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Borrowings | 9 Months Ended
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Sep. 30, 2019
Debt Disclosure [Abstract] |
BORROWINGS | BORROWINGS Our borrowings as of September 30, 2019, and December 31, 2018, are summarized below (dollars in thousands):
| Carrying Value as of |  | As of September 30, 2019
| September 30, 2019 |  | December 31, 2018 |  | Stated Interest Rates(1) (Range; Wtd Avg) |  | Maturity Dates (Range; Wtd Avg)
Notes and bonds payable: |  |  |  |  |  |  |
Fixed-rate notes payable | $ | 360,459 |  |  | $ | 247,249 |  |  | 3.16%–5.70%; 4.08% |  | 6/1/2020–8/1/2044; June 2032
Fixed-rate bonds payable | 90,380 |  |  | 90,877 |  |  | 2.80%–4.57%; 3.55% |  | 12/11/2019–9/13/2028; November 2022
Total notes and bonds payable | 450,839 |  |  | 338,126 |  |  |  |  |
Debt issuance costs – notes and bonds payable | (2,835 | ) |  | (2,338 | ) |  | N/A |  | N/A
Notes and bonds payable, net | $ | 448,004 |  |  | $ | 335,788 |  |  |  |  |
Variable-rate revolving lines of credit | $ | 4,100 |  |  | $ | 100 |  |  | 4.29%–4.54%; 4.29% |  | 4/5/2024
Total borrowings, net | $ | 452,104 |  |  | $ | 335,888 |  |  |  |  |
(1) | Where applicable, stated interest rates are before interest patronage (as described below).
As of September 30, 2019, the above borrowings were collateralized by certain of our farms with an aggregate net book value of approximately $743.4 million. The weighted-average interest rate charged on the above borrowings (excluding the impact of debt issuance costs and before any interest patronage, or refunded interest) was 4.03% and 3.97% for the three and nine months ended September 30, 2019, respectively, and 3.76% and 3.63% for three and nine months ended September 30, 2018, respectively. In addition, 2018 interest patronage from our Farm Credit Notes Payable (as defined below), which we recorded during the three months ended March 31, 2019, resulted in a 21.2% reduction (approximately 95 basis points) to the stated interest rates on such borrowings. We are unable to estimate the amount of interest patronage to be received, if any, related to interest accrued during 2019 on our Farm Credit Notes Payable. As of September 30, 2019, we were in compliance with all covenants applicable to the above borrowings. MetLife Borrowings MetLife Facility On May 9, 2014, we closed on a credit facility (the “MetLife Facility”) with Metropolitan Life Insurance Company (“MetLife”). As a result of subsequent amendments, the MetLife Facility currently consists of an aggregate of $200.0 million of term notes (the “MetLife Term Notes”) and $75.0 million of revolving equity lines of credit (the “MetLife Lines of Credit”). On August 16, 2019, we drew $16.5 million on the MetLife Term Notes. The interest rate on the new disbursement was 3.70% per annum (which rate is fixed through January 4, 2027) and was blended with the existing interest rate on the previously-outstanding balance under the MetLife Term Notes. The following table summarizes the pertinent terms of the MetLife Facility as of September 30, 2019 (dollars in thousands, except for footnotes):
Issuance |  | Aggregate Commitment |  | Maturity Dates |  | Principal Outstanding |  | Interest Rate Terms |  | Undrawn Commitment |
MetLife Term Notes |  | $ | 200,000 |  | (1) | 1/5/2029 |  | $ | 138,408 |  |  | 3.35%, fixed through 1/4/2027 | (2) | $ | 47,030 |  | (3)
MetLife Lines of Credit |  | 75,000 |  |  | 4/5/2024 |  | 4,100 |  |  | 3-month LIBOR + 2.00%–2.25% | (4) | 70,900 |  | (3)
Total principal outstanding |  |  |  | $ | 142,508 |  |  |  |  |  |
(1) | If the aggregate commitment under this facility is not fully utilized by December 31, 2019, MetLife has the option to be relieved of its obligation to disburse the additional funds under the MetLife Term Notes.
(2) | Represents the blended interest rate as of September 30, 2019. Interest rates for subsequent disbursements will be based on then-prevailing market rates. The interest rate on all then-outstanding disbursements will be subject to adjustment on January 5, 2027. Through December 31, 2019, the MetLife Term Notes are also subject to an unused fee ranging from 0.10% to 0.20% on undrawn amounts (based on the balance drawn under the MetLife Term Notes).
(3) | Based on the properties that were pledged as collateral under the MetLife Facility, as of September 30, 2019, the maximum additional amount we could draw under the facility was approximately $18.9 million.
(4) | The interest rate on the MetLife Lines of Credit is subject to a minimum annualized rate of 2.50%, plus an unused fee ranging from 0.10% to 0.20% on undrawn amounts (based on the balance drawn under each line of credit).
Farm Credit Notes Payable From time to time since September 2014 through September 30, 2019, we, through certain subsidiaries of our Operating Partnership, have entered into various loan agreements (collectively, the “Farm Credit Notes Payable”) with 10 different Farm Credit associations (collectively, “Farm Credit”). During the nine months ended September 30, 2019, we entered into the following loan agreement with Farm Credit (dollars in thousands):
Issuer |  | Date of Issuance |  | Amount |  | Maturity Date |  | Principal Amortization |  | Interest Rate Terms(1)
Premier Farm Credit, FLCA |  | 2/7/2019 |  | $ | 1,440 |  |  | 11/1/2043 |  | 25.0 years |  | 5.45%, fixed through October 31, 2023 (variable thereafter)
GreenStone Farm Credit Services |  | 7/11/2019 |  | 1,609 |  |  | 8/1/2044 |  | 25.0 years |  | 5.00%, fixed through June 30, 2029 (variable thereafter)
GreenStone Farm Credit Services |  | 7/11/2019 |  | 3,060 |  |  | 8/1/2044 |  | 25.0 years |  | 5.00%, fixed through June 30, 2029 (variable thereafter)
Farm Credit West, FLCA |  | 7/11/2019 |  | 5,400 |  |  | 5/1/2044 |  | 24.5 years |  | 4.24%, fixed through July 31, 2026 (variable thereafter)
Farm Credit of Central Florida, ACA |  | 7/22/2019 |  | 31,850 |  |  | 7/1/2027 |  | 25.2 years |  | 5.05%, fixed throughout term
Farm Credit of Central Florida, ACA |  | 7/22/2019 |  | 5,850 |  |  | 7/1/2027 |  | None (interest only) |  | 5.05%, fixed throughout term
Farm Credit West, FLCA |  | 8/28/2019 |  | 12,792 |  |  | 5/1/2044 |  | 24.5 years |  | 3.84%, fixed through August 31, 2026 (variable thereafter)(2)
American AgCredit, ACA |  | 8/29/2019 |  | 19,254 |  |  | 10/1/2039 |  | 20.0 years |  | 3.84%, fixed through August 31, 2029 (variable thereafter)
(1) | Stated rate is before interest patronage, as described below.
(2) | Loan originally issued as a variable-rate loan and was converted to a fixed-rate loan effective September 1, 2019.
Interest patronage, or refunded interest, on our borrowings from the various Farm Credit associations is generally recorded upon receipt and is included within Other income on our Condensed Consolidated Statements of Operations and Comprehensive Income. Receipt of interest patronage typically occurs in the first half of the calendar year following the calendar year in which the respective interest payments are made. During the three months ended March 31, 2019, we recorded interest patronage of approximately $700,000 related to interest accrued on loans from Farm Credit during the year ended December 31, 2018, which resulted in a 21.2% reduction (approximately 95 basis points) to the stated interest rates on such borrowings. Prudential Note Payable On June 17, 2019, we entered into a loan agreement with PGMI Real Estate Finance, LLC (“Prudential”), the terms of which are summarized in the following table as of September 30, 2019 (dollars in thousands):
Date of Issuance |  | Amount |  | Maturity Date |  | Principal Amortization |  | Interest Rate Terms
6/17/2019 |  | $ | 17,130 |  |  | 7/1/2029 |  | 25.0 years |  | 4.00%, fixed throughout term
Rabo Note Payable On July 10, 2019, we entered into a loan agreement with Rabo AgriFinance, LLC (“Rabo”), the terms of which are summarized in the following table as of September 30, 2019 (dollars in thousands):
Date of Issuance |  | Amount |  | Maturity Date |  | Principal Amortization |  | Interest Rate Terms
7/10/2019 |  | $ | 5,514 |  |  | 6/1/2029 |  | 25.0 years |  | 1-Month LIBOR + 1.75%(1)
(1) | In connection with securing this loan and to hedge our exposure to the above variable interest rate, we entered into an interest rate swap agreement in which we agreed to pay a fixed interest rate to our counterparty of 4.04% through June 1, 2029. See “—Interest Rate Swap Agreement” below for additional information on this swap agreement.
Debt Service – Aggregate Maturities Scheduled principal payments of our aggregate notes and bonds payable as of September 30, 2019, for the succeeding years are as follows (dollars in thousands):
Period |  | Scheduled Principal Payments
For the remaining three months ending December 31: | 2019 |  | $ | 4,825 |
For the fiscal years ending December 31: | 2020 |  | 30,682 |
| 2021 |  | 19,075 |
| 2022 |  | 41,867 |
| 2023 |  | 35,658 |
| 2024 |  | 26,765 |
| Thereafter |  | 291,967 |
|  |  | $ | 450,839 |
Fair Value ASC 820 provides a definition of fair value that focuses on the exchange (exit) price of an asset or liability in the principal, or most advantageous, market and prioritizes the use of market-based inputs to the valuation. ASC 820-10, “Fair Value Measurements and Disclosures,” establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:
• | Level 1 — inputs that are based upon quoted prices (unadjusted) for identical assets or liabilities in active markets;
• | Level 2 — inputs are based upon quoted prices for similar assets or liabilities in active or inactive markets or model-based valuation techniques, for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
• | Level 3 — inputs are generally unobservable and significant to the fair value measurement. These unobservable inputs are generally supported by little or no market activity and are based upon management’s estimates of assumptions that market participants would use in pricing the asset or liability.
As of September 30, 2019, the aggregate fair value of our notes and bonds payable was approximately $454.5 million, as compared to an aggregate carrying value (excluding unamortized related debt issuance costs) of approximately $450.8 million. The fair value of our long-term, fixed-rate notes and bonds payable is valued using Level 3 inputs under the hierarchy established by ASC 820-10 and is calculated based on a discounted cash flow analysis, using discount rates based on management’s estimates of market interest rates on long-term debt with comparable terms. Further, due to the revolving nature of the MetLife Lines of Credit and the lack of changes in market credit spreads, their aggregate fair value as of September 30, 2019, is deemed to approximate their aggregate carrying value of $4.1 million. Interest Rate Swap Agreement In order to hedge our exposure to variable interest rates, we entered into an interest rate swap agreement in connection with one of our mortgage financings secured during the three months ended September 30, 2019. In accordance with this swap agreement, we will pay our counterparty a fixed rate interest rate on a quarterly basis and receive payments from our counterparty equivalent to the stipulated floating rate. We have adopted the fair value measurement provision for this financial instrument, and the fair values of our interest rate swap agreement is recorded in Other assets, net or Other liabilities, net, as appropriate, on our accompanying Condensed Consolidated Balance Sheets. Generally, in the absence of observable market data, we will estimate the fair value of our interest rate swap using estimates of certain data points, including estimated remaining life, counterparty credit risk, current market yield, and interest rate spreads of similar securities as of the measurement date. As of September 30, 2019, our interest rate swap was valued using Level 2 inputs. In addition, we have designated our interest rate swap as a cash flow hedge, and we record changes in the fair value of the interest rate swap agreement to accumulated other comprehensive income on the Condensed Consolidated Balance Sheets. We record changes in fair value on a quarterly basis, using current market valuations at quarter end. The following table summarizes our interest rate swap as of September 30, 2019 (dollars in thousands):
Aggregate Notional Amount |  | Aggregate Fair Value Asset |  | Aggregate Fair Value Liability
$ | 5,514 |  |  | $ | — |  |  | $ | 347 |
The following table presents the amount of loss recognized in comprehensive income within our condensed consolidated financial statements for the three and nine months ended September 30, 2019 (dollars in thousands):
| Three Months Ended September 30, 2019 |  | Nine Months Ended September 30, 2019
Derivative in cash flow hedging relationship: |  |  |
Interest rate swap | $ | 347 |  |  | $ | 347 |
Total | $ | 347 |  |  | $ | 347 |
The following table summarizes certain information regarding our derivative instrument as of September 30, 2019 (dollars in thousands):
Derivative Type |  | Balance Sheet Location |  | Derivative Liability Fair Value
Derivatives Designated as Hedging Instruments: |  |  |  |
Interest rate swap |  | Other liabilities, net |  | $ | 347 |
Total |  |  |  | $ | 347 |

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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