| PART I | | | |
|---|
| Item 1 | Business | | 6 |
|---|
| Item 1A | Risk Factors | | 16 |
|---|
| Item 1B | Unresolved Staff Comments | | 38 |
|---|
| Item 1C | Cybersecurity | | 38 |
|---|
| Item 2 | Properties | | 39 |
|---|
| Item 3 | Legal Proceedings | | 39 |
|---|
| Item 4 | Mine Safety Disclosures | | 39 |
|---|
| PART II | | | |
|---|
| Item 5 | Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | | 40 |
|---|
| Item 6 | [Reserved] | | 42 |
|---|
| Item 7 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | | 43 |
|---|
| Item 7A | Quantitative and Qualitative Disclosures About Market Risk | | 58 |
|---|
| Item 8 | Financial Statements and Supplementary Data | | 58 |
|---|
| Item 9 | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | | 58 |
|---|
| Item 9A | Controls and Procedures | | 58 |
|---|
| Item 9B | Other Information | | 59 |
|---|
| Item 9C | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | | 59 |
|---|
| PART III | | | |
|---|
| Item 10 | Directors, Executive Officers and Corporate Governance | | 59 |
|---|
| Item 11 | Executive Compensation | | 59 |
|---|
| Item 12 | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | | 60 |
|---|
| Item 13 | Certain Relationships and Related Transactions, and Director Independence | | 60 |
|---|
| Item 14 | Principal Accountant Fees and Services | | 60 |
|---|
| PART IV | | | |
|---|
| Item 15 | Exhibits and Financial Statement Schedules | | 60 |
|---|
| Signatures | | | 64 |
|---|
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
We make statements in this Annual Report on Form 10-K that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). These forward-looking statements include, without limitation, statements concerning pending acquisitions and dispositions, projections, predictions, expectations, estimates or forecasts as to our business, financial and operational results, future stock repurchases and other transactions affecting our capitalization, our dividend policy, future economic performance, crop yields and prices and future rental rates for our properties, ongoing litigation, as well as statements of management’s goals and objectives and other similar expressions concerning matters that are not historical facts. When we use the words “may,” “should,” “could,” “would,” “predicts,” “potential,” “confident,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” or similar expressions or their negatives, as well as statements in future tense, we intend to identify forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, beliefs and expectations, such forward-looking statements are not predictions of future events or guarantees of future performance, and our actual results could differ materially from those set forth in the forward-looking statements. Some factors that might cause such a difference include the following: the ongoing war in Ukraine and other geopolitical tensions and their impact on our tenants’ businesses and the farm economy generally, changes in tariffs and trade policies in the United States and other countries that import U.S. agricultural products, including the impact of tariffs on the export of U.S. soybeans to China, high inflation and elevated interest rates, the onset of an economic recession in the United States and other countries that impact the farm economy, extreme weather events, such as droughts, tornadoes, hurricanes, wildfires or floods, the impact of future public health crises on our business and on the economy and capital markets generally, general volatility of the capital markets and the market price of our common stock, changes in our business strategy, availability, terms and deployment of capital, our ability to refinance existing indebtedness at or prior to maturity on favorable terms, or at all, availability of qualified personnel, changes in our industry or the general economy, the degree and nature of our competition, the outcomes of ongoing litigation, our ability to identify new acquisitions or dispositions and close on pending acquisitions or dispositions and the other factors described in the risk factors described in Item 1A, “Risk Factors” of this Annual Report on Form 10-K and in other documents that we file from time to time with the SEC. Given these uncertainties, undue reliance should not be placed on such statements. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking statements, except to the extent required by law.
Summary Risk Factors
Our business is subject to a number of risks, including risks that may prevent us from achieving our business objectives or may adversely affect our business, financial condition, results of operations, cash flows and prospects. The following is an overview of the most significant risks to which we are exposed in the normal course of our business and which are discussed more fully in “Item 1A. Risk Factors” herein. These risks include, but are not limited to, the following:
| • | Our business is dependent in part upon the profitability of our tenants' farming operations, and a sustained downturn in the profitability of their farming operations could have a material adverse effect on the amount of rent we can collect and, consequently, our cash flow and ability to make distributions to our stockholders. |
| • | We have a substantial amount of indebtedness outstanding, which may expose us to the risk of default under our debt obligations, restrict our operations and our ability to grow our business and revenues, and restrict our ability to pay distributions to our stockholders. |
| • | Mortgage debt obligations expose us to the possibility of foreclosure, which could result in the loss of our investment in a property or group of properties subject to mortgage debt. |
| • | Our debt financing agreements may restrict our ability to engage in certain business activities, including our ability to incur additional indebtedness, make capital expenditures and make certain investments. |
| • | Increases in benchmark interest rates will increase our borrowing costs, which will negatively impact our financial condition, results of operations, growth prospects and ability to make distributions to stockholders, and will increase our tenants’ borrowing costs and may make it more difficult for them to obtain credit. |
| • | Global economic conditions, including elevated levels of inflation, supply chain disruptions and trade policies affecting imports and exports, could materially and adversely affect our and our tenants’ operations. |
| • | Approximately 60% of our portfolio is comprised of properties used to grow primary crops such as corn, soybeans, wheat, rice and cotton, which subjects us to risks associated with primary row crops. |
| • | Approximately 40% of our portfolio is comprised of properties used to grow permanent/specialty crops such as almonds, pistachios, citrus, avocados, strawberries, and edible beans, which have a higher risk profile than farmland used for annual row crops. |
| • | Our failure to continue to identify and consummate suitable farmland acquisitions would significantly impede our growth and our ability to further diversify our portfolio by geography, crop type and tenant. |
| • | We do not intend to continuously monitor and evaluate tenant credit quality, and our financial performance may be subject to risks associated with our tenants' financial condition and liquidity position, including that we may be unable to collect balances due on our leases from any tenants in financial distress or bankruptcy. |
| • | Our short-term leases make us more susceptible to any decreases in prevailing market rental rates than would be the case if we entered into longer-term leases. |
| • | We depend on external sources of capital that are outside of our control and may not be available to us on commercially reasonable terms or at all, which could limit our ability to, among other things, acquire additional properties, meet our capital and operating needs or make the cash distributions to our stockholders necessary to maintain our qualification as a REIT. |
| • | Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our properties. |
| • | Laws in certain states where we own property prohibit or restrict the ownership of agricultural land by business entities, which could impede the growth of our portfolio and our ability to diversify geographically. |
| • | Our farms are exposed to the possibility of extreme weather events, such as droughts, tornadoes, hurricanes, wildfires and floods, which could damage farmland and equipment, adversely affect crop yields and the ability of farmers to pay rent to us or adversely impact the financing of such properties. |
| • | We may be subject to unknown or contingent liabilities related to acquired properties and properties that we may acquire in the future, including potential liability for environmental matters. |
| • | The loss of key management personnel could have a material adverse effect on our ability to implement our business strategy and to achieve our investment objectives. |
| • | Joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on co-venturers’ financial condition and disputes between us and our co-venturers. |
| • | We may fail to realize some or all of the anticipated benefits of our ownership interest in the OZ Fund. |
| • | The FPI Loan Program exposes us to risks associated with being a lender. |
| • | Liability for uninsured or underinsured losses could materially and adversely affect our financial condition and cash flow. |
| • | We have previously been subject to, and may in the future be subject to, litigation or threatened litigation, which may require us to pay damages and expenses or restrict the operation of our business. |
| • | A cybersecurity incident and other technology disruptions could result in a violation of law or negatively impact our reputation and relationships with our tenants. |
| • | We may be required to permit the owners of certain third-party access rights on our properties to enter and occupy parts of the properties, including owners of mineral rights and power generation and transportation infrastructure, which could materially and adversely impact the rental value of our properties. |
| • | Conflicts of interest may exist or could arise in the future between the interests of our stockholders and the interests of holders of units in our Operating Partnership, which may impede business decisions that could benefit our stockholders. |
| • | Our charter contains certain provisions restricting the ownership and transfer of our stock that may delay, defer or prevent a change of control transaction that might involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interests. |
| • | We could increase the number of authorized shares of stock, classify and reclassify unissued stock and issue stock, or the Operating Partnership may issue additional partnership units to third parties, without stockholder approval, which may delay, defer or prevent a transaction that our stockholders believe to be in their best interests. |
| • | Our Board of Directors may change our strategies, policies and procedures without stockholder approval. |
| • | Our charter contains provisions that make removal of our directors difficult, which could make it difficult for our stockholders to effect changes to our management. |
| • | Failure to maintain qualification as a REIT for U.S. federal income tax purposes would subject us to U.S. federal income tax on our taxable income at regular corporate rates, which would substantially reduce our ability to make distributions to our stockholders. |
| • | Complying with the REIT requirements may cause us to forego otherwise attractive opportunities or sell properties earlier or later than we wish. |
| • | We may be unable to make distributions at expected levels, which could result in a decrease in the market price of our common stock. |
| • | We are subject to risks associated with public health crises, such as pandemics and epidemics, which may have a material adverse effect on our business. |
| • | The market price and trading volume of our common stock may be highly volatile and low, respectively. |
| • | Future offerings of debt, which may rank senior to our common stock for purposes of dividend distributions or upon liquidation, or the issuance of Common units in connection with future acquisitions, may materially adversely affect us, including the trading price of our common stock. |
