The following analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the notes included elsewhere in this Quarterly Report, as well as the information contained in our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the Securities Exchange Commission ("SEC") on March 13, 2020, which is accessible on the SEC's website at www.sec.gov.


 References to "we," "our," "us" and "our company" refer to Farmland Partners
Inc., a Maryland corporation, together with our consolidated subsidiaries,
including Farmland Partners Operating Partnership, L.P., a Delaware limited
partnership (the "Operating Partnership"), of which we are the sole member

of
the sole general partner.


Special Note Regarding Forward-Looking Statements





We make statements in this Quarterly Report on Form 10-Q 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, 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," "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 impact of the COVID-19 pandemic and
efforts to reduce its spread 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, interest rates 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 our Annual Report on Form 10-K for the
year ended December 31, 2019, our Quarterly Report on Form 10-Q for the quarter
ended June 30, 2020 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 information, except to the extent required by law.



Overview and Background



We are an internally managed real estate company that owns and seeks to acquire
high-quality farmland located in agricultural markets throughout North America.
As of the date of this Quarterly Report on Form 10-Q, we own farms with an
aggregate of approximately 156,500 acres in Alabama, Arkansas, California,
Colorado, Florida, Georgia, Illinois, Kansas, Louisiana, Michigan, Mississippi,
Nebraska, North Carolina, South Carolina, South Dakota and Virginia. As of the
date of this Quarterly Report on Form 10-Q, approximately 70% of our portfolio
(by value) is used to grow primary crops, such as corn, soybeans, wheat, rice
and cotton, and approximately 30% is used to produce specialty crops, such as
blueberries, vegetables, citrus, nuts and edible beans. We believe our portfolio
gives investors exposure to the increasing global food demand trend in the face
of growing scarcity of high quality farmland and will reflect the approximate
breakdown of U.S. agricultural output between primary crops and animal protein
(whose production relies principally on primary crops as feed), on one hand, and
specialty crops, on the other.



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In addition, under the FPI Loan Program, we make loans to third-party farmers
(both tenant and non-tenant) to provide financing for working capital
requirements and operational farming activities, farming infrastructure projects
and for other farming and agricultural real estate related purposes.



We were incorporated in Maryland on September 27, 2013, and we are the sole
member of the general partner of the Operating Partnership, which is a Delaware
limited partnership that was formed on September 27, 2013. All of our assets are
held by, and our operations are primarily conducted through, the Operating
Partnership and its wholly owned subsidiaries. As of June 30, 2020,
we owned 94.0% of the Common units and none of the Series A preferred units nor
the Series B Participating Preferred Stock. See "Note 9 - Stockholders' Equity
and Non-controlling Interests" within the notes to the consolidated financial
statements included in this Quarterly Report on Form 10-Q for additional
information regarding the non-controlling interests.



We have elected to be taxed as a real estate investment trust ("REIT") under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, commencing with our short taxable year ended December 31, 2014.





The following table sets forth our ownership of acreage by region as of June 30,
2020:




Region (1)        Total Acres
Corn Belt              43,988
Delta and South        27,871
High Plains            29,566
Southeast              43,499
West Coast             11,586
                      156,510



Corn Belt includes farms located in Illinois, Michigan and eastern Nebraska.

Delta and South includes farms located in Arkansas, Louisiana and (1) Mississippi. High Plains includes farms located in Colorado, Kansas, western

Nebraska, and South Dakota. Southeast includes farms located in Florida,

Georgia, North Carolina, South Carolina and Virginia. West Coast includes


    farms located in California.




When we are able to access sufficient additional capital, we intend to continue
to acquire additional farmland to achieve scale and further diversify our
portfolio by geography, crop type and tenants. We also may continue to
selectively dispose of assets when we believe a disposition is in the Company's
best interest. We also may acquire, and make loans secured by mortgages on,
properties related to farming, such as grain storage facilities, grain
elevators, feedlots, processing plants and distribution centers, as well as
livestock farms or ranches. In addition, we engage directly in farming through
FPI Agribusiness Inc., our taxable REIT subsidiary (the "TRS" or "FPI
Agribusiness"). The TRS provides volume purchasing services to our tenants,
operates a small-scale custom farming business, and occasionally provides our
tenants with small operating loans. As of June 30, 2020, the TRS performs these
custom farming operations on 3,676 acres of farmland located in Florida,
Michigan, South Carolina, and California.



Our principal source of revenue is rent from tenants that conduct farming
operations on our farmland. The majority of the leases that are in place as of
the date of this Quarterly Report on Form 10-Q have fixed annual rental
payments. Some of our leases have variable rents based on the revenue generated
by our farm-operator tenants. We believe that this mix of fixed and variable
rents will help insulate us from the variability of farming operations and
reduce our credit-risk exposure to farm-operator tenants while making us an
attractive landlord in certain regions where variable leases are customary.
However, we may be exposed to tenant credit risk and farming operation risks,
particularly with respect to leases that do not require advance payment of 100%
of the annual rent, leases for which the rent is based on a percentage of a
tenant's farming revenues and leases with terms greater than one year.



In addition, an increasing number of our leases provide for crop share lease
payments, through which we only recognize revenue to the amount of the crop
insurance minimum. The excess cannot be recognized as revenue until the tenant
enters into a contract to sell their crop. Generally, we expect tenants to enter
into contracts to sell their crop following the harvest of the crop.







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Impact of COVID-19 on Our Business





As the effects of the coronavirus ("COVID-19") pandemic continue to develop, we
are unable to quantify what the ultimate impact of the virus on our business
will be. So far, the pandemic has significantly affected only sectors of the
U.S. agricultural industry to which we have limited or no direct exposure, such
as fresh food production marketed to the hospitality industry, and meat packing.
We expect slower-moving ripples to potentially affect the sectors of the
agricultural industry in which we are invested. Lower gasoline demand has
affected demand for ethanol and therefore corn.



Labor availability and export logistics disruptions may affect specialty crops
prices and our tenants' ability to effectively harvest and deliver product,
which could adversely affect our results of operations to the extent that a
portion of the rent we receive from tenants is earned under variable-rent
leases. Disruptions in the meat packing industry due to worker health concerns
may affect herd and flock sizes and ultimately feed demand.



Despite short- and medium-term disruptions in the U.S. agricultural industry, we
do not expect global demand for food, feed, fuel and fiber to be materially
affected by COVID-19 and the related economic turmoil, and therefore in the long
term we expect the industry to experience some degree of transformation, but to
survive relatively unscathed compared to other industries. As owners of
essential long-term assets in an essential industry, we also expect our business
to perform relatively well, although we are certainly prepared for a measure of
yet largely unidentified medium-term pain. We expect certain farmers'
profitability to be impacted, however a combination of the high quality of our
tenant base and financial support measures implemented by the U.S. federal
government should prevent a material degradation in our tenants'
creditworthiness.



At this time, we are unable to estimate the ultimate impact of these effects on
our tenants and their ability to pay rent in full and on time. However, the
longer the economic slowdown continues, it becomes more likely that these
factors will impact our results in a material way. Although a significant amount
of our tenants paid 50% of their annual rent in the first quarter of the year in
accordance with the respective leases, financial challenges facing our tenants
could result in delays in our tenants' ability to pay the remaining rent due
under the leases, requests for rent deferral, business closures or bankruptcies.



The direct impact of COVID-19 on our operations has been so far limited. Even
though we operate in an essential industry and therefore we are largely exempted
from stay-at-home orders, we have prioritized the health and well-being of our
employees. We asked our office staff to work from home whenever possible even
before the City and County of Denver and the State of Colorado implemented
stay-at-home orders. Our technology infrastructure was already well suited to
remote working conditions, and the layout of our offices allowed us to
substantially observe social distancing guidelines when staff need to be present
in the office. We asked our field personnel to limit travel to only those trips
required to monitor and maintain the farms we already own, and to substantially
lessen direct contact with our tenants and suppliers. As a result of these
worker health measures, we have experienced a perceptible degradation in
operating efficiency, but not to such an extent as to materially affect our
financial results or internal controls. As of the beginning of the third quarter
of 2020, both in-person office attendance and frequency of travel have increased
as compared to the beginning of the pandemic, but remain below pre-pandemic
levels.



Our interactions with critical third parties have been affected, but so far we
have been able to mitigate any material impact on our business. We are working
with one of our existing lenders to refinance $48.3 million of debt with Farmer
Mac originally due in June and July of this year. However the lender informed us
that, as a result of travel restrictions implemented to contain the spread of
the pandemic, they would be unable to meet the refinancing deadlines of June and
July 2020. In order to avoid repayment issues, we were able to secure from
Farmer Mac an extension of the due date of the expiring debt to October 31,
2020, and the refinancing lender expects to be able to meet that deadline. We
can provide no assurances that we will be able to obtain additional extensions
of near-term maturities if travel restrictions remain in place or are put back
in place after a period of time.



The global capital markets have experienced significant turmoil since the
beginning of the pandemic. However, we don't have any immediate plans to issue
equity capital. During the 2008 financial crisis, the availability and pricing
of agricultural debt remained largely unaffected, reflecting the stability of
farmland values and food demand. We believe

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that, other than the short-term logistical disruptions due to travel restrictions discussed above, our access to debt financing in the ordinary course of business will remain largely unaffected.


Factors That May Influence Future Results of Operations and Farmland Values



The principal factors affecting our operating results and the value of our
farmland include global demand for food relative to the global supply of food,
farmland fundamentals and economic conditions in the markets in which we own
farmland and our ability to increase or maintain rental revenues while
controlling expenses. Although farmland prices may show a decline from time to
time, we believe that any reduction in U.S. farmland values overall is likely to
be short-lived as global demand for food and agricultural commodities typically
exceeds global supply.



Demand



Notwithstanding any impacts from the ongoing COVID-19 pandemic, we expect that
global demand for food, driven primarily by significant increases in the global
population and GDP per capita, will continue to be the key driver of farmland
values. We further expect that global demand for most crops will continue to
grow to keep pace with global population growth, which we anticipate will lead
to either higher prices and/or higher yields and, therefore, higher rental rates
on our farmland, as well as sustained growth in farmland values over the long
term. We also believe that growth in global GDP per capita, particularly in
developing nations, will contribute significantly to increasing demand for
primary crops. As global GDP per capita increases, the composition of daily
caloric intake is expected to shift away from the direct consumption of primary
crops toward animal-based proteins, which is expected to result in increased
demand for primary crops as feed for livestock. According to the United Nations'
Food and Agriculture Organization ("UN FAO"), these factors are expected to
require more than one billion additional tons of global annual grain production
by 2050, a 43% increase from 2005-2007 levels and more than two times the 446
million tons of grain produced in the United States in 2014.  Furthermore, we
believe that, as GDP per capita grows, a significant portion of additional
household income is allocated to food and that once individuals increase
consumption of, and spending on, higher quality food, they will strongly resist
returning to their former dietary habits, resulting in greater inelasticity in
the demand for food. As a result, we believe that, as global demand for food
increases, rental rates on our farmland and the value of our farmland will
increase over the long term. Global demand for corn and soybeans as inputs in
the production of biofuels such as ethanol and soy diesel also could impact the
prices of corn and soybeans, which, in the long term, could impact our rental
revenues and our results of operations. As described above, the COVID-19
pandemic and efforts to reduce its spread have impacted demand for corn.
However, the success of our long-term business strategy is not dependent on
growth in demand for biofuels, and we do not believe that demand for corn and
soybeans as inputs in the production of biofuels will materially impact our
results of operations or the value of our farmland, primarily because we believe
that growth in global population and GDP per capita will be more significant
drivers of global demand for primary crops over the long term.



Supply



Global supply of agricultural commodities is driven by two primary factors, the
number of tillable acres available for crop production and the productivity of
the acres being farmed. Although the amount of global cropland in use has
gradually increased over time, growth has plateaued over the last 20 years.
Cropland area continues to increase in developing countries, but after
accounting for expected continuing cropland loss, the UN FAO projects only 173
million acres will be added from 2005-2007 to 2050, an approximate 5% increase.
In comparison, world population is expected to grow over the same period to 9.1
billion, a nearly 40% increase. According to the World Bank Group arable land
per capita has decreased by approximately 50% from 1961 to 2015. While we expect
growth in the global supply of arable land, we also expect that landowners will
only put that land into production if increases in commodity prices and the
value of farmland cause landowners to benefit economically from using the land
for farming rather than alternative uses. We also believe that decreases in the
amount of arable land in the United States and globally as a result of
increasing urbanization will partially offset the impact of additional supply of
farmland. Additionally, we believe that farmland lost to urban development
disproportionately impacts higher quality farmland. According to a study
published in 2017 in the Proceedings of the National Academy of Sciences, urban
expansion is expected to take place on cropland that is 1.77 times more
productive than the global average. The global supply of food is also impacted
by the productivity per acre of tillable land. Historically, productivity gains
(measured by average crop yields) have been driven by advances in seed
technology, farm equipment, irrigation techniques, improvements in soil health,
and chemical fertilizers and pesticides. Furthermore,

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we expect the increasing shortage of water in many irrigated growing regions in
the United States and other growing regions around the globe, often as a result
of new water restrictions imposed by laws or regulations, to lead to decreased
productivity growth on many acres and, in some cases, cause yields to decline on
those acres.


Conditions in Our Existing Markets





Our portfolio spans numerous farmland markets and crop types, which provides us
broad diversification across conditions in these markets. Across all regions,
farmland acquisitions continue to be dominated by buyers who are existing farm
owners and operators; institutional and investor acquirors remain a small
fraction of the industry. We generally see firm demand for high quality
properties across all regions and crop types.



With regard to leasing dynamics, we believe quality farmland in the United
States has a near-zero vacancy rate as a result of the supply and demand
fundamentals discussed above. Our view is that rental rates for farmland are a
function of farmland operators' view of the long-term profitability of farmland,
and that many farm operators will compete for farmland even during periods of
decreased profitability due to the scarcity of farmland available to rent. In
particular, we believe that due to the relatively high fixed costs associated
with farming operations (including equipment, labor and knowledge), many farm
operators in some circumstances will rent additional acres of farmland when it
becomes available in order to allocate their fixed costs over additional acres.
Furthermore, because it is generally customary in the industry to provide the
existing tenant with the opportunity to re-lease the land at the end of each
lease term, we believe that many farm operators will rent additional land that
becomes available in order to control the ability to farm that land in future
periods. As a result, in our experience, many farm operators will aggressively
pursue rental opportunities in their operable geographic area, even when the
farmer anticipates lower current returns or short-term losses.



In our primary crop farmland, we see flat to modestly higher rent rates in
connection with 2020 lease renewals. This is consistent with, on the one hand,
headwinds in primary crop markets and, on the other, tenant demand for leasing
high quality farmland. Due to the short-term nature of most of our primary crop
leases, we believe that a recovery of crop prices and farm profitability would
be reflected relatively rapidly in our revenues via increases in rent rates.
Across specialty crops, operator profitability is under some pressure.
Participating lease structures are common in many specialty crops and base lease
rates are consistent with or somewhat lower than 2019.



Lease Expirations


Farm leases are generally short-term in nature. As of June 30, 2020, our portfolio had the following lease expirations as a percentage of approximate acres leased and annual minimum cash rents:






($ in thousands)
                                                                                       % of
                                                       % of                           Annual
                                                    Approximate                        Cash
Year Ending December 31,       Approximate Acres       Acres         Annual Rents      Rents
2020 (remaining six months)               44,940           28.8 %   $       10,431       19.2 %
2021                                      43,889           28.1 %            9,113       16.8 %
2022                                      30,480           19.5 %            6,277       11.6 %
2023                                      14,126            9.1 %            2,671        4.9 %
2024                                      10,933            7.0 %              727        1.3 %
2025 and beyond                           11,613            7.5 %           25,033       46.1 %
                                         155,981          100.0 %   $       54,252      100.0 %




As of June 30, 2020, we had approximately 48,000 acres for which lease payments
are at least partially based on a percentage of farming revenues and 3,676 acres
that are leased to our TRS. Acres leased to our TRS are not included in the
table above.  From time to time, we may enter into recreational leases on our
farms.  Since lease renewal periods are exercisable at the option of the lessee,
the preceding table presents future lease expirations during the initial lease
term only.



Rental Revenues



Our revenues are primarily generated from renting farmland to operators of
farming businesses. Our leases have terms ranging from one to 25 years, with
three years being the most common.  Although the majority of our leases do

not
provide

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the tenant with a contractual right to renew the lease upon its expiration, we
believe it is customary to provide the existing tenant with the opportunity to
renew the lease, subject to any increase in the rental rate that we may
establish. If the tenant elects not to renew the lease at the end of the lease
term, the land will be offered to a new tenant.



The leases for the majority of the properties in our portfolio provide that
tenants must pay us at least 50% of the annual rent in advance of each spring
planting season.  As a result, we collect a significant portion of total annual
rents in the first calendar quarter of each year.  We believe our use of leases
pursuant to which at least 50% of the annual rent is payable in advance of each
spring planting season mitigates the tenant credit risk associated with the
variability of farming operations that could be adversely impacted by poor crop
yields, weather conditions, mismanagement, undercapitalization or other factors
affecting our tenants. Tenant credit risk is further mitigated by requiring that
our tenants maintain crop insurance and by our claim on a portion of the related
proceeds, if any, as well as by our security interest in the growing crop. Prior
to acquiring farmland property, we take into consideration the competitiveness
of the local farm-operator tenant environment in order to enhance our ability to
quickly replace a tenant that is unwilling to renew a lease or is unable to pay
a rent payment when it is due.  Some of our leases provide for a reimbursement
of the property taxes we pay.



As described above, we are assessing the impact, if any, on our ability to collect rent from our tenants as a result of the COVID-19 pandemic. At this time, we expect to continue to be able to collect rents in full and on time. However, the situation is continuing to develop, and we are assessing the potential impact on our tenants on an ongoing basis.





Expenses



Substantially all of our farm leases are structured in such a way that we are
responsible for major maintenance, certain insurance and taxes (which are
sometimes reimbursed to us by our tenants), while our tenant is responsible for
minor maintenance, water usage and all of the additional input costs related to
farming operations on the property, such as seed, fertilizer, labor and fuel. We
expect that substantially all of the leases for farmland we acquire in the
future will continue to be structured in a manner consistent with substantially
all of our existing leases. As the owner of the land, we generally only bear
costs related to major capital improvements permanently attached to the
property, such as irrigation systems, drainage tile, grain storage facilities,
permanent plantings or other physical structures customary for farms. In cases
where capital expenditures are necessary, we typically seek to offset, over a
period of multiple years, the costs of such capital expenditures by increasing
rental rates. We also incur the costs associated with maintaining liability

and
casualty insurance.



We incur costs associated with running a public company, including, among
others, costs associated with employing our personnel and compliance costs. We
incur costs associated with due diligence and acquisitions, including, among
others, travel expenses, consulting fees and legal and accounting fees. We also
incur costs associated with managing our farmland. The management of our
farmland, generally, is not labor or capital intensive because farmland
generally has minimal physical structures that require routine inspection and
maintenance, and our leases, generally, are structured to require the tenant to
pay many of the costs associated with the property. Furthermore, we believe that
our platform is scalable, and we do not expect the expenses associated with
managing our portfolio of farmland to increase significantly as the number of
farm properties we own increases over time.



Crop Prices



We believe short-term crop price changes have had little effect historically on
farmland values. They also have a limited impact on our rental revenue, as most
of our leases provide for a fixed cash rental rate, a common approach in
agricultural markets, especially with respect to row crops, for several
reasons.  This approach recognizes that the value of leased land to a tenant is
more closely linked to the total revenue produced on the property, which is
driven by crop yield and crop price. This approach simplifies the administrative
requirements for the landlord and the tenant significantly. This approach
supports the tenants' desire to maintain access to their leased farms, which are
in short supply, a concept expanded upon below, by providing the landlord
consistent rents. Crop price exposure is also limited because tenants also
benefit from the fundamental revenue hedging that occurs when large crop yields
mitigate the effect of lower crop prices. Similarly, lower crop yields have a
tendency to trigger higher crop prices and help increase revenue even when
confronted by lower crop yields. Such hedging effect also limits the impact of
short-term crop price changes on revenues generated by leases with a bonus
component based on farm revenues. Further risk mitigation is available to
tenants, and indirectly to

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us, via crop insurance and hedging programs implemented by tenants. Our TRS also takes advantage of these risk mitigation programs and strategies.



We believe quality farmland in the United States has a near-zero vacancy rate as
a result of supply and demand fundamentals. Our view is that rental rates for
farmland are a function of farmland operators' view of the long-term
profitability of farmland and that many farm operators will compete for farmland
even during periods of decreased profitability due to the scarcity of farmland
available to rent. In particular, we believe that due to the relatively high
fixed costs associated with farming operations (including equipment, labor and
knowledge), many farm operators in some circumstances will rent additional acres
of farmland when they become available in order to allocate their fixed costs
over additional acres. Furthermore, because it is generally customary in the
industry to provide the existing tenant with the opportunity to re-lease the
land at the end of each lease term, we believe that many farm operators will
rent additional land that becomes available in order to control the ability to
farm that land in future periods. As a result, in our experience, many farm
operators will aggressively pursue rental opportunities in their operable
geography, even when the farmer anticipates lower current returns or short-term
losses.

The value of a crop is affected by many factors that can differ on a yearly
basis. Weather conditions and crop diseases in major crop production regions
worldwide create a significant risk of price volatility, which may either
increase or decrease the value of the crops that our tenants produce each year.
Other material factors adding to the volatility of crop prices are changes in
government regulations and policy, fluctuations in global prosperity,
fluctuations in foreign trade and export markets and eruptions of military
conflicts or civil unrest. Prices for many primary crops, particularly corn,
experienced meaningful declines in 2014 and 2015, and have still not recovered
to their pre-2014 prices. Furthermore, the COVID-19 pandemic has impacted crop
prices, including corn and soybeans. We do not believe such declines represent a
trend over the long term. Rather, we believe those declines represented a
combination of correction to historical norms (adjusted for inflation) and high
yields due to favorable weather patterns, and in the case of recent declines in
crop prices, a reaction to the decline in economic activity as a result of the
pandemic. We expect that continued long-term growth trends in global population
and GDP per capita will result in increased revenue per acre for primary crops
over time. We expect pricing across specialty crops to generally remain soft in
2020, and possibly 2021, until the economic disruptions due to the COVID-19
pandemic are behind us. Although annual rental payments under the majority of
our leases are not based expressly on the quality or profitability of our
tenants' harvests, any of these factors could adversely affect our tenants'
ability to meet their obligations to us and our ability to lease or re-lease
properties on favorable terms.



Interest Rates



We expect that future changes in interest rates will impact our overall
operating performance by, among other things, affecting our borrowing costs.
While we may seek to manage our exposure to future changes in rates through
interest rate swap agreements or interest rate caps, portions of our overall
outstanding debt will likely remain at floating rates. In addition, a sustained
material increase in interest rates may cause farmland prices to decline if the
rise in real interest rates (which is defined as nominal interest rates minus
the inflation rate) is not accompanied by rises in the general levels of
inflation. However, our business model anticipates that over time the value of
our farmland will increase, as it has in the past, at a rate that is equal to or
greater than the rate of inflation, which may in part offset the impact of
rising interest rates on the value of our farmland, but there can be no
guarantee that this appreciation will occur to the extent that we anticipate or
at all.



International Trade



Following the trade tensions between China and the U.S. that started developing
in 2018, the two countries reached a "Phase 1" trade deal in late 2019. At this
point, we believe that China and the U.S. will endeavor to largely comply with
the Phase 1 trade deal, leading to increased purchases by China of many U.S.
agricultural exports. However, the economic and political disruptions introduced
by the COVID-19 pandemic make it difficult to predict whether the Phase 1
agreement will be maintained.



The short to medium-term impact on the Company's financial performance due to a
trade conflict may be mitigated by the multi-year term structure of many of our
leases and limited to contingent rent components. However, a long-term trade
conflict would likely impact our rents and thereby negatively impact our
business. Additionally, a long-term trade

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conflict would likely motivate non-US. agricultural businesses to strengthen
their logistics and trade infrastructure. This may also lead to the weakening of
U.S. agricultural trade relationships that would be difficult for the United
States to reestablish in the future.



Critical Accounting Policies and Estimates





Except as set forth in Note 1 to the consolidated financial statements included
in this Quarterly Report on Form 10-Q and the de-designation of our original
interest rate swap and designation of our new swap,  there have been no changes
to our critical accounting policies disclosed in our Annual Report on Form 10-K
for the year ended December 31, 2019.



New or Revised Accounting Standards





For a summary of the new or revised accounting standards, please refer to "Note
1 - Organization and Significant Accounting Policies" within the notes to the
consolidated financial statements included in this Quarterly Report on Form

10-Q.



Results of Operations



Comparison of the three months ended June 30, 2020 to the three months ended
June 30, 2019




                                                For the three months ended June 30,
($ in thousands)                                  2020                     2019            $ Change     % Change
OPERATING REVENUES:
Rental income                               $           9,141       $             9,698    $   (557)      (5.7) %
Tenant reimbursements                                     883                       466          417       89.5 %
Crop sales                                                362                       484        (122)     (25.2) %
Other revenue                                             131                       300        (169)     (56.3) %
Total operating revenues                               10,517                    10,948        (431)      (3.9) %

OPERATING EXPENSES

Depreciation, depletion and amortization                2,003                     2,092         (89)      (4.3) %
Property operating expenses                             1,818                     2,188        (370)     (16.9) %
Cost of goods sold                                        745                         -          745         NM
Acquisition and due diligence costs                        11                         1           10         NM
General and administrative expenses                     1,402              

      1,419         (17)      (1.2) %
Legal and accounting                                      848                     1,293        (445)     (34.4) %
Other operating expenses                                    1                         1            -         NM
Total operating expenses                                6,828                     6,994        (166)      (2.4) %
OPERATING INCOME                                        3,689                     3,954        (265)      (6.7) %

OTHER (INCOME) EXPENSE:
Other income                                             (33)                     (111)           78     (70.3) %

(Gain) loss on disposition of assets                    (917)                   (7,491)        6,574     (87.8) %
Interest expense                                        4,467                     5,031        (564)     (11.2) %
Total other expense                                     3,517              

(2,571) 6,088 NM


Net income before income tax expense                      172              

      6,525      (6,353)         NM

Income tax expense                                          -                         -            -         NM

NET INCOME                                  $             172       $             6,525    $ (6,353)     (97.4) %




NM=Not Meaningful



Our rental income for the three months ended June 30, 2020 was impacted
partially by the three farm dispositions during the three months ended June 30,
2020. Additionally, upon renewal in 2020, a number of leases transitioned to
higher percentages of variable rents relative to fixed rents, which variable
rents have yet to be received. To highlight the effect of changes due to
acquisitions and dispositions, we have separately discussed the rental income
for the same-property portfolio, which includes only properties owned and
operated for the entirety of both periods presented. The

                                       36

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same-property portfolio for the three months ended June 30, 2020 includes approximately 148,500 acres, representing 95% of our current portfolio on an acreage basis.





On a same-property basis, total rental income decreased $0.3 million, or 3.7%,
for the three months ended June 30, 2020 as compared to the three months ended
June 30, 2019. Management does not believe that same-property rent comparisons
for periods shorter than the full year are necessarily indicative of the
expected full year comparison because the majority of bonus and crop share rent
payments are expected to be received in the fourth quarter.



Rental income decreased $0.6 million, or 5.7%, for the three months ended June
30, 2020 as compared to the three months ended June 30, 2019, resulting from
asset dispositions and the timing of crop share revenue recognition in
connection with certain permanent crops.



Revenues recognized from tenant reimbursement of property taxes increased $0.4
million, or 89.5%, during the three months ended June 30, 2020 as compared to
the three months ended June 30, 2019. This increase is the result of higher
tenant reimbursement revenues on properties in the state of California.



Crop sales totaled $0.4 million during the three months ended June 30, 2020 as
compared to $0.5 million in the comparative three-month period ended June 30,
2019. The slight decrease in crop sales is due to timing.



Other revenues totaled $0.1 million during the three months ended June 30, 2020
as compared to $0.3 million in the comparative three-month period ended June 30,
2019.



Depreciation, depletion and amortization expense decreased $0.1 million, or
4.3%, for the three months ended June 30, 2020 as compared to the three months
ended June 30, 2019 as a result of the decrease of the amortization of in-place
leases acquired as part of the AFCO acquisition that were fully amortized in
prior periods.


Property operating expenses decreased $0.4 million, or 16.9%, for the three months ended June 30, 2020 as compared to the three months ended June 30, 2019. The decrease is largely due to lower travel expense and bad debt expense.

General and administrative expenses remained comparable for the three months ended June 30, 2020 and June 30, 2019.





Cost of goods sold increased $0.7 million for the three months ended June 30,
2020 as compared to the three months ended June 30, 2019. This was largely due
to the timing of citrus sales year over year.



Legal and accounting expenses decreased $0.4 million, or 34.4%, for the three
months ended June 30, 2020 as compared to the three months ended June 30, 2019,
which was primarily the result of lower legal fees incurred during Q2 2020 in
relation to a "short and distort" attack against the Company conducted by
anonymous parties, including Quinton Mathews, under the pseudonym Rota Fortunae,
as discussed below under Part II Item 1 "Legal Proceedings," and his
co-conspirators. The Company is pursuing litigation against Quinton Mathews and
his co-conspirators (collectively "Wheel of Fortune"), and is defending
stockholder class action lawsuits that are related to the claims made by Wheel
of Fortune. The Company believes that a substantial portion of the costs
associated with the stockholder class action litigation will be covered by
insurance, but the Company can provide no assurances that costs willnot
ultimately be in excess of the $0.35 million that will be covered by insurance.
The Company does not expect insurance proceeds to cover a substantial portion of
the costs related to the lawsuit it filed against Wheel of Fortune.



Other operating expenses were $0.0 million for the three months ended June 30, 2020 and June 30, 2019.

Other income decreased $0.1 million for the three months ended June 30, 2020 as compared to the three months ended June 30, 2019, resulting primarily from losses in commodity futures.





Gain on disposition of assets decreased $6.5 million for the three months ended
June 30, 2020 as compared to the three months ended June 30, 2019 due primarly
to the gain on sale of properties during Q2 2019 as opposed to smaller
dispositions occurring in Q2 2020. Additionally, during the three months ended
June 30, 2020 the Company recorded disposals of storm-damaged pivots.

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Interest expense decreased $0.6 million, or 11.2%, for the three months ended
June 30, 2020 as compared to the three months ended June 30, 2019. This decrease
is the result of a decrease in interest rates on floating rate debt and the
lower outstanding balance of debt.



Results of Operations



Comparison of the six months ended June 30, 2020 to the six months ended June
30, 2019




                                                    For the Six Months Ended June 30,
($ in thousands)                                     2020                    2019               $ Change        % Change
OPERATING REVENUES:
Rental income                                  $         19,215      $              19,369    $      (154)        (0.8) %
Tenant reimbursements                                     1,744                        934             810         86.7 %
Crop sales                                                  697                        933           (236)       (25.3) %
Other revenue                                               512                        600            (88)       (14.7) %

Total operating revenues                                 22,168                     21,836             332          1.5 %

OPERATING EXPENSES
Depreciation, depletion and amortization                  4,003                      4,207           (204)        (4.8) %
Property operating expenses                               3,679                      4,120           (441)       (10.7) %
Cost of goods sold                                        1,311                        223           1,088        487.9 %
Acquisition and due diligence costs                          11                          1              10           NM
General and administrative expenses                       2,854                      2,793              61          2.2 %
Legal and accounting                                      1,330                      2,016           (686)       (34.0) %
Other operating expenses                                      1                          1               -           NM %
Total operating expenses                                 13,189            

        13,361           (172)        (1.3) %
OPERATING INCOME                                          8,979                      8,475             504          5.9 %

OTHER EXPENSE:
Other income                                                 88                      (136)             224           NM

(Gain) loss on disposition of assets                      (831)            

       (7,909)           7,078           NM
Interest expense                                          9,130                      9,987           (857)        (8.6) %
Total other expense                                       8,387                      1,942           6,445           NM

Net income (loss) before income tax expense                 592            

         6,533         (5,941)       (90.9) %

Income tax expense                                            -                          -               -           NM

NET INCOME                                      $           592       $              6,533    $    (5,941)       (90.9) %




NM=Not Meaningful



Our rental income for the six months ended June 30, 2020 was impacted partially
by the three farm dispositions during the three months ended June 30, 2020.
Additionally, upon renewal in 2020, a number of leases transitioned to higher
percentages of variable rents relative to fixed rents, which variable rents have
yet to be received. This decrease was partially offset by a higher volume of
crop share revenue received in Q1 2020 as compared to Q1 2019. To highlight the
effect of changes due to acquisitions and dispositions, we have separately
discussed the rental income for the same-property portfolio, which includes only
properties owned and operated for the entirety of both periods presented. The
same-property portfolio for the six months ended June 30, 2020 includes
approximately 148,500 acres, representing 95% of our current portfolio on an
acreage basis.



On a same-property basis, total rental income increased $0.6 million, or 3.2%,
for the six months ended June 30, 2020 as compared to the six months ended June
30, 2019. Management does not believe that same-property rent comparisons for
periods shorter than the full year are necessarily indicative of the expected
full year comparison because the majority of bonus and crop share rent payments
are expected to be received in the fourth quarter.



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Rental income decreased $0.2 million, or 0.8%, for the six months ended June 30,
2020 as compared to the six months ended June 30, 2019, resulting from asset
dispositions and the timing of crop share revenue recognition in connection

with
certain permanent crops.



Revenues recognized from tenant reimbursement of property taxes increased $0.8
million, or 86.7%, during the six months ended June 30, 2020 as compared to the
six months ended June 30, 2019. This increase is the result of higher tenant
reimbursement revenues on properties in the state of California.



Crop sales decreased $0.2 million, or 25.3%, during the six months ended June
30, 2020 compared to the six-months ended June 30, 2019 due to timing of crop
sales revenue recognition throughout the year.



Other revenues totaled $0.5 million during the six months ended June 30, 2020 as compared to $0.6 million in the comparative six-month period ended June 30, 2019.


Depreciation, depletion and amortization expense decreased $0.2 million, or
4.8%, for the six months ended June 30, 2020 as compared to the six months ended
June 30, 2019 as a result of the decrease of the amortization of in-place leases
acquired as part of the AFCO acquisition that were fully amortized in prior
periods.



Property operating expenses decreased $0.4 million, or 10.7%, for the six months
ended June 30, 2020 as compared to the six months ended June 30, 2019. The
decrease is largely due to higher travel expense and bad debt expense in 2019
compared to 2020.


General and administrative expenses remained comparable for the six months ended June 30, 2020 and June 30, 2019.

Cost of goods sold increased $1.1 million, or 487.9%, for the six months ended June 30, 2020 as compared to the six months ended June 30, 2019. This was largely due to the timing of citrus sales year over year.


Legal and accounting expenses decreased $0.7 million, or 34.0%, for the six
months ended June 30, 2020 as compared to the six months ended June 30, 2019,
which was primarily the result of lower legal fees incurred during 2020 in
relation to a "short and distort" attack against the Company conducted by
anonymous parties, including Quinton Mathews, under the pseudonym Rota Fortunae,
as discussed below under Part II Item 1 "Legal Proceedings." The Company is
pursuing litigation against Quinton Mathews's co-conspirators, and is defending
stockholder class action lawsuits that are related to the claims made by Wheel
of Fortune. The Company believes that a substantial portion of the costs
associated with the stockholder class action litigation will be covered by
insurance, but the Company can provide no assurances that costs will not
ultimately be in excess of the $0.35 million that will be covered by insurance.
The Company does not expect insurance proceeds to cover a substantial portion of
the costs related to the lawsuit it filed against Wheel of Fortune.



Other operating expenses were $0.0 million for the six months ended June 30, 2020 and June 30, 2019.


Other income decreased $0.2 million for the six months ended June 30, 2020 as
compared to the six months ended June 30, 2019, resulting primarily from losses
in commodity futures.



Gain on disposition of assets decreased $7.1 million for the six months ended
June 30, 2020 as compared to the six months ended June 30, 2019 due primarly to
the gain on sale of properties during 2019 as opposed to smaller dispositions
occurring in 2020. Additionally, during the six months ended June 30, 2020, the
Company recorded disposals of storm-damaged pivots.



Interest expense decreased $0.9 million, or 8.6%, for the six months ended June
30, 2020 as compared to the six months ended June 30, 2019. This decrease is the
result of a decrease in interest rates on floating rate debt and the lower

outstanding balance of debt.





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Liquidity and Capital Resources





Overview


Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments to repay any outstanding borrowings, fund and maintain our assets and operations, make distributions to our stockholders and unitholders and other general business needs.


Our short-term liquidity requirements consist primarily of funds necessary to
acquire additional farmland, to pay legal fees in relation to the stockholder
class action litigation and the Rota Fortunae litigation in excess of the
Company's insurance coverage and make other investments consistent with our
investment make principal and interest payments on outstanding borrowings, make
distributions on our Series A preferred units and Series B Participating
Preferred Stock and make distributions necessary to qualify for taxation as a
REIT and fund our operations. Our sources of funds primarily will be cash on
hand, operating cash flows, proceeds from asset disposals and borrowings from
prospective lenders.



Our long-term liquidity needs consist primarily of funds necessary to acquire
additional farmland, make other investments and certain long-term capital
expenditures, make principal and interest payments on outstanding borrowings and
make distributions necessary to qualify for taxation as a REIT. We expect to
meet our long-term liquidity requirements through various sources of capital,
including future equity issuances (including issuances of Common units), net
cash provided by operations, long-term mortgage indebtedness and other secured
and unsecured borrowings.



We manage our liquidity position and expected liquidity needs taking into
consideration current cash balances and reasonably expected cash receipts. When
material debt repayments are due within the following 12 months, we work with
current and new lenders and other potential sources of capital to ensure that
all our obligations are timely satisfied. Our ability to incur additional debt
will depend on a number of factors, including our degree of leverage, the value
of our unencumbered assets, compliance with the covenants under our existing
debt agreements, borrowing restrictions that may be imposed by lenders and the
conditions of debt markets. Our ability to access the equity capital markets
will depend on a number of factors as well, including general market conditions
for REITs and market perceptions about us.



On April 30, 2020, the Company entered into amendments to bonds 8A and 9 with
Farmer Mac to extend the maturities of such bonds, under which there is a total
of $48.3 million outstanding, from June and July 2020 to October 31, 2020. We
are working with one of our existing lenders to refinance Farmer Mac bonds 8A
and 9, and we anticipated having the refinancing finalized during the second
quarter of 2020. However the lender informed us that, as a result of travel
restrictions implemented to contain the spread of the pandemic, they would be
unable to meet the refinancing deadlines of June and July 2020. In order to
avoid repayment issues, we were able to secure from Farmer Mac an extension of
the due date of the expiring debt to October 31, 2020, and the refinancing
lender expects to be able to meet that deadline. However, we can provide no
assurances that we will be able to obtain additional extensions of these
near-term maturities if travel restrictions are put back in place. If we are
unable to refinance this debt, we may be required to dispose of farms to repay
it at maturity.



During the six months ended June 30, 2020, we used $3.2 million to repurchase an
aggregate of 494,661 shares of common stock and $3.1 million to repurchase an
aggregate of 140,189 shares of Series B Participating preferred stock.We
currently have authority to repurchase up to an aggregate of $44.7 million in
additional shares of our common stock or shares of our Series B participating
preferred Stock.



Consolidated Indebtedness



For further details relating to our consolidated indebtness, refer to "Note 7 -
Mortgage Notes, Line of Credit and Bonds Payable" in the financial statements
included elsewhere in this Quarterly Report on Form 10-Q.



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  Table of Contents

Sources and Uses of Cash



The following table summarizes our cash flows for the six months ended June 30,
2020 and 2019:




                                                                For the six months ended June 30,
(in thousands)                                                     2020                   2019
Net cash provided by operating activities                    $           9,982      $          12,127
Net cash provided by investing activities                    $           

6,707 $ 34,109 Net cash (used in) provided by financing activities $ (17,652) $ (40,768)

Comparison of the six months ended June 30, 2020 to the six months ended June 30, 2019

As of June 30, 2020, we had $11.6 million of cash compared to $22.4 million at June 30, 2019.

Cash Flows from Operating Activities

Net cash provided by operating activities decreased by $2.1 million primarily as a result of the following:

Receipt of $22.1 million in cash rents for the six months ended June 30, 2020

? as compared to receiving $23.9 million in cash rents in the six months ended

June 30, 2019;

? A decrease of $1.5 million in cash interest payments as compared to the six

months ended June 30, 2019;

? Decrease in accrued expenses of $1.3 million as compared to the six months

ended June 30, 2019; and

? A decrease in deferred revenue of $3.2 million as compared to the six months


   ended June 30, 2019.



Cash Flows from Investing Activities

Net cash provided by investing activities decreased $27.4 million primarily as a result of the following:

Property dispositions during the six months ended June 30, 2020 for aggregate

? consideration of $7.5 million as opposed to completing property dispositions

during the six months ended June 30, 2019 for aggregate cash consideration of

$34.2 million;

? A decrease of $2.6 million in investments in real estate improvements as

compared to the six months ended June 30, 2019;

Property acquisition during the six months ended June 30, 2020 for $0.9 million

? as compared to no property acquisitions during the six months ended June 30,

2019;

? A $3.8 million decrease in principal repayments on notes receivable received by

the Company as compared to the six months ended June 30, 2019; and

? A $1.4 million decrease in notes receivable issued by the Company as compared


   to the six months ended June 30, 2019.



Cash Flows from Financing Activities

Net cash used in financing activities decreased $23.1 million primarily as a result of the following:

? Debt payments decreased $11.2 million as compared to the six months ended June

30, 2019;

? A decrease of $0.2 million in dividends paid on common stock as compared to the

six months ended June 30, 2019;

? Common stock repurchases decreased $16.3 million as compared to the six months

ended June 30, 2019;

? An increase of $2.2 million in dividends paid on participating preferred shares

as compared to the six months ended June 30, 2019;

? An increase of $0.1 million in debt issuance costs as compared to the six

months ended June 30, 2019 as the Company is currently refinancing debt; and

? An increase of $2.2 million in participating preferred stock repurchased as


   compared to the six months ended June 30, 2019.


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Off-Balance Sheet Arrangements

As of June 30, 2020, we did not have any off-balance sheet arrangements.

Non-GAAP Financial Measures

Funds from Operations ("FFO") and Adjusted Funds from Operations ("AFFO")





We calculate FFO in accordance with the standards established by the National
Association of Real Estate Investment Trusts, or Nareit. Nareit defines FFO as
net income (loss) (calculated in accordance with GAAP), excluding gains (or
losses) from sales of depreciable operating property, plus real estate related
depreciation, depletion and amortization (excluding amortization of deferred
financing costs), and after adjustments for unconsolidated partnerships and
joint ventures. FFO is a supplemental non-GAAP financial measure. Management
presents FFO as a supplemental performance measure because it believes that FFO
is beneficial to investors as a starting point in measuring our operational
performance. Specifically, in excluding real estate related depreciation and
amortization and gains and losses from sales of depreciable operating
properties, which do not relate to or are not indicative of operating
performance, FFO provides a performance measure that, when compared year over
year, captures trends in occupancy rates, rental rates and operating costs. We
believe that, as a widely recognized measure of the performance of REITs, FFO
will be used by investors as a basis to compare our operating performance with
that of other REITs.



However, because FFO excludes depreciation and amortization and captures neither
the changes in the value of our properties that result from use or market
conditions nor the level of capital expenditures necessary to maintain the
operating performance of improvements on our properties, all of which have real
economic effects and could materially impact our results from operations, the
utility of FFO as a measure of our performance is limited. In addition, other
equity REITs may not calculate FFO in accordance with the Nareit definition as
we do, and, accordingly, our FFO may not be comparable to such other REITs' FFO.
Accordingly, FFO should be considered only as a supplement to net income as a
measure of our performance. FFO should not be used as a measure of our
liquidity, nor is it indicative of funds available to fund our cash needs,
including our ability to pay dividends or service indebtedness. FFO also should
not be used as a supplement to or substitute for cash flow from operating
activities computed in accordance with GAAP.



We do not, however, believe that FFO is the only measure of the sustainability
of our operating performance. Changes in GAAP accounting and reporting rules
that were put in effect after the establishment of Nareit's definition of FFO in
1999 result in the inclusion of a number of items in FFO that do not correlate
with the sustainability of our operating performance. Therefore, in addition to
FFO, we present AFFO and AFFO per share, fully diluted, both of which are
non-GAAP measures. Management considers AFFO a useful supplemental performance
metric for investors as it is more indicative of the Company's operational
performance than FFO. AFFO is not intended to represent cash flow or liquidity
for the period and is only intended to provide an additional measure of our
operating performance. Even AFFO, however, does not properly capture the timing
of cash receipts, especially in connection with full-year rent payments under
lease agreements entered into in connection with newly acquired
farms. Management considers AFFO per share, fully diluted to be a supplemental
metric to GAAP earnings per share. AFFO per share, fully diluted provides
additional insight into how our operating performance could be allocated to
potential shares outstanding at a specific point in time. Management believes
that AFFO is a widely recognized measure of the operations of REITs, and
presenting AFFO will enable investors to assess our performance in comparison to
other REITs. However, other REITs may use different methodologies for
calculating AFFO and AFFO per share, fully diluted, and, accordingly, our AFFO
and AFFO per share, fully diluted may not always be comparable to AFFO and AFFO
per share amounts calculated by other REITs. AFFO and AFFO per share, fully
diluted should not be considered as an alternative to net income (loss) or
earnings per share (determined in accordance with GAAP) as an indication of
financial performance or as an alternative to net income (loss) earnings per
share (determined in accordance with GAAP) as a measure of our liquidity, nor
are they indicative of funds available to fund our cash needs, including our
ability to make distributions.



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AFFO is calculated by adjusting FFO to exclude or include the income and expenses that we believe are not reflective of the sustainability of our ongoing operating performance, as further explained below:

Real estate related acquisition and due diligence costs. Acquisition (including

audit fees associated with these acquisitions) and due diligence costs are

incurred for investment purposes and, therefore, do not correlate with the

ongoing operations of our portfolio. We believe that excluding these costs from

AFFO provides useful supplemental information reflective of the realized

economic impact of our leases, which is useful in assessing the sustainability

? of our operating performance. Acquisition and due diligence costs totaled $0.0

million and $0.0 million and $0.0 million and $0.1 million for the three and

nine months ended September 30, 2019 and 2018, respectively. We believe that

excluding these costs from AFFO provides useful supplemental information

reflective of the realized economic impact of our current acquisition strategy,

which is useful in assessing the sustainability of our operating

performance. These exclusions also improve comparability of our results over

each reporting period and of our Company with other real estate operators.

Stock based compensation. Stock based compensation is a non-cash expense and,

? therefore, does not correlate with the ongoing operations. We believe that

excluding these costs from AFFO improves comparability of our results over each


   reporting period and of our Company with other real estate operators.



Deferred impact of interest rate swap terminations. When an interest rate swap

is terminated and the related termination fees are rolled into a new swap, the

terminated swap's termination fees are amortized over what would have been the

remaining life of the terminated swap, while the related contractual and

? financial obligations extend over the life of the new swap. As a result, the

net impact on interest expense is uneven throughout the life of the swap, which

is inconsistent with the purpose of an interest rate swap. We believe that,

with this adjustment, AFFO better reflects the actual cash cost of the fixed

interest rate we are obligated to pay under the new swap agreement, and results


   in improved comparability of our results across reporting periods.



Distributions on Series A preferred units. Distributions on Series A preferred

units, which are convertible into Common units on or after March 2, 2026, have

? a fixed and certain impact on our cash flow, and thus they are subtracted from

FFO. We believe this improves comparability of our Company with other real


   estate operators.




   Dividends on Series B Participating Preferred Stock. Dividends on Series B

Participating Preferred Stock, which may be redeemed for cash or converted into

? shares of common stock on or after September 30, 2021, have a fixed and certain

impact on our cash flow, and thus they are subtracted from FFO. We believe this


   improves comparability of our Company with other real estate operators.



Common shares fully diluted. In accordance with GAAP, common shares used to

calculate earnings per share are presented on a weighted average basis. Common

shares on a fully diluted basis includes shares of common stock, Common units,

redeemable Common units and unvested restricted stock outstanding at the end of

? the period on a share equivalent basis because all shares are participating

securities and thus share in the performance of the Company. The conversion of

Series A preferred units is excluded from the calculation of common shares

fully diluted as they are not participating securities; thus, they don't share


   in the performance of the Company, and their impact on shares outstanding is
   uncertain.




                                       43

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The following table sets forth a reconciliation of net income (loss) to FFO,
AFFO and net (loss) income available to common stockholders per share to AFFO
per share, fully diluted, the most directly comparable GAAP equivalents,
respectively, for the periods indicated below as previously reported
(unaudited):




                                                  For the three months ended     For the six months ended
                                                           June 30,                      June 30,

(in thousands except per share amounts)              2020            2019          2020            2019
Net income (loss)                                 $      172      $    6,525    $      592      $    6,533
(Gain) loss on disposition of assets                   (917)         (7,491)         (831)         (7,909)
Depreciation, depletion and amortization               2,003           2,092         4,003           4,207
FFO                                                    1,258           1,126         3,764           2,831

Stock based compensation                                 276             382           517             778
Deferred impact of interest rate swap
terminations                                             137               -           137               -
Real estate related acquisition and due
diligence costs                                           11               1            11               1
Distributions on Preferred units                     (3,088)         (3,125)       (6,203)         (6,250)
AFFO                                              $  (1,406)      $  

(1,616) $ (1,774) $ (2,640)

AFFO per diluted weighted average share data:



AFFO weighted average common shares                   31,656          

33,456 31,708 33,907



Net loss per share available to common
stockholders                                      $   (0.10)      $     0.09    $   (0.19)      $   (0.01)
Income available to redeemable non-controlling
interest and non-controlling interest in
operating partnership                                   0.11            0.10          0.21            0.20
Depreciation and depletion                              0.06            0.06          0.13            0.12
Stock based compensation                                0.01            0.01          0.02            0.02
(Gain) loss on disposition of assets                  (0.03)          (0.22)        (0.03)          (0.23)
Distributions on Preferred units                      (0.10)          (0.09)        (0.20)          (0.18)
AFFO per diluted weighted average share           $   (0.04)      $   (0.05)    $   (0.06)      $   (0.08)




The following table sets forth a reconciliation of AFFO share information to
basic weighted average common shares outstanding, the most directly comparable
GAAP equivalent, for the periods indicated below (unaudited):




                                                      For the three
                                                      months ended       For the six months
                                                        June 30,           ended June 30,
(in thousands)                                      2020         2019     2020         2019
Basic weighted average shares outstanding          29,433       30,637   29,485       30,714
Weighted average OP units on an as-if converted
basis                                               1,904        2,397    1,904        2,817
Weighted average unvested restricted stock            319          422      319          376
AFFO weighted average common shares                31,656       33,456   31,708       33,907






EBITDAre



The Company calculates Earnings Before Interest Taxes Depreciation and
Amortization for real estate ("EBITDAre") in accordance with the standards
established by NAREIT in its September 2017 White Paper. NAREIT defines EBITDAre
as net income (calculated in accordance with GAAP) excluding interest expense,
income tax, depreciation and amortization, gains or losses on disposition of
depreciated property (including gains or losses on change of control),
impairment write-downs of depreciated property and of investments in
unconsolidated affiliates caused by a decrease in value of depreciated property
in the affiliate, and adjustments to reflect the entity's pro rata share of
EBITDAre of unconsolidated affiliates. EBITDAre is a key financial measure used
to evaluate the Company's operating performance but should not be construed as
an alternative to operating income, cash flows from operating activities or net
income, in each case as determined in accordance with GAAP.  The Company
believes that EBITDAre is a useful performance measure commonly reported and
will be widely used by analysts and investors in the Company's industry.
However, while EBITDAre is a performance measure widely used across the
Company's industry, the Company does not believe that it correctly captures the
Company's business operating performance because it includes non-cash expenses
and recurring adjustments that are necessary to better understand the Company's
business operating performance.  Therefore, in addition to EBITDAre, management
uses Adjusted EBITDAre, a non-GAAP measure.



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We further adjust EBITDAre for certain additional items such as stock based
compensation, indirect offering costs, real estate acquisition related audit
fees and real estate related acquisition and due diligence costs (for a full
discussion of these adjustments, see AFFO adjustments discussed above) that we
consider necessary to understand our operating performance.  We believe that
Adjusted EBITDAre provides useful supplemental information to investors
regarding our ongoing operating performance that, when considered with net
income and EBITDAre, is beneficial to an investor's understanding of our
operating performance.



EBITDAre and Adjusted EBITDAre have limitations as analytical tools, and you
should not consider them in isolation or as a substitute for analysis of our
results as reported under GAAP. Some of these limitations are:



? EBITDAre and Adjusted EBITDAre do not reflect our cash expenditures, or future

requirements, for capital expenditures or contractual commitments;

? EBITDAre and Adjusted EBITDAre do not reflect changes in, or cash requirements

for, our working capital needs;

? EBITDAre and Adjusted EBITDAre do not reflect the interest expense, or the cash

requirements necessary to service interest or principal payments, on our debt;

Although depreciation and amortization are non-cash charges, the assets being

? depreciated and amortized will often have to be replaced in the future, and

EBITDAre and Adjusted EBITDAre do not reflect any cash requirements for these

replacements; and

? Other companies in our industry may calculate EBITDAre and Adjusted EBITDAre

differently than we do, limiting the usefulness as a comparative measure.


Because of these limitations, EBITDAre and Adjusted EBITDAre should not be
considered as a measure of discretionary cash available to us to invest in the
growth of our business. We compensate for these limitations by relying primarily
on our GAAP results of operations and using EBITDAre and Adjusted EBITDAre only
as a supplemental measure of our performance.



The following table sets forth a reconciliation of our net income to our EBITDAre and Adjusted EBITDAre for the periods indicated below (unaudited):






                                                              For the three months ended          For the six months ended
                                                                       June 30,                           June 30,
(in thousands)                                                 2020               2019             2020             2019

Net Income (loss)                                          $        172      $         6,525   $        592     $       6,533
Interest expense                                                  4,467                5,031          9,130             9,987
Income tax expense                                                    -                    -              -                 -

Depreciation, depletion and amortization                          2,003                2,092          4,003             4,207
(Gain) loss on disposition of assets                              (917)              (7,491)          (831)           (7,909)
EBITDAre                                                   $      5,725

$ 6,157 $ 12,894 $ 12,818


Stock based compensation                                            276                  382            517               778
Real estate related acquisition and due diligence costs              11    

               1             11                 1
Adjusted EBITDAre                                          $      6,012      $         6,540   $     13,422     $      13,597




Inflation



Most of our farming leases are two to three years for row crops and one to seven
years for permanent crops, pursuant to which each tenant is responsible for
substantially all of the operating expenses related to the property, including
maintenance, water usage and insurance. As a result, we believe that the effect
on us of inflationary increases in operating expenses may be offset in part by
the operating expenses that are passed through to our tenants and by contractual
rent increases because our leases will be renegotiated every one to five
years. We do not believe that inflation has had a material impact on our
historical financial position or results of operations.



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Seasonality



Because the leases for many of the properties in our portfolio require
significant payments in advance of the spring planting season (for row crops),
we receive a significant portion of our cash rental payments in the first
calendar quarter of each year, although we recognize rental revenue from these
leases on a pro rata basis over the non-cancellable term of the lease in
accordance with GAAP.

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