of these expenses improves comparability of our operating results on a period-to-period basis.
Acquisition-related accounting fees. Certain auditing and accounting fees we incur are directly related to acquisitions and vary depending on the number and complexity of acquisitions completed during a period. Due to the inconsistency in which these costs are incurred, we believe the exclusion of these expenses improves comparability of our operating results on a period-to-period basis.
Other adjustments. We will adjust for certain non-recurring charges and receipts and will explain such adjustments accordingly. During the three months ended June 30, 2018, we modified our definitions of CFFO and AFFO to exclude the net incremental impact of the farming operations conducted through Land Advisers, as we do not anticipate this to be an ongoing aspect of our core operations. As such, we believe the exclusion of these amounts improves comparability of our operating results on a period-to-period basis and will apply the same modified definitions of CFFO and AFFO for all prior-year periods presented to provide consistency and better comparability.
Further, we calculate AFFO by adjusting CFFO for the following items:
 
Rent adjustments. This adjustment removes the effects of straight-lining rental income, as well as the amortization related to above-market lease values and lease incentives and accretion related to below-market lease values, other deferred revenue, and tenant improvements, resulting in rental income reflected on a modified accrual cash basis. In addition to these adjustments, we also modify the calculation of cash rents within our definition of AFFO to provide greater consistency and comparability due to the period-to-period volatility in which cash rents are received. To coincide with our tenants’ harvest seasons, our leases typically provide for cash rents to be paid at various points throughout the lease year, usually annually or semi-annually. As a result, cash rents received during a particular period may not necessarily

be comparable to other periods or represent the cash rents indicative of a given lease year. Therefore, we further adjust AFFO to normalize the cash rent received pertaining to a lease year over that respective lease year on a straight-line basis, resulting in cash rent being recognized ratably over the period in which the cash rent is earned.
Amortization of debt issuance costs. The amortization of costs incurred to obtain financing is excluded from AFFO, as it is a non-cash expense item that is not directly related to the operating performance of our properties.
We believe the foregoing adjustments aid our investors’ understanding of our ongoing operational performance.
FFO, CFFO and AFFO do not represent cash flows from operating activities in accordance with GAAP, which, unlike FFO, CFFO, and AFFO, generally reflects all cash effects of transactions and other events in the determination of net income, and should not be considered an alternative to net income as an indication of our performance or to cash flows from operations as a measure of liquidity or ability to make distributions. Comparisons of FFO, CFFO, and AFFO, using the NAREIT definition for


FFO and the definitions above for CFFO and AFFO, to similarly-titled measures for other REITs may not necessarily be meaningful due to possible differences in the definitions used by such REITs.
Diluted funds from operations (“Diluted FFO”), diluted core funds from operations (“Diluted CFFO”), and diluted adjusted funds from operations (“Diluted AFFO”) per share are FFO, CFFO, and AFFO, respectively, divided by the weighted-average number of total shares (including shares of our common stock and OP Units held by non-controlling limited partners) outstanding on a fully-diluted basis during a period. We believe that diluted earnings per share is the most directly-comparable GAAP measure to each of Diluted FFO, CFFO, and AFFO per share. Because many REITs provide Diluted FFO, CFFO, and AFFO per share information to the investment community, we believe these are useful supplemental measures when comparing us to other REITs.
We believe that FFO, CFFO, and AFFO and Diluted FFO, CFFO, and AFFO per share are useful to investors because they provide investors with a further context for evaluating our FFO, CFFO, and AFFO results in the same manner that investors use net income and EPS in evaluating net income.

The following table provides a reconciliation of our FFO, CFFO, and AFFO for the three months ended March 31, 20182019 and 20172018 to the most directly-comparable GAAP measure, net income (loss), and a computation of diluted FFO, CFFO, and AFFO per share, using the weighted-average number of total shares (including shares of our common stock and OP Units held by non-controlling limited partners) outstanding during the respective periods (dollars in thousands, except per-share amounts):
 For the Three Months Ended March 31,For the Three Months Ended March 31,
 2018 20172019 2018
Net (loss) income $(318) $173
Net income (loss)$108
 $(318)
Plus: Real estate and intangible depreciation and amortization 2,189
 1,472
2,597
 2,189
Plus: Losses on dispositions of real estate assets, net32
 
FFO2,737
 1,871
Less: Dividends declared on Series B Preferred Stock(601) 
FFO available to common stockholders and OP Unitholders 1,871
 1,645
2,136
 1,871
Plus: Acquisition-related expenses 134
 9
Plus: Acquisition-related accounting fees 22
 11
Plus: Other charges(1)
 163
 
Plus: Acquisition- and disposition-related expenses139
 156
Plus: Other charges, net(1)
3
 163
CFFO available to common stockholders and OP Unitholders 2,190
 1,665
2,278
 2,190
Net rent adjustment (251) (134)34
 (251)
Plus: Amortization of debt issuance costs 143
 116
150
 143
AFFO available to common stockholders and OP Unitholders $2,082
 $1,647
$2,462
 $2,082
       
Weighted-average common shares outstanding – basic and diluted 13,957,732
 10,395,736
18,028,826
 13,957,732
Weighted-average OP Units outstanding(2)
 977,271
 1,449,258
433,393
 977,271
Weighted-average total shares outstanding 14,935,003
 11,844,994
18,462,219
 14,935,003
       
Diluted FFO per weighted-average total share $0.13
 $0.14
$0.12
 $0.13
Diluted CFFO per weighted-average total share $0.15
 $0.14
$0.12
 $0.15
Diluted AFFO per weighted-average total share $0.14
 $0.14
$0.13
 $0.14
(1) 
Consists of thea property and casualty loss recorded during the three months ended March 31, 2018, plus approximately $34,000 ofand additional repairs incurred and expensed during each period as a result of damage caused to certain irrigation improvements from a lightning strike on one of our Arizona properties, which repairs were expensed during the three months ended March 31, 2018.farms by natural disasters.
(2) 
Includes onlyRepresents OP Units held by third parties. As of March 31, 2018 and 2017, there were 970,605 and 1,449,258, respectively, OP Units held by non-controlling limited partners, representing 6.0% and 10.9%, respectively, of all OP Units issued and outstanding.parties during the periods.

Net Asset Value
Real estate companies are required to record real estate using the historical cost basis of the real estate, adjusted for accumulated depreciation and amortization, and, as a result, the carrying value of the real estate does not typically change as the fair value of the assets change. Thus, one challenge is determining the fair value of the real estate in order to allow stockholders to see the value of the real estate increase or decrease over time, which we believe is useful to our investors.
Determination of Fair Value
Our Board of Directors reviews and approves the valuations of our properties pursuant to a valuation policy approved by our Board of Directors (the “Valuation Policy”). Such review and approval occurs in three phases: (i) prior to its quarterly meetings, the Board of Directors receives written valuation recommendations and supporting materials that are provided by professionals of the Adviser and Administrator, with oversight and direction from the chief valuation officer, who is also employed by the Administrator (collectively, the “Valuation Team”); (ii) the valuation committee of the Board of Directors (the “Valuation Committee”), which is comprised entirely of independent directors, meets to review the valuation recommendations and supporting materials; and (iii) after the Valuation Committee concludes its meeting, it and the chief valuation officer present the Valuation Committee’s findings to the entire Board of Directors so that the full Board of Directors may review and approve the fair values of our properties in accordance with the Valuation Policy. Further, on a quarterly basis, the Board of Directors reviews the Valuation Policy to determine if changes thereto are advisable and also reviews whether the Valuation Team has applied the Valuation Policy consistently.
Per the Valuation Policy, our valuations are generally derived based on the following:
For properties acquired within 12 months prior to the date of valuation, the purchase price of the property will generally be used as the current fair value unless overriding factors apply. In situations where OP Units are issued as partial or whole consideration in connection with the acquisition of a property, the fair value of the property will generally be the lower of: (i) the agreed-upon purchase price between the seller and the buyer (as shown in the purchase and sale

agreement or contribution agreement and using the agreed-upon pricing of the OP Units, if applicable), or (ii) the value as determined by an independent, third-party appraiser.
For real estate we acquired more than one year prior to the date of valuation, we determine the fair value either by relying on estimates provided by independent, third-party appraisers or through an internal valuation process. In addition, if significant capital improvements take place on a property, we will typically have those properties reappraised upon completion of the project by an independent, third-party appraiser. In any case, we intend to have each property valued by an independent, third-party appraiser via a full appraisal at least once every three years, with interim values generally being determined by either: (i) a restricted appraisal (a “desk appraisal”) performed by an independent, third-party appraiser, or (ii) our internal valuation process.
Various methodologies were used, both by the appraisers and in our internal valuations, to determine the fair value of our real estate, on a fee simple, “as-is” basis, including the sales comparison, income capitalization (or a discounted cash flow analysis), and cost approaches of valuation. In performing their analyses, the appraisers typically (i) conducted site visits to the properties (where full appraisals were performed), (ii) discussed each property with our Adviser and reviewed property-level information, including, but not limited to, property operating data, prior appraisals (as available), existing lease agreements, farm acreage, location, access to water and water rights, potential for future development, and other property-level information, and (iii) reviewed information from a variety of sources about regional market conditions applicable to each of our properties, including, but not limited to, recent sale prices of comparable farmland, market rents for similar farmland, estimated marketing and exposure time, market capitalization rates, and the current economic environment, among others. In performing our internal valuations, we will consider the most recent appraisal available and use similar methodologies in determining an updated fair value. We will also obtain updated market data related to the property, such as updated sales and market rent comparisons and market capitalization rates, and perform an updated assessment of the tenants’ credit risk profiles, among others. Sources of this data may come from market inputs from recent acquisitions of our own portfolio of real estate, recent appraisals of properties we own that are similar in nature and in the same region (as applicable) as the property being valued, market conditions and trends we observe in our due diligence process, and conversations with appraisers, brokers, and farmers.

A breakdown of the methodologies used to value our properties and the aggregate value as of March 31, 2018,2019, determined by each method is shown in the table below (dollars in thousands, except in footnotes):
Valuation Method 
Number of
Farms
 
Total
Acres
 
Farm
Acres
 
Net Cost
Basis(1)
 
Current
Fair Value
 
% of Total
Fair Value
 
Number of
Farms
 
Total
Acres
 
Farm
Acres
 
Net Cost
Basis(1)
 
Current
Fair Value
 
% of Total
Fair Value
Purchase Price 13 8,383 7,052 $72,765
 $66,114
  12.3% 12 12,472 8,849 $88,824
 $88,781
  14.3%
Internal Valuation 8 8,356 6,553 39,927
 46,264
(2) 
8.6%
Third-party Appraisal(3)
 54 46,612 37,554 348,494
 425,000
  79.1%
Third-party Appraisal(2)
 74 61,428 49,495 455,177
 531,653
  85.7%
Total 75 63,351 51,159 $461,186
 $537,378
  100.0% 86 73,900 58,344 $544,001
 $620,434
  100.0%
(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 paid for by us that were associated with the properties, and adjusted for accumulated depreciation and amortization.
(2) 
96.7% of this valuation, or approximately $44.8 million, is supported by values as determined by third-party appraisals performed between August 2015 and June 2016. The difference of approximately $1.5 million represents the net appreciation of those properties since the time of such appraisals, as determined in accordance with our Valuation Policy.
(3)
Appraisals performed between July 2017June 2018 and March 2018.2019.
Some of the significant assumptions used by appraisers and the Valuation Team in valuing our portfolio as of March 31, 2018,2019, include land values per farmable acre, market rental rates per farmable acre, and capitalization rates, among others. These assumptions were applied on a farm-by-farm basis and were selected based on several factors, including comparable land sales, surveys of both existing and current market rates, discussions with other brokers and farmers, soil quality, size, location, and other factors deemed appropriate. A summary of these significant assumptions is provided in the following table:
 Appraisal Assumptions Internal Valuation Assumptions
 
Range
(Low - High)
 Weighted
Average
 
Range
(Low - High)
 Weighted
Average
 
Range
(Low - High)
 Weighted
Average
Land Value (per farmable acre) $815 – $92,176 $38,981
 $4,123 – $18,941 $7,202
 $600 – $87,500 $33,045
Market Rent (per farmable acre) $20 – $4,718 $1,886
 $215 – $1,474 $386
 $250 – $4,600 $2,508
Market Capitalization Rate 1.14% – 5.65% 4.18% 4.70% – 5.87% 4.97% 3.75% – 6.43% 4.32%
Note: Figures in the table above apply only to the farmland portion of our portfolio and exclude assumptions made relating to farm-related property (e.g., cooling facilities), and other structures on our properties (e.g., residential housing), as their aggregate value was considered to be insignificant in relation to that of the farmland.
Our Valuation Team reviews the appraisals, including the significant assumptions and inputs used in determining the appraised values, and considers any developments that may have occurred since the time the appraisals were performed. Developments considered that may have an impact on the fair value of our real estate include, but are not limited to, changes in tenant credit profiles, changes in lease terms (such as expirations and notices of non-renewals or to vacate), and potential asset sales (particularly those at prices different from the appraised values of our properties).

Management believes that the purchase prices of the farms acquired during the previous 12 months and the most recent appraisals available for the farms acquired prior to the previous 12 months that were not valued internally, and the farms that were valued internally during the previous 12 months fairly represent the current market values of the properties as of March 31, 2018,2019, and, accordingly, did not make any adjustment to these values.
A quarterly roll-forward of the change in our portfolio value for the three months ended March 31, 2018,2019, from the prior value basis as of December 31, 2017,2018, is provided in the table below (dollars in thousands):
Total portfolio fair value as of December 31, 2017 $533,297
Plus: Acquisition of two new farms during the three months ended March 31, 2018 5,045
Plus net value appreciation (depreciation) during the three months ended March 31, 2018:  
27 farms valued via third-party appraisals$(964) 
Total net depreciation for the three months ended March 31, 2018 (964)
Total portfolio fair value as of March 31, 2018 $537,378
Total portfolio fair value as of December 31, 2018 $617,866
Plus: Acquisition of one new farm during the three months ended March 31, 2019 2,400
Plus net value appreciation during the three months ended March 31, 2019  
29 farms valued via third-party appraisals$168
 
Total net appreciation for the three months ended March 31, 2019 168
Total portfolio fair value as of March 31, 2019 $620,434
Management also determined fair values of all of its long-term borrowings.borrowings and preferred stock. Using a discounted cash flow analysis, management determined that the fair value of all long-term encumbrances on our properties as of March 31, 2018,2019, was approximately $278.8$332.1 million, as compared to a carrying value (excluding unamortized related debt issuance costs) of approximately $291.1$336.1 million. In addition, using the closing stock price as of March 31, 2018,2019, the fair value of the Series A Term Preferred stock was determined to be approximately $29.6 million, as compared to a carrying value (excluding unamortized related issuance costs) of approximately $28.8 million.

Finally, pursuant to Financial Industry Regulatory Authority Rule 2310(b)(5), with the assistance of a third-party valuation expert, we determined the estimated value of our Series B Preferred Stock to be $25.00 per share as of March 31, 2019 (see Exhibit 99.1 to this Form 10-Q).
Calculation of Estimated Net Asset Value
To provide our stockholders with an estimate of the fair value of our real estate assets, we intend to estimate the fair value of our farms and farm-related properties and provide an estimated net asset value (“NAV”) on a quarterly basis. NAV is a non-GAAP, supplemental measure of financial position of an equity REIT and is calculated as total equity, adjusted for the increase or decrease in fair value of our real estate assets and long-term borrowings (including any preferred stock required to be treated as debt for GAAP purposes) relative to their respective costs bases. Further, we calculate NAV per common share by dividing NAV by our total common shares outstanding (consisting of our common stock and OP Units held by non-controlling limited partners). A reconciliation of NAV to total equity, which we believe is the most directly-comparable GAAP measure, is provided below.
The fair values presented above and their usage in the calculation of net asset value per share presented below have been prepared by and is the responsibility of management. PricewaterhouseCoopers LLP has neither examined, compiled, nor performed any procedures with respect to the fair values or the calculation of net asset value per common share, which utilizes information that is not disclosed within the financial statements, and, accordingly, does not express an opinion or any other form of assurance with respect thereto.
As of March 31, 2018,2019, we estimate ourthe NAV per common share to be $13.57, as detailed$12.30. A reconciliation of NAV to total equity, which we believe is the most directly-comparable GAAP measure, is provided below (dollars in thousands, except per-share data):
Total equity per balance sheet   $131,968
   $194,769
Fair value adjustment for long-term assets:        
Less: net cost basis of tangible and intangible real estate holdings(1)
 $(461,186)   $(544,001)  
Plus: estimated fair value of real estate holdings(2)
 537,378
   620,434
  
Net fair value adjustment for real estate holdings   76,192
   76,433
Fair value adjustment for long-term liabilities:        
Plus: book value of aggregate long-term indebtedness(3)
 319,880
   364,867
  
Less: fair value of aggregate long-term indebtedness(3)(4)
 (308,360)   (361,688)  
Net fair value adjustment for long-term indebtedness   11,520
   3,179
Estimated NAV   $219,680
   274,381
Total shares outstanding(5)
   16,186,804
Less: fair value of Series B Preferred Stock(5)
   (47,293)
Estimated NAV available to common stockholders and OP Unitholders   $227,088
Total common shares and OP Units outstanding(6)
   18,462,219
Estimated NAV per common share   $13.57
   $12.30
(1) 
Per Net Cost Basis as presented in the table above.

(2) 
Per Current Fair Value as presented in the table above.
(3) 
Includes the principal balances outstanding of all long-term borrowings (consisting of mortgage notes and bonds payable) and the Series A Term Preferred Stock.
(4) 
Long-term mortgage notes and bonds payable were valued using a discounted cash flow model. The Series A Term Preferred Stock was valued based on its closing stock price as of March 31, 2018.2019.
(5) 
Valued at the security’s liquidation value, as discussed above.
(6)
Includes 15,216,19918,462,219 shares of common stock and 970,605no OP Units held by non-controlling limited partners.
A quarterly roll-forward in the estimated NAV per common share for the three months ended March 31, 2018,2019, is provided below
Estimated NAV per common share as of December 31, 2017   $13.96
Estimated NAV per common share and OP Unit as of December 31, 2018   $12.88
Less net loss   (0.02)   (0.03)
Plus change in valuations:    
Plus net change in valuations:    
Net change in unrealized fair value of farmland portfolio(1)
 $(0.35)   $0.01
  
Net change in unrealized fair value of long-term indebtedness 0.29
   (0.32)  
Net change in valuations   (0.06)   (0.31)
Less distributions   (0.13)   (0.13)
Less dilutive effect of equity issuances(2)
   (0.18)   (0.11)
Estimated NAV per common share as of March 31, 2018   $13.57
Estimated NAV per common share as of March 31, 2019   $12.30
(1) 
The net change in unrealized fair value of farmland portfolio consists of three components: (i) a decreasean increase of $0.07$0.01 due to the net depreciationappreciation in value of 2729 farms that were valued during the three months ended March 31, 2018,2019, (ii) an increase of $0.15$0.14 due to the aggregate depreciation and amortization expense recorded during the three months ended March 31, 2018,2019, and (iii) a decrease of $0.43$0.14 due to capital improvements made on certain properties that have not yet been considered in the determination of the respective properties’ estimated fair values.
(2) 
Reflective of shares of common stockour Series B Preferred Stock issued during the three months ended March 31, 2018 through the March 2018 follow-on common stock offering and our ATM Program.2019.

Comparison of estimated NAV and estimated NAV per common share, using the definitions above, to similarly-titled measures for other REITs may not necessarily be meaningful due to possible differences in the calculation or application of the definition of NAV used by such REITs. In addition, the trading price of our common shares may differ significantly from our most recent estimated NAV per common share calculation. For example, while we estimated our NAV per common share to be $12.30 as of March 31, 2018, to be $13.57 per share2019, based on the calculation above, the closing price of our common stock on March 31, 2018,2019, was $12.08,$12.65, and it has subsequently traded between $11.70$12.13 and $13.95$12.81 per share.
The determination of estimated NAV is subjective and involves a number of assumptions, judgments, and estimates, and minor adjustments to these assumptions, judgments, or estimates may have a material impact on our overall portfolio valuation. In addition, many of the assumptions used are sensitive to market conditions and can change frequently. Changes in the market environment and other events that may occur during our ownership of these properties may cause the values reported above to vary from the actual fair value that may be obtained in the open market. Further, while management believes the values presented reflect current market conditions, the ultimate amount realized on any asset will be based on the timing of such dispositions and the then-current market conditions. There can be no assurance that the ultimate realized value upon disposition of an asset will approximate the estimated fair value above.


ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices, and other market changes that affect market-sensitive instruments. The primary market risk that we believe we are and will be exposedThis Item is not applicable to is interest rate risk. Certain of our existing leases contain escalations based on market indices, and certain of our existing borrowings are subject to variable interest rates. Further, the interest rates on certain of our fixed-rate borrowings are either fixed for a finite period before converting to variable rate or are subject to periodic adjustments. Although we seek to mitigate this risk by structuring certain provisions into many of our leases, such as escalation clauses or adjusting the rent to prevailing market rents at two- to three-year intervals, these features do not eliminate this risk. To date, we have not entered into any derivative contracts to attempt to manage our exposure to interest rate fluctuations.
As of March 31, 2018, the fair value of our fixed-rate borrowings outstanding (excluding our Series A Term Preferred Stock), which accounted for approximately 98.6% of the aggregate principal balance of all borrowings outstanding as of March 31, 2018, was approximately $278.8 million. However, interest rate fluctuations may affect the fair value of our fixed-rate borrowings. If market interest rates had been one percentage point lower or higher than those rates in place as of March 31, 2018, the fair value of our fixed-rate borrowings would have increased or decreased by approximately $14.4 million or $13.4 million, respectively.
There have been no material changes in the quantitative and qualitative market risk disclosures for the three months ended March 31, 2018, from that disclosed in our Form 10-K.smaller reporting companies.
ITEM 4.CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of March 31, 2018,2019, our management, including our chief executive officer and chief financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, the chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of March 31, 2018,2019, in providing a reasonable level of assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in applicable SEC rules and forms, including providing a reasonable level of assurance that information required to be disclosed by us in such reports is accumulated and communicated to our management, including our chief executive officer and our chief financial officer, as appropriate to allow timely decisions regarding required disclosure. However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of necessarily achieving the desired control objectives, and management was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2018,2019, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


PART II – OTHER INFORMATION
 
Item 1.Legal Proceedings
We are not currently subject to any material legal proceedings, nor, to our knowledge, are any such material legal proceedings threatened against us.
Item 1A.Risk Factors
Our business is subject to certain risks and events that, if they occur, could adversely affect our financial condition and results of operations and the trading price of our securities. For a discussion of these risks, please refer to the section captioned, “Item 1A. Risk Factors,” in our Form 10-K. There have been no material changes to risks associated with our business or investment in our securities from those previously set forth in the report described above.
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Sales of Unregistered Securities
During the three months ended March 31, 2018,2019, we issued 7,700570,879 shares of common stock in exchange for 7,700570,879 OP Units that were held by certain limited partners of our Operating Partnership in connection with certain of our prior acquisitions. OP Units are generally redeemable for cash or, at our discretion, exchangeable into shares of our common stock on a one-for-one basis. The cash redemption amount per OP Unit is based on the market price of a shares of our common stock at the time of redemption. These shares of common stock were issued in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended. We relied on the exemption under Section 4(a)(2) based upon factual representations received from the limited partners who received the shares of common stock.
Issuer Purchases of Equity Securities
None.
Item 3.Defaults Upon Senior Securities
Not applicable.
Item 4.Mine Safety Disclosures
Not applicable.
Item 5.Other Information
None.

Item 6.Exhibits
EXHIBIT INDEX
Exhibit
Number
 Exhibit Description
3.1
 
3.2
 
3.3
 
3.4
 
3.5
 
4.1
 
4.2
 
4.3
 
4.4
 
10.1
10.2
10.3
10.4
11
31.1
 
31.2
 
32.1
 
32.2
 
99.1
101.INS*** XBRL Instance Document
101.SCH*** XBRL Taxonomy Extension Schema Document
101.CAL*** XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*** XBRL Taxonomy Extension Label Linkbase Document
101.PRE*** XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*** XBRL Definition Linkbase

***Attached as Exhibit 101 to this Quarterly Report on Form 10-Q are the following materials, formatted in eXtensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets as of March 31, 2018,2019, and December 31, 2017,2018, (ii) the Condensed Consolidated Statements of Operations for the three months ended March 31, 2018,2019 and 2017,2018, (iii) the Condensed Consolidated Statements of Equity for the three months ended March 31, 2018,2019 and 2017,2018, (iv) the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2018,2019 and 20172018, and (v) the Notes to the Condensed Consolidated Financial Statements.

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 Gladstone Land Corporation
   
Date: May 8, 20187, 2019By: /s/ Lewis Parrish
   Lewis Parrish
   
Chief Financial Officer and
Assistant Treasurer
   
Date: May 8, 20187, 2019By: /s/ David Gladstone
   David Gladstone
   
Chief Executive Officer and
Chairman of the Board of Directors


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