GLADSTONE LAND Corp

Previous wording

We are an externally-managed, agricultural real estate investment trust (“REIT”) that is engaged in the business of owning and leasing farmland. We are not a grower of crops, nor do we typically farm the properties we own. We currently own 168 farms comprised of 111,836 acres located across 15 states in the U.S. We also own several farm-related facilities, such as cooling facilities, packinghouses, processing facilities, and various storage facilities.

Current wording

We are an externally-managed, agricultural real estate investment trust (“REIT”) that is engaged in the business of owning and leasing farmland. We are not a grower of crops, nor do we typically farm the properties we own. We currently own 168 farms comprised of 111,836 acres located across 15 states in the U.S. and 53,975 acre-feet of water assets in California. We also own several farm-related facilities, such as cooling facilities, packinghouses, processing facilities, and various storage facilities.

Previous wording

The following table summarizes the different geographic locations (by state) of our farms owned as of and during the three months ended March 31, 2024 and 2023 (dollars in thousands):

Current wording

The following table summarizes the different geographic locations (by state) of our farms owned as of and during the six months ended June 30, 2024 and 2023 (dollars in thousands):

Previous wording

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 7 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, semi-annual, or quarterly basis, with such rent typically subject to periodic escalation clauses provided for within the lease. Currently, 105 of our farms are leased on a pure, triple-net basis, 45 farms are leased on a partial-net basis (with us, as landlord, responsible for all or a portion of the related property taxes), 3 farms are leased on a single-net basis (with us, as landlord, responsible for the related property taxes, as well as certain maintenance, repairs, or insurance costs), 11 farms are direct-operated, and 4 farms are vacant. Additionally, 27 of our farms are leased under agreements that include a variable rent component, called “participation rents,” that are based on the gross revenues earned on the respective farms (though such leases generally include a guarantee of a minimum amount of rental income).

Current wording

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 7 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, semi-annual, or quarterly basis, with such rent typically subject to periodic escalation clauses as set forth within the lease. Currently, 103 of our farms are leased on a pure, triple-net basis, 49 farms are leased on a partial-net basis (with us, as landlord, responsible for all or a portion of the related property taxes), 3 farms are leased on a single-net basis (with us, as landlord, responsible for the related property taxes, as well as certain maintenance, repairs, or insurance costs), 12 farms are direct-operated, and 1 farm is vacant. Additionally, 28 of our farms are leased under agreements that include a variable rent component, called “participation rents,” that are based on the gross revenues earned on the respective farms (though such leases generally include a guarantee of a minimum amount of rental income).

Previous wording

(2)Primarily consists of ancillary leases (e.g., renewable energy leases; oil, gas, and mineral leases; telecommunications leases; etc.) with varying expirations on certain of our farms.

Current wording

(3)Primarily consists of ancillary leases (e.g., renewable energy leases; oil, gas, and mineral leases; telecommunications leases; etc.) with varying expirations on certain of our farms.

Previous wording

We currently have five agricultural leases scheduled to expire within the next six months. We are currently in negotiations with the existing tenants on the farms, as well as other potential tenants, and we anticipate being able to renew the leases at their respective current market rental rates without incurring any downtime on the farms. Regarding all vacancies and upcoming lease expirations, there can be no assurance that we will be able to renew the existing leases or execute new leases at rental rates favorable to us, if at all, or be able to find replacement tenants, if necessary.

Current wording

We currently have nine agricultural leases scheduled to expire within the next six months. We are currently exploring a variety of options with certain of these properties, including negotiating lease terms with existing and prospective new tenants, discussing sale options with prospective buyers, and considering operating the properties ourselves via third-party management agreements. Regarding all vacancies and upcoming lease expirations, there can be no assurance that we will be able to renew the existing leases or execute new leases at rental rates favorable to us, if at all, or be able to find replacement tenants, if necessary.

Previous wording

During a portion of the three months ended March 31, 2024, we had 20 farms (5 in California, 14 in Michigan, and 1 in Washington) that were either vacant or on which lease revenues were recognized on a cash basis (due to credit issues with two tenants causing us to determine that the full collectability of the remaining rental payments under the respective leases were not deemed to be probable).

Current wording

During a portion of the six months ended June 30, 2024, we had 20 farms (5 in California, 14 in Michigan, and 1 in Washington) that were either vacant, direct-operated (via management agreements with unrelated third parties), or on which lease revenues were recognized on a cash basis (due to credit issues with two tenants leading us to determine that the full collectability of the remaining rental payments under the respective leases was not deemed to be probable). During the six months ended June 30, 2024, we recorded lease revenue related to the aforementioned farms of approximately $561,000 (including no participation rents), as compared to approximately $1.8 million (including approximately $72,000 of participation rents) during the prior-year period.

Previous wording

Regarding the properties currently on non-accrual status, the tenant on two of the four farms is current with their rental payments to us. We are continuing to work with the tenant leasing the other two farms and will seek to come to an agreement for the remaining rental payments, if possible. Such agreement, if one can be reached, may include placing the tenant on a payment plan, deferring a portion of the rent owed to us, or agreeing to terminate the lease. In the event of a termination, we estimate that we would be able to find new tenants to lease each of these properties to at market rental rates within 1 to 12 months.

Current wording

Currently, 1 farm (in Washington) is vacant, 12 farms (1 in California, 10 in Michigan, and 1 in Oregon) are direct-operated, and 4 farms (in California remain) on non-accrual status. Regarding vacant and direct-operated farms, we are exploring both leasing and selling options, and we are in discussions with both potential tenants and potential buyers for these farms. We currently expect to enter into lease or sale agreements within the next six months with respect to each of these farms; however, there can be no guarantee that we will be able to reach lease or sale agreements with tenants or buyers at favorable terms, or at all. Regarding the properties currently on non-accrual status, we are continuing to work with each of the tenants and will seek to come to an agreement for the remaining rental payments, if possible. Such agreement, if one can be reached, may include placing the tenant on a payment plan, deferring a portion of the rent owed to us, or agreeing to terminate the lease. In the event of a termination, we estimate that we would be able to find new tenants to lease each of these properties to at market rental rates within 1 to 12 months.

Previous wording

We currently own a total of 49,076 acre-feet of long-term water assets, and our investments in these long-term water assets have an aggregate carrying value of approximately $35.4 million.

Current wording

We currently own a total of 53,975 acre-feet of long-term water assets, and our investments in these long-term water assets have an aggregate carrying value of approximately $36.9 million.

Previous wording

From January 1, 2024, through the date of this filing, we repaid approximately $16.2 million of maturing bonds. On a weighted-average basis, these borrowings bore interest at an annual rate of 3.15%.

Current wording

From April 1, 2024, through the date of this filing, we repaid approximately $6.0 million of loans. On a weighted-average basis, these borrowings bore interest at a stated rate of 4.31% and an effective rate (after interest patronage, where applicable) of 3.06%.

Previous wording

On November 9, 2022, we filed a prospectus supplement with the SEC for a continuous public offering (the “Series E Offering”) of up to 8,000,000 shares of our newly-designated 5.00% Series E Cumulative Redeemable Preferred Stock, par value $0.001 per share (the “Series E Preferred Stock”), on a “reasonable best efforts” basis through Gladstone Securities at an offering price of $25.00 per share. See Note 6,“Related-Party Transactions—Gladstone Securities—Dealer-Manager Agreement,” for a discussion of the commissions and fees to be paid to Gladstone Securities in connection with the Series E Offering.

Current wording

On November 9, 2022, we filed a prospectus supplement with the U.S. Securities and Exchange Commission (the “SEC”) for a continuous public offering (the “Series E Offering”) of up to 8,000,000 shares of our newly-designated 5.00% Series E Cumulative Redeemable Preferred Stock, par value $0.001 per share (the “Series E Preferred Stock”), on a “reasonable best efforts” basis through Gladstone Securities at an offering price of $25.00 per share. See Note 6,“Related-Party Transactions—Gladstone Securities—Dealer-Manager Agreement,” for a discussion of the commissions and fees to be paid to Gladstone Securities in connection with the Series E Offering.

Previous wording

(1)Net of underwriting discounts, selling commissions, and dealer-manager fees borne by us. Aggregate selling commissions and dealer-manager fees paid to Gladstone Securities as a result of these sales was approximately $28,000.

Current wording

(1)Net of underwriting discounts, selling commissions, and dealer-manager fees borne by us. Aggregate selling commissions and dealer-manager fees paid to Gladstone Securities as a result of these sales was approximately $10,000.

Previous wording

According to the U.S. Bureau of Labor Statistics, the consumer price index (“CPI”) grew at an annual rate of 3.5% through March 31, 2024, as overall inflation continued to ease from the peak levels experienced in the summer of 2022, when it reached the highest rates seen in over 40 years. The increase in food prices has also slowed but has generally kept pace with the rate of inflation until the past few months, as the overall food segment increased at an annual rate of 2.2% through March 31, 2024. In addition, according to the NCREIF Farmland Index, which, as of March 31, 2024, consisted of approximately $15.8 billion of farms across the U.S., the total return on U.S. farmland (including appreciation and income) was 3.6% for the 12 months ended March 31, 2024. Despite the slowdown in food prices in recent months, prices remain high, as the overall food segment has increased by 10.9%% over the past two years, outpacing overall inflation of 8.6% over the same time period. Although our farm operators have experienced increases in input costs, we believe such increases will be somewhat mitigated to the extent that food price increases continue to outpace or keep pace with inflation.

Current wording

According to the U.S. Bureau of Labor Statistics, the consumer price index (“CPI”) grew at an annual rate of 3.0% through June 30, 2024, as overall inflation continued to ease from the peak levels experienced in the summer of 2022, when it reached the highest rates seen in over 40 years. The increase in food prices has also slowed but has generally kept pace with the rate of inflation until the past few months, as the overall food segment increased at an annual rate of 2.2% through June 30, 2024. In addition, according to the NCREIF Farmland Index, which, as of June 30, 2024, consisted of approximately $16.0 billion of farms across the U.S., the total return on U.S. farmland (including appreciation and income) was 2.5% for the 12 months ended June 30, 2024. Despite the slowdown of increased food prices in recent months, prices remain high, as the food segment has increased by 8.1% over the past two years, outpacing overall CPI of 6.0% over the same time period. Although our farm operators have experienced increases in input costs, we believe such increases will be somewhat mitigated to the extent that food price increases continue to outpace or keep pace with the rate of inflation.

Previous wording

To combat inflation, the Federal Reserve raised its benchmark funds rate 11 times between March 2022 and July 2023, resulting in the highest target rate seen since January 2001. Since that time, it has held rates flat, and many now expect the Federal Reserve to begin cutting rates later this year, though the timing of such rate cuts, if any, remains uncertain. Despite evidence that economic growth is beginning to slow, including a first-quarter economic growth report that was the weakest in nearly two years, inflation continues to be higher than desired, and the labor market remains strong. As such, the Federal Reserve has stated its desire to see more evidence of inflation being on a sustainable path to its target rate of 2.0%, indicating a “higher-for-longer” stance. As a result of this uncertainty, interest rates remain somewhat volatile. The yield on the 10-year US Treasury Note has withdrawn from the 16-year high it achieved in October 2023 but still remains well above 4.0%. As such, interest rates on long-term financing continue to be high, limiting our ability to finance new acquisitions at favorable terms.

Current wording

To combat inflation, the Federal Reserve raised its benchmark funds rate 11 times between March 2022 and July 2023, resulting in the highest target rate seen since January 2001. Since that time, the Federal Reserve has held rates flat, stating its desire to see more evidence of inflation being on a sustainable path to its target rate of 2.0% and indicating a “higher-for-longer” stance. Despite inflation continuing to run higher than the target rate, with evidence that economic growth is beginning to slow, including a weaker labor market, most now expect the Federal Reserve to begin cutting rates later this year, though the timing and extent of such rate cuts, if any, remains uncertain. As a result of this uncertainty, interest rates remain somewhat volatile. The yield on the 10-year US Treasury Note has withdrawn from the 16-year high it achieved in October 2023 and recently fell to its lowest point of the year. However, as it is still hovering near 4.0%, interest rates on long-term financing continue to be high, limiting our ability to finance new acquisitions on favorable terms.

Previous wording

Over 99.9% of our borrowings are currently at fixed rates, and on a weighted-average basis, these rates are fixed at an effective interest rate of 3.39% for another 4.2 years. As such, with respect to our current borrowings, we have experienced minimal impact from the recent increases in interest rates, and we believe we are well-protected against any further interest rate increases, which remain a possibility.

Current wording

Over 99.9% of our borrowings are currently at fixed rates, and on a weighted-average basis, these rates are fixed at an effective interest rate of 3.40% for another 3.9 years. As such, with respect to our current borrowings, we have experienced minimal impact from the higher interest rates experienced over the past couple of years, and we believe we are well-protected against a prolonged period of elevated interest rates, which remains a possibility.

Previous wording

Pursuant to the Advisory Agreement, 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. Our Adviser does not charge acquisition or disposition fees when we acquire or dispose of properties, as is common in other externally-managed REITs. The base management and incentive fees are described below. For information on the capital gains and termination fees, refer to Note 6, “Related-Party Transactions—Our Adviser and Administrator—Advisory Agreements,” within the accompanying notes to our condensed consolidated financial statements.

Current wording

Pursuant to the Advisory Agreement, 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. Our Adviser does not charge acquisition or disposition fees when we acquire or dispose of properties, as is common in other externally-managed REITs. The base management and incentive fees are described below. For information on the capital gains and termination fees, refer to Note 6, “Related-Party Transactions—Our Adviser and Administrator—Advisory Agreement,” within the accompanying notes to our condensed consolidated financial statements.

Previous wording

The preparation of our financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) requires management to make judgments that are subjective in nature to make certain estimates and assumptions. Application of these accounting policies involves the exercise of judgment regarding the use of assumptions as to future uncertainties, and, as a result, actual results could materially differ from these estimates. A summary of our significant accounting policies is provided in Note 2 to our consolidated financial statements in our Form 10-K. There were no material changes to our critical accounting policies during the three months ended March 31, 2024.

Current wording

The preparation of our financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) requires management to make judgments that are subjective in nature to make certain estimates and assumptions. Application of these accounting policies involves the exercise of judgment regarding the use of assumptions as to future uncertainties, and, as a result, actual results could materially differ from these estimates. A summary of our significant accounting policies is provided in Note 2 to our consolidated financial statements in our Form 10-K. There were no material changes to our critical accounting policies during the six months ended June 30, 2024.

Previous wording

◦Farms that were vacant (either wholly or partially) at any point during either period presented. 16 of our farms were vacant during a portion of either of the three months ended March 31, 2024 or 2023;

Current wording

◦Farms that were vacant (either wholly or partially) at any point during either period presented;

Previous wording

◦Farms with leases where revenue was recognized on a cash basis during either period presented (rather than a straight-line basis) due to full collectability of future rental payments under the respective leases deemed not to be probable as a result of tenant credit issues. We recognized revenue from four different leases with three separate tenants (encompassing six different farms) on a cash basis during a portion of either of the three months ended March 31, 2024 or 2023.

Current wording

◦Farms with leases where revenue was recognized on a cash basis during either period presented (rather than a straight-line basis) due to full collectability of future rental payments under the respective leases deemed not to be probable as a result of tenant credit issues.

Previous wording

A comparison of results of components comprising our operating income for the three months ended March 31, 2024 and 2023 is below (dollars in thousands):

Current wording

A comparison of results of components comprising our operating income for the three and six months ended June 30, 2024 and 2023 is below (dollars in thousands):

Previous wording

The following table provides a summary of our lease revenues during the three months ended March 31, 2024 and 2023 (dollars in thousands):

Current wording

The following table provides a summary of our lease revenues during the three and six months ended June 30, 2024 and 2023 (dollars in thousands):

Previous wording

Lease revenues from participation rents decreased for the three months ended March 31, 2024, due to insufficient information available to us as of March 31, 2024, to allow certain amounts to be reasonably determinable.

Current wording

Lease revenues from participation rents increased primarily due to additional information related to the 2023 harvest on certain of our farms not being made available to us until the three months ended June 30, 2024, thus allowing such amounts to be reasonably determinable and recorded.

Previous wording

Fixed lease payments from vacant, direct-operated, or non-accrual properties decreased primarily due to revenue from certain of our leases being recognized on a cash basis during a portion of the three months ended March 31, 2024 (rather than a straight-line basis), due to full collectability of future rental payments under the respective leases deemed not to be probable as a result of tenant credit issues. In addition, 16 of our farms were vacant for portions of each of the three months ended March 31, 2024 and 2023. The decrease in lease revenue from vacant, direct-operated, or non-accrual properties was partially offset by cash collections (in part or in whole) from tenants occupying certain of these properties during the three months ended March 31, 2024.

Current wording

Fixed lease payments from vacant, direct-operated, or non-accrual properties decreased primarily due to revenue from certain of our leases being recognized on a cash basis during a portion of the current-year periods (rather than a straight-line basis), due to full collectability of future rental payments under the respective leases deemed not to be probable as a result of tenant credit issues. In addition, certain of our farms were either direct-operated (on a temporary basis via management agreements with unrelated third-parties) or vacant for portions of each of the six months ended June 30, 2024 and 2023. The decrease in lease revenue from vacant, direct-operated, or non-accrual properties was partially offset by cash collections (in part or in whole) from tenants occupying certain of these properties during the three and six months ended June 30, 2024.

Previous wording

The fluctuations in tenant reimbursement revenue are primarily driven by payments made by certain tenants on our behalf (pursuant to the lease agreements) to unconsolidated entities of ours that convey water to the respective properties. As such, the timing of tenant reimbursement revenue fluctuates as payments are made by our tenants. Amounts recorded during the current-year period include increased reimbursements from certain tenants for costs to deliver water to their farms via a pipeline owned by an unconsolidated entity of ours.

Current wording

The fluctuations in tenant reimbursement revenue are primarily driven by payments made by certain tenants on our behalf (pursuant to the lease agreements) to unconsolidated entities of ours that convey water to the respective properties. As such, the timing of tenant reimbursement revenue fluctuates as payments are made by our tenants. Amounts recorded during the current-year periods include increased reimbursements from certain tenants for costs to deliver water to their farms via a pipeline owned by an unconsolidated entity of ours.

Previous wording

Other operating revenue consists of non-lease revenue generated as a result of activities performed on certain of our properties. During the three months ended March 31, 2024, we recognized approximately $426,000 of non-cash revenue associated with the transfer and storing of surplus water on behalf of a government municipality using a groundwater recharge facility constructed on one of our farms. See above under “Recent Developments—Portfolio Activity–Existing Properties—Water Asset Acquisitions” for further discussion.

Current wording

Other operating revenue consists of non-lease revenue generated as a result of activities performed on certain of our properties. During the three and six months ended June 30, 2024, we recognized approximately $27,000 and $453,000, respectively, of non-cash revenue associated with the transfer and storing of surplus water on behalf of a government municipality using a groundwater recharge facility constructed on one of our farms. See Note 3, “Real Estate and Intangible Assets—Investments in Water Assets,” within the accompanying notes to our condensed consolidated financial statements for further discussion.

Previous wording

Depreciation and amortization expense decreased primarily due to the disposition of certain assets, including the sale of a 3,748-acre farm in Florida, and certain other assets reaching the end of their useful lives. This decrease was partially offset by additional depreciation expense associated with new capital improvements made on certain of our farms.

Current wording

Depreciation and amortization expense decreased primarily due to the disposition of certain assets, including the sale of a 3,748-acre farm in Florida in the first quarter of 2024, and certain other assets reaching the end of their useful lives. This decrease was partially offset by additional depreciation expense associated with new capital improvements made on certain of our farms.

Previous wording

Property operating expenses consist primarily of real estate taxes, repair and maintenance expenses, insurance premiums, and other miscellaneous operating expenses paid for certain of our properties. The following table provides a summary of the property-operating expenses recorded during the three months ended March 31, 2024 and 2023 (dollars in thousands):

Current wording

Property operating expenses consist primarily of real estate taxes, repair and maintenance expenses, insurance premiums, and other miscellaneous operating expenses paid for certain of our properties. The following table provides a summary of the property-operating expenses recorded during the three and six months ended June 30, 2024 and 2023 (dollars in thousands):

Previous wording

Property operating expenses decreased primarily due to a decrease in legal fees and other costs incurred in connection with protecting water rights on certain farms in California, as well as a decrease in repairs and maintenance expense incurred during the prior-year period as a result of minor damage cause by natural disasters at certain farms.

Current wording

Property operating expenses increased primarily due to additional property taxes paid by us on behalf of one of our tenants who terminated their lease subsequent to June 30, 2024. For the six months ended June 30, 2024, this increase was partially offset by a decrease in legal fees and other costs incurred in connection with protecting water rights on certain farms in California, as well as a decrease in repairs and maintenance expense incurred during the prior-year period as a result of minor damage at certain farms caused by natural disasters.

Previous wording

Property operating expenses attributable to vacant, direct-operated, or non-accrual properties decreased primarily due to a decrease in legal fees incurred in connection with rent collection or lease termination efforts for those tenants on farms that were placed on non-accrual status and a decrease in third-party property management expenses. This decrease was partially offset by an increase in property tax expense.

Current wording

Property operating expenses attributable to vacant, direct-operated, or non-accrual properties increased primarily due to additional property management fees incurred on certain farms that were direct-operated for a portion of the current year-periods (via management agreements with unrelated third-parties) and additional property taxes incurred, including those paid on behalf of certain tenants leasing farms that were placed on non-accrual status. This increase was partially offset by a decrease in legal fees incurred in connection with rent collection or lease termination efforts for those tenants on farms that were placed on non-accrual status.

Previous wording

The fluctuations in tenant-reimbursed property operating expenses are primarily driven by miscellaneous property operating costs incurred by us in connection with our ownership interests in certain unconsolidated entities, for which our tenants are contractually obligated to reimburse us under the terms of the respective leases. Such expenses will fluctuate commensurate with the timing and amount of miscellaneous operating costs incurred by the underlying entities. Amounts recorded during the current-year period include additional costs to deliver water to certain of our farms via a pipeline owned by an unconsolidated entity of ours, which costs were reimbursed to us by our tenants.

Current wording

The fluctuations in tenant-reimbursed property operating expenses are primarily driven by miscellaneous property operating costs incurred by us in connection with our ownership interests in certain unconsolidated entities, for which our tenants are contractually obligated to reimburse us under the terms of the respective leases. Such expenses will fluctuate commensurate with the timing and amount of miscellaneous operating costs incurred by the underlying entities. Amounts recorded during the current-year periods include additional costs to deliver water to certain of our farms via a pipeline owned by an unconsolidated entity of ours, which costs were reimbursed to us by our tenants.

Previous wording

The following table provides the calculations of the base management and incentive fees due to our Adviser pursuant to the Advisory Agreement for the three months ended March 31, 2024 and 2023 (dollars in thousands; for further discussion on certain defined terms used below, refer to Note 6, “Related-Party Transactions,” within the accompanying notes to our condensed consolidated financial statements):

Current wording

The following table provides the calculations of the base management and incentive fees due to our Adviser pursuant to the Advisory Agreement for the three and six months ended June 30, 2024 and 2023 (dollars in thousands; for further discussion on certain defined terms used below, refer to Note 6, “Related-Party Transactions,” within the accompanying notes to our condensed consolidated financial statements):

Previous wording

No incentive fee was earned by our Adviser during either of the three months ended March 31, 2024 or 2023, as our Pre-Incentive Fee FFO did not surpass the required hurdle rate in either period.

Current wording

No incentive fee was earned by our Adviser during either of the three and six months ended June 30, 2024 or 2023, as our Pre-Incentive Fee FFO did not surpass the required hurdle rate in either period.

Previous wording

General and administrative expenses consist primarily of professional fees, director fees, stockholder-related expenses, overhead insurance, acquisition-related costs for investments no longer being pursued, and other miscellaneous expenses. General and administrative expenses decreased during the current-year period, primarily due to a decrease in stockholder-related expenses related to the annual stockholders’ meeting and the listing of the Series C Preferred Stock on Nasdaq in the first half of 2023. The decrease was also attributable to a decrease in professional fees, particularly lower legal and accounting costs.

Current wording

General and administrative expenses consist primarily of professional fees, director fees, stockholder-related expenses, overhead insurance, acquisition-related costs for investments no longer being pursued, and other miscellaneous expenses. General and administrative expenses decreased during the current-year periods, primarily due to a decrease in stockholder-related expenses related to the listing of the Series C Preferred Stock on Nasdaq in 2023. The decrease was also attributable to a decrease in acquisition-related costs for investments no longer being pursued and lower professional fees.

Previous wording

A comparison of results of other components contributing to net loss attributable to common stockholders for the three months ended March 31, 2024 and 2023 is below (dollars in thousands):

Current wording

A comparison of results of other components contributing to net loss attributable to common stockholders for the three and six months ended June 30, 2024 and 2023 is below (dollars in thousands):

Previous wording

Other income, which generally consists 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, decreased primarily due to less interest patronage received from Farm Credit (primarily due to decreased borrowings from Farm Credit).

Current wording

Other income generally consists 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. Other income increased during the three months ended June 30, 2024, primarily due to additional income earned on short-term investments due to higher interest rates, but decreased slightly for the six months ended June 30, 2024, primarily due to less interest patronage received from Farm Credit (primarily due to decreased borrowings from Farm Credit).

Previous wording

Interest expense decreased, primarily due to a decrease in overall borrowings. The weighted-average principal balance of our aggregate borrowings (excluding our cumulative term preferred stock) outstanding for the three months ended March 31, 2024, was approximately $557.6 million, as compared to approximately $612.2 million for the prior-year period. Excluding interest patronage received on certain of our Farm Credit borrowings and the impact of debt issuance costs, the weighted-average interest rate charged on our aggregate borrowings for the three months ended March 31, 2024, was 3.81%, as compared to 3.77% for the prior-year period.

Current wording

Interest expense decreased, primarily due to a decrease in overall borrowings. The weighted-average principal balance of our aggregate borrowings (excluding our cumulative term preferred stock) outstanding for the three and six months ended June 30, 2024, was approximately $553.5 million and $555.5 million, respectively, as compared to approximately $600.1 million and $606.1 million for the respective prior-year periods. Excluding interest patronage received on certain of our Farm Credit borrowings and the impact of debt issuance costs, the weighted-average interest rate charged on our aggregate borrowings for the three and six months ended June 30, 2024, was 3.83% and 3.82%, respectively, as compared to 3.79% and 3.78% for the respective prior-year periods.

Previous wording

During the three months ended March 31, 2024, we recorded a net capital gain, driven by the sale of a 3,748-acre farm in Martin County, Florida for approximately $65.7 million, which after accounting for closing costs, resulted in a net gain of approximately $10.4 million. The net loss recorded during the three months ended March 31, 2023, related to the disposals of certain irrigation and other improvements on certain of our farms.

Current wording

During the six months ended June 30, 2024, we recorded a net capital gain, driven by the sale of a 3,748-acre farm in Martin County, Florida, for approximately $65.7 million, which after accounting for closing costs, resulted in a net gain of approximately $10.4 million. During the three and six months ended June 30, 2023, we recorded a net capital gain, driven by the sale of a 138-acre parcel of unfarmed land in Florida for $9.6 million, which, after accounting for closing costs, resulted in a net gain of approximately $6.4 million. The net loss recorded during the three months ended June 30, 2024, related to the removal of some permanent plantings and the disposal of certain irrigation and other improvements on certain of our farms.

Previous wording

The net property and casualty loss relates to net expenses incurred and insurance recoveries received for certain improvements that were damaged due to natural disasters. The property and casualty loss recorded during the three months ended March 31, 2023, was primarily due to the heavy rainfall that occurred in California in early 2023 and the resulting flooding, which damaged certain structures located on one of our farms in the Central Valley.

Current wording

The net property and casualty loss relates to net expenses incurred and insurance recoveries received for certain improvements that were damaged due to natural disasters. The property and casualty loss recorded during the six months ended June 30, 2023, was primarily due to the heavy rainfall that occurred in California in early 2023 and the resulting flooding, which damaged certain structures located on one of our farms in the Central Valley.

Previous wording

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 our credit facility with Metropolitan Life Insurance Company (“MetLife”)), and issuances of additional equity securities. Our current available liquidity is approximately$203.5 million, consisting of approximately$57.0 million in cash on hand and, based on the current level of collateral pledged, approximately $146.5 million of availability under our credit facility with MetLife (subject to compliance with covenants) and other undrawn lines of credit, notes, or bonds. In addition, we currently have certain properties valued at a total of approximately $130.1 million that are unencumbered and eligible to be pledged as collateral.

Current wording

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 our credit facility with Metropolitan Life Insurance Company (“MetLife”)), and issuances of additional equity securities. Our current available liquidity is approximately $179.2 million, consisting of approximately $32.7 million in cash on hand and, based on the current level of collateral pledged, approximately $146.5 million of availability under our credit facility with MetLife (subject to compliance with covenants) and other undrawn lines of credit, notes, or bonds. In addition, we currently have certain properties valued at a total of approximately $148.3 million that are unencumbered and eligible to be pledged as collateral.

Previous wording

Over 99.9% of our borrowings are currently at fixed rates, and on a weighted-average basis, these rates are fixed at an effective interest rate of 3.39% for another 4.2 years. In addition, the weighted-average remaining term of our notes and bonds payable is approximately 8.7 years. As such, with respect to our current borrowings, we have experienced minimal impact from increased interest rates over the past two years, and we believe we are well-protected against any future interest rate increases. Despite ongoing uncertainty in the markets, based on discussions with our lenders, we do not believe there will be a credit freeze on agricultural lending in the near term. We are in compliance with all of our debt covenants under our respective credit facilities and borrowings, and we believe we currently have adequate liquidity to cover all near- and long-term debt obligations and operating expenses.

Current wording

Over 99.9% of our borrowings are currently at fixed rates, and on a weighted-average basis, these rates are fixed at an effective interest rate of 3.40% for another 3.9 years. In addition, the weighted-average remaining term of our notes and bonds payable is approximately 8.4 years. As such, with respect to our current borrowings, we have experienced minimal impact from increased interest rates in recent years, and we believe we are well-protected against a prolonged high rate environment. Despite ongoing uncertainty in the markets, based on discussions with our lenders and other market participants, we do not believe there will be a credit freeze on agricultural lending in the near term. We are in compliance with all of our debt covenants under our respective credit facilities and borrowings, and we believe we currently have adequate liquidity to cover all near- and long-term debt obligations and operating expenses.

Previous wording

Our short- and long-term liquidity requirements consist primarily of making principal and interest payments on outstanding borrowings; funding our general operating costs; making dividend payments on our currently-designated preferred securities; making distributions to common stockholders (including non-controlling OP Unitholders, if any) to maintain our qualification as a REIT; and, as capital is available, funding capital improvements on existing farms and new farmland and farm-related acquisitions consistent with our investment strategy.

Current wording

Our short- and long-term liquidity requirements consist primarily of making principal and interest payments on outstanding borrowings; funding our general operating costs; making dividend payments on our currently-designated preferred securities; making distributions to common stockholders (including non-controlling OP Unitholders, if any) to maintain our qualification as a REIT; and, as capital is available, funding capital improvements on existing farms, repurchasing shares of preferred stock under our Repurchase Program, and funding new farmland and farm-related acquisitions consistent with our investment strategy.