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Real Estate and Intangible Assets | 6 Months Ended
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Jun. 30, 2015
Property, Plant and Equipment [Abstract] |
Real Estate and Intangible Assets | NOTE 3. REAL ESTATE AND INTANGIBLE ASSETS All of our properties are wholly-owned on a fee-simple basis. The following table provides certain summary information about our 36 farms as of June 30, 2015:
Property Name |  | Location |  | Date Acquired |  | Number of Farms |  |  | Total Acres |  |  | Farm Acres |  |  | Lease Expiration Date |  | Net Cost Basis(1) |  |  | Encumbrances |
San Andreas |  | Watsonville, CA |  | 6/16/1997 |  |  | 1 |  |  |  | 307 |  |  |  | 238 |  |  | 12/31/2020 |  | $ | 4,806,449 |  |  | $ | 4,072,726 |
West Gonzales |  | Oxnard, CA |  | 9/15/1998 |  |  | 1 |  |  |  | 653 |  |  |  | 502 |  |  | 6/30/2020 |  |  | 12,309,315 |  |  |  | 20,720,863 |
West Beach |  | Watsonville, CA |  | 1/3/2011 |  |  | 3 |  |  |  | 196 |  |  |  | 195 |  |  | 12/31/2023 |  |  | 9,304,059 |  |  |  | 3,967,397 |
Dalton Lane |  | Watsonville, CA |  | 7/7/2011 |  |  | 1 |  |  |  | 72 |  |  |  | 70 |  |  | 10/31/2020 |  |  | 2,690,463 |  |  |  | 1,314,507 |
Keysville Road |  | Plant City, FL |  | 10/26/2011 |  |  | 2 |  |  |  | 59 |  |  |  | 56 |  |  | 6/30/2020 |  |  | 1,241,322 |  |  |  | 897,600 |
Colding Loop |  | Wimauma, FL |  | 8/9/2012 |  |  | 1 |  |  |  | 219 |  |  |  | 181 |  |  | 6/14/2018 |  |  | 4,013,732 |  |  |  | 2,640,000 |
Trapnell Road |  | Plant City, FL |  | 9/12/2012 |  |  | 3 |  |  |  | 124 |  |  |  | 110 |  |  | 6/30/2017 |  |  | 4,025,042 |  |  |  | 2,655,000 |
38th Avenue |  | Covert, MI |  | 4/5/2013 |  |  | 1 |  |  |  | 119 |  |  |  | 89 |  |  | 4/4/2020 |  |  | 1,293,824 |  |  |  | 627,762 |
Sequoia Street |  | Brooks, OR |  | 5/31/2013 |  |  | 1 |  |  |  | 218 |  |  |  | 206 |  |  | 5/31/2028 |  |  | 3,127,897 |  |  |  | 1,451,202 |
Natividad Road |  | Salinas, CA |  | 10/21/2013 |  |  | 1 |  |  |  | 166 |  |  |  | 166 |  |  | 10/31/2024 |  |  | 8,189,239 |  |  |  | 3,276,906 |
20th Avenue |  | South Haven, MI |  | 11/5/2013 |  |  | 3 |  |  |  | 151 |  |  |  | 94 |  |  | 11/4/2018 |  |  | 1,837,778 |  |  |  | 936,259 |
Broadway Road |  | Moorpark, CA |  | 12/16/2013 |  |  | 1 |  |  |  | 60 |  |  |  | 60 |  |  | 12/15/2023 |  |  | 2,891,102 |  |  |  | 1,404,388 |
Oregon Trail |  | Echo, OR |  | 12/27/2013 |  |  | 1 |  |  |  | 1,895 |  |  |  | 1,640 |  |  | 12/31/2023 |  |  | 13,955,285 |  |  |  | 6,553,812 |
East Shelton |  | Willcox, AZ |  | 12/27/2013 |  |  | 1 |  |  |  | 1,761 |  |  |  | 1,320 |  |  | 2/29/2024 |  |  | 7,972,401 |  |  |  | 3,136,467 |
Collins Road |  | Clatskanie, OR |  | 5/30/2014 |  |  | 2 |  |  |  | 200 |  |  |  | 157 |  |  | 9/30/2024 |  |  | 2,478,279 |  |  |  | 1,263,949 |
Spring Valley |  | Watsonville, CA |  | 6/13/2014 |  |  | 1 |  |  |  | 145 |  |  |  | 110 |  |  | 9/30/2022 |  |  | 5,807,119 |  |  |  | 2,761,963 |
McIntosh Road |  | Dover, FL |  | 6/20/2014 |  |  | 2 |  |  |  | 94 |  |  |  | 78 |  |  | 6/30/2017 |  |  | 2,553,622 |  |  |  | 1,599,600 |
Naumann Road |  | Oxnard, CA |  | 7/23/2014 |  |  | 1 |  |  |  | 68 |  |  |  | 66 |  |  | 7/31/2017 |  |  | 6,821,216 |  |  |  | 3,225,412 |
Sycamore Road |  | Arvin, CA |  | 7/25/2014 |  |  | 1 |  |  |  | 326 |  |  |  | 322 |  |  | 10/31/2024 |  |  | 6,387,629 |  |  |  | 2,715,151 |
Wauchula Road |  | Duette, FL |  | 9/29/2014 |  |  | 1 |  |  |  | 808 |  |  |  | 590 |  |  | 9/30/2024 |  |  | 13,521,618 |  |  |  | 7,949,287 |
Santa Clara Avenue |  | Oxnard, CA |  | 10/29/2014 |  |  | 2 |  |  |  | 333 |  |  |  | 331 |  |  | 7/31/2017 |  |  | 24,313,506 |  |  |  | 11,703,235 |
Dufau Road |  | Oxnard, CA |  | 11/4/2014 |  |  | 1 |  |  |  | 65 |  |  |  | 64 |  |  | 11/3/2017 |  |  | 6,090,913 |  |  |  | 3,675,000 |
Espinosa Road |  | Salinas, CA |  | 1/5/2015 |  |  | 1 |  |  |  | 331 |  |  |  | 329 |  |  | 10/31/2016 |  |  | 16,725,452 |  |  |  | 10,178,000 |
Parrish Road |  | Duette, FL |  | 3/10/2015 |  |  | 1 |  |  |  | 419 |  |  |  | 211 |  |  | 6/30/2025 |  |  | 3,867,252 |  |  |  | 2,374,680 |
Immokalee Exchange |  | Immokalee, FL |  | 6/25/2015 |  |  | 2 |  |  |  | 2,678 |  |  |  | 1,644 |  |  | 6/30/2020 |  |  | 15,762,300 |  |  |  | 9,360,000 |
|  |  |  |  |  |  | 36 |  |  |  | 11,467 |  |  |  | 8,829 |  |  |  |  | $ | 181,986,814 |  |  | $ | 110,461,166 |
(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 depreciation and amortization accumulated through June 30, 2015.
In accordance with the lease terms, substantially all operating expenses are required to be paid by the tenant; however, we would be required to pay real estate property taxes on the respective parcels of land in the event the tenants fail to pay them. The aggregate annual real estate property taxes for all parcels of land owned by us as of June 30, 2015, are approximately $1,442,000. As of June 30, 2015, due to the terms of certain of our leases currently in place, the annualized amount of real estate property taxes for which we are responsible is approximately $595,000. However, effective November 1, 2015, the lease structures on two of our farms will convert from modified gross leases to pure, triple-net leases, reducing the portion of the annual real estate property taxes for which we are responsible by approximately $171,000. Real Estate The following table sets forth the components of our investments in tangible real estate assets as of June 30, 2015, and December 31, 2014:
|  | June 30, 2015 |  |  | December 31, 2014 |
Real estate: |  |  |  |  |  |  |  |
Land and land improvements |  | $ | 156,085,513 |  |  | $ | 122,999,316 |
Irrigation systems |  |  | 16,439,003 |  |  |  | 12,365,514 |
Buildings and improvements |  |  | 10,845,136 |  |  |  | 10,479,301 |
Horticulture |  |  | 1,559,339 |  |  |  | 1,559,340 |
Other site improvements |  |  | 1,044,261 |  |  |  | 968,007 |
Real estate, at cost |  |  | 185,973,252 |  |  |  | 148,371,478 |
Accumulated depreciation |  |  | (5,482,928 | ) |  |  | (4,431,290 | )
Real estate, net |  | $ | 180,490,324 |  |  | $ | 143,940,188 |
Real estate depreciation expense on these tangible assets was $539,125 and $1,051,639 for the three and six months ended June 30, 2015, respectively, and $296,946 and $556,509 for the three and six months ended June 30, 2014, respectively. New Real Estate Activity 2015 New Real Estate Activity During the six months ended June 30, 2015, we acquired four new farms in three separate transactions, which are summarized in the table below.
Property Name |  | Property Location |  | Acquisition Date |  | Total Acreage |  |  | Number of Farms |  |  | Primary Crop(s) |  | Lease Term |  | Renewal Options |  | Total Purchase Price |  |  | Acquisition Costs |  |  | Annualized Straight-line Rent(1) |
Espinosa Road(2) |  | Salinas, CA |  | 1/5/2015 |  |  | 331 |  |  |  | 1 |  |  | Strawberries |  | 1.8 years |  | None |  | $ | 16,905,500 |  |  | $ | 87,512 (3 | ) |  | $ | 778,342 |
Parrish Road |  | Duette, FL |  | 3/10/2015 |  |  | 419 |  |  |  | 1 |  |  | Strawberries |  | 10.3 years |  | 2 (5 years) |  |  | 3,913,280 |  |  |  | 101,610 (3 | ) |  |  | 251,832 |
Immokalee Exchange |  | Immokalee, FL |  | 6/25/2015 |  |  | 2,678 |  |  |  | 2 |  |  | Misc.Vegetables |  | 5.0 years |  | 2 (5 years) |  |  | 15,757,700 |  |  |  | 148,960 (3 | ) |  |  | 960,104 |
|  |  |  |  |  |  | 3,428 |  |  |  | 4 |  |  |  |  |  |  |  |  | $ | 36,576,480 |  |  | $ | 338,082 |  |  | $ | 1,990,278 |
(1) | Annualized GAAP amount is based on the minimum rental payments required per the lease and includes the amortization of any above-market and below-market lease values recorded.
(2) | In connection with this acquisition, our Adviser earned a finder’s fee of $320,905, which fee was fully credited back to us by our Adviser during the three months ended March 31, 2015. See Note 4, “Related-Party Transactions” for further discussion on this fee.
(3) | Acquisition accounted for as a business combination under ASC 805. As such, all acquisition-related costs were expensed as incurred, other than direct leasing costs, which were capitalized. In aggregate, we incurred $7,225 of direct leasing costs in connection with these acquisitions.
As noted in the table above, all acquisitions during the six months ended June 30, 2015, were accounted for as business combinations in accordance with Accounting Standards Codification (“ASC”) 805, as there was a prior leasing history on the property. As such, the fair value of all assets acquired and liabilities assumed were determined in accordance with ASC 805, and all acquisition-related costs were expensed as incurred, other than those costs that directly related to reviewing or assigning leases we assumed upon acquisition, which were capitalized as part of leasing costs. We determined the fair value of acquired assets and liabilities assumed related to the properties acquired during the six months ended June 30, 2015, to be as follows:
Property Name |  | Land and Land Improvements |  |  | Buildings and Improvements |  |  | Irrigation System |  |  | In-place Leases |  |  | Leasing Costs |  |  | Customer Relationships |  |  | Total Purchase Price |
Espinosa Road |  | $ | 15,852,466 |  |  | $ | 84,478 |  |  | $ | 497,401 |  |  | $ | 246,472 |  |  | $ | 43,894 |  |  | $ | 180,789 |  |  | $ | 16,905,500 |
Parrish Road |  |  | 2,403,064 |  |  |  | 42,619 |  |  |  | 1,299,851 |  |  |  | 54,405 |  |  |  | 77,449 |  |  |  | 35,892 |  |  |  | 3,913,280 |
Immokalee Exhange |  |  | 14,410,840 |  |  |  | 273,107 |  |  |  | 515,879 |  |  |  | 229,406 |  |  |  | 148,691 |  |  |  | 179,777 |  |  |  | 15,757,700 |
|  | $ | 32,666,370 |  |  | $ | 400,204 |  |  | $ | 2,313,131 |  |  | $ | 530,283 |  |  | $ | 270,034 |  |  | $ | 396,458 |  |  | $ | 36,576,480 |
The allocation of the purchase price for the farms acquired during the six months ended June 30, 2015, is preliminary and may change during the measurement period if we obtain new information regarding the assets acquired or liabilities assumed at the acquisition date. Below is a summary of the total operating revenues and earnings recognized on the properties acquired during the three and six months ended June 30, 2015:
|  |  |  | For the three months ended June 30, 2015 |  |  | For the six months ended June 30, 2015 |
Property Name |  | Acquisition Date |  | Operating Revenues |  |  | Earnings(1) |  |  | Operating Revenues |  |  | Earnings(1) |
Espinosa Road |  | 1/5/2015 |  | $ | 194,585 |  |  | $ | 101,813 |  |  | $ | 380,802 |  |  | $ | 198,871 |
Parrish Road |  | 3/10/2015 |  |  | 62,958 |  |  |  | 21,770 |  |  |  | 77,174 |  |  |  | 28,949 |
Immokalee Exchange |  | 6/25/2015 |  |  | — |  |  |  | (1,223 | ) |  |  | — |  |  |  | (1,223 | )
|  |  |  | $ | 257,543 |  |  | $ | 122,360 |  |  | $ | 457,976 |  |  | $ | 226,597 |
(1) | Earnings are calculated as net income less interest expense and any acquisition-related costs that are required to be expensed if the acquisition is treated as a business combination under ASC 805.
2014 New Real Estate Activity During the six months ended June 30, 2014, we acquired five farms in three separate transactions, which are summarized in the table below.
Property Name |  | Property Location |  | Acquisition Date |  | Total Acreage |  |  | Number of Farms |  |  | Primary Crop(s) |  | Lease Term |  | Renewal Options |  | Total Purchase Price |  |  | Acquisition Costs(1) |  |  | Annualized Straight-line Rent(2) |
Collins Road |  | Clatskanie, OR |  | 5/30/2014 |  |  | 200 |  |  |  | 2 |  |  | Blueberries |  | 10.3 years |  | 3 (5 years each) |  | $ | 2,591,333 |  |  | $ | 58,441 |  |  | $ | 181,172 |
Spring Valley |  | Watsonville, CA |  | 6/13/2014 |  |  | 145 |  |  |  | 1 |  |  | Strawberries |  | 2.3 years |  | None |  |  | 5,900,000 |  |  |  | 48,915 |  |  |  | 270,901 |
McIntosh Road |  | Dover, FL |  | 6/20/2014 |  |  | 94 |  |  |  | 2 |  |  | Strawberries |  | 3.0 years |  | None |  |  | 2,666,000 |  |  |  | 61,190 |  |  |  | 136,908 |
|  |  |  |  |  |  | 439 |  |  |  | 5 |  |  |  |  |  |  |  |  | $ | 11,157,333 |  |  | $ | 168,546 |  |  | $ | 588,981 |
(1) | Each of the properties acquired during the six months ended June 30, 2104, were accounted for as a business combination under ASC 805; therefore, the related costs associated with the acquisitions were expensed in the period incurred. However, $7,175 of these acquisition costs were direct costs incurred related to reviewing and assigning leases we assumed upon acquisition; therefore, we capitalized these costs as part of leasing costs. Further, $19,277 of the acquisition costs related to the closing of McIntosh Road was expensed prior to 2014.
(2) | Annualized straight-line amount is based on the minimum rental payments required per the lease and includes the amortization of any above-market and below-market leases recorded.
No new debt was issued related to any of the properties acquired during the six months ended June 30, 2014; however, we funded a portion of the acquisitions with a $3.0 million draw on our line of credit with Metropolitan Life Insurance Company (“MetLife”) during the three months ended June 30, 2014. As noted in the table above, all acquisitions during the six months ended June 30, 2014, were accounted for as business combinations in accordance with ASC 805, as there was a leasing history on the property or a lease in place that we assumed upon acquisition. As such, the fair value of all assets acquired and liabilities assumed were determined in accordance with ASC 805, and all acquisition-related costs were expensed as incurred. We determined the fair value of acquired assets and liabilities assumed related to the properties acquired during the six months ended June 30, 2014, to be as follows:
Property Name |  | Land and Land Improvements |  |  | Buildings |  |  | Irrigation System |  |  | Site Improvements |  |  | Horticulture(1) |  |  | In-place Leases |  |  | Leasing Costs |  |  | Customer Relationships |  |  | Above (Below)- Market Leases |  |  | Total Purchase Price |
Collins Road |  | $ | 1,252,387 |  |  | $ | 555,667 |  |  | $ | — |  |  | $ | 126,719 |  |  | $ | 520,993 |  |  | $ | 45,086 |  |  | $ | 65,685 |  |  | $ | 24,796 |  |  | $ | — |  |  | $ | 2,591,333 |
Spring Valley |  |  | 5,576,138 |  |  |  | 5,781 |  |  |  | 200,855 |  |  |  | — |  |  |  | — |  |  |  | 83,487 |  |  |  | 17,498 |  |  |  | 66,217 |  |  |  | (49,976 | ) |  |  | 5,900,000 |
McIntosh Road |  |  | 1,970,074 |  |  |  | 30,745 |  |  |  | 537,254 |  |  |  | 2,846 |  |  |  | — |  |  |  | 34,674 |  |  |  | 16,766 |  |  |  | 27,966 |  |  |  | 45,675 |  |  |  | 2,666,000 |
|  | $ | 8,798,599 |  |  | $ | 592,193 |  |  | $ | 738,109 |  |  | $ | 129,565 |  |  | $ | 520,993 |  |  | $ | 163,247 |  |  | $ | 99,949 |  |  | $ | 118,979 |  |  | $ | (4,301 | ) |  | $ | 11,157,333 |
(1) | Horticulture acquired on Collins Road consists of various types of blueberry bushes.
Below is a summary of the total revenue and earnings recognized on the properties acquired during the three and six months ended June 30, 2014:
|  |  |  | For the Three and Six Months Ended June 30, 2014 |
Property Name |  | Acquisition Date |  | Rental Revenue |  |  | Earnings (1) |
Collins Road |  | 5/30/2014 |  | $ | 16,072 |  |  | $ | 8,278 |
Spring Valley |  | 6/13/2014 |  |  | 13,545 |  |  |  | 8,335 |
McIntosh Road |  | 6/20/2014 |  |  | 4,183 |  |  |  | 951 |
|  |  |  | $ | 33,800 |  |  | $ | 17,564 |
Acquired Intangibles and Liabilities For acquisitions treated as business combinations, the purchase price was allocated to the identifiable intangible assets and liabilities in accordance with ASC 805. No purchase price was allocated to any intangible assets or liabilities related to acquisitions treated as asset acquisitions under ASC 360; however, the direct costs we incurred in connection with originating new leases or reviewing existing leases were capitalized over the lives of the respective leases. The following table shows the weighted-average amortization period, in years, for the intangible assets acquired and liabilities assumed in connection with the new properties acquired during the six months ended June 30, 2015 and 2014:
|  | Weighted-Average |
|  | Amortization Period (in Years) |
Intangible Assets |  | 2015 |  |  | 2014 |
In-place leases |  |  | 4.1 |  |  |  | 4.7 |
Leasing commissions |  |  | 6.1 |  |  |  | 7.8 |
Tenant relationships |  |  | 9.5 |  |  |  | 7.3 |
Above-market lease values |  |  | — |  |  |  | 3.0 |
Below-market lease values |  |  | — |  |  |  | 2.3 |
All intangible assets |  |  | 6.3 |  |  |  | 5.6 |
Pro-Forma Financials We acquired four farms during the six months ended June 30, 2015, and 11 farms during the year ended December 31, 2014. The following table reflects pro-forma consolidated financial information as if each farm was acquired at the beginning of the previous fiscal year. In addition, pro-forma earnings have been adjusted to assume that acquisition-related costs related to these farms were incurred at the beginning of the previous fiscal year.
|  | For the Six Months Ended June 30, |
|  | 2015 |  |  | 2014 |
|  | (Unaudited) |  |  | (Unaudited) |
Operating Data: |  |  |  |  |  |  |  |
Total operating revenue |  | $ | 6,032,056 |  |  | $ | 5,868,815 |
Total operating expenses |  |  | (3,237,854 | ) |  |  | (3,627,657 | )
Other expenses |  |  | (1,927,153 | ) |  |  | (2,155,079 | )
Net income before income taxes |  |  | 867,049 |  |  |  | 86,079 |
Provision for income taxes |  |  | — |  |  |  | (13,246 | )
Net income |  | $ | 867,049 |  |  | $ | 72,833 |
Share and Per-share Data: |  |  |  |  |  |  |  |
Earnings per share of common stock - basic and diluted |  | $ | 0.10 |  |  | $ | 0.01 |
Weighted average common shares outstanding - basic and diluted |  |  | 8,872,584 |  |  |  | 6,578,270 |
The pro-forma consolidated results are prepared for informational purposes only. They are not necessarily indicative of what our consolidated financial condition or results of operations actually would have been assuming the acquisitions had occurred at the beginning of the respective previous periods, nor do they purport to represent our consolidated financial position or results of operations for future periods. Significant Existing Real Estate Activity On February 9, 2015, we terminated the lease with the tenant occupying Keysville Road and, on February 10, 2015, entered into a lease with a new tenant to occupy the property. The new lease is scheduled to expire on June 30, 2020, and provides for rent escalations over its life, with minimum, annualized straight-line rental income of $73,749, representing a 7.9% increase over that of the previous lease. In connection with the termination of the previous lease, during the three months ended March 31, 2015, we wrote off an aggregate amount of $32,497 related to deferred rent asset balances and rental income that had been recorded in prior periods. On February 23, 2015, we renewed the lease with the tenant occupying Spring Valley, which lease was originally set to expire on September 30, 2016. The lease was renewed for an additional six years, through September 30, 2022, and provides for rent escalations over its life, with minimum annualized, straight-line rental income of $327,904, representing a 32.5% increase over that of the previous lease. The new lease also grants the tenant two options to extend the lease for an additional six years each. On April 8, 2015, the tenant occupying Santa Clara exercised its option to extend the two existing leases, which were originally set to expire on July 31, 2015. The leases were each extended for an additional two years, through July 31, 2017, and provide for annualized, straight-line rental income of $1,302,783, representing a 5.8% increase over that of the previous leases. On April 13, 2015, we renewed the lease with the tenant occupying Dalton Lane, which was originally set to expire on October 31, 2015. The lease was renewed for an additional five years, through October 31, 2020, and provides for rent escalations over its life, with annualized, straight-line rental income of $163,989, representing a 16.8% increase over that of the previous lease. The new lease also grants the tenant one option to extend the lease for an additional five years. Involuntary Conversions and Property and Casualty Recovery In April 2014, two separate fires occurred on two of our properties, partially damaging a structure on each property. One occurred on 20th Avenue, on which the majority of a residential house was destroyed by a fire, and the other occurred on West Gonzales, damaging a portion of the cooling facility on the property. During the year ended December 31, 2014, we wrote down the carrying values of these properties by an aggregate amount of $232,737, and, in accordance with ASC 605, “Revenue Recognition – Gains and Losses,” we also recorded a corresponding property and casualty loss. We recovered $495,700 of insurance proceeds during the year ended December 31, 2014, and, in accordance with ASC 450, “Contingencies,” we recorded these amounts as an offset to the property and casualty loss recorded earlier in the year, resulting in a net recovery. During the three months ended June 30, 2015, we received an additional $20,809 of insurance proceeds related to the fire on West Gonzales, and such recovery is included in Property and casualty recovery (loss), net on the accompanying Condensed Consolidated Statements of Operations. In addition, subsequent to June 30, 2015, we received the remaining $76,423 of insurance proceeds related to the fire on West Gonzales, which amount will be recognized during the three months ending September 30, 2015. No further recoveries are expected relating to either of these fires. Repairs are substantially complete on West Gonzales, and, during the three months ended March 31, 2015, we expended $35,648 in repairs and upgrades to the cooler as a result of the fire. Of this amount, $25,682 was capitalized as a real estate addition, and $9,966 was recorded in repairs and maintenance expense, included in Property operating expense on the accompanying Condensed Consolidated Statements of Operations. Repairs on 20th Avenue are ongoing and are expected to be completed during the three months ending September 30, 2015, at no cost to us. Intangible Assets and Liabilities The following table summarizes the carrying value of lease intangibles and the accumulated amortization for each intangible asset or liability class as of June 30, 2015, and December 31, 2014:
|  | June 30, 2015 |  |  | December 31, 2014 |
|  | Lease Intangibles |  |  | Accumulated Amortization |  |  | Lease Intangibles |  |  | Accumulated Amortization |
In-place leases |  | $ | 1,399,490 |  |  | $ | (548,041 | ) |  | $ | 869,207 |  |  | $ | (263,428 | )
Leasing costs |  |  | 634,041 |  |  |  | (145,105 | ) |  |  | 357,210 |  |  |  | (80,617 | )
Tenant relationships |  |  | 898,128 |  |  |  | (169,162 | ) |  |  | 501,670 |  |  |  | (66,467 | )
|  | $ | 2,931,659 |  |  | $ | (862,308 | ) |  | $ | 1,728,087 |  |  | $ | (410,512 | )
|  | Deferred Rent Asset (Liability) |  |  | Accumulated (Amortization) Accretion |  |  | Deferred Rent Asset (Liability) |  |  | Accumulated (Amortization) Accretion |
Above-market lease values(1) |  | $ | 65,203 |  |  | $ | (19,817 | ) |  | $ | 65,203 |  |  | $ | (9,027 | )
Below-market lease values(2) |  |  | (371,707 | ) |  |  | 269,927 |  |  |  | (371,707 | ) |  |  | 162,194 |
|  | $ | (306,504 | ) |  | $ | 250,110 |  |  | $ | (306,504 | ) |  | $ | 153,167 |
(1) | Above-market lease values are included as a part of Other assets in the accompanying Condensed Consolidated Balance Sheets, and the related amortization is recorded as a reduction of rental income.
(2) | Below-market lease values are included as a part of Other liabilities in the accompanying Condensed Consolidated Balance Sheets, and the related accretion is recorded as an increase to rental income.
Total amortization expense related to these lease intangible assets was $172,678 and $451,796 for the three and six months ended June 30, 2015, respectively, and $33,540 and $62,008 for the three and six months ended June 30, 2014, respectively. Total amortization related to above-market lease values was $5,395 and $10,790, for the three and six months ended June 30, 2015, respectively, and $461 for both the three and six months ended June 30, 2014. Total accretion related to below-market lease values was $52,590 and $107,733 for the three and six months ended June 30, 2015, respectively, and $20,980 and $40,874 for the three and six months ended June 30, 2014, respectively. Portfolio Diversification and Concentrations Diversification The following table summarizes the geographic locations, by state, of our properties with leases in place as of June 30, 2015 and 2014:
|  | As of and For the Six Months Ended June 30, 2015 |  |  | As of and For the Six Months Ended June 30, 2014 |
State |  | Number of Farms |  |  | Total Acres |  |  | % of Total Acres |  |  | Rental Revenue |  |  | % of Total Rental Revenue |  |  | Number of Farms |  |  | Total Acres |  |  | % of Total Acres |  |  | Rental Revenue |  |  | % of Total Rental Revenue |
California |  |  | 15 |  |  |  | 2,722 |  |  |  | 23.7 | % |  | $ | 3,712,894 |  |  |  | 68.7 | % |  |  | 9 |  |  |  | 1,599 |  |  |  | 24.8 | % |  | $ | 2,051,017 |  |  |  | 67.1 | %
Florida |  |  | 12 |  |  |  | 4,401 |  |  |  | 38.4 | % |  |  | 820,834 |  |  |  | 15.2 | % |  |  | 8 |  |  |  | 496 |  |  |  | 7.7 | % |  |  | 240,304 |  |  |  | 7.9 | %
Oregon |  |  | 4 |  |  |  | 2,313 |  |  |  | 20.2 | % |  |  | 583,763 |  |  |  | 10.8 | % |  |  | 4 |  |  |  | 2,313 |  |  |  | 35.9 | % |  |  | 492,121 |  |  |  | 16.1 | %
Arizona |  |  | 1 |  |  |  | 1,761 |  |  |  | 15.4 | % |  |  | 161,935 |  |  |  | 3.0 | % |  |  | 1 |  |  |  | 1,761 |  |  |  | 27.4 | % |  |  | 145,328 |  |  |  | 4.7 | %
Michigan |  |  | 4 |  |  |  | 270 |  |  |  | 2.3 | % |  |  | 123,357 |  |  |  | 2.3 | % |  |  | 4 |  |  |  | 270 |  |  |  | 4.2 | % |  |  | 128,157 |  |  |  | 4.2 | %
|  |  | 36 |  |  |  | 11,467 |  |  |  | 100.0 | % |  | $ | 5,402,783 |  |  |  | 100.0 | % |  |  | 26 |  |  |  | 6,439 |  |  |  | 100.0 | % |  | $ | 3,056,927 |  |  |  | 100.0 | %
Concentrations Credit Risk Our farms are leased to 30 different third-party tenants. Two of our farms are leased to the same tenant, Dole Food Company (“Dole”). Aggregate rental income attributable to Dole accounted for approximately $1.5 million, or 27.3%, of the rental revenue recorded during the six months ended June 30, 2015, as compared to 46.5% of the total rental revenue recorded during the six months ended June 30, 2014. In addition, a separate tenant accounted for approximately 11.7% of the total rental revenue recorded during the six months ended June 30, 2015. If either tenant fails to make rental payments or elects to terminate their lease, and the land cannot be re-leased on satisfactory terms, there would likely be a material adverse effect on our financial performance and ability to continue operations. No other individual tenant represented greater than 10.0% of the total rental revenue recorded during the six months ended June 30, 2015. Geographic Risk 15 of our 36 farms owned as of June 30, 2015, are located in California, and 12 farms are located in Florida. As of June 30, 2015, our farmland in California accounted for 2,722 acres, or 23.7% of the total acreage we owned. Furthermore, these farms accounted for approximately $3.7 million, or 68.7%, of the rental revenue recorded during the six months ended June 30, 2015. However, our farms are spread across three of the many different growing regions within California. As of June 30, 2015, our farmland in Florida accounted for 4,401 acres, or 38.4% of the total acreage we owned, and these farms accounted for approximately $0.8 million, or 15.2%, of the rental revenue recorded during the six months ended June 30, 2015. In addition, our farms in Oregon accounted for approximately 10.8% of the rental revenue recorded during the six months ended June 30, 2015. Though we seek to continue to further diversify geographically, as may be desirable or feasible, should an unexpected natural disaster occur where our properties are located, there could be a material adverse effect on our financial performance and ability to continue operations. No other single state accounted for more than 10.0% of the total rental revenue recorded during the six months ended June 30, 2015. Active Purchase and Sale Agreements On June 17, 2015, we entered into an agreement to purchase 841 acres of farmland in California (the “841-Acre California Property”) for approximately $18.9 million. The 841-Acre California Property is currently vineyard farmland; however, we expect to develop the property with almond trees if acquired. The prospective purchase of the 841-Acre California Property is expected to close during the three months ending September 30, 2015, subject to customary conditions and termination rights for transactions of this type, including a due diligence inspection period. However, there can be no assurance that this prospective acquisition will be consummated by that time, on the terms currently anticipated, or at all.

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