Gladstone Land(LAND) - 2019 Q4 - Annual Report

Part I Business Gladstone Land Corporation is an externally-managed agricultural REIT that owns and leases farmland across the United States, focusing on triple-net leases and diversifying crop types - The company is an agricultural REIT owning 113 farms comprised of 87,860 acres across 10 U.S. states, primarily leasing properties on a triple-net basis[8] - The company's strategy is to maximize stockholder returns through monthly cash distributions, land appreciation, and capital gains from property sales, with key components including geographic expansion, crop diversification, and leverage[9] - The company is externally managed by Gladstone Management Corporation (the "Adviser") and receives administrative services from Gladstone Administration, LLC (the "Administrator"), both of which are affiliates[8][22] - The company faces competition for farmland acquisitions from various entities, including agricultural investment firms like Hancock Agricultural Investment Group, other agricultural REITs such as Farmland Partners, Inc., and privately-held funds[33] Risk Factors The company faces significant risks including tenant and geographic concentration, agricultural vulnerabilities, financial dependence on external capital, and potential conflicts of interest from its external management structure - A single tenant, Tenant A, accounted for approximately 10.9% of the rental revenue for the year ended December 31, 2019, posing a significant concentration risk[39] - The real estate portfolio is concentrated in a limited number of states, making the company vulnerable to adverse weather, economic, or regulatory changes in those specific markets[40] - The company's agricultural properties are subject to risks from adverse weather, seasonal variability, crop diseases, and contaminants, which could affect tenants' ability to pay rent[64] - To maintain its REIT qualification, the company must distribute at least 90% of its taxable income, making it highly dependent on third-party capital for future needs, including property acquisitions[68] - Potential conflicts of interest exist with the Adviser, which also manages other affiliated entities, including Gladstone Commercial (a real estate company) and Gladstone Capital and Gladstone Investment (investment companies)[102] Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - None[150] Properties As of December 31, 2019, the company owned 111 farms totaling 86,535 acres across 10 states, with California and Florida as primary holdings Property Portfolio Summary as of December 31, 2019 | State | No. of Farms | Total Acres | Net Cost Basis ($ thousands) | Encumbrances ($ thousands) | | :--- | :--- | :--- | :--- | :--- | | California | 42 | 14,830 | $420,537 | $261,957 | | Florida | 23 | 20,770 | $211,132 | $133,327 | | Arizona | 6 | 6,280 | $55,941 | $22,427 | | Colorado | 10 | 31,448 | $42,125 | $27,089 | | Nebraska | 8 | 7,104 | $27,439 | $17,246 | | Other States | 22 | 5,103 | $37,597 | $23,003 | | Total | 111 | 86,535 | $794,769 | $485,049 | Legal Proceedings The company is not currently subject to any material legal proceedings, nor is it aware of any threatened against it - The company is not currently party to any material legal proceedings[154] Mine Safety Disclosures This section is not applicable to the company - Not applicable[155] Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock trades on Nasdaq under 'LAND,' consistently paying monthly distributions since its 2013 IPO, with 570,879 OP Units exchanged for common stock since January 2019 - Common stock is traded on Nasdaq under the symbol "LAND"[157] - The company has paid uninterrupted quarterly distributions (paid monthly) on its common stock since its IPO on January 29, 2013[157] - Since January 1, 2019, 570,879 OP Units were redeemed in exchange for 570,879 shares of common stock[159] Selected Financial Data This item is not applicable as the company qualifies as a smaller reporting company - This item is not applicable to smaller reporting companies[163] Management's Discussion and Analysis of Financial Condition and Results of Operations In 2019, total operating revenues increased 10.9% to $40.7 million, driven by property acquisitions, while net income attributable to common stockholders was a loss of $2.5 million due to preferred stock dividends Key Operating Results (2019 vs. 2018) | Metric | 2019 (in thousands) | 2018 (in thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Total Lease Revenues | $40,692 | $29,362 | 38.6% | | Total Operating Revenues | $40,692 | $36,687 | 10.9% | | Operating Income | $19,306 | $12,112 | 59.4% | | Net Income | $1,762 | $2,766 | (36.3)% | | Net (Loss) Attributable to Common Stockholders | $(2,499) | $2,250 | NM | - Since January 1, 2019, the company acquired 28 farms for a total purchase price of approximately $260.2 million[173] Non-GAAP Performance Metrics (per share) | Metric | 2019 | 2018 | | :--- | :--- | :--- | | Diluted FFO per share | $0.54 | $0.38 | | Diluted CFFO per share | $0.56 | $0.51 | | Diluted AFFO per share | $0.57 | $0.51 | - The estimated Net Asset Value (NAV) per common share as of December 31, 2019, was $11.41[263][264] - The advisory agreement was amended effective January 1, 2020 (the "2020 Advisory Agreement"), changing the base management fee calculation from being based on equity to being based on Gross Tangible Real Estate[191][192] Quantitative and Qualitative Disclosures About Market Risk This item is not applicable as the company qualifies as a smaller reporting company - This item is not applicable to smaller reporting companies[269] Financial Statements and Supplementary Data This section presents the company's consolidated financial statements for 2019 and 2018, including an unqualified audit opinion on financial statements and internal controls from PricewaterhouseCoopers LLP - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2019[273] - The independent auditor, PricewaterhouseCoopers LLP, issued an unqualified opinion, stating the financial statements are presented fairly in all material respects and that the company maintained effective internal control over financial reporting[276] Consolidated Balance Sheet Highlights (as of Dec 31) | Metric (in thousands) | 2019 | 2018 | | :--- | :--- | :--- | | Total Assets | $816,787 | $565,119 | | Total Liabilities | $537,817 | $384,066 | | Total Equity | $278,970 | $181,053 | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[449] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of December 31, 2019, with no material changes to internal control over financial reporting during the year - Management concluded that disclosure controls and procedures were effective as of December 31, 2019[450] - No material changes to internal control over financial reporting occurred during the year ended December 31, 2019[452] Other Information The company reports no other information - None[452] Part III Directors, Executive Officers and Corporate Governance Information required by this item is incorporated by reference from the company's definitive Proxy Statement for its 2020 Annual Meeting of Stockholders - Information is incorporated by reference from the 2020 Proxy Statement[455] Executive Compensation Information required by this item is incorporated by reference from the company's definitive Proxy Statement for its 2020 Annual Meeting of Stockholders - Information is incorporated by reference from the 2020 Proxy Statement[456] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information required by this item is incorporated by reference from the company's definitive Proxy Statement for its 2020 Annual Meeting of Stockholders - Information is incorporated by reference from the 2020 Proxy Statement[456] Certain Relationships and Related Transactions and Director Independence Information required by this item is incorporated by reference from the company's definitive Proxy Statement for its 2020 Annual Meeting of Stockholders - Information is incorporated by reference from the 2020 Proxy Statement[457] Principal Accountant Fees and Services Information required by this item is incorporated by reference from the company's definitive Proxy Statement for its 2020 Annual Meeting of Stockholders - Information is incorporated by reference from the 2020 Proxy Statement[457] Part IV Exhibits and Financial Statement Schedules This section lists all financial statements, schedules, and exhibits filed as part of the Form 10-K, including key corporate and loan agreements - Lists all financial statements, schedules, and exhibits filed with the report[459] - Includes key agreements such as the Fourth Amended and Restated Investment Advisory Agreement and various loan agreements with MetLife and Farmer Mac[460][461][462] Form 10-K Summary This section is not applicable - Not applicable[466]