GLADSTONE LAND Corp [LAND] Filings

10-Q 1 land-20230930.htm 10-Q land-20230930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended September 30, 2023


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

For the transition period from _______________ to _______________

Commission file number: 001-35795

GLADSTONE LAND CORPORATION

(Exact name of registrant as specified in its charter)


Maryland		54-1892552
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1521 Westbranch Drive,	Suite 100
McLean,	Virginia	22102
(Address of principal executive offices)		(Zip Code)

(703) 287-5800

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

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

Title of each 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

6.00% Series B Cumulative Redeemable Preferred Stock, $0.001 par value per share

LANDO

The Nasdaq Stock Market, LLC

6.00% Series C Cumulative Redeemable Preferred Stock, $0.01 par value per share

LANDP

The Nasdaq Stock Market, LLC

5.00% Series D Cumulative Redeemable Term Preferred Stock, $0.001 par value per share

LANDM

The Nasdaq Stock Market, LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

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 ☒

The number of shares of the registrant’s Common Stock, $0.001 par value per share, outstanding as of November 6, 2023, was 35,838,442.

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GLADSTONE LAND CORPORATION

FORM 10-Q FOR THE QUARTER ENDED

SEPTEMBER 30, 2023

TABLE OF CONTENTS


		PAGE
PART I	FINANCIAL INFORMATION

ITEM 1.	Financial Statements (Unaudited):

	Condensed Consolidated Balance Sheets as of September 30, 2023, and December 31, 2022	3

	Condensed Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 30, 2023 and 2022	4

	Condensed Consolidated Statements of Equity for the three and nine months ended September 30, 2023 and 2022	5

	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022	7

	Notes to Condensed Consolidated Financial Statements	8

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	47

ITEM 4.	Controls and Procedures	47

PART II	OTHER INFORMATION

ITEM 1.	Legal Proceedings	49

ITEM 1A.	Risk Factors	49

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49

ITEM 3.	Defaults Upon Senior Securities	49

ITEM 4.	Mine Safety Disclosures	49

ITEM 5.	Other Information	50

ITEM 6.	Exhibits	51

SIGNATURES		53

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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, 2023		December 31, 2022
ASSETS
Real estate, at cost	$	1,437,268	$	1,432,394
Less: accumulated depreciation	(133,237)		(106,966)
Total real estate, net	1,304,031		1,325,428
Lease intangibles, net	5,018		5,702
Cash and cash equivalents	25,080		61,141


Other assets, net	71,983		64,980
TOTAL ASSETS	$	1,406,112	$	1,457,251

LIABILITIES AND EQUITY
LIABILITIES:
Borrowings under lines of credit	$	100	$	100
Notes and bonds payable, net	584,098		626,400
Series D cumulative term preferred stock, net, $0.001 par value, $25.00 per share liquidation preference; 3,600,000 shares authorized, 2,415,000 shares issued and outstanding as of September 30, 2023, and December 31, 2022	59,416		59,107
Accounts payable and accrued expenses	9,723		16,266
Due to related parties, net	3,620		4,370
Other liabilities, net	17,669		19,646
Total liabilities	674,626		725,889
Commitments and contingencies (Note 7)
EQUITY:
Stockholders’ equity:
Series B cumulative redeemable preferred stock, $0.001 par value, $25.00 per share liquidation preference; 6,456,065 shares authorized, 5,956,065 shares issued and outstanding as of September 30, 2023, and December 31, 2022	6		6
Series C cumulative redeemable preferred stock, $0.001 par value, $25.00 per share liquidation preference; 25,902,437 shares authorized, 10,156,509 shares issued and outstanding as of September 30, 2023; 25,951,347 shares authorized, 10,191,353 shares issued and outstanding as of December 31, 2022	10		10
Series E cumulative redeemable preferred stock, $0.001 par value, $25.00 per share liquidation preference; 15,998,400 shares authorized, 221,481 shares issued and outstanding as of September 30, 2023; 16,000,000 shares authorized, 0 shares issued and outstanding as of December 31, 2022	—		—
Common stock, $0.001 par value; 48,043,098 shares authorized, 35,838,442 shares issued and outstanding as of September 30, 2023; 47,992,588 shares authorized, 35,050,397 shares issued and outstanding as of December 31, 2022	36		35
Additional paid-in capital	855,891		836,674
Distributions in excess of accumulated earnings	(134,728)		(114,370)
Accumulated other comprehensive income	10,271		9,007
Total stockholders’ equity	731,486		731,362
Non-controlling interests in Operating Partnership	—		—
Total equity	731,486		731,362
TOTAL LIABILITIES AND EQUITY	$	1,406,112	$	1,457,251

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

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GLADSTONE LAND CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(In thousands, except share and per-share data)

(Unaudited)


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2023		2022		2023		2022
OPERATING REVENUES:
Lease revenue, net	$	23,534	$	24,209	$	65,946	$	64,445

Total operating revenues	23,534		24,209		65,946		64,445
OPERATING EXPENSES:
Depreciation and amortization	9,244		9,146		27,407		25,883
Property operating expenses	729		706		2,744		2,103
Base management fee	2,150		2,086		6,447		6,165
Incentive fee	789		505		789		1,636

Administration fee	619		543		1,708		1,470
General and administrative expenses	605		729		2,181		1,983

Write-off of costs associated with offering of Series C cumulative redeemable preferred stock	—		851		—		851


Total operating expenses	14,136		14,566		41,276		40,091
OTHER INCOME (EXPENSE):
Other income	382		237		3,365		3,067
Interest expense	(5,856)		(6,476)		(17,835)		(19,446)
Dividends declared on cumulative term preferred stock	(755)		(755)		(2,264)		(2,264)
(Loss) gain on dispositions of real estate assets, net	(4)		(819)		5,910		(2,100)
Property and casualty (loss) recovery, net	—		—		(1,016)		49

Loss from investments in unconsolidated entities	(24)		(24)		(84)		(54)
Total other expense, net	(6,257)		(7,837)		(11,924)		(20,748)
NET INCOME	3,141		1,806		12,746		3,606
Net income attributable to non-controlling interests	—		(2)		—		(9)
NET INCOME ATTRIBUTABLE TO THE COMPANY	3,141		1,804		12,746		3,597
Dividends declared on cumulative redeemable preferred stock	(6,105)		(5,389)		(18,257)		(13,786)
Loss on extinguishment of cumulative redeemable preferred stock	—		(9)		(46)		(15)
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(2,964)	$	(3,594)	$	(5,557)	$	(10,204)

LOSS PER COMMON SHARE:
Basic and diluted	$	(0.08)	$	(0.10)	$	(0.16)	$	(0.30)
WEIGHTED-AVERAGE SHARES OF COMMON STOCK OUTSTANDING:
Basic and diluted	35,822,123		34,607,440		35,698,458		34,472,018

NET INCOME	$	3,141	$	1,806	$	12,746	$	3,606
Change in fair value related to interest rate hedging instruments	1,557		3,199		1,264		10,491
COMPREHENSIVE INCOME	4,698		5,005		14,010		14,097
Net income attributable to non-controlling interests	—		(2)		—		(9)

COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY	$	4,698	$	5,003	$	14,010	$	14,088

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

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GLADSTONE LAND CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(In thousands, except share data)

(Unaudited)





















	Three Months Ended September 30, 2023
	Series B Preferred Stock			Series C Preferred Stock			Series E Preferred Stock			Common Stock			Additional Paid-in Capital		Distributions in Excess of Accumulated Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity		Non- Controlling Interests		Total Equity
	No. of Shares	Par Value		No. of Shares	Par Value		No. of Shares	Par Value		No. of Shares	Par Value
Balance at June 30, 2023	5,956,065	$	6	10,156,509	$	10	135,409	$	—	35,780,082	$	36	$	852,967	$	(126,799)	$	8,714	$	734,934	$	—	$	734,934






Issuance of Series E Preferred Stock, net	—	—		—	—		87,672	—		—	—		1,958		—		—		1,958		—		1,958
Redemptions of Series E Preferred Stock, net	—	—		—	—		(1,600)	—		—	—		(36)		—		—		(36)		—		(36)
Issuance of common stock, net	—	—		—	—		—	—		58,360	—		1,002		—		—		1,002		—		1,002
Net income	—	—		—	—		—	—		—	—		—		3,141		—		3,141		—		3,141
Dividends—cumulative redeemable preferred stock	—	—		—	—		—	—		—	—		—		(6,105)		—		(6,105)		—		(6,105)
Distributions—OP Units and common stock	—	—		—	—		—	—		—	—		—		(4,965)		—		(4,965)		—		(4,965)
Comprehensive income attributable to the Company	—	—		—	—		—	—		—	—		—		—		1,557		1,557		—		1,557

Balance at September 30, 2023	5,956,065	$	6	10,156,509	$	10	221,481	$	—	35,838,442	$	36	$	855,891	$	(134,728)	$	10,271	$	731,486	$	—	$	731,486





















	Nine months ended September 30, 2023
	Series B Preferred Stock			Series C Preferred Stock			Series E Preferred Stock			Common Stock			Additional Paid-in Capital		Distributions in Excess of Accumulated Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity		Non- Controlling Interests		Total Equity
	No. of Shares	Par Value		No. of Shares	Par Value		No. of Shares	Par Value		No. of Shares	Par Value
Balance at December 31, 2022	5,956,065	$	6	10,191,353	$	10	—	$	—	35,050,397	$	35	$	836,674	$	(114,370)	$	9,007	$	731,362	$	—	$	731,362


Issuance of Series C Preferred Stock, net	—	—		14,069	—		—	—		—	—		298		—		—		298		—		298
Redemptions of Series C Preferred Stock, net	—	—		(48,913)	—		—	—		—	—		(1,110)		(46)		—		(1,156)		—		(1,156)


Issuance of Series E Preferred Stock, net	—	—		—	—		223,081	—		—	—		4,986		—		—		4,986		—		4,986
Redemptions of Series E Preferred Stock, net	—	—		—	—		(1,600)	—		—	—		(36)		—		—		(36)		—		(36)
Issuance of common stock, net	—	—		—	—		—	—		788,045	1		15,079		—		—		15,080		—		15,080
Net income	—	—		—	—		—	—		—	—		—		12,746		—		12,746		—		12,746
Dividends—cumulative redeemable preferred stock	—	—		—	—		—	—		—	—		—		(18,257)		—		(18,257)		—		(18,257)
Distributions—OP Units and common stock	—	—		—	—		—	—		—	—		—		(14,801)		—		(14,801)		—		(14,801)
Comprehensive income attributable to the Company	—	—		—	—		—	—		—	—		—		—		1,264		1,264		—		1,264

Balance at September 30, 2023	5,956,065	$	6	10,156,509	$	10	221,481	$	—	35,838,442	$	36	$	855,891	$	(134,728)	$	10,271	$	731,486	$	—	$	731,486

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

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GLADSTONE LAND CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Continued)

(In thousands, except share data)

(Unaudited)





















	Three months ended September 30, 2022
	Series B Preferred Stock			Series C Preferred Stock			Series E Preferred Stock			Common Stock			Additional Paid-in Capital		Distributions in Excess of Accumulated Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity		Non- Controlling Interests		Total Equity
	No. of Shares	Par Value		No. of Shares	Par Value		No. of Shares	Par Value		No. of Shares	Par Value
Balance at June 30, 2022	5,956,065	$	6	6,529,895	$	7	—	$	—	34,520,068	$	35	$	742,070	$	(96,442)	$	6,256	$	651,932	$	—	$	651,932


Issuance of Series C Preferred Stock, net	—	—		2,480,956	2		—	—		—	—		56,272		—		—		56,274		—		56,274
Redemptions of Series C Preferred Stock, net	—	—		(18,075)	—		—	—		—	—		(411)		(9)		—		(420)		—		(420)



Issuance of common stock, net	—	—		—	—		—	—		183,937	—		4,563		—		—		4,563		—		4,563
Net income	—	—		—	—		—	—		—	—		—		1,804		—		1,804		2		1,806
Dividends—cumulative redeemable preferred stock	—	—		—	—		—	—		—	—		—		(5,389)		—		(5,389)		—		(5,389)
Distributions—OP Units and common stock	—	—		—	—		—	—		—	—		—		(4,739)		—		(4,739)		—		(4,739)
Comprehensive income attributable to the Company	—	—		—	—		—	—		—	—		—		—		3,199		3,199		—		3,199
Adjustment to non-controlling interests resulting from changes in ownership of the Operating Partnership	—	—		—	—		—	—		—	—		2		—		—		2		(2)		—
Balance at September 30, 2022	5,956,065	$	6	8,992,776	$	9	—	$	—	34,704,005	$	35	$	802,496	$	(104,775)	$	9,455	$	707,226	$	—	$	707,226





















	Nine months ended September 30, 2022
	Series B Preferred Stock			Series C Preferred Stock			Series E Preferred Stock			Common Stock			Additional Paid-in Capital		Distributions in Excess of Accumulated Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity		Non- Controlling Interests		Total Equity
	No. of Shares	Par Value		No. of Shares	Par Value		No. of Shares	Par Value		No. of Shares	Par Value
Balance at December 31, 2021	5,956,065	$	6	3,493,333	$	3	—	$	—	34,210,013	$	34	$	668,275	$	(80,467)	$	(1,036)	$	586,815	$	2,251	$	589,066


Issuance of Series C Preferred Stock, net	—	—		5,522,158	6		—	—		—	—		125,291		—		—		125,297		—		125,297
Redemptions of Series C Preferred Stock, net	—	—		(22,715)	—		—	—		—	—		(516)		(15)		—		(531)		—		(531)

Redemptions of OP Units	—	—		—	—		—	—			—		(3,700)		—		—		(3,700)		(3,970)		(7,670)

Issuance of common stock, net	—	—		—	—		—	—		493,992	1		14,884		—		—		14,885		—		14,885
Net income	—	—		—	—		—	—		—	—		—		3,597		—		3,597		9		3,606
Dividends—cumulative redeemable preferred stock	—	—		—	—		—	—		—	—		—		(13,786)		—		(13,786)		—		(13,786)
Distributions—OP Units and common stock	—	—		—	—		—	—		—	—		—		(14,104)		—		(14,104)		(28)		(14,132)
Comprehensive income attributable to the Company	—	—		—	—		—	—		—	—		—		—		10,491		10,491		—		10,491
Adjustment to non-controlling interests resulting from changes in ownership of the Operating Partnership	—	—		—	—		—	—		—	—		(1,738)		—		—		(1,738)		1,738		—
Balance at September 30, 2022	5,956,065	$	6	8,992,776	$	9	—	$	—	34,704,005	$	35	$	802,496	$	(104,775)	$	9,455	$	707,226	$	—	$	707,226

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

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GLADSTONE LAND CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	For the Nine Months Ended September 30,
	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	12,746	$	3,606
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	27,407		25,883
Amortization of debt issuance costs	766		817
Amortization of deferred rent assets and liabilities, net	—		(180)
Amortization of right-of-use assets from operating leases and operating lease liabilities, net	69		69
Loss from investments in unconsolidated entities	84		54
Bad debt expense	70		68
Write-off of unamortized deferred offering costs associated with cumulative redeemable preferred stock (Series C)	—		798
(Gain) loss on dispositions of real estate assets, net	(5,910)		2,100

Property and casualty loss (recovery), net	1,016		(49)
Changes in operating assets and liabilities:

Other assets, net	(6,501)		(7,549)
Accounts payable and accrued expenses and Due to related parties, net	(5,640)		(431)
Other liabilities, net	(1,450)		(2,113)
Net cash provided by operating activities	22,657		23,073
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of new real estate assets	—		(59,102)
Capital expenditures on existing real estate assets	(9,978)		(16,072)
Contributions to unconsolidated real estate entities	—		(2,749)
Proceeds from dispositions of real estate assets	9,037		—
Deposits on prospective real estate acquisitions and investments	(145)		(704)

Net cash used in investing activities	(1,086)		(78,627)
CASH FLOWS FROM FINANCING ACTIVITIES:


Borrowings from notes and bonds payable	—		9,932
Repayments of notes and bonds payable	(42,657)		(38,260)
Payments of financing fees	(3)		(826)


Proceeds from issuance of preferred and common equity	20,909		151,237
Offering costs	(700)		(11,318)
Redemptions of cumulative redeemable preferred stock	(1,192)		(531)
Payments for redemptions of OP Units	—		(7,669)
Dividends paid on cumulative redeemable preferred stock	(19,188)		(12,581)
Distributions paid on non-controlling common interests in Operating Partnership	—		(28)
Distributions paid on common stock	(14,801)		(14,104)

Net cash (used in) provided by financing activities	(57,632)		75,852
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(36,061)		20,298
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	61,141		16,708
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	25,080	$	37,006

NON-CASH INVESTING AND FINANCING INFORMATION:



Real estate additions included in Accounts payable and accrued expenses and Due to related parties, net	$	1,886	$	2,980


Tenant-funded improvements included within Real estate, at cost	25		284
Stock offering and OP Unit issuance costs included in Accounts payable and accrued expenses and Due to related parties, net	95		10
Financing fees included in Accounts payable and accrued expenses and Due to related parties, net	7		32


Unrealized gain related to interest rate hedging instruments	10,270		9,455
Dividends paid on Series C Preferred Stock via additional share issuances	320		290

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

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GLADSTONE LAND CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1. BUSINESS AND ORGANIZATION

Business and Organization

Gladstone Land Corporation (“we,” “us,” or the “Company”) is an agricultural real estate investment trust (“REIT”) that was re-incorporated in Maryland on March 24, 2011, having been originally incorporated in California on June 14, 1997. We are primarily in the business of owning and leasing farmland, and we conduct substantially all of our operations through a subsidiary, Gladstone Land Limited Partnership (the “Operating Partnership”), a Delaware limited partnership. As we currently control the sole general partner of the Operating Partnership and own, directly or indirectly, a majority of the common units of limited partnership interest in the Operating Partnership (“OP Units”), the financial position and results of operations of the Operating Partnership are consolidated within our financial statements. As of September 30, 2023, and December 31, 2022, the Company owned 100.0% of the outstanding OP Units (see Note 8, “Equity,” for additional discussion regarding OP Units).

Gladstone Land Advisers, Inc. (“Land Advisers”), a Delaware corporation and a subsidiary of ours, was created to collect any non-qualifying income related to our real estate portfolio and to perform certain small-scale farming business operations. We have elected for Land Advisers to be taxed as a taxable REIT subsidiary (“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. For the nine months ended September 30, 2023, and for the tax year ended December 31, 2022, there was no taxable income or loss from Land Advisers, nor did we have any undistributed REIT taxable income.

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 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. 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, 2022, as filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 21, 2023 (the “Form 10-K”). The results of operations for the three and nine months ended September 30, 2023, 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. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making certain judgments. Actual results may materially differ from these estimates.

Recently-Issued Accounting Pronouncements

As of September 30, 2023, there were no recently-issued accounting pronouncements that had a material impact on our condensed consolidated financial statements.

NOTE 3. REAL ESTATE AND INTANGIBLE ASSETS

All of our properties are wholly-owned on a fee-simple basis, except where noted. The following table provides certain summary information about the 169 farms we owned as of September 30, 2023 (dollars in thousands, except for footnotes):


Location	No. of Farms	Total Acres	Farm Acres	Acre-feet of Water	Net Cost Basis(1)		Encumbrances(2)
California(3)(4)(5)	63	34,844	32,321	45,000	$	855,109	$	391,135
Florida	26	22,468	17,639	0	221,433		96,693
Washington	6	2,529	1,997	0	61,651		20,542
Arizona(6)	6	6,320	5,333	0	52,778		12,300
Colorado	12	32,773	25,577	0	46,061		14,768
Nebraska	9	7,782	7,050	0	30,544		11,658
Oregon(7)	6	898	736	0	29,753		11,448
Michigan	23	1,892	1,245	0	23,267		13,867
Texas	1	3,667	2,219	0	8,119		4,814
Maryland	6	987	863	0	8,044		4,345
South Carolina	3	597	447	0	3,565		2,147
Georgia	2	230	175	0	2,643		1,645
North Carolina	2	310	295	0	2,128		—
New Jersey	3	116	101	0	2,114		1,238
Delaware	1	180	140	0	1,301		697
	169	115,593	96,138	45,000	$	1,348,510	$	587,297

(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. Specifically, includes Total real estate, net (excluding improvements paid for by the tenant) and Lease intangibles, net; plus long-term water assets, net above-market lease values, lease incentives, and investments in special-purpose LLCs included in Other assets, net; and less net below-market lease values and other deferred revenue included in Other liabilities, net; each as shown on the accompanying Condensed Consolidated Balance Sheets.

(2)Excludes approximately $3.1 million of debt issuance costs related to notes and bonds payable, included in Notes and bonds payable, net on the accompanying Condensed Consolidated Balance Sheets.

(3)Includes ownership in a special-purpose LLC that owns a pipeline conveying water to certain of our properties. As of September 30, 2023, this investment had a net carrying value of approximately $1.0 million and is included within Other assets, net on the accompanying Condensed Consolidated Balance Sheets.

(4)Includes eight acres in which we own a leasehold interest via a ground lease with a private individual that expires in December 2040 and five acres in which we own a leasehold interest via a ground sublease with a California municipality that expires in December 2041. As of September 30, 2023, these two ground leases had a net cost basis of approximately $699,000 and are included in Lease intangibles, net on the accompanying Condensed Consolidated Balance Sheets.

(5)Includes 45,000 acre-feet of water stored with Semitropic Water Storage District, located in Kern County. See “—Investments in Water Assets” below for additional information.

(6)Includes two farms consisting of 1,368 total acres and 1,221 farm acres in which we own leasehold interests via two ground leases with the State of Arizona that expire in February 2025 and February 2032, respectively. As of September 30, 2023, these ground leases had an aggregate net cost basis of approximately $460,000 and are included in Lease intangibles, net on the accompanying Condensed Consolidated Balance Sheets.

(7)Includes ownership in a special-purpose LLC that owns certain irrigation infrastructure that provides water to two of our farms. As of September 30, 2023, this investment had a net carrying value of approximately $4.8 million and is included within Other assets, net on the accompanying Condensed Consolidated Balance Sheets.

Real Estate

The following table sets forth the components of our investments in tangible real estate assets as of September 30, 2023, and December 31, 2022 (dollars in thousands):


	September 30, 2023		December 31, 2022
Real estate:
Land and land improvements	$	843,205	$	845,779
Permanent plantings	359,322		358,249
Irrigation and drainage systems	170,593

GLADSTONE LAND Corp [LAND] Filings
GLADSTONE LAND Corp [LANDM] Filings
GLADSTONE LAND Corp [LANDO] Filings
GLADSTONE LAND Corp [LANDP] Filings
10-Q	[2023-11-07]
10-Q	[2023-08-07]
10-Q	[2023-05-08]
10-K	[2023-02-21]
10-Q	[2022-11-08]
10-Q	[2022-08-09]
10-Q	[2022-05-10]
10-K	[2022-02-22]
10-Q	[2021-11-09]
10-Q	[2021-08-10]
10-Q	[2021-05-12]
10-K	[2021-02-24]
10-Q	[2020-11-04]
10-Q	[2020-08-05]
10-Q	[2020-05-06]
10-K	[2020-02-19]
10-Q	[2019-11-06]
10-Q	[2019-08-07]
10-Q	[2019-05-07]
10-K	[2019-02-26]
10-Q	[2018-11-08]
10-Q	[2018-08-08]
10-Q	[2018-05-08]
10-K	[2018-02-20]
10-Q	[2017-11-07]
10-Q	[2017-08-08]
10-Q	[2017-05-09]
10-K	[2017-02-21]
10-Q	[2016-11-14]
10-Q	[2016-08-02]
10-Q	[2016-05-02]
10-K	[2016-02-23]
10-Q	[2015-11-03]
10-Q	[2015-08-04]
10-Q	[2015-05-15]
10-K	[2015-02-24]
10-Q	[2014-10-27]
10-Q	[2014-08-04]
10-Q	[2014-05-05]
10-K	[2014-02-24]
10-Q	[2013-10-29]
10-Q	[2013-08-07]
10-Q	[2013-05-06]
10-K	[2013-03-27]

GLADSTONE LAND Corp [LAND] Filings

GLADSTONE LAND Corp [LANDM] Filings

GLADSTONE LAND Corp [LANDO] Filings

GLADSTONE LAND Corp [LANDP] Filings