UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

~~Washington,~~WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)



ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~SEPTEMBER 30, 2017~~MARCH 31, 2019



¨	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~~number: 001-35795

GLADSTONE LAND CORPORATION

(Exact ~~Name~~name of ~~Registrant~~registrant as ~~Specified~~specified in its ~~Charter)~~

charter)



MARYLAND		54-1892552
(State or ~~Other Jurisdiction~~other jurisdiction of ~~Incorporation~~incorporation or ~~Organization~~organization)		(I.R.S. Employer Identification No.)

1521 WESTBRANCH DRIVE, SUITE 100 MCLEAN, VIRGINIA		22102
(Address of ~~Principal Executive Offices~~principal executive offices)		(Zip ~~Code~~Code)

(703) 287-5800

(Registrant’s ~~Telephone Number, Including Area Code~~telephone number, including area code)

Not Applicable

(Former ~~Name, Former Address~~name, former address and ~~Former Fiscal Year,~~former fiscal year, if ~~Changed Since Last Report~~changed since last report)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.001 par value per share	LAND	The Nasdaq Stock Market, LLC
6.375% Series A Cumulative Term Preferred Stock, $0.001 par value per share	LANDP	The Nasdaq Stock Market, LLC

Indicate by check mark whether the ~~registrant~~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~~“emerging growth ~~company"~~company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	¨		Accelerated filer	x
Non-accelerated filer	¨		Smaller reporting company	x

~~Non-accelerated filer~~	¨	~~(Do not check if a smaller reporting company)~~	~~Smaller reporting company~~	x

Emerging growth company	¨

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 ~~November~~May 6, ~~2017,~~2019, was ~~13,637,938.~~18,462,219.

GLADSTONE LAND CORPORATION

FORM 10-Q FOR THE QUARTER ENDED

~~SEPTEMBER 30, 2017~~MARCH 31, 2019

TABLE OF CONTENTS



		PAGE
PART I	FINANCIAL INFORMATION

ITEM 1.	Financial Statements (Unaudited):

	Condensed Consolidated Balance Sheets as of ~~September 30, 2017,~~March 31, 2019, and December 31, ~~2016~~2018	3

	Condensed Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018	4

	Condensed Consolidated Statements of Equity for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018	5

	Condensed Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018	6

	Notes to Condensed Consolidated Financial Statements	78

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	4742

ITEM 4.	Controls and Procedures	4742

PART II	OTHER INFORMATION

ITEM 1.	Legal Proceedings	4843

ITEM 1A.	Risk Factors	4843

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4843

ITEM 3.	Defaults Upon Senior Securities	4843

ITEM 4.	Mine Safety Disclosures	4843

ITEM 5.	Other Information	4843

ITEM 6.	Exhibits	4944

SIGNATURES		5045

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)


	September 30, 2017			December 31, 2016			March 31, 2019			December 31, 2018
ASSETS
Investments in real estate, net	$	444,390		$	326,311		$	541,451		$	538,953
Lease intangibles, net	5,796			2,000			5,364			5,686
Cash and cash equivalents	3,758			2,438			23,108			14,730
Deferred financing costs related to borrowings under line of credit, net	209			239
Other assets, net	2,407			2,997			6,026			5,750
TOTAL ASSETS	$	456,560		$	333,985		$	575,949		$	565,119

LIABILITIES AND EQUITY
LIABILITIES:
Borrowings under lines of credit	$	5,100		$	16,550		$	100		$	100
Mortgage notes and bonds payable, net	290,234			190,797
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 September 30, 2017, and December 31, 2016, net	27,831			27,655
Notes and bonds payable, net							333,835			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, net							28,183			28,124
Accounts payable and accrued expenses	4,382			2,801			6,715			9,152
Due to related parties, net⁽¹⁾	984			751
Due to related parties, net							676			945
Other liabilities, net	9,043			7,654			11,671			9,957
Total liabilities	337,574			246,208			381,180			384,066
Commitments and contingencies⁽²⁾
Commitments and contingencies (Note 7)

EQUITY:
Stockholders’ equity:
Common stock, $0.001 par value; 98,000,000 shares authorized, 13,485,025 shares issued and outstanding as of September 30, 2017; 18,000,000 shares authorized, 10,024,875 shares issued and outstanding as of December 31, 2016	13			10
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, 2018							2			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, 2018							18			18
Additional paid-in capital	126,848			90,082			223,480			202,053
Accumulated deficit	(17,801		)	(13,402		)
Distributions in excess of accumulated earnings							(28,731		)	(25,826		)
Total stockholders’ equity	109,060			76,690			194,769			176,246
Non-controlling interests in the Operating Partnership	9,926			11,087
Non-controlling interests in Operating Partnership							—			4,807
Total equity	118,986			87,777			194,769			181,053

TOTAL LIABILITIES AND EQUITY	$	456,560		$	333,985		$	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 September 30, For the Nine Months Ended September 30,
2017 2016 2017 2016
OPERATING REVENUES:
Rental revenue $ 6,561
$ 4,467
$ 18,302
$ 12,388
Tenant recovery revenue 3
2
8
8
Total operating revenues 6,564
4,469
18,310
12,396
OPERATING EXPENSES:
Depreciation and amortization 2,051
1,432
5,123
3,744
Property operating expenses 257
161
747
545
Acquisition-related expenses 22
123
68
243
Management fee⁽¹⁾
523
385
1,446
1,158
Incentive fee⁽¹⁾
261
22
688
181
Administration fee⁽¹⁾
211
184
656
575
General and administrative expenses 374
356
1,208
1,150
Total operating expenses 3,699
2,663
9,936
7,596
Credits to fees from Adviser⁽¹⁾
(54 ) —
(54 ) —
Total operating expenses, net of credits to fees 3,645
2,663
9,882
7,596
OPERATING INCOME 2,919
1,806
8,428
4,800

OTHER INCOME (EXPENSE):
Other income 4
2
190
106
Interest expense (2,634 ) (1,554 ) (6,984 ) (4,297 )
Distributions attributable to mandatorily-redeemable preferred stock (458 ) (219 ) (1,375 ) (219 )
Loss on disposal of real estate asset (78 ) —
(78 ) —
Total other expense (3,166 ) (1,771 ) (8,247 ) (4,410 )
NET (LOSS) INCOME (247 ) 35
181
390
Plus (less) net loss (income) attributable to non-controlling interests 26
(3 ) (23 ) (16 )
NET (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY $ (221 ) $ 32
$ 158
$ 374
(LOSS) EARNINGS PER COMMON SHARE:
Basic and diluted $ (0.02 ) $ 0.00
$ 0.01
$ 0.04
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING:
Basic and diluted 12,271,925
10,018,331
11,512,968
10,001,466



	For the Three Months Ended March 31,
	2019			2018
OPERATING REVENUES:
Lease revenue	$	7,830		$	6,694
Other operating revenues	—			2,551
Total operating revenues	7,830			9,245
OPERATING EXPENSES:
Depreciation and amortization	2,597			2,189
Property operating expenses	816			428
Base management fee	905			656
Administration fee	306			274
General and administrative expenses	550			553
Other operating expenses	—			2,359
Total operating expenses	5,174			6,459
Credits to fees from Adviser	(569		)	—
Total operating expenses, net of credits to fees	4,605			6,459
OTHER INCOME (EXPENSE):
Other income	826			315
Interest expense	(3,453		)	(2,832		)
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		)
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 COMPANY	105			(297		)
Dividends declared on Series B cumulative redeemable preferred stock	(601		)	—
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(496	)	$	(297	)

LOSS PER COMMON SHARE:
Basic and diluted	$	(0.03	)	$	(0.02	)
WEIGHTED-AVERAGE SHARES OF COMMON STOCK OUTSTANDING:
Basic and diluted	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

Number
of Shares
Par Value
Additional
Paid-in Capital

Accumulated
Deficit

Non-
Controlling
Interests

Total
Equity
Balance at December 31, 2015 9,992,941
$ 10
$ 86,892
$ (8,895 ) $ —
$ 78,007
Net income —
—
—
374
16
390
Proceeds from issuance of common stock, net 31,934
—
350
—
—
350
Distributions —
—
—
(3,676 ) (234 ) (3,910 )
Issuance of OP Units as consideration in real estate acquisitions, net —
—
—
—
11,708
11,708
Adjustment to non-controlling interests resulting from changes in ownership of the Operating Partnership —
—
2,133
—
(2,133 ) —
Balance at September 30, 2016 10,024,875
$ 10
$ 89,375
$ (12,197 ) $ 9,357
$ 86,545

Balance at December 31, 2016 10,024,875
$ 10
$ 90,082
$ (13,402 ) $ 11,087
$ 87,777
Net income —
—
—
158
23
181
Proceeds from issuance of common stock, net 3,410,150
3
38,420
—
—
38,423
Distributions —
—
—
(4,557 ) (568 ) (5,125 )
Issuance of OP Units as consideration in real estate acquisitions, net —
—
—
—
—
—
Redemption of OP Units 50,000
—
404
—
(2,674 ) (2,270 )
Adjustment to non-controlling interests resulting from changes in ownership of the Operating Partnership —
—
(2,058 ) —
2,058
—
Balance at September 30, 2017 13,485,025
$ 13
$ 126,848
$ (17,801 ) $ 9,926
$ 118,986



	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		Number of Shares	Par Value		Additional Paid-in Capital			Distributions in Excess of Accumulated Earnings			Total Stockholders’ Equity			Non- Controlling Interests			Total Equity

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, net	—		—		1,416,925	1		16,714			—			16,715			—			16,715
Net loss	—		—		—	—		—			(297		)	(297		)	(21		)	(318		)
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			—
Balance at March 31, 2018	—		$	—	15,216,199	$	15	$	145,990		$	(21,950	)	$	124,055		$	7,913		$	131,968

Balance at December 31, 2018	1,144,393		$	1	17,891,340	$	18	$	202,053		(25,826		)	$	176,246		$	4,807		$	181,053
Issuance of preferred stock, net	747,916		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, 2019	1,891,709		$	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 Nine Months Ended September 30,
2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 181
$ 390
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 5,123
3,744
Amortization of deferred financing costs 366
135
Amortization of deferred rent assets and liabilities, net (189 ) (129 )
Allowance for doubtful accounts —
72
Loss on disposal of real estate asset 78
—
Changes in operating assets and liabilities:
Other assets 492
(153 )
Accounts payable, accrued expenses, and due to related parties 541
(273 )
Other liabilities 1,079
4,126
Net cash provided by operating activities 7,671
7,912
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of new real estate (120,985 ) (69,174 )
Capital expenditures on existing real estate (3,438 ) (10,126 )
Proceeds from sale of real estate —
156
Change in deposits on real estate acquisitions and investments, net (865 ) (617 )
Net cash used in investing activities (125,288 ) (79,761 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of equity 40,421
360
Offering costs (1,962 ) (242 )
Payment for redemption of OP Units (2,270 ) —
Borrowings from mortgage notes and bonds payable 104,590
28,953
Repayments on mortgage notes and bonds payable (4,663 ) (2,606 )
Borrowings from lines of credit 52,500
44,700
Repayments on lines of credit (63,950 ) (22,300 )
Proceeds from issuance of mandatorily-redeemable preferred stock —
28,750
Payment of financing fees (604 ) (1,292 )
Distributions paid on common stock (4,557 ) (3,676 )
Distributions paid to non-controlling interests in Operating Partnership (568 ) (234 )
Payment of contingent consideration —
(700 )
Net cash provided by financing activities 118,937
71,713
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,320
(136 )
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,438
2,533
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,758
$ 2,397
NON-CASH INVESTING AND FINANCING INFORMATION:
Issuance of non-controlling interests in operating partnership in conjunction with acquisitions $ —
$ 11,763
Real estate additions included in Other assets 15
—
Real estate additions included in Accounts payable, accrued expenses, and due to related parties 1,140
390
Loss on disposal of real estate asset included in Accounts payable, accrued expenses, and due to related parties 23
—
Real estate additions included in Other liabilities 506
809
Common stock offering and OP Unit issuance costs included in Accounts payable, accrued expenses, and due to related parties 237
31
Financing fees included in Accounts payable, accrued expenses, and due to related parties 54
59



	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"~~“Company”) is an agricultural real estate investment trust (“REIT”) that was re-incorporated in Maryland on March 24, 2011, having been ~~previously re-incorporated in Delaware on May 25, 2004, and having been~~ originally incorporated in California on 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. ~~The Company owned 91.7% and 87.4%~~As we currently control the sole general partner of the Operating Partnership and own, directly or indirectly, all of the units of limited partnership ~~interests~~interest in the Operating Partnership ("(“OP ~~Units"~~Units”) as, the financial position and results of ~~September 30, 2017,~~operations of the Operating Partnership are consolidated within our financial statements. As of March 31, 2019, and December 31, ~~2016,~~2018, the Company owned 100.0% and approximately 96.9%, respectively, of the outstanding OP Units (see Note ~~7, "Equity,"~~8, “Equity,” for additional discussion regarding OP Units). ~~In addition, we have elected for~~

Gladstone Land Advisers, Inc. ("(“Land ~~Advisers"~~Advisers”), a Delaware corporation and a ~~wholly-owned~~ 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 ~~taxed~~treated as a taxable REIT subsidiary ~~("TRS"~~(“TRS”). of ours. 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-Party~~“Related-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~~(consisting solely of normal recurring ~~accruals,~~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, ~~2016,~~2018, as filed with the U.S. Securities and Exchange Commission (the “SEC”) on February ~~21, 2017~~26, 2019 (the “Form 10-K”). The results of operations for the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 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, 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 portfolio each quarter for any impairment indicators and perform an impairment analysis on those select properties that have an indication of impairment. As of March 31, 2019, and December 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 Sales

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 in operating the farm generally consisted 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). Revenue from the sale of harvested crops were recognized when the harvested crops had been delivered to the facility and title had transferred and were recorded using the market price on the date of delivery. Accumulated costs were charged to cost of products sold (based on percentage of gross revenue from sales) as the related crops were harvested and sold.

Revenue 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
Sales revenue⁽¹⁾	$	2,546
Cost of sales^(2)(3)(4)	(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 Statements of Operations (see Note 6, “Related-Party Transactions—TRS Fee Arrangements—TRS Expense Sharing Agreement” for further discussion on this fee).

The lease to Land Advisers expired on July 31, 2018, after which we leased the farm to a 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 any 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

~~Certain line items on~~

On the accompanying Condensed Consolidated Statement of Operations ~~and Condensed Consolidated Statement of Cash Flows~~ for the three ~~and nine~~ months ended ~~September 30, 2016,~~March 31, 2019, operating rental revenue has been reclassified to be displayed in accordance with ASU 2016-02 (as defined below), which was adopted on January 1, 2019, and acquisition-related expenses have been reclassified to ~~conform to the current period’s presentation.~~be included within general and administrative expenses. These reclassifications had no impact on previously-reported ~~stockholders’ equity,~~ net income (loss), equity, or net change in cash and cash equivalents.

~~Non-controlling Interests~~

Non-controlling interests are interests in the Operating Partnership not owned by us. We evaluate whether non-controlling interests are subject to redemption features outside of our control. As of both September 30, 2017, and December 31, 2016, the non-controlling interests in the Operating Partnership are redeemable at the option of the holder for cash or, at our election, shares of our common stock and thus are reported in the equity section of the accompanying Condensed Consolidated Balance Sheet but separate from stockholders’ equity. The amounts reported for non-controlling interests on the accompanying Condensed Consolidated Statement of Operations represent the portion of income from the Operating Partnership not attributable to us. At the end of each reporting period, we determine the amount of equity (at book value) that is allocable to

non-controlling interests based upon the respective ownership interests. To reflect the non-controlling interests' equity interest in the Company, an adjustment is made to non-controlling interests, with a corresponding adjustment to paid-in capital, as reflected on the accompanying Condensed Consolidated Statements of Equity.

~~Critical 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 nine months ended September 30, 2017.

Recently-Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2014-09, ~~"Revenue~~“Revenue from Contracts with Customers (Topic 606)~~" ("~~” (“ASU ~~2014-09"~~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. ~~As deferred by the FASB in July 2015,~~We adopted ASU 2014-09 as amended, is effective for annual reporting periods beginning after December 15, 2017, and interim periods within those years. We will adopt this guidance for our annual and interim periods beginningon January 1, 2018, ~~and expect to use~~using the modified retrospective method, under which the cumulative effect of initially applying the guidance iswas recognized at the date of initial application. ~~We do not expect~~Our adoption of ASU 2014-09 todid not 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 did not take effect until the new leasing standard (ASU 2016-02, as defined below) became 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 ~~similar~~similarly 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 guidance~~that under the previous standard for sales-type leases, direct financing leases, and operating leases. We adopted ASU 2016-02 ~~supersedes the previous leasing standard, Accounting Standards Codification ("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 Statements~~using the modified retrospective method, under which we recorded the cumulative effect of ~~Operations) to increase marginally, as~~applying the new ~~standard requires~~guidance 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 2016-02~~account for leases with a term of 12 months or less similar to ~~materially impact our condensed consolidated financial statements, as we~~existing 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 clarifies how entities should classify certain cash receipts and cash payments~~” for further discussion on the ~~statement~~impact of cash flows, with the objective of reducing the existing diversity in practice related to certain cash flow issues. ASU 2016-15 is effective for annual periods beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. We will adopt this guidance for our ~~annual and interim periods beginning January 1, 2018. We do not expect the~~ adoption of ASU ~~2016-15 to have a material impact on our condensed consolidated financial statements.~~

~~In November 2016,~~2016-02 and the ~~FASB issued ASU 2016-18, "Statement of Cash Flows (Topic 230): Restricted cash (a consensus of~~assumptions used in determine 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,~~related right-of-use asset 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 is effective for us beginning January 1, 2018, with early adoption permitted. We do not expect the adoption of ASU 2016-18 to have a material impact on our condensed consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business" ("ASU 2017-01"), which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting, including acquisitions and disposals. ASU 2017-01 is effective for

annual periods beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. We adopted ASU 2017-01, effective October 1, 2016, and, as a result of our early adoption, all of our farmland acquisitions since our adoption have been treated as asset acquisitions under ASC 360, which has resulted in a lower amount of acquisition-related costs being expensed on our condensed consolidated statements of operations, as the majority of those costs have been capitalized and included as part of the fair value allocation of the respective purchase prices. We anticipate that the majority of our future acquisitions will continue to be treated as asset acquisitions under ASC 360, resulting in similar treatment of acquisition-related costs.lease liability.

NOTE 3. REAL ESTATE AND INTANGIBLE ASSETS

All of our ~~farms~~properties are ~~owned~~wholly-owned on a fee-simple basis, except where noted. The following table provides certain summary information about ~~our 72~~the 86 farms we owned as of ~~September 30, 2017~~March 31, 2019 (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	27	7,921	7,156	$	202,181	$	145,819	33	10,147	9,336	$	249,319	$	166,109
Florida	17	11,225	9,027	117,549		76,072		22	17,184	12,981	154,297		96,772
Arizona⁽³⁾								6	6,280	5,228	55,340		22,008
Colorado	9	30,170	23,257	41,812		24,686		10	31,448	24,513	41,790		25,046
Arizona⁽³⁾	6	6,280	5,228	40,570		23,166
Oregon	4	2,313	2,003	19,755		12,528
Nebraska	2	2,559	2,101	10,667		6,602		3	3,254	2,701	12,847		8,490
Washington	1	746	417	9,525		5,460		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	4	270	183	2,965		1,602		5	446	291	4,990		2,740
North Carolina	2	310	295	2,308		1,301		2	310	295	2,313		1,270
	72	61,794	49,667	$	447,332	$	297,236	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;~~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 ~~$1.9~~$2.3 million of ~~deferred financing~~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 ~~$3.3~~$2.5 million as of ~~September 30, 2017~~March 31, 2019 (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 ~~September 30, 2017,~~March 31, 2019, and December 31, ~~2016~~2018 (dollars in thousands):


	September 30, 2017			December 31, 2016			March 31, 2019			December 31, 2018
Real estate:
Land and land improvements	$	356,015		$	265,985		$	419,602		$	417,310
Irrigation systems	48,750			33,969
Buildings	17,790			14,671
Irrigation and drainage systems							73,864			71,583
Horticulture	30,967			17,759			49,057			48,894
Other improvements	6,244			4,993
Real estate, at cost	459,766			337,377
Farm-related facilities							18,534			18,510
Other site improvements							6,717			6,707
Real estate, at gross cost							567,774			563,004
Accumulated depreciation	(15,376		)	(11,066		)	(26,323		)	(24,051		)
Real estate, net	$	444,390		$	326,311		$	541,451		$	538,953

Real estate depreciation expense on these tangible assets was approximately ~~$1.7~~$2.3 million and ~~$4.4~~$1.9 million for the three ~~and nine~~ months ended ~~September 30, 2017, respectively,~~March 31, 2019 and ~~$1.2 million and $3.2 million for the three and nine months ended September 30, 2016,~~2018, respectively.

Included in the figures above are amounts related to improvements made on certain of our properties paid for by our tenants but owned by us, or tenant improvements. As of ~~September 30, 2017,~~March 31, 2019, and December 31, ~~2016,~~2018, we recorded tenant improvements, net of accumulated depreciation, of approximately ~~$2.2~~$2.3 million and ~~$1.8~~$2.4 million, respectively. We recorded both depreciation expense and additional ~~rental~~lease revenue related to these tenant improvements of approximately ~~$61,000~~$74,000 and ~~$150,000 for~~$76,000 during the

three ~~and nine~~ months ended ~~September 30, 2017, respectively,~~March 31, 2019 and ~~$31,000 and $98,000 for the three and nine months ended September 30, 2016,~~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 ~~September 30, 2017,~~March 31, 2019, and December 31, ~~2016~~2018 (dollars in thousands):


	September 30, 2017			December 31, 2016			March 31, 2019			December 31, 2018
Lease intangibles:
Leasehold interest – land	$	3,498		$	—		$	3,498		$	3,498
In-place leases	1,523			1,481			2,046			2,046
Leasing costs	1,511			1,086			1,965			1,963
Tenant relationships	439			706			414			414
Lease intangibles, at cost	6,971			3,273			7,923			7,921
Accumulated amortization	(1,175		)	(1,273		)	(2,559		)	(2,235		)
Lease intangibles, net	$	5,796		$	2,000		$	5,364		$	5,686

Total amortization expense related to these lease intangible assets was approximately ~~$390,000~~$324,000 and ~~$739,000~~$293,000 for the three ~~and nine~~ months ended ~~September 30, 2017, respectively,~~March 31, 2019 and ~~$207,000 and $582,000 for the three and nine months ended September 30, 2016,~~2018, respectively.

The following table summarizes the carrying values of certain lease intangible assets or liabilities included in Other assets, ~~and~~net or Other liabilities, net, respectively, on the accompanying Condensed Consolidated Balance Sheets and the related accumulated amortization or accretion, respectively, as of ~~September 30, 2017,~~March 31, 2019, and December 31, ~~2016~~2018 (dollars in thousands).:


	September 30, 2017						December 31, 2016						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⁾	$	46		$	(21	)	$	19		$	(14	)	$	216		$	(51	)	$	126		$	(18	)
Below-market lease values and deferred revenue⁽²⁾	(823		)	108			(785		)	61
Below-market lease values and other deferred revenue⁽²⁾													(917		)	240			(917		)	202
	$	(777	)	$	87		$	(766	)	$	47		$	(701	)	$	189		$	(791	)	$	184


⁽¹⁾	~~Above-market~~Net above-market lease values and lease incentives are included as part of Other assets, innet 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-market~~Net below-market lease values and other deferred revenue are included as a part of Other liabilities, innet 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 ~~$4,000~~$33,000 and ~~$7,000~~$2,000 for the three ~~and nine~~ months ended ~~September 30, 2017, respectively,~~March 31, 2019 and ~~$2,000 and $5,000 for the three and nine months ended September 30, 2016,~~2018, respectively. Total accretion related to below-market lease values and other deferred revenue was approximately ~~$17,000~~$38,000 and ~~$47,000~~$17,000 for the three ~~and nine~~ months ended ~~September 30, 2017, respectively,~~March 31, 2019 and ~~$9,000 and $24,000 for the three and nine months ended September 30, 2016,~~2018, respectively.

Acquisitions

~~Until~~Upon our adoption of ASU 2017-01, ~~which clarified~~“Business Combinations (Topic 805): Clarifying the ~~definition~~Definition of a ~~business, certain acquisitions during the prior-year period were accounted for as business combinations in accordance with ASC 805, as there was a prior leasing history~~Business,” on the property. As such, the fair value of all assets acquired and liabilities assumed were determined in accordance with ASC 805, and all acquisition-related costs were expensed as incurred, other than those costs directly related to reviewing or assigning leases that we assumed upon acquisition, which were capitalized as part of leasing costs. Upon our early adoption of ASU 2017-01, effective October 1, 2016, most acquisitions, including those with a prior leasing history, are ~~now~~ generally treated as an asset acquisition under ASC 360. For acquisitions accounted for as asset acquisitions under ASC 360, all acquisition-related costs, ~~were~~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 those~~or liabilities assumed. Upon our adoption of ASU 2016-02 on January 1, 2019, costs that directly related to either negotiating and originating new leases ~~we executed upon acquisition, which~~or 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.

~~2017~~2019 Acquisitions

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2019, we acquired 14one new ~~farms in seven separate transactions,~~farm, which ~~are~~is summarized in the table below (dollars in ~~thousands, except for footnotes).~~

thousands):

Property
Name

Property
Location

Acquisition
Date

Total
Acreage

No. of
Farms

Primary
Crop(s)

Lease
Term⁽¹⁾

Renewal
Options

Total
Purchase
Price

Acquisition
Costs⁽²⁾

Annualized
Straight-line
Rent⁽³⁾

New
Long-term
Debt
Citrus Boulevard Martin, FL 1/12/2017 3,748 1 Organic Vegetables 7.0 years 3 (5 years) $ 54,000
$ 80
$ 2,926
$ 32,400
Spot Road⁽⁴⁾
Yuma, AZ 6/1/2017 3,280 4 Melons and Alfalfa Hay 8.6 years 1 (10 years) & 1 (2 years) 27,500
88
1,673
15,300
Poplar Street Bladen, NC 6/2/2017 310 2 Organic Blueberries 9.6 years 1 (5 years) 2,169
49
122
⁽⁵⁾
1,301
Phelps Avenue Fresno, CA 7/17/2017 847 4 Pistachios and Almonds 10.3 years 1 (5 years) 13,603
43
681
⁽⁵⁾
8,162
Parrot Avenue⁽⁶⁾
Okeechobee, FL 8/9/2017 1,910 1 Misc. Vegetables 0.5 years None 9,700
64
488
5,820
Cat Canyon Road⁽⁷⁾
Santa Barbara, CA 8/30/2017 361 1 Wine Grapes 9.8 years 2 (5 years) 5,375
67
322
3,225
Oasis Road Walla Walla, WA 9/8/2017 746 1 Apples, Cherries, and Wine Grapes 6.3 years None 9,500
45
480
⁽⁵⁾
5,460
11,202 14 $ 121,847
$ 436
$ 6,692
$ 71,668



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⁾	~~Where more than one~~Includes approximately $4,000 of aggregate external legal fees associated with negotiating and originating the lease ~~was assumed or executed, represents~~associated with this acquisition, which costs were expensed in the ~~weighted-average lease term on the property.~~period incurred.


⁽²⁾	~~Unless noted otherwise, acquisitions were accounted for as asset acquisitions under ASC 360.~~


⁽³⁾	Annualized straight-line ~~amount~~rent is based on the minimum cash rental payments guaranteed under the lease, as required under ~~GAAP.~~

⁽⁴⁾

~~Includes two farms (1,368 total acres) acquired through a leasehold interest, with the State of Arizona~~GAAP, and excludes contingent rental payments, such as the lessor. These state leases expire in February 2022 (485 total acres) and February 2025 (883 total acres). In addition, in connection with the acquisition of this property, we assumed four in-place leases with us as the lessor or sublessor. Three of these leases are agricultural leases, with one lease expiring on June 30, 2019, and two leases expiring on September 15, 2026. The fourth lease is a residential lease that expires on September 30, 2019. If either of the state leases is not renewed upon its expiration, the subleases on the respective acreage shall terminate automatically.


⁽⁵⁾	Leases also provide for a variable rent component based on the gross crop revenues earned on the property. The figures above represent only the minimum cash rents guaranteed under the respective leases.

⁽⁶⁾

In connection with the acquisition of this property, we executed a 6-year, follow-on lease with a new tenant that begins upon the expiration of the 7-month lease assumed at acquisition. The follow-on lease includes two, 6-year extension options and provides for minimum annualized straight-line rents of approximately $542,000. In addition, in connection with the execution of the follow-on lease, we committed to providing up to $1.0 million of capital for certain irrigation and property improvements. As stipulated in the follow-on lease, we will earn additional rent income on the total cost of the improvements as disbursements are made by us at a rate commensurate with the annual yield on the farmland (as determined by each year's minimum cash rent per the follow-on lease).


⁽⁷⁾	In connection with the acquisition of this property, we committed up to $4.0 million of capital to fund the development of additional vineyard acreage on the property. As stipulated in the lease agreement, we will earn additional rental income on the total cost of the project as the capital is disbursed by us at rates specified in the lease.participation rents.

During the three ~~and nine~~ months ended ~~September 30, 2017, in the aggregate,~~March 31, 2019, we recognized operating revenues of approximately ~~$1.5 million~~$24,000 and ~~$3.0 million, respectively, and earnings~~net income of approximately ~~$341,000 and $1.2 million, respectively,~~$2,000 related to the above ~~acquisitions.~~acquisition.

~~2016~~2018 Acquisitions

During the ~~nine~~three months ended ~~September 30, 2016,~~March 31, 2018, we acquired 13two new farms, ~~in seven separate transactions,~~ 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⁾
Net
Long-term
Debt Issued
Gunbarrel Road ⁽²⁾
Saguache, CO 3/3/2016 6,191 3 Organic Potatoes 5 years 1 (5 years) $ 25,736
$ 119
⁽³⁾
$ 1,591
$ 15,531
Calaveras Avenue Fresno, CA 4/5/2016 453 1 Pistachios 10 years 1 (5 years) 15,470
39
⁽⁴⁾
774
⁽⁵⁾
9,282
Orange Avenue St. Lucie, FL 7/1/2016 401 1 Vegetables 7 years 2 (7 years) 5,100
38
⁽⁴⁾
291
3,120
Lithia Road Hillsborough, FL 8/11/2016 72 1 Strawberries 5 years None 1,700
38
⁽³⁾
97
1,020
Baca County⁽⁶⁾
Baca, CO 9/1/2016 7,384 5 Grass Hay
and Alfalfa 4 years 1 (5 years) 6,323
73
⁽⁴⁾
384
—
Diego Ranch⁽⁷⁾
Stanislaus, CA 9/14/2016 1,357 1 Almonds 3 years 3 (5 years) & 1 (3 years) 13,997
64
⁽³⁾
621
—
Nevada Ranch Merced, CA 9/14/2016 1,130 1 Almonds 3 years 3 (5 years) & 1 (3 years) 13,232
42
⁽³⁾
574
—
16,988 13 $ 81,558
$ 413
$ 4,332
$ 28,953



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


⁽¹⁾	Annualized straight-line ~~amount~~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.


⁽²⁾	~~As partial consideration for~~Farm was purchased with no lease in place at the ~~acquisition~~time of this property, we issued 745,879 OP Units, constituting an aggregate fair value of approximately $6.5 million as of the acquisition date. We incurred $25,500 of legal costs in connection with the issuance of these OP Units.


⁽³⁾	~~Acquisition accounted for as a business combination under ASC 805. In aggregate, $9,520 of these costs were direct leasing costs incurred in connection with these acquisitions.~~


⁽⁴⁾	~~Acquisition accounted for as an asset acquisition under ASC 360.~~


⁽⁵⁾	~~Leases provide for a variable rent component based on the gross crop revenues earned on the property. The figures above represent only the minimum cash rents guaranteed under the respective leases.~~


⁽⁶⁾	As partial consideration for the acquisition of this property, we issued 125,677 OP Units, constituting an aggregate fair value of approximately $1.5 million as of the acquisition date. We incurred approximately $8,235 of legal costs in connection with the issuance of these OP Units.


⁽⁷⁾	As partial consideration for the acquisition of this property, we issued 343,750 OP Units, constituting an aggregate fair value of approximately $3.9 million as of the acquisition date. We incurred approximately $21,710 of legal costs in connection with the issuance of these OP Units.acquisition.

During the three ~~and nine~~ months ended ~~September 30, 2016,~~March 31, 2018, in the aggregate, we recognized operating revenues of approximately ~~$770,000~~$8,000 and ~~$1.5 million, respectively, and losses of~~a net loss of approximately ~~$42,000 and $196,000, respectively,~~$5,000 related to the above ~~acquisitions (which loss figures include approximately $128,000 and $229,000, respectively, of non-recurring acquisition-related costs).~~acquisitions.

Purchase Price Allocations

The allocation of the aggregate purchase price for the farms acquired during each of the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018 is as follows (dollars in thousands):

Acquisition Period
Land and
Land
Improvements
Buildings
Irrigation
System

Other
Improvements
Horticulture
Leasehold
Interest –
Land

In-place
Leases

Leasing
Costs
Net Below-Market Leases
Total
Purchase
Price
2017 Acquisitions $ 89,614
$ 2,804
$ 11,534
$ 824
$ 12,611
$ 3,488
487
$ 508
$ (23 ) $ 121,847
2016 Acquisitions 59,038
3,691
4,952
2,079
11,431
—
501
448
(582 ) 81,558

~~Acquired Intangibles and Liabilities~~

The following table shows the weighted-average amortization period, in years, for the intangible assets acquired and liabilities assumed in connection with new real estate acquired during the nine months ended September 30, 2017 and 2016:

Weighted-Average
Amortization Period
(in Years)
Intangible Assets and Liabilities 2017 2016
Leasehold interest – land 6.9 —
In-place leases 6.3 8.7
Leasing costs 8.8 10.6
Above-market lease values 2.1 —
Below-market lease values and deferred revenue 4.7 20.9
All intangible assets and liabilities 7.0 14.0

~~Pro-Forma Financials~~

During the nine months ended September 30, 2016, we acquired six farms that qualified as business combinations. No farms were acquired during the nine months ended September 30, 2017 that were treated as business combinations. The following table reflects pro-forma consolidated financial information as if each farm acquired during the nine months ended September 30, 2016, as part of a business combination was acquired on January 1, 2015. In addition, pro-forma earnings have been adjusted to assume that acquisition-related costs related to these farms were incurred at the beginning of the previous fiscal year (dollars in thousands, except share and per-share amounts).

For the three months ended September 30, 2016 For the nine months ended September 30, 2016
(Unaudited) (Unaudited)
Operating Data:
Total operating revenue $ 4,718
$ 13,286
Net income attributable to the company $ 212
$ 594
Share and Per-share Data:
Earnings per share of common stock – basic and diluted $ 0.02
$ 0.06
Weighted-average common shares outstanding – basic and diluted 10,018,331
10,001,466

The pro-forma consolidated results are prepared for informational purposes only. They are not necessarily indicative of what our consolidated financial condition or results of operations actually would have been assuming the acquisitions had occurred at the beginning of the previous fiscal year, nor do they purport to represent our consolidated financial position or results of operations for future periods.



Acquisition Period	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		582		961		123		76		47		5,045

Significant Existing Real Estate Activity

~~Lease Extensions and Renewals~~Leasing Activity

~~During~~The following table summarizes certain leasing activity that occurred on our existing properties during the ~~nine~~three months ended ~~September 30, 2017, we executed ten separate leases on nine different farms~~March 31, 2019 (dollars in ~~California and Florida that had leases expiring in either 2017 or 2018. In total, these leases were renewed~~thousands, except footnotes):

PRIOR LEASES⁽¹⁾

NEW LEASES⁽²⁾

Farm
Locations

Number

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

4,375

2,143

8 / 4

2,127

3.2

8 / 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 ~~terms ranging between one and five years and for total annualized rents of approximately $2.2 million, representing a decrease of approximately $167,000 (approximately 7.0%) from~~leasing activity that of the prior leases. These renewals were executed without incurring any downtime on the respective farms, and no leasing commissions or tenant improvements were incurred in connection with these renewals.occurred subsequent to March 31, 2019.

Project Completion

~~In connection with~~During the ~~lease~~year ended December 31, 2018, we ~~executed upon~~replaced 23 irrigation pivots on one of our ~~acquisition of an 854-acre farm~~properties in California in September 2015, we agreed to fund the development of the property into an almond orchard. The development included the removal of 274 acres of old grape vineyards, the installation of a new irrigation system, including the drilling of four new wells, and the planting of over 800 acres of new almond trees. As of September 30, 2017, the development project had been completedColorado at a total cost of approximately ~~$8.4 million, and, as~~$1.4 million. Pursuant to a ~~result,~~lease amendment executed during the three months ended March 31, 2019, in connection with this project, we ~~expect to receive~~will earn additional straight-line rental income of approximately ~~$5.2 million of additional rent~~$117,000 per year throughout the remaining term of the lease, which expires ~~January 9, 2031.~~on February 28, 2021.

Future Minimum Lease Payments

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

The following table summarizes the future lease payments to be received under non-cancelable leases as of March 31, 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 ~~properties~~farms owned and with leases in place as of ~~September 30, 2017~~ and ~~2016~~for the three months ended March 31, 2019 and 2018 (dollars in thousands):


	As of and For the Nine Months Ended September 30, 2017						As of and For the Nine Months Ended September 30, 2016						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)	27	7,921	12.8%	$	8,749	47.8%	21	6,516	19.3%	$	6,986	56.4%	33	10,147	13.7%	$	3,734	47.7%	29	8,241	13.0%	$	3,030	45.3%
Florida	17	11,225	18.2%	4,839		26.5%	15	5,567	16.5%	2,408		19.4%	22	17,184	23.2%	2,339		29.9%	16	11,006	17.4%	1,754		26.2%
Colorado	9	30,170	48.8%	2,018		11.0%	8	13,575	40.1%	951		7.7%	10	31,448	42.6%	696		8.9%	10	31,450	49.6%	686		10.3%
Arizona	6	6,280	10.2%	1,114		6.1%	2	3,000	8.9%	544		4.4%	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%	887		4.8%	4	2,313	6.8%	877		7.1%	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	4.2%	435		2.4%	2	2,559	7.6%	435		3.5%	3	3,254	4.4%	60		0.8%	2	2,559	4.0%	145		2.2%
Michigan	4	270	0.4%	187		1.0%	4	270	0.8%	187		1.5%	5	446	0.6%	21		0.2%	5	446	0.7%	70		1.0%
North Carolina	2	310	0.5%	42		0.2%	—	—	—%	—		—%
Washington	1	746	1.2%	31		0.2%	—	—	—%	—		—%
TOTALS	72	61,794	100.0%	$	18,302	100.0%	56	33,800	100.0%	$	12,388	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 ~~September 30, 2017,~~March 31, 2019, our farms were leased to 4964 different, unrelated third-party tenants, with certain tenants leasing more than one farm. One unrelated third-party tenant ("(“Tenant A"A”) leases five of our farms, and aggregate ~~rental~~lease revenue attributable to Tenant A accounted for approximately ~~$3.2~~$1.1 million, or ~~17.7%~~14.1%, of the ~~rental~~total lease revenue recorded during the ~~nine~~three months ended September 30, 2017. In addition, Dole Food Company (“Dole”) leases two of our farms, and aggregate rental revenue attributable to Dole accounted for approximately $2.2 million, or 12.2% of the rental revenue recorded during the nine months ended September 30, 2017.March 31, 2019. If ~~either~~ Tenant A ~~or Dole fail~~fails to make rental payments, ~~or elect~~elects to terminate its leases prior to their ~~respective~~expirations, or does not renew its leases ~~and~~(and we cannot re-lease the ~~properties cannot be re-leased~~farms on satisfactory ~~terms,~~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 ~~rental~~lease revenue recorded during the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2019.

Geographic Risk

~~As of September 30, 2017, 27 of the 72 farms we owned were~~Farms located in California ~~17 farms were located in~~and Florida ~~and 9 farms were located in Colorado. Further, our California, Florida, and Colorado farms~~ accounted for approximately ~~$8.7~~$3.7 million ~~(47.8%~~(47.7%)~~, $4.8~~ and $2.3 million ~~(26.5%), and $2.0 million (11.0%~~(29.9%), respectively, of the ~~rental~~total lease revenue recorded during the ~~nine~~three months ended ~~September 30, 2017. Our 27 California farms are spread across four of the many different growing regions within the state.~~March 31, 2019. Though we seek to continue to further diversify geographically, as may be desirable or feasible, should an unexpected natural disaster occur where our properties are located, there could be a material adverse effect on our financial performance and ability to continue operations. No other single state accounted for more than 10.0% of ~~the~~our total ~~rental~~lease revenue recorded during the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2019.

NOTE 4. BORROWINGS

Our borrowings as of ~~September 30, 2017,~~March 31, 2019, and December 31, ~~2016~~2018, are summarized below (dollars in thousands):

Carrying Value as of As of September 30, 2017
September 30, 2017 December 31, 2016
Stated Interest
Rates⁽¹⁾
(Range; Wtd Avg)

Maturity Dates
(Range; Wtd Avg)
Mortgage notes and bonds payable:
Fixed-rate mortgage notes payable $ 207,618
$ 142,861

2.90%–4.47%; 3.59%

6/1/2020–11/1/2041; April 2029
Fixed-rate bonds payable 84,518
49,348

2.38%–4.05%; 3.13%

7/30/2018–8/30/2024; June 2021
Total mortgage notes and bonds payable 292,136
192,209

Deferred financing costs – mortgage notes and bonds payable (1,902 ) (1,412 ) N/A N/A
Mortgage notes and bonds payable, net $ 290,234
$ 190,797

Variable-rate revolving lines of credit $ 5,100
$ 16,550
3.55% 4/5/2024

Total borrowings, net $ 295,334
$ 207,347



	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 payable	90,629			90,877			2.80%–4.57%; 3.55%	12/11/2019–9/13/2028; November 2022
Total notes and bonds payable	336,117			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 ~~deferred financing~~debt issuance costs and before any interest patronage, or refunded ~~interest,~~interest) was ~~3.44%~~3.93% and ~~3.33%~~3.52% for the three ~~and nine~~ months ended ~~September 30, 2017, respectively,~~March 31, 2019, and ~~3.29% and 3.27% for the three and nine months ended September 30, 2016,~~2018, respectively. In addition, ~~2016~~2018 interest patronage from our Farm Credit Notes Payable (as defined below), which we ~~received and~~ recorded during the ~~six~~three months ended ~~June 30, 2017,~~March 31, 2019, resulted in a ~~17.2%~~21.2% reduction (approximately 6195 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 2019 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"~~“MetLife Facility”) with Metropolitan Life Insurance Company (“MetLife”) ~~that originally consisted~~. As a result of ~~a $100.0~~subsequent amendments, the MetLife Facility currently consists of an aggregate of $200.0 million ~~long-term note payable~~of term notes (the ~~“2015 MetLife~~“MetLife Term ~~Note”~~Notes”) and ~~a $25.0~~$75.0 million of revolving equity ~~line~~lines of credit (the ~~“2015 MetLife Line~~“MetLife Lines of Credit”). As amended on October 5, 2016, the overall size of the MetLife Facility was increased from $125.0 million to $200.0 million (the "2016 Amendment"). Pursuant to the 2016 Amendment, the MetLife Facility now consists of the 2015 MetLife Term Note, the 2015 MetLife Line of Credit, a $50.0 million long-term note payable (the "2016 MetLife Term Note" and, together with the 2015 MetLife Term Note, the "MetLife Term Notes"), the terms of which are pari passu with those of the 2015 MetLife Term Note, and a second $25.0 million revolving equity line of credit (the "2016 MetLife Line of Credit" and, together with the 2015 MetLife Line of Credit, the "MetLife Lines of Credit"), the terms of which are pari passu to those of the 2015 MetLife Line of Credit.

On September 19, 2017, we drew approximately $27.5 million on the MetLife Term Notes, which was used to repay a portion of the balance outstanding under the MetLife Lines of Credit. The interest rate on the new disbursement was 3.85% per annum (which rate is fixed through January 4, 2027) and was blended with the existing interest rate on the previously-outstanding balance under the MetLife Term Notes.

The following table summarizes the pertinent terms of the MetLife Facility as of ~~September 30, 2017~~March 31, 2019 (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

150,000

⁽¹⁾

1/5/2029

131,210

3.30%, fixed through 1/4/2027

⁽²⁾

13,530

^(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

50,000

4/5/2024

5,100

3-month LIBOR + 2.25%

⁽⁵⁾

44,900

⁽³⁾

75,000

4/5/2024

100

3-month LIBOR + 2.25%

⁽⁴⁾

74,900

⁽³⁾

Total principal outstanding

136,310

Total principal outstanding

124,383


⁽¹⁾	If the aggregate commitment under ~~the MetLife Facility~~this facility is not fully utilized by December 31, ~~2018,~~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 ~~on the MetLife Term Notes~~ as of ~~September 30, 2017.~~March 31, 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, ~~2018,~~2019, the MetLife Term Notes are also subject to an unused fee ofranging from 0.10% to 0.20% on undrawn ~~amounts.~~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 ~~September 30, 2017,~~March 31, 2019, the maximum additional amount we could draw under the facility was approximately ~~$12.9~~$20.4 million.


⁽⁴⁾	~~Net of amortizing principal payments of approximately $5.3 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 ofranging from 0.10% to 0.20% on undrawn ~~amounts.~~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 ~~September 30, 2017,~~March 31, 2019, the interest rate on the MetLife Lines of Credit was ~~3.55%~~5.05%.

~~Individual MetLife Notes~~

In May 2017, we also entered into two new loan agreements with MetLife (collectively, the "Individual MetLife Notes"), the terms of which are summarized in the aggregate in the table below (dollars in thousands):



~~Date of Issuance~~	~~Amount~~		~~Maturity Date~~	~~Principal Amortization~~	~~Interest Rate Terms~~
~~5/31/2017~~	~~$15,300~~	⁽¹⁾	~~2/14/2022 & 2/14/2025~~	~~28.6 years~~	~~3.55% & 3.85%, fixed throughout their respective terms~~


⁽¹⁾	~~Proceeds from these notes were used for the acquisition of a new property.~~

~~As of September 30, 2017, 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 (collectively, the “Farm Credit Notes Payable”) with ~~certain~~eight different 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"~~“Farm Credit”). During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2019, we entered into the following loan ~~agreements~~agreement with Farm Credit (dollars in thousands):

Issuer Date of Issuance
Amount⁽¹⁾
Maturity Date Principal Amortization
Interest Rate Terms⁽²⁾
Farm Credit CFL⁽³⁾
7/13/2017 $ 5,472
8/1/2022 28.4 years 4.47%, fixed throughout term
Farm Credit West 7/17/2017 8,162
5/1/2037 20.0 years 4.31%, fixed through 7/31/2024, variable thereafter
CF Farm Credit 6/14/2017 1,301
7/1/2022 40.2 years 4.41%, fixed throughout its term
Farm Credit FL 8/9/2017 5,820
3/1/2037 19.5 years 4.70%, fixed through 2/29/2024, variable thereafter
NW Farm Credit 9/8/2017 5,460
9/1/2024 39.6 years 4.41%, fixed throughout its term


⁽¹⁾	~~Proceeds from these notes were used to fund new acquisitions, to repay existing indebtedness, and for other general corporate purposes.~~


⁽²⁾	~~Stated rate is before interest patronage, as discussed below.~~

⁽³⁾

During the three months ended September 30, 2017, we amended four existing loan agreements with Farm Credit CFL to increase the loan amounts and adjust the principal amortization and interest rate terms as shown in the table above. The amount presented in the table above represents the total additional funds advanced under the four loans. The new terms of each of these four loans are pari passu with one another.

The following table summarizes, in the aggregate, the pertinent terms of the loans outstanding from Farm Credit (collectively, the "Farm Credit Notes Payable") as of September 30, 2017 (dollars in thousands, except for footnotes):

Issuer
# of Loans
Outstanding
Dates of Issuance Maturity Dates
Principal
Outstanding

Stated Interest
Rate⁽¹⁾

Farm Credit CFL 8 9/19/2014 – 7/13/2017 6/1/2020 – 10/1/2040 $ 27,472
4.15%
⁽²⁾
Farm Credit West 3 4/4/2016 – 7/17/2017 5/1/2037 – 11/1/2041 21,054
3.91%
⁽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 5,820
4.70%
⁽⁴⁾
NW Farm Credit 1 9/8/2017 9/1/2024 5,460
4.41%
⁽⁴⁾
Total 14 $ 61,107

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, blended~~Stated rate ~~(before~~is before interest patronage, as ~~discussed below) on the respective borrowings as of September 30, 2017.~~


⁽²⁾	In April 2017, we received interest patronage of approximately $124,000 related to interest accrued on loans from Farm Credit CFL during the year ended December 31, 2016, which resulted in a 15.8% reduction (approximately 55 basis points) to the stated interest rates on such borrowings. In March 2016, we received interest patronage related to loans from Farm Credit CFL of approximately $94,000.


⁽³⁾	In February 2017, we received interest patronage of approximately $59,000 related to interest accrued on loans from Farm Credit West during the year ended December 31, 2016, which resulted in a 21.3% reduction (approximately 76 basis points) to the stated interest rates on such borrowings. We did not receive any patronage related to loans from Farm Credit West during the prior year.


⁽⁴⁾	~~To date, no interest patronage has been received or recorded associated with these loans, as they were not outstanding during 2016.~~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 During the three months ended March 31, 2019, we recorded interest patronage of ~~September 30, 2017, we were~~approximately $700,000 related to interest accrued on loans from Farm Credit during the year ended December 31, 2018, which resulted in ~~compliance with all covenants applicable~~a 21.2% reduction (approximately 95 basis points) 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 that provides for bond issuances up to an aggregate principal amount of $75.0 million (the “Farmer Mac Facility”). On June 16, 2016, we amended the Farmer Mac Facility to increase the maximum borrowing capacity from $75.0 million to $125.0 million and extend the term of the Bond Purchase Agreement by two years, to December 11, 2018.

During the nine months ended September 30, 2017, we issued five bonds for gross proceeds of approximately $35.6 million, the terms of which are summarized, in the aggregate, in the table below (dollars in thousands):

Date of Issuance
Gross
Proceeds⁽¹⁾
Maturity Dates Principal Amortization Interest Rate Terms
1/12/2017-8/30/2017 $ 35,625
⁽¹⁾
1/10/2020 – 8/30/2024 None 2.80% – 4.05%, fixed throughout their respective terms


⁽¹⁾	~~Proceeds from these bonds were used for the acquisitions of new properties.~~

~~The following table summarizes, in the aggregate, the terms of the 14 bonds outstanding under the Farmer Mac Facility as of September 30, 2017 (dollars in thousands):~~

Dates of Issuance Initial Commitment Maturity Dates Principal Outstanding
Stated
Interest
Rate⁽¹⁾
Undrawn Commitment
12/11/2014–8/30/2017 $ 125,000
⁽²⁾
7/30/2018–8/30/2024 $ 84,519
3.13% $ 39,118
⁽³⁾


⁽¹⁾	~~Represents the weighted-average interest rate as of September 30, 2017.~~


⁽²⁾	~~If the balance of the Farmer Mac Facility is not fully utilized by December 11, 2018, Farmer Mac has the option to be relieved of its obligations to purchase additional bonds under the facility.~~


⁽³⁾	~~As of September 30, 2017, there was no additional availability to draw under the Farmer Mac Facility, as no additional properties had been pledged as collateral.~~

~~As of September 30, 2017, we were in compliance with all covenants under the Farmer Mac Facility.~~

stated interest rates on such borrowings.

Debt Service – Aggregate Maturities

Scheduled principal payments of our aggregate ~~mortgage~~ notes and bonds payable as of ~~September 30, 2017,~~March 31, 2019, for the succeeding years are as follows (dollars in thousands):


Period	Period	Scheduled Principal Payments		Period	Scheduled Principal Payments
For the remaining three months ending December 31:	2017	$	601
For the remaining nine months ending December 31:				2019	$	8,953
For the fiscal years ending December 31:	2018	23,433		2020	28,181
	2019	11,060		2021	16,205
	2020	26,484		2022	38,645
	2021	7,242		2023	32,420
	2022	36,089		2024	23,508
	Thereafter	187,227		Thereafter	188,205
		$	292,136		$	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~~“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~~management’s estimates of assumptions that market participants would use in pricing the asset or liability.

As of ~~September 30, 2017,~~March 31, 2019, the aggregate fair value of our long-term, fixed-rate ~~mortgage~~ notes and bonds payable was approximately ~~$286.3~~$332.1 million, as compared to an aggregate carrying value (excluding unamortized related debt issuance costs) of ~~$292.1~~approximately $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 ~~September 30, 2017,~~March 31, 2019, is deemed to approximate their aggregate carrying value of ~~$5.1 million.~~$100,000.

NOTE 5. ~~MANDATORILY-REDEEMABLE~~SERIES A TERM PREFERRED STOCK

OnIn August ~~17,~~ 2016, we completed a public offering ~~of 1,000,000 shares~~ of 6.375% Series A Cumulative Term Preferred Stock, par value $0.001 per share (the ~~"Term~~“Series A Term Preferred ~~Stock"~~Stock”), at a public offering price of $25.00 per share. Simultaneous with the closing of the offering and on the same terms and conditions, the underwriters exercised in full their option to purchase an additional 150,000 shares of the Term Preferred Stock to cover over-allotments. As a result of this offering

(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. ~~These proceeds were used to repay existing indebtedness, to fund new property acquisitions and for other general corporate purposes.~~ The Series A Term Preferred Stock is traded under the ticker symbol ~~"LANDP,"~~“LANDP” on ~~the NASDAQ Global Market. The Term Preferred Stock is not convertible into our common stock or any other securities.~~Nasdaq.

Generally, we ~~may~~were 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 after~~Beginning on September 30, 2018, we ~~may~~were 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.~~ 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 costs~~are being amortized over the mandatory redemption period ~~which ends~~as a component of interest expense on ~~September 30, 2021.~~

the accompanying Condensed Consolidated Statements of Operations. The Series A Term Preferred Stock is recorded as a liability on our accompanying Condensed Consolidated Balance ~~Sheet~~Sheets in accordance with ASC 480, ~~"Distinguishing~~“Distinguishing Liabilities from Equity,"” which states that ~~mandatorily redeemable~~mandatorily-redeemable financial instruments should be classified as liabilities. In addition, the related dividend payments are treated ~~similar~~similarly to interest expense inon the accompanying Condensed Consolidated ~~Statement~~Statements of Operations.

As of ~~September 30, 2017,~~March 31, 2019, the fair value of our Series A Term Preferred Stock was approximately ~~$29.8~~$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~~“Fair Value Measurements and Disclosures,"” and is calculated based on the closing per-share price as of ~~September 30, 2017,~~March 31, 2019, of ~~$25.93.~~$25.73.

~~The~~For 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 ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016 are reflected in the table below.~~

Fiscal Year Declaration Date Record Date Payment Date Dividend per
Preferred Share
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

April 11, 2017 April 21, 2017 April 28, 2017 0.1328125

April 11, 2017 May 19, 2017 May 31, 2017 0.1328125

April 11, 2017 June 21, 2017 June 30, 2017 0.1328125

July 11, 2017 July 21, 2017 July 31, 2017 0.1328125

July 11, 2017 August 21, 2017 August 31, 2017 0.1328125

July 11, 2017 September 20, 2017 September 29, 2017 0.1328125

Nine months ended September 30, 2017 $ 1.1953125

2016 September 12, 2016 September 21, 2016 September 30, 2016 $ 0.190364583
⁽¹⁾
Nine months ended September 30, 2016 $ 0.190364583


⁽¹⁾2018, see Note 8, “Equity—Distributions.”	~~Represents the cumulative dividend from (but excluding) the date of original issuance through the month ended September 30, 2016.~~

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, ~~and~~ chief executive ~~officer.~~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.~~

~~The~~president, general counsel, and secretary. We have entered into an investment advisory agreement with our Adviser, ~~that was in effect through March 31, 2017~~as amended from time to time (the “Advisory Agreement”), and ~~the current~~an administration agreement with our Administrator (the “Administration Agreement”) ~~each became effective February 1, 2013. A summary of each of these agreements is provided in Note 6 to our consolidated financial statements included in our Form 10-K.~~

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.

In addition, 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 registered with the Financial Industry Regulatory Authority and insured by the Securities Investor Protection Corporation. Gladstone Securities is an affiliate of ours, as its parent company is owned and controlled by David Gladstone, our chairman and chief executive officer. Mr. Gladstone also serves on the board of managers of Gladstone Securities.

A summary of the compensation terms for each of the ~~Amended~~ Advisory Agreement and the ~~Financing Arrangement~~Administration Agreement is below.

In addition, subsequent to September 30, 2017, the existing lease on one of our farms was assigned by the tenant to our TRS. See Note 10, "Subsequent Events," for further discussion on this transaction.

~~Amended~~ Advisory Agreement

Pursuant to the ~~Amended~~ Advisory Agreement, ~~effective beginning with the three months ended June 30, 2017,~~ our Adviser is 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 ~~will be~~is paid quarterly and ~~will be~~is calculated as 2.0% per annum (0.50% per quarter) of the prior calendar ~~quarter's~~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"~~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 ~~will be~~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~~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 Fee~~incentive 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~~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.

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.

~~Financing Arrangement~~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 previously-existing tenant on a 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 5.0% 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 recorded 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 under a 10-year lease.

TRS Fee Arrangements

In connection with 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, 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”). No such fees were incurred during the three months ended March 31, 2019.

TRS Expense Sharing Agreement

Pursuant to the TRS Expense Sharing Agreement, our Adviser was responsible for maintaining the day-to-day operations on the farm leased to Land Advisers from October 17, 2017, through July 31, 2018. In exchange for such services, Land Advisers compensated 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).

Costs incurred by our Adviser, while payable by Land Advisers, were initially accumulated and deferred and then allocated to costs of sales as the related crops were harvested and sold. During the three months ended March 31, 2018, approximately

$66,000 of the total accumulated costs incurred by our Adviser was allocated to the costs of crops sold and is included within Base management fee on the accompanying Condensed Consolidated Statement of Operations for the three months ended March 31, 2018.

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 was 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 paid by us was allocated to Land Advisers. This allocation is included within Administration fee 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 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 Gladstone Securities may, from time to time, solicit the interest of various agricultural or commercial real estate lenders and/or recommend to us third-party lenders offering credit products or packages that are responsive to our needs.

We ~~will~~ 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 be~~is payable upon closing of the respective financing, ~~will range~~ranges 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 ~~each of~~ the three ~~and nine~~ months ended ~~September 30, 2017,~~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, 2019, the total amount of financing fees paid to Gladstone Securities represented approximately ~~0.1%~~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 serves as our exclusive dealer-manager in connection with the primary offering of our Series B Preferred Stock (each as defined in Note 8, “Equity—Series B Preferred Stock”). Pursuant to the Dealer-Manager Agreement, Gladstone Securities provides certain sales, promotional, and marketing services to us in connection with the offering of the Series B Preferred Stock, and we generally will pay Gladstone Securities: (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”). 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 Fees to participating broker-dealers and wholesalers in support of the offering. The terms of the Dealer-Manager Agreement were approved by our board of directors, including all of its independent directors. During the three months ended March 31, 2019, we paid total selling commissions and dealer-manager fees 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 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 ~~certain~~ related-party fees paid or accrued for and reflected in our accompanying ~~Condensed Consolidated Statements of Operations~~condensed consolidated financial statements (dollars in thousands):

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2017 2016 2017 2016
Management fee⁽¹⁾⁽²⁾
$ 523
$ 385
$ 1,446
$ 1,158
Incentive fee⁽¹⁾⁽²⁾
261
22
688
181
Credits from voluntary, irrevocable waiver granted by Adviser’s board of directors⁽²⁾⁽³⁾
(54 ) —
(54 ) —
Net fees due to our Adviser $ 730
$ 407
$ 2,080
$ 1,339
Administration fee⁽¹⁾⁽²⁾
$ 211
$ 184
$ 656
$ 575
Financing Fees to Gladstone Securities⁽⁴⁾
$ 28
$ —
$ 30
$ —



	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 ~~Advisory and Administration Agreements, respectively.~~agreements with the respective related-party entities, as discussed above.


⁽²⁾	Reflected as a line item on our accompanying Condensed Consolidated Statements of Operations.

⁽³⁾

~~The credit received from~~Includes the allocation of approximately $66,000 of the total accumulated costs incurred by our ~~Advisor for~~Adviser as a result of the crops harvested and sold on the farm operated by Land Advisers during the three ~~and nine~~ months ended ~~September 30, 2017, was granted~~March 31, 2018, as ~~a voluntary, irrevocable waiver to be applied against the incentive fee payable to the Advisor.~~further described above under “TRS Expense Sharing Agreement.”


⁽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 ~~Mortgage notes~~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 ~~September 30, 2017,~~March 31, 2019, and December 31, ~~2016,~~2018, were as follows (dollars in thousands):

September 30, 2017 December 31, 2016
Management fee due to Adviser $ 523
$ 384
Incentive fee due to Adviser 261
169
Credits to fees due to Adviser⁽¹⁾
(54 ) —
Other due to Adviser⁽²⁾
43
2
Total due to Adviser 773
555
Administration fee due to Administrator 211
202
Other due from Administrator⁽²⁾
—
(6 )
Total due to Administrator 211
196
Total due to related parties⁽³⁾
$ 984
$ 751



	March 31, 2019			December 31, 2018
Due from Gladstone Securities⁽¹⁾	$	—		$	20

Base management fee	905			736
Capital gains fee⁽²⁾	—			(150		)
Credits to fees⁽³⁾	(569		)	(44		)
Other⁽⁴⁾	(4		)	63
Total due to Adviser	332			605
Administration fee	306			340			⁽⁵⁾
Total due to Administrator	306			340
Selling Commissions and Dealer-Manager Fees	58
Other⁽¹⁾	(20		)
Due to Gladstone Securities	38			—
Total due to related parties⁽⁶⁾	$	676		$	945

⁽¹⁾

~~The credit received~~Other amounts due from Gladstone Securities represent costs for certain sales, promotional, or marketing services related to the 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 ~~Advisor for the three and nine months ended September 30, 2017, was granted as a voluntary, irrevocable waiver to be applied against the incentive fee payable to our Advisor.~~accompanying Condensed Consolidated Balance Sheets.


⁽²⁾	The credit to 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 ~~fees~~amounts due to or from ~~related parties~~our Adviser primarily relate to miscellaneous general and administrative expenses either paid by our Adviser ~~or Administrator~~ on our behalf or by us on our ~~Adviser's or Administrator's~~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.


⁽³⁾⁽⁵⁾	Includes approximately $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.


⁽⁶⁾	Reflected as a line item on our accompanying Condensed Consolidated Balance Sheets.

~~NOTE 7. EQUITY~~

~~Amendment to Articles of Incorporation~~

On July 12, 2017, we filed an Articles of Amendment with the State Department of Assessments and Taxation for Maryland to increase the number of shares of capital stock that we have authority to issue from 20,000,000 shares to 100,000,000 shares, with the additional 80,000,000 shares of stock being initially classified as common stock, $0.001 par value per share.

~~Stockholders’ Equity~~

As of September 30, 2017, there were 98,000,000 shares of common stock, par value $0.001 per share, authorized, with 13,485,025 shares issued and outstanding. As of December 31, 2016, there were 18,000,000 shares of common stock, par value $0.001 per share, authorized, with 10,024,875 shares issued and outstanding.

~~Non-Controlling Interests in Operating Partnership~~

We consolidate our Operating Partnership, which is a majority-owned partnership. As of September 30, 2017, and December 31, 2016, we owned approximately 91.7% and 87.4%, 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 September 20, 2017, 221,875 OP Units were tendered for redemption, and on September 29, 2017, we issued 50,000 shares of common stock in exchange for 50,000 OP Units, and we satisfied the redemption of 171,875 OP Units with a cash payment of approximately $2.3 million (approximately $13.21 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 September 30, 2017, and December 31, 2016, there were 1,227,383 and 1,449,258 OP Units held by non-controlling limited partners outstanding, respectively, of which 993,431 and zero OP Units, respectively, were eligible to be tendered for redemption. Subsequent to September 30, 2017, 121,875 additional OP Units were tendered for redemption; see Note 10, "Subsequent Events," for further discussion on the redemption of these OP Units.

~~Distributions~~

~~The distributions to common stockholders declared by our Board of Directors and paid by us during the nine months ended September 30, 2017 and 2016 are reflected in the table below.~~

Fiscal Year Declaration Date Record Date Payment Date
Distributions per
Common Share
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
April 11, 2017 April 21, 2017 April 28, 2017 0.04350
April 11, 2017 May 19, 2017 May 31, 2017 0.04350
April 11, 2017 June 21, 2017 June 30, 2017 0.04350
July 11, 2017 July 21, 2017 July 31, 2017 0.04400
July 11, 2017 August 21, 2017 August 31, 2017 0.04400
July 11, 2017 September 20, 2017 September 29, 2017 0.04400
Nine Months Ended September 30, 2017 $ 0.39150

2016 January 12, 2016 January 22, 2016 February 2, 2016 $ 0.04000
January 12, 2016 February 18, 2016 February 29, 2016 0.04000
January 12, 2016 March 21, 2016 March 31, 2016 0.04000
April 12, 2016 April 22, 2016 May 2, 2016 0.04125
April 12, 2016 May 19, 2016 May 31, 2016 0.04125
April 12, 2016 June 17, 2016 June 30, 2016 0.04125
July 12, 2016 July 22, 2016 August 2, 2016 0.04125
July 12, 2016 August 22, 2016 August 31, 2016 0.04125
July 12, 2016 September 21, 2016 September 30, 2016 0.04125
Nine Months Ended September 30, 2016 $ 0.36750

~~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.~~

~~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 "2014 Registration Statement"). 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 September 30, 2017, we have issued a total of 1,584,401 shares of common stock (excluding 50,000 shares of common stock issued in exchange for certain OP Units that were tendered for redemption) for gross proceeds of approximately $19.7 million under the 2017 Registration Statement.

In conjunction with the replacement of the 2014 Registration Statement, during the three months ended March 31, 2017, we wrote off approximately $46,000 of unallocated costs associated with the initial filing of the 2014 Registration Statement. These costs were written off to professional fees and stockholder-related expenses, both of which are included in General and administrative expenses on our accompanying Condensed Consolidated Statement of Operations.

~~2017 Equity Issuances~~

On March 8, 2017, we completed a public offering of 1,680,000 shares of our common stock at a public offering price of $11.35 per share. This issuance settled on March 13, 2017, and resulted in gross proceeds of approximately $19.1 million and net proceeds, after deducting underwriting discounts and offering expenses borne by us, of approximately $18.0 million. On March 17, 2017, the underwriters exercised a portion of their over-allotment option in connection with this offering, and, as a result, we issued an additional 145,749 shares. This issuance settled on March 22, 2017, and resulted in gross proceeds of approximately $1.7 million and net proceeds, after deducting underwriting discounts and offering expenses borne by us, of approximately $1.6 million. We used the proceeds received from this offering to repay existing indebtedness (which, in turn, was used to fund future farmland acquisitions) and for other general corporate purposes.

On September 8, 2017, we completed a public offering of 1,150,000 shares (including 150,000 shares issued as a result of the underwriters simultaneously exercising their over-allotment option) of our common stock at a public offering price of $12.25 per share. This issuance settled on September 12, 2017, and resulted in gross proceeds of approximately $14.1 million and net proceeds, after deducting underwriting discounts and offering expenses borne by us, of approximately $13.4 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 both the three and nine months ended September 30, 2017, we issued and sold 434,401 shares of our common stock at an average sales price of $12.92 per share under the ATM Program for gross proceeds of approximately $5.6 million and net proceeds of approximately $5.5 million. Through September 30, 2017, we have issued and sold a total of 498,962 shares of our common stock at an average sales price of $12.57 per share for gross proceeds of approximately $6.3 million and net proceeds of approximately $6.2 million. See Note 10, "Subsequent Events," for shares of common stock issued and sold under the ATM Program subsequent to September 30, 2017.

~~On April 13, 2017, we amended each of the Sales Agreements to reference the new 2017 Registration Statement. All other material terms of the Sales Agreements remained unchanged.~~

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 ~~providing~~provide 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 September 30, 2017,March 31, 2019, we have expended or accrued approximately ~~$677,000~~$1.0 million related to this project. In addition, as part of the project, certain blueberry bushes owned by us were removed to allow for the planting of new varieties of blueberry bushes. As a result, during the three months ended September 30, 2017, we recorded a loss of approximately $78,000 associated with the removal of these bushes, which amount represents the net cost basis of such bushes plus all removal costs. This loss is recorded as Loss on disposal of real estate asset on our Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2017.

In connection with the lease we executed upon our acquisition of our two North Carolina farms in June 2017, we committed to ~~providing~~provide 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~~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~~March 31, ~~2026. As of September 30, 2017,~~2019, we have expended or accrued approximately ~~$103,000~~$166,000 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 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 lease amendment we executed on one of our ~~Florida properties~~Oregon farms in ~~June 2017,~~May 2018, we committed to ~~providing~~provide up to ~~$700,000~~approximately $250,000 of capital ~~to expand and upgrade the existing cooler~~for certain irrigation improvements on the ~~property,~~farm, which ~~improvements~~ are expected to be completed ~~during the three months ending December 31, 2017. 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 8.5%, which rate is subject to annual escalations.~~May 1, 2019. As a result of this project, the lease 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 ~~assuming full deployment~~Hendry Counties, Florida, in July 2018, we committed to provide up to $2.0 million of capital for certain irrigation improvements on

the ~~capital commitment amount, we expect to receive approximately $280,000 of additional rent~~farms throughout the term of the lease, which expires on June 30, ~~2022. As of September 30, 2017, we~~2025. While no specific plans for such improvements have ~~expended or accrued approximately $240,000 related to this project.~~

In connection with the follow-on lease we executed upon our acquisition of a 1,910-acre farm in Florida in August 2017 (which has a commencement date of February 24, 2018), we committed to providing up to $1.0 million ofbeen developed yet, if and when any capital ~~in the first year of the lease to support additional plantings and infrastructure on the farm, which improvements are expected to be completed during the three months ending March 31, 2019. As~~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~~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 $305,000 of additional rent throughout the term of the lease, which expires February 23, 2024. We~~ have not expended or accrued ~~any costs related to this project, as the follow-on lease has not yet gone into effect.~~

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 completed by August 30, 2019. As stipulated in the lease, 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 September 30, 2017, we have expended or accrued approximately $132,000anything 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 lease arrangements under which we are the lessee (with the State of Arizona as the lessor). These 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 lease expense (included within Property operating expenses on the accompanying Condensed Consolidated Statement of Operations) of approximately $12,000. Future 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):



	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.

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.

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. ~~EARNINGS~~LOSS PER SHARE OF COMMON STOCK

The following table sets forth the computation of basic and diluted ~~earnings~~loss per common share for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 and ~~2016,~~2018, computed using the weighted average number of shares outstanding during the respective periods. Net loss 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 ~~earnings~~loss per share ~~calculations,~~calculation, as there would be no effect on the amounts since the non-controlling limited partners’ share of ~~income~~loss would also be added back to net ~~income. Net income figures are presented net of non-controlling interests in the earnings per share calculations.~~loss.

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2017 2016 2017 2016
(Dollars in thousands, except per-share amounts)
Net (loss) income attributable to the Company $ (221 ) $ 32
$ 158
$ 374
Weighted average number of common shares outstanding – basic and diluted 12,271,925
10,018,331
11,512,968
10,001,466
(Loss) earnings per common share – basic and diluted $ (0.02 ) $ 0.00
$ 0.01
$ 0.04



	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 ~~1,444,435~~433,393 and ~~1,447,633~~977,272, for the three ~~and nine~~ months ended ~~September 30, 2017, respectively,~~March 31, 2019 and ~~854,116 and 613,446 for the three and nine months ended September 30, 2016,~~2018, respectively.

NOTE 10. SUBSEQUENT EVENTS

Acquisition Activity

On ~~October 2, 2017,~~April 9, 2019, we ~~added onto one of our existing farms by acquiring an adjacent, 1,280-acre~~acquired a 928-acre farm in ~~Baca~~Madera County, ~~Colorado ("JJ Road"),~~California, that grows pistachios for ~~$900,000.~~approximately $28.6 million. At closing, we entered into a ~~sale-leaseback~~10.6-year, triple-net lease agreement with ~~the seller for a 4-year, triple-net lease~~an unrelated third-party tenant that also includes ~~one,~~two, 5-year extension ~~option and~~options. The lease, which consists of a fixed cash rent component plus a variable rent component based on the gross crop revenues earned on the farm, provides for minimum annualized, straight-line rents of approximately ~~$52,000.~~$1.7 million. We will account for this acquisition as an asset acquisition in accordance with ASC 360.

~~Financing Activity~~

On ~~October 13, 2017,~~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 ~~connection~~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 ~~JJ Road, we closed on a term loan from Rabo AgriFinance, LLC,~~this property is subject to customary terms and conditions and termination rights for ~~$540,000. The loan is scheduled to mature on October 1, 2022, and will bear interest at a fixed rate of 4.59% per annum throughout its term.~~

~~Related-Party Activity~~

On October 17, 2017, our TRS 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 was then amended to shorten the lease term by two years (the new expiration date is July 31, 2018) and to remove any tenant renewal options. All other terms of the lease remained unchanged, including the rental amounts. In addition, in connection with the initial operations on the farm, on October 17, 2017, our TRS 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.~~

~~As a result~~transactions of this ~~transaction, the amount of rent~~type, including a due diligence inspection period for us, and ~~interest our TRS pays to us (as the parent-landlord) will not~~there can be qualifying income for purposes of certain of our REIT tests; however, we do not expect such amounts to be at a level where we would be at risk of not qualifying as a REIT. In addition, any taxable income generated by our TRS (whose operations are consolidated within our financial statements)no assurance that this prospective acquisition will be ~~subject~~consummated by a certain time, or at all.

Leasing Activity

The following table summarizes the leasing activity that occurred on our existing properties subsequent to ~~regular corporate income taxes, which we will account for~~March 31, 2019 (dollars in ~~accordance with the provisions of ASC 740, "Income Taxes." At this time, we are unable to estimate the amount of taxable income, if any, that will be generated by our TRS.~~thousands):

PRIOR LEASE

NEW LEASES

Farm
Locations

Number

Leases

Total

Farm

Acres

Total

Annualized

Straight-line

Rent⁽¹⁾

# of Leases

with

Participation

Rents

Lease

Structures

(# of NNN

/ NN)

Total
Annualized
Straight-line
Rent⁽¹⁾

Wtd. Avg.

Term
(Years)

# of Leases
with
Participation
Rents

Lease
Structures
(# of NNN
/ NN)

0 / 1

3.0

0 / 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

~~Redemption~~Sales of ~~OP Units~~

~~On October 6, 2017, 121,875 OP Units were tendered for redemption, and, on October 13, 2017, we issued 121,875 shares of common stock in exchange for 121,875 OP Units.~~

~~ATM Program~~Series B Preferred Stock

Subsequent to ~~September 30, 2017,~~March 31, 2019, through the date of this filing, we have sold ~~31,038~~345,031 shares of ~~our common stock at an average sales price of $13.39 per share under~~ the ~~ATM Program~~Series B Preferred Stock for gross proceeds of approximately ~~$416,000~~$8.5 million and net proceeds of approximately ~~$409,000.~~$7.8 million. Total 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 offering, such as participating broker-dealers and wholesalers).

Distributions

On ~~October 10, 2017,~~April 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
October 20, 2017 October 31, 2017 $ 0.0441
$ 0.1328125
November 20, 2017 November 30, 2017 0.0441
0.1328125
December 19, 2017 December 29, 2017 0.0441
0.1328125
Total: $ 0.1323
$ 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”~~“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"~~“Forward-Looking Statements” and “Risk Factors” in this report and our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2018 (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 Ventura County, California, which is currently leased (on a temporary basis) to a wholly-owned subsidiary of ours, we~~We are not a grower of crops, nor do we typically farm the properties we own. We currently own 7387 farms comprised of ~~63,074~~74,828 acres located across ~~nine~~10 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, ~~buildings utilized for the storage and assembly of boxes for shipping produce ("box barns"),~~ 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 92.5%~~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 ~~taxed~~treated as a taxable REIT subsidiary ~~("TRS"~~(“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.

~~Leases~~

~~General~~

~~Our farms are currently leased to 49 different, third-party tenants that are either independent or corporate farming operations,and, as of October 17, 2017, one farm is leased to our TRS.~~We primarily lease our farms on a triple-net basis, an arrangement under which 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. Generally, our leases will have original terms ranging from 3 to 10 years for farms growing row crops and 5 to 15 years for farms growing permanent crops and will contain built-in rental rate increases. Currently, our 73 farms are leased under agricultural leases with original terms ranging from 1 to 15 years, with 47 farms leased on a pure triple-net basis, 24 farms leased on a partial-net basis (with the landlord responsible for all or a portion of the related property taxes), and 2 farms leased on a gross basis (with the landlord responsible for the related property taxes, insurance, and maintenance on the property). Additionally, 12 of our farms are leased under agreements that include a variable rent component based on the success of the farms' harvests each year.

~~Lease Expirations~~

Farm leases are often short-term in nature, so in any given year, we may have multiple leases up for renewal or extension. The following table summarizes the lease expirations by year for the properties owned as of September 30, 2017, and with leases currently in place (dollars in thousands):

Year Number of Expiring Leases Expiring Leased Acreage % of Total Acreage Rental Revenue for the Nine Months Ended September 30, 2017 % of Total Revenue
2017 1
⁽¹⁾
— —% $ 24
0.1%
2018 5    4,839 7.8% 665
3.6%
2019 4    157 0.3% 113
0.6%
2020 13    28,666 46.4% 6,178
33.8%
2021 5    6,954 11.3% 1,455
8.0%
2022 3    269 0.4% 451
2.5%
Thereafter 25    20,909 33.8% 9,416
51.4%
Totals 56    61,794 100.0% $ 18,302
100.0%


⁽¹⁾	~~Represents one oil and gas lease which continues on a year-to-year basis.~~

~~Recent Developments~~

~~Investment, Leasing and Other Portfolio Activity~~

~~Property Acquisitions~~

~~Since July 1, 2017, through the date of this filing, we have acquired eight 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⁾

Phelps Avenue Fresno, CA 7/17/2017 847 4 Pistachios and Almonds 10.3 years 1 (5 years) $ 13,603
$ 43
$ 681
⁽³⁾
Parrot Avenue⁽⁴⁾
Okeechobee, FL 8/9/2017 1,910 1 Misc. Vegetables 0.5 years None 9,700
64
488

Cat Canyon Road⁽⁵⁾
Santa Barbara, CA 8/30/2017 361 1 Wine Grapes 9.8 years 2 (5 years) 5,375
67
322

Oasis Road Walla Walla, WA 9/8/2017 746 1 Apples, Cherries, and Wine Grapes 6.3 years None 9,500
45
480
⁽³⁾
JJ Road Baca, CO 10/2/2017 1,280 1 Grass Hay and Alfalfa 4.3 years 1 (5 years) 900
26
52

5,144 8 $ 39,078
$ 245
$ 2,023


⁽¹⁾	Acquisition accounted for as an asset acquisition under ASC 360. As such, all acquisition-related costs were capitalized and allocated among the identifiable assets acquired. The figures above represent only the costs paid or accrued for as of the date of this filing.


⁽²⁾	~~Annualized straight-line amount is based on the minimum cash rental payments guaranteed under the lease, as required under GAAP.~~


⁽³⁾	~~Leases also provide for a variable rent component based on the gross crop revenues earned on the property. The figures above represent only the minimum cash rents guaranteed under the lease.~~

⁽⁴⁾


⁽⁵⁾	In connection with the acquisition of this property, we committed up to $4.0 million of capital to fund the development of additional vineyard acreage on the property. As stipulated in the lease agreement, we will earn additional rental income on the total cost of the project as the capital is disbursed by us at rates specified in the lease.

~~Existing Properties~~

~~Lease Renewals~~

During the three months ended September 30, 2017, we renewed the final two agricultural leases that were originally scheduled to expire in 2017. Each of these leases (which were on two of our farms in California) were renewed for an additional three years for total annualized rents of approximately $1.1 million, representing a decrease of approximately 12.5% (or approximately $163,000) from that of the prior leases. These renewals were executed without incurring any downtime on the respective farms, and no leasing commissions or tenant improvements were incurred in connection with these renewals.

~~Project Completion~~

In connection with the lease we executed upon our acquisition of an 854-acre farm in California in September 2015, we agreed to fund the development of the property into an almond orchard. The development included the removal of 274 acres of old grape vineyards, the installation of a new irrigation system, including the drilling of four new wells, and the planting of over 800 acres of new almond trees. We completed the project during the three months ended September 30, 2017, at a total cost of approximately $8.4 million, and, as a result, we expect to receive approximately $5.2 million of additional rent throughout the term of the lease, which expires January 9, 2031.

~~TRS Lease Assumption~~

As a result of this transaction, the amount of rent and interest our TRS pays to us (as the parent-landlord) will not be qualifying income for purposes of certain of 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 our TRS (whose operations are consolidated within our financial statements) will be subject to regular corporate income taxes, which we will account for in accordance with the provisions of ASC 740, "Income Taxes." We are unable to estimate the amount of taxable income, if any, that will be generated by our TRS.

~~Financing Activity~~

~~Debt Activity~~

~~Since July 1, 2017, through the date of this filing, we have entered into the following loan agreements (dollars in thousands):~~

Lender⁽¹⁾

Dates of
Issuance

Principal
Amount

Maturity
Date

Principal
Amortization

Stated Interest Rate Terms⁽²⁾
Farm Credit CFL^(3),(4)
7/13/2017 $ 5,472
8/1/2022 28.4 years 4.47%, fixed throughout term
Farm Credit West⁽⁵⁾
7/17/2017 8,162
5/1/2037 20.0 years 4.31%, fixed through 7/31/2024 (variable thereafter)
Farm Credit FL 8/9/2017 5,820
3/1/2037 19.5 years 4.70%, fixed through 2/29/2024 (variable thereafter)
Farmer Mac 8/30/2017 3,225
8/30/2024 None 4.05%, fixed throughout term
NW Farm Credit 9/8/2017 5,460
9/1/2024 39.6 years 4.41%, fixed throughout term
MetLife⁽⁶⁾
9/19/2017 27,450
1/5/2029 28.6 years 3.85%, fixed through 1/4/2027
Rabo AgriFinance 10/13/2017 540
10/1/2022 25.0 years 4.59%, fixed throughout term
$ 56,129


⁽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.~~


⁽²⁾	~~Where applicable, rate is before interest patronage, or refunded interest.~~

⁽³⁾

In April 2017, we received interest patronage from Farm Credit CFL representing a 15.8% refund of the interest accrued on all borrowings from Farm Credit CFL during the year ended December 31, 2016. This interest patronage reduced the interest rates on our borrowings from Farm Credit CFL during the year ended December 31, 2016, from a weighted-average stated interest rate of 3.47% to a weighted-average effective interest rate of 2.93%. We are unable to estimate the amount of interest patronage to be received, if any, related to interest accrued during 2017 on our Farm Credit CFL borrowings.

⁽⁴⁾

⁽⁵⁾

In February 2017, we received interest patronage from Farm Credit West representing a 21.3% refund of the interest accrued on all borrowings from Farm Credit West during the year ended December 31, 2016. This interest patronage reduced the interest rates on our borrowings from Farm Credit West during the year ended December 31, 2016, from a weighted-average stated interest rate of 3.59% to a weighted-average effective interest rate of 2.83%. We are unable to estimate the amount of interest patronage to be received, if any, related to interest accrued during 2017 on our Farm Credit West borrowings.

⁽⁶⁾

This balance was drawn on the MetLife Term Notes, with the proceeds from the disbursement being used to repay a portion of the balance outstanding under the MetLife Lines of Credit (refer to Note 4, "Borrowings," in the notes to our accompanying condensed consolidated financial statements for definitions of each of these terms). The interest rate on the new disbursement under the MetLife Term Notes was blended with the interest rate in place for the previously-existing balance drawn, which resulted in a new, overall blended interest rate on the MetLife Term Notes of 3.30% per annum, which rate is fixed through January 4, 2027.

~~Proceeds from the above borrowings were used to fund new farm acquisitions, repay existing indebtedness, and for other general corporate purposes.~~

~~Equity Activity~~

~~September 2017 Offering~~

In September 2017, we completed an overnight offering of our common stock at public offering price of $12.25 per share (the “September 2017 Offering”). Including the underwriters' simultaneous exercise of their over-allotment option, we issued a total of 1,150,000 shares in connection with the September 2017 Offering, resulting in gross proceeds of approximately $14.1 million and net proceeds, after deducting underwriting discounts and offering expenses borne by us, of approximately $13.4 million. We used the proceeds received from this offering to repay existing indebtedness (which, in turn, was used to fund future farmland acquisitions) and for other general corporate purposes.

~~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”). On April 13, 2017, we amended the Sales Agreements to reference the new universal registration statement on Form S-3 (File No. 333-217042) (the "2017 Registration Statement"), filed with the SEC on March 31, 2017, and declared effective on April 12, 2017. All other material terms of the Sales Agreements remained the same.

Since July 1, 2017, through the date of this filing, we sold 465,439 shares of our common stock under the ATM Program at an average sales price of $12.95 per share for gross proceeds of approximately $6.0 million and net proceeds of approximately $5.9 million. To date, we have sold 530,000 shares of our common stock at an average sales price of $12.62 per share under the ATM Program for gross proceeds of approximately $6.7 million and net proceeds of approximately $6.6 million.

~~OP Unit Redemptions~~

Since July 1, 2017, through the date of this filing, a total of 343,750 OP Units were tendered for redemption. As a result, the Company issued 171,875 shares of common stock (in exchange for 171,875 of the tendered OP Units), and we satisfied the redemption of the remaining 171,875 of the tendered OP Units with a cash payment of approximately $2.3 million (approximately $13.21 per OP Unit). Currently, there are 1,105,508 OP Units held by non-controlling limited partners outstanding, of which 871,556 are eligible to be tendered for redemption.

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 7387 farms leased to 4964 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 ~~begun to diversify~~diversified our portfolio into farmland suitable for other crop types, including permanent crops ~~consisting primarily of~~(e.g., almonds, blueberries, pistachios, and ~~blueberries,~~wine grapes) and, to a lesser extent, certain commodity crops ~~consisting primarily of corn~~(e.g., beans and ~~beans.~~corn). The following table summarizes the different ~~sources~~geographic locations (by state) of ~~revenues for~~ our ~~properties~~farms owned and with leases in place as of and for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018 (dollars in thousands):

As of and For the As of and For the Annualized GAAP
Rental Revenue as of
Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016
September 30, 2017⁽¹⁾
Revenue Source Total
Farmable
Acres % of
Total
Farmable
Acres Rental
Revenue % of
Total
Revenue Total
Farmable
Acres % of
Total
Farmable
Acres Rental
Revenue % of
Total
Revenue Total Rental
Revenue % of
Total
Revenue
Annual row crops – fresh produce⁽²⁾
14,935 30.1% $ 10,926
59.7% 9,768 34.9% $ 8,303
67.0% $ 14,988
55.3%
Annual row crops – commodity crops⁽³⁾
28,851 58.1% 2,645
14.4% 14,132 50.6% 1,206
9.8% 4,436
16.3%
Subtotal – Total annual row crops 43,786 88.2% 13,571
74.1% 23,900 85.5% 9,509
76.8% 19,424
71.6%
Permanent crops⁽⁴⁾
5,881 11.8% 3,272
17.9% 4,058 14.5% 1,587
12.8% 5,683
21.0%
Subtotal – Total crops 49,667 100.0% 16,843
92.0% 27,958 100.0% 11,096
89.6% 25,107
92.6%
Facilities and other⁽⁵⁾
— — 1,459
8.0% — — 1,292
10.4% 2,005
7.4%
Total 49,667 100.0% $ 18,302
100.0% 27,958 100.0% $ 12,388
100.0% $ 27,112
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 GAAP rental revenue is based on the minimum rental payments required per the leases in place as of September 30, 2017, and includes the amortization of any above-market lease values or accretion of any below-market lease values, deferred revenue and tenant improvements.


⁽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 coolers, 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 61 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 with leases in place as of and for the nine months ended September 30, 2017 and 2016 (dollars in thousands):

As of and For the As of and For the
Annualized GAAP
Rental Revenue as of
Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016
September 30, 2017⁽¹⁾
State
Total
Acres

% of
Total
Acres

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⁾
7,921 12.8% $ 8,749
47.8% 6,516 19.3% $ 6,986
56.4% $ 12,356
45.6%
Florida 11,225 18.2% 4,839
26.5% 5,567 16.5% 2,408
19.4% 7,000
25.8%
Colorado 30,170 48.8% 2,018
11.0% 13,575 40.1% 951
7.7% 2,691
9.9%
Arizona 6,280 10.2% 1,114
6.1% 3,000 8.9% 544
4.4% 2,414
8.9%
Oregon 2,313 3.7% 887
4.8% 2,313 6.8% 877
7.1% 1,202
4.4%
Nebraska 2,559 4.2% 435
2.4% 2,559 7.6% 435
3.5% 580
2.2%
Michigan 270 0.4% 187
1.0% 270 0.8% 187
1.5% 250
0.9%
North Carolina 310 0.5% 42
0.2% — —% —
—% 127
0.5%
Washington 746 1.2% 31
0.2% — —% —
—% 492
1.8%
61,794 100.0% $ 18,302
100.0% 33,800 100.0% $ 12,388
100.0% $ 27,112
100.0%


⁽¹⁾	Annualized GAAP rental revenue is based on the minimum rental payments required per the leases in place as of September 30, 2017, and includes the amortization of any above-market lease values and lease incentives or accretion of any below-market lease values, deferred revenue, and tenant improvements.


⁽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

Most of our leases are on a triple-net basis, an arrangement under which, in addition to rent, the tenant is required to pay the related taxes, insurance costs, maintenance, and other operating costs. 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, with such rent typically subject to periodic escalation clauses provided for within the lease. Currently, 64 of our farms are leased on a pure, triple-net basis, 19 farms are leased on a partial-net basis (with us, as landlord, responsible for all or a portion of the related property taxes), and 4 farms leased on a gross basis (with the landlord responsible for the related property taxes, insurance, and maintenance on the property). Additionally, 23 of our farms are leased under agreements that include a participation rent component based on the gross revenues earned on the respective farms.

Lease Expirations

Agricultural leases are often short-term in nature, so in any given year, we may have multiple leases up for extension or renewal. The following table summarizes the lease expirations by year for the farms owned and with leases in place as of March 31, 2019 (dollars in thousands):



Year	Number of Expiring Leases		Expiring Leased Acreage	% of Total Acreage	Lease Revenue for the Three Months Ended March 31, 2019		% of Total Lease Revenue
2019	3	⁽¹⁾	4,967	6.7%	$	183	2.3%
2020	12		32,975	44.6%	1,801		23.0%
2021	11		8,921	12.1%	616		7.9%
2022	4		325	0.4%	233		3.0%
2023	6		5,846	7.9%	1,148		14.7%
2024	4		2,576	3.5%	456		5.8%
Thereafter	21		18,283	24.8%	3,353		42.8%
Other⁽²⁾	7		7	—%	40		0.5%
Totals	68		73,900	100.0%	$	7,830	100.0%


⁽¹⁾	Includes one lease that was renewed for an additional period of three years subsequent to March 31, 2019 (see “Recent Developments—Portfolio Activity—Existing Properties—Leasing Activity” below for additional information on this and other recent leasing activities).


⁽²⁾	Consists of ancillary leases (e.g., oil, gas, and mineral leases, telecommunications leases, etc.) on certain of our farms.

Recent Developments

Portfolio Activity

Property Acquisitions

Since January 1, 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⁾
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⁾

Acquisitions were accounted for as asset 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 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.


⁽³⁾	Lease provides for a participation rent component based on the gross crop revenues earned on the farm. The rent figure above represents only the minimum cash guaranteed under the lease.

Existing Properties

Leasing Activity

The following table summarizes the leasing activity that has occurred on our existing properties since January 1, 2019 (dollars in thousands, except footnotes):

PRIOR LEASES⁽¹⁾

NEW LEASES⁽²⁾

Farm
Locations

Number

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

4,431

2,158

8 / 4

2,189

3.2

8 / 4


⁽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.

Project Completions

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, 2019, in connection with this project, we will earn additional straight-line rental income of approximately $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 Contingencies—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 $2,000 in connection with securing this financing.

Equity Activity

Series B Preferred Stock

On 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 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, LLC, our dealer-manager for the Primary Offering. See Note 6, “Related-Party Transactions—Gladstone Securities—Dealer-Manager Agreement,” within the accompanying notes to our condensed consolidated financial statements for more details on the Dealer-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 that is the earlier of either 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 (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 Termination Date, though there can be no assurance that a listing will be achieved in such timeframe, or at all.

OP Unit Redemptions

From January 1, 2019, through the date of this 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 a contractual ~~investment advisory arrangement (the “Advisory Agreement”)~~arrangements with our Adviser ~~under~~and our Administrator (both affiliates of ours), which ~~our Adviser directly employs certain~~collectively employ all of our personnel and ~~pays~~pay their ~~payroll,~~salaries, benefits, and general expenses ~~directly,~~directly. The investment advisory agreement with our Adviser, as amended (the “Advisory Agreement”), and ~~our Administrator provides administrative services to us pursuant to a separate~~the administration agreement with our Administrator (the “Administration Agreement”). Both our Adviser and Administrator are affiliates of ours, as their parent company is owned and controlled by Mr. David Gladstone, our chairman and chief executive officer. In addition, two of our executive officers, Mr. Gladstone and Mr. Terry Brubaker (our vice chairman and chief operating officer), serve as directors and executive officers of each of our Adviser and Administrator. Mr. Michael LiCalsi, our general counsel and secretary, also serves as our Administrator’s president. 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.February 1, 2013.

~~A summary of each of the Advisory Agreement and the Administration Agreement is provided in Note 6 to our consolidated financial statements in our 2016 Form 10-K.~~ A summary of the compensation terms for the ~~Amended~~ Advisory Agreement is ~~below.~~

~~Amended Advisory Agreement~~

~~Pursuant to~~provided in Note 6, “Related-Party Transactions,” within the ~~Amended Advisory Agreement, effective beginning with the three months ended June 30, 2017, our Adviser is compensated as follows:~~

A base management fee is paid quarterly and will be 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 as reported on our balance sheet, adjusted to exclude unrealized gains and losses and certain other one-time events and non-cash items ("Total Adjusted Equity").

An incentive fee is calculated and payable quarterly in arrears if the Pre-Incentive Fee FFO (as defined below) 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 (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 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).

A capital gains-based incentive fee is 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.

In the event of our termination of the Amended Advisory Agreement (or in the event of non-renewal by us) 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.

~~We expect this amendment to result in an increase~~accompanying notes to our base management fee in future periods, as the previous base management fee calculation did not include non-controlling interests in our Operating Partnership. In addition, if, in the future, we choose to issue either securities that are classified as mezzanine equity or preferred stock that is required to be treated as permanent equity under GAAP, these amounts will increase the base on which our base management fee is calculated, whereas they were excluded in the from the calculation of our base management fee before the Amended Advisory Agreement went into effect. However, we expect our overall incentive fee (including the capital gains-based incentive fee) to be lower in future periods due to: (i) a higher base management fee (which will result in a lower Pre-Incentive Fee FFO) and (ii) a lower fee on any capital gains we may realize, as the previous incentive fee calculation essentially included a 20% fee on realized capital gains.

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 ~~2016~~ Form 10-K. There were no material changes to our critical accounting policies during the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 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:~~

~~With~~expenses with regard to the comparison between the three months ended ~~September 30,~~March 31, 2019 and 2018:

Same-property basis represents properties owned as of December 31, 2017, ~~versus 2016:~~and were not vacant at any point during either period presented;


◦	~~Same-property basis represents properties that were owned as of June 30, 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, 2018 (including one farm that we purchased without a lease in place and was mostly vacant during a majority of the period);

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, 2016;~~


◦	~~Properties acquired subsequent to prior-year period are properties acquired subsequent to September 30, 2016; and~~


◦	Properties with vacancy represent properties that were vacant at any point during either period presented (we had one property that was vacant for a portion of the three months ended September 30, 2016).

~~With regard to the comparison between the nine~~ months ended September 30, ~~2017 versus 2016:~~


◦	~~Same-property basis represents properties that were owned as of December 31, 2015, and were not vacant at any point during either period presented;~~


◦	~~Properties acquired during the prior-year period are properties acquired during the nine months ended September 30, 2016;~~


◦	~~Properties acquired subsequent to prior-year period are properties acquired subsequent to September 30, 2016; and~~


◦	Properties with vacancy represent properties that were vacant at any point during either period presented (we had one property that was vacant for a portion of the nine months ended September 30, 2016).

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 ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018 is below (dollars in thousands):

For the Three Months Ended September 30,
2017 2016 $ Change % Change
Operating revenues:
Rental revenues $ 6,561
$ 4,467
$ 2,094
46.9%
Tenant recovery revenue 3
2
1
50.0%
Total operating revenues 6,564
4,469
2,095
46.9%
Operating expenses:
Depreciation and amortization 2,051
1,432
619
43.2%
Property operating expenses 257
161
96
59.6%
Acquisition-related expenses 22
123
(101 ) (82.1)%
Management and incentive fees, net of fee credits 730
407
323
79.4%
Administration fee 211
184
27
14.7%
General and administrative 374
356
18
5.1%
Total operating expenses 3,645
2,663
982
36.9%
Operating income 2,919
1,806
1,113
61.6%
Other income (expense)
Other income 4
2
2
100.0%
Interest expense (2,634 ) (1,554 ) (1,080 ) 69.5%
Distributions on Term Preferred Stock (458 ) (219 ) (239 ) 109.1%
Loss on disposal of real estate asset (78 ) —
(78 ) NM
Total other expense (3,166 ) (1,771 ) (1,395 ) 78.8%
Net (loss) income (247 ) 35
(282 ) (805.7)%
Plus (less) net loss (income) attributable to non-controlling interests 26
(3 ) 29
(966.7)%
Net (loss) income attributable to the Company $ (221 ) $ 32
$ (253 ) (790.6)%

~~NM = Not Meaningful~~

For the Nine Months Ended September 30,
2017 2016 $ Change % Change
Operating revenues:
Rental revenues $ 18,302
$ 12,388
$ 5,914
47.7%
Tenant recovery revenue 8
8
—
—%
Total operating revenues 18,310
12,396
5,914
47.7%
Operating expenses:
Depreciation and amortization 5,123
3,744
1,379
36.8%
Property operating expenses 747
545
202
37.1%
Acquisition-related expenses 68
243
(175 ) (72.0)%
Management and incentive fees, net of fee credits 2,080
1,339
741
55.3%
Administration fee 656
575
81
14.1%
General and administrative 1,208
1,150
58
5.0%
Total operating expenses 9,882
7,596
2,286
30.1%
Operating income 8,428
4,800
3,628
75.6%
Other income (expense)
Other income 190
106
84
79.2%
Interest expense (6,984 ) (4,297 ) (2,687 ) 62.5%
Distributions on Term Preferred Stock (1,375 ) (219 ) (1,156 ) 527.9%
Loss on disposal of real estate asset (78 ) —
(78 ) NM
Total other expense (8,247 ) (4,410 ) (3,837 ) 87.0%
Net income 181
390
(209 ) (53.6)%
Less net income attributable to non-controlling interests (23 ) (16 ) (7 ) 43.8%
Net income attributable to the Company $ 158
$ 374
$ (216 ) (57.8)%



	For the Three Months Ended March 31,
	2019			2018			$ Change			% Change
Operating revenues:
Lease revenue:
Fixed base rents, net	$	7,773		$	6,672		$	1,101		16.5%
Variable rents	57			22			35			159.1%
Total lease revenue	7,830			6,694			1,136			17.0%
Other operating revenues	—			2,551			(2,551		)	NM
Total operating revenues	7,830			9,245			(1,415		)	(15.3)%
Operating expenses:
Depreciation and amortization	2,597			2,189			408			18.6%
Property operating expenses	816			428			388			90.7%
Base management fee, net of credits	336			656			(320		)	(48.8)%
Administration fee	306			274			32			11.7%
General and administrative expenses	550			553			(3		)	(0.5)%
Other operating expenses	—			2,359			(2,359		)	NM
Total operating expenses, net of credits	4,605			6,459			(1,854		)	(28.7)%
Operating income	3,225			2,786			439			15.8%
Other income (expense):
Other income	826			315			511			162.2%
Interest expense	(3,453		)	(2,832		)	(621		)	21.9%
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
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 Company	105			(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 Revenues:	For the Three Months Ended September 30,							For the Nine Months Ended September 30,
	2017		2016		$ Change		% Change	2017		2016		$ 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	$	4,337	$	4,278	$	59	1.4%	$	11,197	$	10,845	$	352		3.2%	$	6,302	$	6,328	$	(26	)	(0.4)%
Properties acquired during prior-year period	492		178		314		176.4%	3,288		1,475		1,813			122.9%	80		8		72			900.0%
Properties acquired subsequent to prior-year period	1,712		—		1,712		—	3,760		—		3,760			—	1,175		—		1,175			—%
Property with vacancy	20		11		9		81.8%	57		68		(11		)	(16.2)%
	$	6,561	$	4,467	$	2,094	46.9%	$	18,302	$	12,388	$	5,914		47.7%
Disposed of, vacant, or self-operated properties																216		336		(120		)	(35.7)%
Total fixed base rents, net																$	7,773	$	6,672	$	1,101		16.5%

~~Rental revenues on~~On a same-property basis, ~~increased~~fixed base rents for both the three and nine months ended September 30, 2017, as compared to the respective prior-year periods, by 1.4% and 3.2%, respectively. These increases were primarily due to our general ability to renew existing leases at higher rates and earn additional revenue on capital improvements constructed on certain properties; however, these increases were partially offset (particularly in the three months ended ~~September 30, 2017)~~March 31, 2019, decreased by 0.4% from the ~~recent renewals~~prior-year period, primarily due to decreases in the fixed base rent component of ~~two leases on two~~certain of our ~~California farms that resulted in a 12.5% decrease to the aggregate rental rate~~recent lease renewals, partially offset by additional revenue earned on ~~the two farms. Rental revenues~~recent capital improvements completed on certain of our properties. Fixed base rents from acquired properties increased for ~~both~~ the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2019, as compared to the ~~respective~~ prior-year ~~periods,~~period, due to the additional revenues recorded from owning the ~~9 and 13~~two farms we acquired during the three ~~and nine~~ months ended ~~September 30, 2016, respectively,~~March 31, 2018, for the full ~~three- and nine-month periods~~three-month period ended ~~September 30, 2017,~~March 31, 2019, coupled with ~~the~~ additional revenues earned ~~from~~on the 1612 new farms we acquired ~~subsequent~~Subsequent to ~~September 30, 2016. We had one~~March 31, 2018. Fixed base rents from disposed of, vacant, or self-operated properties decreased for the three months ended March 31, 2019, as compared to the prior-year period, due primarily to the loss of rental income on a farm sold in ~~Florida that was vacant for~~July 2018, coupled with vacancies on two of our farms in Nebraska during a portion of the three ~~and nine~~ months ended ~~September 30, 2016. Rental revenues~~March 31, 2019. This decrease was partially offset by the rental revenue earned on a 169-acre farm in California that was previously operated by Land Advisers, as revenue from rents owed to us by Land Advisers was eliminated upon consolidation. Effective August 1, 2018, this farm ~~increased for~~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 ~~September 30, 2017,~~March 31, 2019 and ~~decreased for the nine months ended September 30, 2017, as compared to the respective prior-year periods.~~2018, we earned approximately $27,000 and $16,000, respectively, of participation rents from two blueberry farms located in North Carolina. In ~~June 2016, the lease on the~~

farm was terminated early, and the farm was subsequently re-leased at a lower rental rate, which drove the decrease for the nine months ended September 30, 2017. However, we were able to renew the lease at an increased rental rate in August 2017, which led to an increase foraddition, during the three months ended ~~September 30, 2017.~~

~~Other Operating Revenues~~

~~Tenant~~March 31, 2019 and 2018, we recorded tenant recovery revenue ~~represents real estate taxes~~of approximately $30,000 and ~~insurance premiums 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 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 revenue earned from sales of harvested crops on a farm that was operated by Land Advisers from October 17, 2017, until July 31, 2018, at which time the farm 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 September 30,								For the Nine Months Ended September 30,								2019		2018		$ Change			% Change
	2017		2016		$ Change			% Change	2017		2016		$ Change			% Change
Same-property basis	$	1,455	$	1,365	$	90		6.6%	$	2,844	$	2,682	$	162		6.0%	$	2,308	$	2,103	$	205		9.7%
Properties acquired during prior-year period	43		31		12			38.7%	1,428		970		458			47.2%	30		8		22			275.0%
Properties acquired subsequent to prior-year period	526		—		526			—	770		—		770			—	202		—		202			—%
Property with vacancy	27		36		(9		)	(25.0)%	81		92		(11		)	(12.0)%
Disposed of, vacant, or self-operated properties																	57		78		(21		)	(26.9)%
	$	2,051	$	1,432	$	619		43.2%	$	5,123	$	3,744	$	1,379		36.8%	$	2,597	$	2,189	$	408		18.6%

Depreciation and amortization expense on a same-property basis increased for ~~both~~ the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2019, as compared to the ~~respective~~ prior-year ~~periods,~~period, primarily as a result of additional depreciation on site improvements completed on certain properties subsequent to ~~September 30, 2016,~~December 31, 2017, partially offset by the expiration of certain lease intangible amortization periods subsequent to ~~September 30, 2016.~~December 31, 2017. Depreciation and amortization expense on acquired properties increased for ~~both~~ the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2019, as compared to the ~~respective~~ prior-year ~~periods,~~period, due to the additional depreciation and amortization expense recorded from owning the ~~9 and 13~~two farms we acquired during the three ~~and nine~~ months ended ~~September 30, 2016, respectively, for the full three- and nine-month periods ended September 30, 2017,~~March 31, 2018, coupled with the additional depreciation and amortization expense incurred on the 1612 new farms we acquired subsequent to ~~September 30, 2016. For our one property with vacancy, the decrease in depreciation~~March 31, 2018. Depreciation and amortization expense on disposed of, vacant, or self-operated properties decreased for the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2019, as compared to the ~~respective~~ prior-year ~~periods, was due to an early lease termination, which resulted~~period, primarily as a result of a farm sold in ~~the recognition of the remaining unamortized balance of the related lease intangibles directly into amortization expense.~~July 2018.


Same-property Analysis (dollars in thousands)																For the Three Months Ended March 31,
Property operating expenses:	For the Three Months Ended September 30,								For the Nine Months Ended September 30,							2019		2018		$ Change		% Change
	2017		2016		$ Change			% Change	2017		2016		$ Change		% Change
Same-property basis	$	189	$	154	$	35		22.7%	$	618	$	531	$	87	16.4%	$	711	$	387	$	324	83.7%
Properties acquired during prior-year period	4		4		—			—	21		6		15		250.0%	25		2		23		1,150.0%
Properties acquired subsequent to prior-year period	62		—		62			—	100		—		100		—	15		—		15		—%
Property with vacancy	2		3		(1		)	(33.3)	8		8		—		—
Disposed of, vacant, or self-operated properties																35		33		2		6.1%
Tenant-reimbursed property operating expenses⁽¹⁾																30		6		24		400.0%
	$	257	$	161	$	96		59.6%	$	747	$	545	$	202	37.1%	$	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 ~~expense,~~premiums, and other ~~overhead~~miscellaneous operating expenses paid for certain of our properties. Property operating expenses on a same-property basis increased by approximately ~~$35,000 and $87,000~~$324,000 for the three ~~and nine~~ months ended ~~September 30, 2017, respectively,~~March 31, 2019, as compared to the ~~respective~~ prior-year ~~periods. These increases were~~period. This increase was primarily driven by ~~a net increase in aggregate property tax expense (due to~~temporary generator rental costs for newly-drilled wells on one of our ~~pure, triple-net leases converting to a partial-net lease during the three months ended December 31, 2016, partially offset by a decrease in property taxes on certain~~ properties, ~~that were entered into land conservation contracts under the California Land Conservation Act, which restricts the land to agricultural use and reduces the property tax assessment),~~ as well as additional expenses incurred related to obtaining certain permits on one 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 ~~both~~ the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2019, as compared to the ~~respective~~ prior-year ~~periods,~~period, primarily due to additional ~~property taxes and other operating~~miscellaneous property-operating expenses ~~owed~~incurred on certain of the new farms we acquired ~~during the three and nine months ended September 30, 2016, and~~ subsequent to ~~September 30, 2016. On our overall portfolio,~~December 31, 2017. Property operating expenses on disposed of, vacant, or self-operated properties for the three ~~and nine~~ months ended ~~September 30, 2017, we accrued approximately $177,000 and $501,000,~~

~~respectively, of aggregate real estate taxes related to certain of our farms, as compared to approximately $111,000 and $355,000 for the respective prior-year periods.~~

~~Other Operating Expenses~~

Acquisition-related 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 decreased for both the three and nine months ended September 30, 2017,March 31, 2019, remained relatively flat as compared to the ~~respective~~ prior-year ~~periods, primarily due to the differences~~period. The increase in ~~accounting treatment of such~~tenant-reimbursed property operating expenses incurred in connection with the properties acquired during each of the respective periods or expected to be acquired in the near future (i.e., acquisition costs are capitalized under ASC 360 if the acquisition is considered an asset acquisition, whereas such costs are expensed under ASC 805 if the acquisition is treated as a business combination). With our early adoption of ASU 2017-01, as defined in Note 2, "Summary of Significant Accounting Policies—Recently-Issued Accounting Pronouncements," in the notes to our accompanying condensed consolidated financial statements, we anticipate that most of our acquisitions will be treated as asset acquisitions, which will result in lower acquisition-related expenses, as the majority of these costs will be capitalized and included as part of the fair value allocation of the purchase price. As of September 30, 2017, we have capitalized approximately $21,000 of acquisition-related costs (which costs were incurred during the nine months ended September 30, 2017) related to farms we expect to acquire duringfor the three months ~~ending December~~ended March 31, 2017, 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 September 30, 2017.

~~The aggregate net fees to our Adviser, including both the management and incentive fees and any credits to those fees, increased for each of the three and nine months ended September 30, 2017,~~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 ~~periods.~~period, primarily due to an increased fee credit during the current-year period. For the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2019, the gross base management fee increased by approximately ~~$138,000 and $288,000, respectively, as compared to~~$249,000 from the ~~respective~~ prior-year ~~periods,~~period, primarily due to additional ~~common~~ equity raised since January 1, ~~2016.~~2018. From January 1, ~~2016,~~2018, through ~~September 30, 2017,~~March 31, 2019, we have raised approximately ~~$38.8~~$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, ~~increasing~~all 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. Pursuant to the Amended Advisory Agreement, which became effective beginning with~~calculated. In addition, during the three months ended ~~June 30, 2017,~~March 31, 2019, our Adviser granted us a non-contractual, unconditional, and irrevocable waiver of approximately $569,000 to be applied against 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 and nine months ended September 30, 2017. Our Adviser also earned incentive fees during each of the periods presented, due to our pre-incentive fee funds from operations exceeding the required hurdle rate of the equity base applicable to each period (which was total stockholders' equity through March 31, 2017, as stipulated in our Advisory Agreement; and, beginning with the three months ended June 30, 2017, was Total Adjusted Equity (which includes non-controlling interests in the Operating Partnership), as stipulated in our Amended Advisory Agreement). The incentive fees earned by our Adviser (net of credits) for the three and nine months ended September 30, 2017, increased by approximately $185,000 and $453,000, respectively, compared to the respective prior-year periods, primarily due to increased rental revenues earned on properties acquired during and subsequent to the nine months ended September 30, 2016, outpacing the operating expenses (other than depreciation and amortization expense) incurred on such properties. The credit to the incentive fee of $54,000 that was recorded for each of the three and nine months ended September 30, 2017, represents an irrevocable waiver granted by our Adviser. See "Our Adviser and Administrator—Amended Advisory Agreement" above for further discussion on changes to the compensation terms stipulated in the Amended Advisory Agreement.fee.

The administration fee paid to our Administrator increased for ~~both~~ the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2019, as compared to the ~~respective~~ prior-year ~~periods,~~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 each of the three and nine months ended September 30, 2017.~~Administrator.

General and administrative expenses, ~~increased~~which consist primarily of professional fees, director fees, stockholder-related expenses, overhead insurance, acquisition-related costs for ~~each of the three~~investments no longer being pursued, and ~~nine months ended September 30, 2017, as compared to the respective prior-year periods. These increases were primarily driven by increased accounting fees (due to additional~~other miscellaneous expenses, related to new acquisitions and higher tax preparation fees), along with additional costs associated with the implementation of a new accounting system (which was completed during the three months ended June 30, 2016) and increased marketing and advertising efforts during the current year. These increases were largely offset by a decrease in bad debt expense, as we wrote off approximately $21,000 and $85,000 of deferred rent asset balances during the three and nine months ended September 30, 2016, respectively, related to a lease on one of our Florida farms that was terminated prior to its expiration. In addition, duringremained relatively flat for the three months ended March 31, 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 a farm that was operated by Land Advisers from October 17, 2017, until July 31, 2018. During the three months ended March 31, 2018, we ~~wrote off~~allocated approximately ~~$46,000~~$2.4 million of ~~unallocated~~ costs ~~associated with~~to the ~~initial filing~~crops sold during the period (excluding the allocation of fees earned by our ~~prior universal registration statement on Form S-3 (File No. 333-194539) (the "2014 Registration Statement"), which~~Adviser from Land Advisers of approximately $66,000). Effective August 1, 2018, the farm was ~~replaced with the 2017 Registration Statement.~~

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,” in the accompanying notes to our condensed consolidated financial statements) and interest earned on short-term investments, increased for ~~each of~~ the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2019, as compared to the ~~respective~~ prior-year ~~periods.~~ ~~The increase in other income during the nine months ended September 30, 2017, was~~period, primarily ~~due to~~driven by additional interest patronage received from Farm ~~Credit.~~Credit (due to increased borrowings from Farm Credit). During the three months ended March 31, ~~2017,~~2019, we recorded approximately ~~$183,000~~$700,000 of interest patronage from Farm Credit related to interest accrued during ~~2016,~~2018, compared to ~~$94,000~~approximately $314,000 of interest patronage ~~received~~recorded during the prior-year period. The receipt of ~~this~~ interest patronage received from Farm Credit during 2019 resulted in a ~~17.2%~~21.2% decrease (approximately 6195 basis points) in our effective interest rate on our aggregate borrowings from Farm Credit during the year ended December 31, ~~2016.~~2018. In addition, during the three months ended March 31, 2019, we recognized $110,000 of income as a result of accumulated deferred revenue related to

a sale agreement for one of our farms that was terminated. Payments received from the potential buyer of the farm were initially deferred and recognized as income upon termination of the agreement.

Interest expense increased for ~~both~~ the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2019, as compared to the ~~respective~~ prior-year ~~periods,~~period, primarily due to increased overall borrowings. The weighted-average principal balance of our aggregate borrowings (excluding our ~~6.375%~~ Series A ~~Cumulative~~ Term Preferred ~~Stock, par value $0.001 per share (the "Term Preferred Stock"))~~Stock) outstanding for the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2019, was approximately ~~$291.3~~$336.3 million, ~~and $265.2 million, respectively,~~ as compared to ~~$181.1~~approximately $305.3 million ~~and $169.5 million, respectively,~~ for the ~~respective~~ prior-year ~~periods.~~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 ~~deferred financing~~debt issuance costs) was ~~3.44% and 3.24%~~3.10% for each of the three ~~and nine~~ months ended ~~September 30, 2017, respectively, as compared to 3.29%~~March 31, 2019 and ~~3.20%, respectively, for the respective prior-year periods.~~2018.

During ~~the~~each of three ~~and nine~~ months ended ~~September 30, 2017,~~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 and $1.4 million, respectively, as compared to approximately $219,000 for each of~~$458,000.

During the three ~~and nine~~ months ended ~~September 30, 2016. The offering~~March 31, 2019, we recorded a net loss of approximately $32,000 related to the ~~Term Preferred Stock was completed in August 2016.~~

~~In connection with an ongoing project~~disposal of certain irrigation improvements on one of our ~~farms in Oregon, for which we are providing the capital to fund, among other improvements, irrigation upgrades~~farms.

The property and ~~the planting of new blueberry bushes, certain blueberry bushes owned by us were removed~~casualty loss incurred during the three months ended September 30, 2017, to allow for the planting of new varieties of blueberry bushes. The bushes that were removed (and that were owned by us) had a net cost basis of approximately $55,000 at the time of their removal. In addition, we incurred approximately $23,000 of removal costs. As such, we recorded a total loss of approximately $78,000March 31, 2018, related to a natural disaster that damaged certain irrigation improvements on one of our properties. We estimated the ~~removal~~aggregate carrying value of ~~these bushes, which is recorded~~the damaged improvements to be approximately $129,000, and we recognized the write-down in the carrying value of the assets as ~~Loss on disposal of real estate asset on our Condensed Consolidated Statement of Operations for~~a property and casualty loss during the three ~~and nine~~ months ended ~~September 30, 2017.~~March 31, 2018.

LIQUIDITY AND CAPITAL RESOURCES

Overview

Since our IPO in January 2013, we have invested approximately ~~$406.6~~$541.5 million ~~into 61~~in 77 new farms, and we have expended or accrued an additional ~~$19.2~~$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)~~as defined below under “—Debt Capital”), and issuances of additional equity securities. Our current available liquidity is approximately ~~$15.0~~$20.7 million, consisting of ~~$3.1~~approximately $5.6 million in cash on hand and, based on the current level of collateral pledged, ~~$11.9~~$15.1 million of availability under the MetLife Facility ~~subject~~(subject to compliance with ~~covenants.~~covenants).

As of ~~September 30, 2017,~~March 31, 2019, our total-debt-to-total-capitalization ratio (including our Series A Term Preferred Stock as debt), at book value, was ~~73.3%~~65.0%, ~~compared to 72.8%~~which is down from 66.8% as of December 31, ~~2016.~~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 ~~September 30, 2017,~~March 31, 2019, was ~~60.7%~~56.9%, which is updown from ~~59.3%~~57.4% as of December 31, ~~2016~~2018 (see ~~“Non-GAAP~~“Non-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 Series B Preferred Stock, 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 Series B Preferred Stock, 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 ~~common stock through~~ our ~~ATM Program)~~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 ~~properties~~facilities that satisfy our investment criteria, and our pipeline of potential acquisitions remains healthy. We ~~currently~~ have ~~two~~several properties under signed purchase and sale agreements ~~for an aggregate proposed purchase price of approximately $8.6 million (a portion of which is expected~~that we hope to ~~be paid in OP Units), which we expect to be consummated~~consummate during the three months ending December 31, 2017. 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.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 ~~for~~from operating, investing, and financing activities for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018 (dollars in thousands):


	For the Nine Months Ended September 30,										For the Three Months Ended March 31,
	2017			2016			$ Change			% Change	2019			2018			$ Change			% Change
Net change in cash from:
Operating activities	$	7,671		$	7,912		$	(241	)	(3.0)%	$	2,432		$	2,751		$	(319	)	(11.6	)%
Investing activities	(125,288		)	(79,761		)	(45,527		)	57.1%	(5,717		)	(9,310		)	3,593			(38.6	)%
Financing activities	118,937			71,713			47,224			65.9%	11,663			6,300			5,363			85.1	%
Net change in Cash and cash equivalents	$	1,320		$	(136	)	$	1,456		(1,070.6)%	$	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 decreased for the three months ended March 31, 2019, as compared to the prior-year period, primarily due to the timing of certain rental receipts and increased interest payments made during the three months ended March 31, 2019.

Investing Activities

The decrease in cash ~~provided by operating~~used in investing activities during the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2019, as compared to the prior-year period, was primarily due to ~~the receipt~~a decrease in aggregate cash paid for acquisitions of ~~two years of prepaid rent upon the closing of the three~~new farms ~~we acquired~~and capital improvements on existing farms during the three months ended March 31, ~~2016, largely offset by additional rental payments received from farms we have acquired since September 30, 2016.~~

~~Investing Activities~~

~~The increase in cash used in investing activities during the nine months ended September 30, 2017, as compared to the prior-year period,~~2019, which was ~~primarily due to an increase in cash paid for acquisitions of new farms during the nine months ended September 30, 2017, which exceeded that of the prior-year period by~~ approximately ~~$51.8 million. This increase was partially offset by a decrease of approximately $6.7~~$4.1 million ~~in cash paid for capital improvements made on existing properties during the nine months ended September 30, 2017, as compared to~~less than the prior-year period.

Financing Activities

The increase in cash provided by financing activities during the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2019, as compared to the prior-year period, was primarily due to ~~increased~~a decrease in net repayments of borrowings, as ~~our~~ net repayments of borrowings for the ~~nine~~three months ended ~~September 30, 2017, were~~March 31, 2019, decreased by approximately ~~$39.7~~$5.9 million ~~more than~~from that of the prior-year ~~period, as well as the $38.5 million of aggregate net cash proceeds received from two overnight~~period. Partially offsetting this was an increase in distributions paid on certain equity securities, including our Series B Preferred Stock, common stock, ~~offerings~~ and additional issuances of common stock under our ATM Program during the nine months ended September 30, 2017. These increases were partially offset by the receipt of approximately $27.6 million of net proceeds from the issuance of our Term Preferred Stock during the prior-year period.

OP Units.

Debt Capital

MetLife

As amended on ~~October 5, 2016, in aggregate,~~December 15, 2017, our facility with Metropolitan Life Insurance Company ~~("MetLife"~~(“MetLife”) consists of ~~$150.0~~a total of $200.0 million of term notes and ~~$50.0~~$75.0 million of revolving equity lines of credit (the ~~"MetLife Facility"~~“MetLife Facility”). In aggregate, we currently have approximately ~~$131.2~~$124.3 million outstanding under the term notes that ~~bear~~bears interest at a ~~blended~~ fixed rate of 3.30% per annum (which rate is fixed until January 5, 2027) and ~~$6.1~~$5.4 million outstanding under the lines of credit that currently ~~bear~~bears interest at ~~3.60%~~a weighted-average rate of 4.59% (which isrates are variable). While approximately ~~$57.4~~$134.0 million of the full commitment amount under the MetLife Facility remains undrawn (including ~~approximately $5.3 million of aggregate~~ amortizing principal payments made on the term notes), based on the ~~current~~ level of collateral pledged, we currently have approximately ~~$11.9~~$15.1 million of availability under the ~~facility.~~MetLife Facility.

Farmer Mac

As amended on June 16, 2016, our agreement with Federal Agricultural Mortgage Corporation ("(“Farmer ~~Mac"~~Mac”) ~~provides~~provided for bond issuances up to an aggregate amount of $125.0 million (the ~~"Farmer~~“Farmer Mac ~~Facility"~~Facility”). To date, we have issued aggregate bonds of approximately $85.9 million under the Farmer Mac Facility, and we currently have $84.5 million of bonds outstanding that bears interest at a weighted-average interest rate of 3.13% (which rates are fixed throughout the bonds' respective terms) and have a weighted-average maturity date of June 2021. While approximately $39.1 million of the full commitment balance remains undrawn, we currently have no additional availability under the Farmer Mac Facility based on the current 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, after which Farmer Mac ~~has~~had the option to be relieved of its obligation to purchase additional bonds under this facility. As of December 11, 2018, we had issued aggregate bonds of approximately $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 $90.6 million of bonds outstanding under the facility that bear interest at a weighted-average

interest rate of 3.55% (which rates are fixed throughout the bonds’ respective terms) and have a weighted-average maturity date of November 2022.

Farm Credit

Since September ~~19,~~ 2014, we have closed on 1523 separate loans with ~~five~~eight 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 ~~$64.7~~$114.2 million (the ~~"Farm~~“Farm Credit Notes ~~Payable"~~Payable”). We currently have approximately ~~$60.6~~$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 ~~3.36%~~3.83% (which rates are fixed, on a weighted-average basis, until ~~January, 2023)~~September 2024) and have a weighted-average maturity date of ~~December, 2030.~~September 2036. While we do not ~~currently~~ 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

~~During 2017, through the date of this filing, we~~The following table provides information on equity sales that have completed two separate overnight common stock offerings 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 3,441,188 shares of our common stock for gross proceeds of approximately $40.8 million and net proceeds, after deducting underwriting discounts and offering expenses borne by us, of approximately $38.8 million. We used the proceeds received from these offerings to fund new acquisitions, repay existing indebtedness (which,occurred since January 1, 2019 (dollars in ~~turn, was used to fund future farmland acquisitions), and for other general corporate purposes.~~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)~~Program and up to $150.0 million reserved for issuance of shares of the 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 ~~$20.1~~$67.5 million of common stock ~~under the 2017 Registration Statement~~ (including approximately ~~$6.0~~$19.9 million through our ATM Program). and approximately $55.1 million of Series B Preferred Stock under the 2017 Registration Statement.

In addition, we have the ability to, and ~~may~~expect to in the future, issue additional OP Units to third parties as consideration in future property acquisitions.

~~Contractual Obligations~~

~~The following table reflects our material contractual obligations as of September 30, 2017 (dollars in thousands):~~

Payments Due During the

Remaining Three
Months of
Fiscal Years Ending December 31,
Contractual Obligation Total 2017 2018 – 2019 2020 – 2021 2022+
Debt obligations⁽¹⁾
$ 297,236
$ 601
$ 34,493
$ 33,726
$ 228,416
Interest on debt obligations⁽²⁾
79,522
1,132
19,813
17,382
41,195
Term Preferred Stock⁽³⁾
28,750
—
—
28,750
—
Term Preferred Stock dividends⁽³⁾
3,671
458
1,836
1,377
—
Operating obligations⁽⁴⁾
6,647
1,093
5,380
174
—
Operating lease obligations⁽⁵⁾
284
—
96
96
92
Total $ 416,110
$ 3,284
$ 61,618
$ 81,505
$ 269,703


⁽¹⁾	Debt obligations include all borrowings (consisting of mortgage notes and bonds payable and our lines of credit) outstanding as of September 30, 2017. Maturity dates of these debt obligations range from July 2018 to November 2041.


⁽²⁾	Interest on debt obligations includes estimated interest on our MetLife Lines of Credit. The balances and interest rates on our MetLife 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 September 30, 2017.


⁽³⁾	Our Term Preferred Stock has a mandatory redemption date of September 30, 2021, and the related dividend payments are treated similar to interest expense in the accompanying Condensed Consolidated Statements of Operations.


⁽⁴⁾	Operating obligations represent commitments outstanding as of September 30, 2017. 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 ~~September 30, 2017,~~March 31, 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-related~~Acquisition- and disposition-related expenses. ~~Acquisition-related~~Acquisition- 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, ~~due~~certain 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 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 ~~our~~the calculation inof 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 ~~deferred financing~~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'~~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"~~FFO”), diluted core funds from operations ("(“Diluted ~~CFFO"~~CFFO”), and diluted adjusted funds from operations ("(“Diluted ~~AFFO"~~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 ~~(loss)~~ 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 ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018 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 September 30,						For the Nine Months Ended September 30,						For the Three Months Ended March 31,
	2017			2016			2017			2016			2019			2018
Net income	$	(247	)	$	35		$	181		$	390
Net income (loss)													$	108		$	(318	)
Plus: Real estate and intangible depreciation and amortization	2,051			1,432			5,123			3,744			2,597			2,189
Plus: Loss on disposal of asset	78			—			78			—
Plus: Losses on dispositions of real estate assets, net													32			—
FFO													2,737			1,871
Less: Dividends declared on Series B Preferred Stock													(601		)	—
FFO available to common stockholders and OP Unitholders	1,882			1,467			5,382			4,134			2,136			1,871
Plus: Acquisition-related expenses	22			123			68			243
Plus: Acquisition-related accounting fees	47			50			82			78
Plus: Acquisition- and disposition-related expenses													139			156
Plus: Other charges, net⁽¹⁾													3			163
CFFO available to common stockholders and OP Unitholders	1,951			1,640			5,532			4,455			2,278			2,190
Net rent adjustment	(174		)	(146		)	(465		)	(316		)	34			(251		)
Plus: Amortization of deferred financing costs	130			66			366			135
Plus: Amortization of debt issuance costs													150			143
AFFO available to common stockholders and OP Unitholders	$	1,907		$	1,560		$	5,433		$	4,274		$	2,462		$	2,082

Weighted-average common shares outstanding – basic and diluted	12,271,925			10,018,331			11,512,968			10,001,466			18,028,826			13,957,732
Weighted-average OP Units outstanding⁽¹⁾	1,444,435			854,116			1,447,632			613,446
Weighted-average OP Units outstanding⁽²⁾													433,393			977,271
Weighted-average total shares outstanding	13,716,360			10,872,447			12,960,600			10,614,912			18,462,219			14,935,003

Diluted FFO per weighted-average total share	$	0.14		$	0.13		$	0.42		$	0.39		$	0.12		$	0.13
Diluted CFFO per weighted-average total share	$	0.14		$	0.15		$	0.43		$	0.42		$	0.12		$	0.15
Diluted AFFO per weighted-average total share	$	0.14		$	0.14		$	0.42		$	0.40		$	0.13		$	0.14


⁽¹⁾	~~Includes only~~Consists of a property and casualty loss recorded during the three months ended March 31, 2018, and additional repairs incurred and expensed during each period as a result of damage caused to certain irrigation improvements on our farms by natural disasters.


⁽²⁾	Represents OP Units held by third parties. As of September 30, 2017 and 2016, there were 1,227,383 and 1,215,306, respectively, OP Units held by non-controlling limited partners, representing 8.3% and 10.8%, 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, ~~a difficulty in owning shares of a real estate-based company~~one challenge is determining the fair value of the real estate ~~so that~~in order to allow stockholders ~~can~~to see the value of the real estate increase or decrease over ~~time. For this reason,~~time, which we believe ~~determining the fair value of our real estate assets~~ 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) ~~performed~~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 ~~September 30, 2017,~~March 31, 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	16	27,994	21,709	$	140,051	$	139,947		26.3%	12	12,472	8,849	$	88,824	$	88,781	14.3%
Internal Valuation	14	12,853	10,071	93,354		143,560		⁽²⁾	27.0%
Third-party Appraisal⁽³⁾	42	20,947	17,887	213,927		248,157			46.7%
Third-party Appraisal⁽²⁾										74	61,428	49,495	455,177		531,653		85.7%
Total	72	61,794	49,667	$	447,332	$	531,664		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⁾	98.1% of this valuation, or approximately $140.8 million, is supported by values as determined by third-party appraisals performed between October 2014 and June 2016. The difference of approximately $2.8 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 June 2018 and March ~~2017 and October 2017.~~2019.

Some of the significant assumptions used by appraisers and the Valuation Team in valuing our portfolio as of ~~September 30, 2017,~~March 31, 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 – $103,000	$	39,325	$4,123 – $105,000	$	51,376	$600 – $87,500	$	33,045
Market Rent (per farmable acre)	$261 – $4,864	$	1,858	$215 – $4,500	$	1,996	$250 – $4,600	$	2,508
Market Capitalization Rate	3.44% – 5.49%	4.47%		3.12% – 5.87%	4.04%		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 ~~such as~~(e.g., cooling ~~facilities and box barns,~~facilities), and other structures on our properties ~~including~~(e.g., residential ~~housing and horticulture,~~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;~~ profiles, changes in lease terms ~~such~~(such as expirations and notices of non-renewals or to ~~vacate;~~vacate), and potential asset sales ~~particularly~~(particularly those at prices different from the appraised values of our ~~properties.~~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 ~~September 30, 2017,~~March 31, 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 ~~September 30, 2017,~~March 31, 2019, from the prior value basis as of ~~June 30, 2017,~~December 31, 2018, is provided in the table below (dollars in thousands):

Total portfolio fair value as of June 30, 2017 $ 492,972
Plus: Acquisition of seven new farms during the three months ended September 30, 2017 38,178
Plus net value appreciation (depreciation) during the three months ended September 30, 2017:
13 farms valued via third-party appraisals $ 514

Total net appreciation for the three months ended September 30, 2017 514
Total portfolio fair value as of September 30, 2017 $ 531,664



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 ~~September 30, 2017,~~March 31, 2019, was approximately ~~$286.3~~$332.1 million, as compared to a carrying value (excluding unamortized related debt issuance costs) of ~~$292.1~~approximately $336.1 million. In addition, using the closing stock price as of ~~September 30, 2017,~~March 31, 2019, the fair value of the Series A Term Preferred stock was determined to be approximately ~~$29.8~~$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 ~~farm~~farms and farm-related properties ~~expressed in terms of~~and provide an estimated net asset value (“NAV”)~~, and provide that to our stockholders~~ 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 the Company believes 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 ~~September 30, 2017,~~March 31, 2019, we estimate ~~our~~the NAV per common share to be ~~$14.15, 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 ~~amount)~~data):


Total equity per balance sheet				$	118,986				$	194,769
Fair value adjustment for long-term assets:
Less: net cost basis of tangible and intangible real estate holdings⁽¹⁾	$	(447,332	)			$	(544,001	)
Plus: estimated fair value of real estate holdings⁽²⁾	531,664					620,434
Net fair value adjustment for real estate holdings				84,332					76,433
Fair value adjustment for long-term liabilities:
Plus: book value of aggregate long-term indebtedness⁽³⁾	320,886					364,867
Less: fair value of aggregate long-term indebtedness⁽³⁾⁽⁴⁾	(316,086		)			(361,688		)
Net fair value adjustment for long-term indebtedness				4,800					3,179
Estimated NAV				$	208,118				274,381
Total shares outstanding⁽⁵⁾				14,712,408
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				$	14.15				$	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 ~~September 30, 2017.~~March 31, 2019.


⁽⁵⁾	Valued at the security’s liquidation value, as discussed above.


⁽⁶⁾	Includes ~~13,485,025~~18,462,219 shares of common stock and ~~1,227,383~~no OP Units held by non-controlling limited ~~partners (representing 8.3% of all OP Units issued and outstanding as of September 30, 2017).~~partners.

A quarterly roll-forward in the estimated NAV per common share for the three months ended ~~September 30, 2017,~~March 31, 2019, is provided ~~below:~~

below

Estimated NAV per common share as of June 30, 2017 $ 14.46
Plus net income (0.02 )
Plus change in valuations:
Net change in unrealized appreciation of farmland portfolio⁽¹⁾
$ —

Net change in unrealized fair value of long-term indebtedness 0.10

Net change in valuations 0.10
Less distributions (0.13 )
Less dilutive effect of equity issuances⁽²⁾
(0.26 )
Estimated NAV per common share as of September 30, 2017 $ 14.15



Estimated NAV per common share and OP Unit as of December 31, 2018				$	12.88
Less net loss				(0.03		)
Plus net change in valuations:
Net change in unrealized fair value of farmland portfolio⁽¹⁾	$	0.01
Net change in unrealized fair value of long-term indebtedness	(0.32		)
Net change in valuations				(0.31		)
Less distributions				(0.13		)
Less dilutive effect of equity issuances⁽²⁾				(0.11		)
Estimated NAV per common share as of March 31, 2019				$	12.30

⁽¹⁾

The net change in unrealized ~~appreciation~~fair value of farmland portfolio consists of three components: (i) an increase of ~~$0.04~~$0.01 due to the net appreciation in value of 1329 farms that were valued during the three months ended ~~September 30, 2017,~~March 31, 2019, (ii) an increase of ~~$0.15~~$0.14 due to the aggregate depreciation and amortization expense recorded during the three months ended ~~September 30, 2017,~~March 31, 2019, and (iii) a decrease of ~~$0.19~~$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 ~~the September 2017 Follow-on Offering and~~ shares of ~~common stock sold under the ATM Program~~our Series B Preferred Stock issued during the three months ended ~~September 30, 2017.~~March 31, 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 ~~the~~our NAV per common share to be $12.30 as of ~~September 30, 2017, to be $14.15 per~~March 31, 2019, based on the calculation above, the closing price of our common stock on ~~September 30, 2017,~~March 31, 2019, was ~~$13.62,~~$12.65, and it has subsequently traded between ~~$13.01~~$12.13 and ~~$14.29~~$12.81 per share.

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.

~~We intend to report any adjustments to the estimated NAV, as well as to the values of our properties, in this section on a quarterly basis, but in no case less than annually. However, the~~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 September 30, 2017, excluding our Term Preferred Stock, the fair value of our fixed-rate borrowings outstanding, which accounted for approximately 98.3% of our total indebtedness, at cost, as of September 30, 2017, was approximately $286.3 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 September 30, 2017, the fair value of our fixed-rate borrowings would have increased or decreased by approximately $13.8 million or $12.8 million, respectively.

~~There have been no material changes in the quantitative and qualitative market risk disclosures for the nine months ended September 30, 2017, from that disclosed in our Form 10-K.~~smaller reporting companies.



ITEM 4.	CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of ~~September 30, 2017,~~March 31, 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 ~~September 30, 2017,~~March 31, 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 ~~September 30, 2017,~~March 31, 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~~“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 ~~September 30, 2017,~~March 31, 2019, we issued ~~50,000~~570,879 shares of common stock in exchange for ~~50,000~~570,879 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			Articles of Incorporation, ~~of the Registrant,~~ incorporated by reference to Exhibit 3.1 to Pre-Effective Amendment No. 2 to the Registration Statement on Form S-11 (File No. 333-183965), filed on November 2, 2012.
3.2			Amended and Restated Bylaws, ~~of the Registrant,~~ incorporated by reference to Exhibit 3.2 to Pre-Effective Amendment No. 3 to the Registration Statement on Form S-11 (File No. 333-183965), filed on November 15, 2012.
3.3			Articles Supplementary establishing the 6.375% Series A Cumulative Term Preferred Stock, incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 001-35795), filed on August 11, 2016.
3.4			Articles of Amendment, ~~of the Registrant,~~ incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 001-35795), filed on July 12, 2017.
3.5			Articles Supplementary establishing the 6.00% Series B Cumulative Redeemable Preferred Stock, incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 001-35795), filed on May 31, 2018.
4.1			Form of Common Stock Certificate, ~~of the Registrant,~~ incorporated by reference to Exhibit 4.1 to Pre-Effective Amendment No. 4 to the Registration Statement on Form S-11 (File No. 333-183965), filed on December 27, 2012.
4.2			Form of Indenture, incorporated by reference to Exhibit 4.2 to the Registration Statement on Form S-3 (File No. 333-217042), filed on March 30, 2017.
4.3			Form of Certificate for 6.375% Series A Cumulative Term Preferred Stock, incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 001-35795), filed on August 11, 2016.
114.4			~~Computation~~Form of ~~Per Share Earnings from Operations.~~Certificate for 6.00% Series B Cumulative Redeemable Preferred Stock, incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 001-35795), filed on May 31, 2018.
31.1			Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002.~~2002 (filed herewith).
31.2			Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002.~~2002 (filed herewith).
32.1			Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002.~~2002 (furnished herewith).
32.2			Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002.~~2002 (furnished herewith).
99.1			Estimated Value Methodology for Series B Cumulative Redeemable Preferred Stock at March 31, 2019 (filed herewith)

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 ~~September 30, 2017,~~March 31, 2019, and December 31, ~~2016,~~2018, (ii) the Condensed Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 and ~~2016,~~2018, (iii) the Condensed Consolidated Statements of Equity for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016,~~2018, (iv) the Condensed Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016,~~2018, 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: ~~November~~May 7, ~~2017~~2019	By:	/s/ Lewis Parrish
		Lewis Parrish
		Chief Financial Officer and Assistant Treasurer

Date: ~~November~~May 7, ~~2017~~2019	By:	/s/ David Gladstone
		David Gladstone
		Chief Executive Officer and Chairman of the Board of Directors

5045



	Common Stock
	Number of Shares	Par Value		Additional Paid-in Capital			Accumulated Deficit			Non- Controlling Interests			Total Equity
Balance at December 31, 2015	9,992,941	$	10	$	86,892		$	(8,895	)	$	—		$	78,007
Net income	—	—		—			374			16			390
Proceeds from issuance of common stock, net	31,934	—		350			—			—			350
Distributions	—	—		—			(3,676		)	(234		)	(3,910		)
Issuance of OP Units as consideration in real estate acquisitions, net	—	—		—			—			11,708			11,708
Adjustment to non-controlling interests resulting from changes in ownership of the Operating Partnership	—	—		2,133			—			(2,133		)	—
Balance at September 30, 2016	10,024,875	$	10	$	89,375		$	(12,197	)	$	9,357		$	86,545

Balance at December 31, 2016	10,024,875	$	10	$	90,082		$	(13,402	)	$	11,087		$	87,777
Net income	—	—		—			158			23			181
Proceeds from issuance of common stock, net	3,410,150	3		38,420			—			—			38,423
Distributions	—	—		—			(4,557		)	(568		)	(5,125		)
Issuance of OP Units as consideration in real estate acquisitions, net	—	—		—			—			—			—
Redemption of OP Units	50,000	—		404			—			(2,674		)	(2,270		)
Adjustment to non-controlling interests resulting from changes in ownership of the Operating Partnership	—	—		(2,058		)	—			2,058			—
Balance at September 30, 2017	13,485,025	$	13	$	126,848		$	(17,801	)	$	9,926		$	118,986



Acquisition Period	Land and Land Improvements		Buildings		Irrigation System		Other Improvements		Horticulture		Leasehold Interest – Land		In-place Leases	Leasing Costs		Net Below-Market Leases			Total Purchase Price
2017 Acquisitions	$	89,614	$	2,804	$	11,534	$	824	$	12,611	$	3,488	487	$	508	$	(23	)	$	121,847
2016 Acquisitions	59,038		3,691		4,952		2,079		11,431		—		501	448		(582		)	81,558



	For the three months ended September 30, 2016		For the nine months ended September 30, 2016
	(Unaudited)		(Unaudited)
Operating Data:
Total operating revenue	$	4,718	$	13,286
Net income attributable to the company	$	212	$	594
Share and Per-share Data:
Earnings per share of common stock – basic and diluted	$	0.02	$	0.06
Weighted-average common shares outstanding – basic and diluted	10,018,331		10,001,466



	Carrying Value as of						As of September 30, 2017
	September 30, 2017			December 31, 2016			Stated Interest Rates⁽¹⁾ (Range; Wtd Avg)	Maturity Dates (Range; Wtd Avg)
Mortgage notes and bonds payable:
Fixed-rate mortgage notes payable	$	207,618		$	142,861		2.90%–4.47%; 3.59%	6/1/2020–11/1/2041; April 2029
Fixed-rate bonds payable	84,518			49,348			2.38%–4.05%; 3.13%	7/30/2018–8/30/2024; June 2021
Total mortgage notes and bonds payable	292,136			192,209
Deferred financing costs – mortgage notes and bonds payable	(1,902		)	(1,412		)	N/A	N/A
Mortgage notes and bonds payable, net	$	290,234		$	190,797

Variable-rate revolving lines of credit	$	5,100		$	16,550		3.55%	4/5/2024

Total borrowings, net	$	295,334		$	207,347



Issuer	# of Loans Outstanding	Dates of Issuance	Maturity Dates	Principal Outstanding		Stated Interest Rate⁽¹⁾
Farm Credit CFL	8	9/19/2014 – 7/13/2017	6/1/2020 – 10/1/2040	$	27,472	4.15%	⁽²⁾
Farm Credit West	3	4/4/2016 – 7/17/2017	5/1/2037 – 11/1/2041	21,054		3.91%	⁽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	5,820		4.70%	⁽⁴⁾
NW Farm Credit	1	9/8/2017	9/1/2024	5,460		4.41%	⁽⁴⁾
Total	14			$	61,107



Date of Issuance	Gross Proceeds⁽¹⁾			Maturity Dates	Principal Amortization	Interest Rate Terms
1/12/2017-8/30/2017	$	35,625	⁽¹⁾	1/10/2020 – 8/30/2024	None	2.80% – 4.05%, fixed throughout their respective terms



Dates of Issuance	Initial Commitment			Maturity Dates	Principal Outstanding		Stated Interest Rate⁽¹⁾	Undrawn Commitment
12/11/2014–8/30/2017	$	125,000	⁽²⁾	7/30/2018–8/30/2024	$	84,519	3.13%	$	39,118	⁽³⁾



Fiscal Year	Declaration Date	Record Date	Payment Date	Dividend per Preferred Share
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
	April 11, 2017	April 21, 2017	April 28, 2017	0.1328125
	April 11, 2017	May 19, 2017	May 31, 2017	0.1328125
	April 11, 2017	June 21, 2017	June 30, 2017	0.1328125
	July 11, 2017	July 21, 2017	July 31, 2017	0.1328125
	July 11, 2017	August 21, 2017	August 31, 2017	0.1328125
	July 11, 2017	September 20, 2017	September 29, 2017	0.1328125
	Nine months ended September 30, 2017			$	1.1953125

2016	September 12, 2016	September 21, 2016	September 30, 2016	$	0.190364583	⁽¹⁾
	Nine months ended September 30, 2016			$	0.190364583



	September 30, 2017			December 31, 2016
Management fee due to Adviser	$	523		$	384
Incentive fee due to Adviser	261			169
Credits to fees due to Adviser⁽¹⁾	(54		)	—
Other due to Adviser⁽²⁾	43			2
Total due to Adviser	773			555
Administration fee due to Administrator	211			202
Other due from Administrator⁽²⁾	—			(6		)
Total due to Administrator	211			196
Total due to related parties⁽³⁾	$	984		$	751



Record Date	Payment Date	Distribution per Common Share		Dividend per share of Term Preferred Stock
October 20, 2017	October 31, 2017	$	0.0441	$	0.1328125
November 20, 2017	November 30, 2017	0.0441		0.1328125
December 19, 2017	December 29, 2017	0.0441		0.1328125
Total:		$	0.1323	$	0.3984375



Year	Number of Expiring Leases		Expiring Leased Acreage	% of Total Acreage	Rental Revenue for the Nine Months Ended September 30, 2017		% of Total Revenue
2017	1	⁽¹⁾	—	—%	$	24	0.1%
2018	5		4,839	7.8%	665		3.6%
2019	4		157	0.3%	113		0.6%
2020	13		28,666	46.4%	6,178		33.8%
2021	5		6,954	11.3%	1,455		8.0%
2022	3		269	0.4%	451		2.5%
Thereafter	25		20,909	33.8%	9,416		51.4%
Totals	56		61,794	100.0%	$	18,302	100.0%



	As of and For the					As of and For the					Annualized GAAP Rental Revenue as of
	Nine Months Ended September 30, 2017					Nine Months Ended September 30, 2016					September 30, 2017⁽¹⁾
Revenue Source	Total Farmable Acres	% of Total Farmable Acres	Rental Revenue		% of Total Revenue	Total Farmable Acres	% of Total Farmable Acres	Rental Revenue		% of Total Revenue	Total Rental Revenue		% of Total Revenue
Annual row crops – fresh produce⁽²⁾	14,935	30.1%	$	10,926	59.7%	9,768	34.9%	$	8,303	67.0%	$	14,988	55.3%
Annual row crops – commodity crops⁽³⁾	28,851	58.1%	2,645		14.4%	14,132	50.6%	1,206		9.8%	4,436		16.3%
Subtotal – Total annual row crops	43,786	88.2%	13,571		74.1%	23,900	85.5%	9,509		76.8%	19,424		71.6%
Permanent crops⁽⁴⁾	5,881	11.8%	3,272		17.9%	4,058	14.5%	1,587		12.8%	5,683		21.0%
Subtotal – Total crops	49,667	100.0%	16,843		92.0%	27,958	100.0%	11,096		89.6%	25,107		92.6%
Facilities and other⁽⁵⁾	—	—	1,459		8.0%	—	—	1,292		10.4%	2,005		7.4%
Total	49,667	100.0%	$	18,302	100.0%	27,958	100.0%	$	12,388	100.0%	$	27,112	100.0%



			Payments Due During the
			Remaining Three Months of		Fiscal Years Ending December 31,
Contractual Obligation	Total		2017		2018 – 2019		2020 – 2021		2022+
Debt obligations⁽¹⁾	$	297,236	$	601	$	34,493	$	33,726	$	228,416
Interest on debt obligations⁽²⁾	79,522		1,132		19,813		17,382		41,195
Term Preferred Stock⁽³⁾	28,750		—		—		28,750		—
Term Preferred Stock dividends⁽³⁾	3,671		458		1,836		1,377		—
Operating obligations⁽⁴⁾	6,647		1,093		5,380		174		—
Operating lease obligations⁽⁵⁾	284		—		96		96		92
Total	$	416,110	$	3,284	$	61,618	$	81,505	$	269,703



Total portfolio fair value as of June 30, 2017			$	492,972
Plus: Acquisition of seven new farms during the three months ended September 30, 2017			38,178
Plus net value appreciation (depreciation) during the three months ended September 30, 2017:
13 farms valued via third-party appraisals	$	514
Total net appreciation for the three months ended September 30, 2017			514
Total portfolio fair value as of September 30, 2017			$	531,664



Estimated NAV per common share as of June 30, 2017			$	14.46
Plus net income			(0.02		)
Plus change in valuations:
Net change in unrealized appreciation of farmland portfolio⁽¹⁾	$	—
Net change in unrealized fair value of long-term indebtedness	0.10
Net change in valuations			0.10
Less distributions			(0.13		)
Less dilutive effect of equity issuances⁽²⁾			(0.26		)
Estimated NAV per common share as of September 30, 2017			$	14.15