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REAL ESTATE AND INTANGIBLE ASSETS | 3 Months Ended
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Mar. 31, 2025
Real Estate [Abstract] |
REAL ESTATE AND INTANGIBLE ASSETS | REAL ESTATE AND INTANGIBLE ASSETS All of our properties are wholly-owned on a fee-simple basis, except where noted. The following table provides certain summary information about the 150 farms we owned as of March 31, 2025 (dollars in thousands, except for footnotes):
Location |  | No. of Farms |  | Total Acres |  | Farm Acres |  | Acre-feet of Water Assets |  | Net Cost Basis(1) |  | Encumbrances(2)
California(3)(4)(5) |  | 63 |  | 34,845 |  | 32,321 |  | 55,350 |  | $ | 833,896 |  |  | $ | 364,788 |
Florida |  | 20 |  | 13,090 |  | 10,279 |  | 0 |  | 129,003 |  |  | 57,155 |
Washington |  | 6 |  | 2,520 |  | 2,004 |  | 0 |  | 55,219 |  |  | 15,196 |
Arizona(6) |  | 6 |  | 6,320 |  | 5,333 |  | 0 |  | 49,248 |  |  | 11,556 |
Colorado |  | 12 |  | 32,773 |  | 25,577 |  | 0 |  | 45,490 |  |  | 13,562 |
Oregon(7) |  | 6 |  | 898 |  | 736 |  | 0 |  | 29,020 |  |  | 10,801 |
Nebraska |  | 7 |  | 5,223 |  | 4,949 |  | 0 |  | 19,807 |  |  | 9,689 |
Michigan |  | 12 |  | 1,245 |  | 778 |  | 0 |  | 15,069 |  |  | 8,560 |
Texas |  | 1 |  | 3,667 |  | 2,219 |  | 0 |  | 8,990 |  |  | — |
Maryland |  | 6 |  | 987 |  | 863 |  | 0 |  | 7,916 |  |  | 4,153 |
South Carolina |  | 3 |  | 597 |  | 447 |  | 0 |  | 3,429 |  |  | 2,076 |
Georgia |  | 2 |  | 230 |  | 175 |  | 0 |  | 2,331 |  |  | 1,577 |
North Carolina |  | 2 |  | 310 |  | 295 |  | 0 |  | 2,065 |  |  | — |
New Jersey |  | 3 |  | 116 |  | 101 |  | 0 |  | 2,045 |  |  | 1,185 |
Delaware |  | 1 |  | 180 |  | 140 |  | 0 |  | 1,275 |  |  | 666 |
|  | 150 |  | 103,001 |  | 86,217 |  | 55,350 |  | $ | 1,204,803 |  |  | $ | 500,964 |
(1)Consists of the initial acquisition price (including the costs allocated to both tangible and intangible assets acquired and liabilities assumed), plus subsequent improvements and other capitalized costs associated with the properties, and adjusted for accumulated depreciation and amortization. Specifically, includes Total real estate, net and Lease intangibles, net; plus long-term water assets and related acquisition costs, net above-market lease values, net lease incentives, and net investments in special-purpose LLCs included in Other assets, net; and less net below-market lease values and other deferred revenue included in Other liabilities, net; each as shown on the accompanying Condensed Consolidated Balance Sheets. (2)Excludes approximately $2.1 million of debt issuance costs related to notes and bonds payable, included in Notes and bonds payable, net on the accompanying Condensed Consolidated Balance Sheets. (3)Includes ownership in a special-purpose LLC that owns a pipeline conveying water to certain of our properties. As of March 31, 2025, this investment had a net carrying value of approximately $902,000 and is included within Other assets, net on the accompanying Condensed Consolidated Balance Sheets. (4)Includes eight acres in which we own a leasehold interest via a ground lease with a private individual that expires in December 2040 and five acres in which we own a leasehold interest via a ground sublease with a California municipality that expires in December 2041. As of March 31, 2025, these two ground leases had a net cost basis of approximately $642,000 and are included in Lease intangibles, net on the accompanying Condensed Consolidated Balance Sheets. (5)Includes 48,309 acre-feet of water stored with Semitropic Water Storage District, located in Kern County, California, and 7,041 surplus water credits in certain of our accounts with Westlands Water District, located in Fresno County, California. See “—Investments in Water Assets” below for additional information. (6)Includes two farms consisting of 1,368 total acres and 1,221 farm acres in which we own leasehold interests via two ground leases with the State of Arizona that expire in February 2032 and February 2035, respectively. As of March 31, 2025, these ground leases had an aggregate net cost basis of zero. (7)Includes ownership in a special-purpose LLC that owns certain irrigation infrastructure that provides water to two of our farms. As of March 31, 2025, this investment had a net carrying value of approximately $4.7 million and is included within Other assets, net on the accompanying Condensed Consolidated Balance Sheets. Real Estate The following table sets forth the components of our investments in tangible real estate assets as of March 31, 2025, and December 31, 2024 (dollars in thousands):
| March 31, 2025 |  | December 31, 2024
Real estate: |  |  |
Land and land improvements | $ | 743,158 |  |  | $ | 743,141 |
Permanent plantings | 350,251 |  |  | 349,761 |
Irrigation and drainage systems | 170,010 |  |  | 169,098 |
Farm-related facilities | 49,063 |  |  | 49,063 |
Other site improvements | 14,106 |  |  | 13,569 |
Real estate, at cost | 1,326,588 |  |  | 1,324,632 |
Accumulated depreciation | (176,046) |  |  | (167,782) |
Total real estate, net | $ | 1,150,542 |  |  | $ | 1,156,850 |
Real estate depreciation expense on these tangible assets was approximately $8.3 million and $8.5 million for the three months ended March 31, 2025 and 2024, respectively. Intangible Assets and Liabilities The following table summarizes the carrying values of certain lease intangible assets and the related accumulated amortization as of March 31, 2025, and December 31, 2024 (dollars in thousands):
| March 31, 2025 |  | December 31, 2024
Lease intangibles: |  |  |
Leasehold interest – land | $ | 797 |  |  | $ | 3,372 |
In-place lease values | 1,798 |  |  | 1,798 |
Leasing costs | 2,279 |  |  | 2,280 |
Other(1) | 117 |  |  | 117 |
Lease intangibles, at cost | 4,991 |  |  | 7,567 |
Accumulated amortization | (1,551) |  |  | (3,979) |
Lease intangibles, net | $ | 3,440 |  |  | $ | 3,588 |
(1)Other includes tenant relationships and acquisition-related costs allocated to miscellaneous lease intangibles. Total amortization expense related to these lease intangible assets was approximate ly $148,000 and $231,000 for the three months ended March 31, 2025 and 2024, respectively, The following table summarizes the carrying values of certain lease intangible assets or liabilities (excluding those related to real estate held for sale) included in Other assets, net or Other liabilities, net, respectively, on the accompanying Condensed Consolidated Balance Sheets and the related accumulated amortization or accretion, respectively, as of March 31, 2025, and December 31, 2024 (dollars in thousands):
|  | March 31, 2025 |  | December 31, 2024
Intangible Asset or Liability |  | Deferred Rent Asset (Liability) |  | Accumulated (Amortization) Accretion |  | Deferred Rent Asset (Liability) |  | Accumulated (Amortization) Accretion
Above-market lease values(1) |  | $ | 695 |  |  | $ | (217) |  |  | $ | 695 |  |  | $ | (198) |
Below-market lease values(2) |  | (1,371) |  |  | 595 |  |  | (1,371) |  |  | 561 |
Lease incentives and other deferred revenue, net(3) |  | 13,625 |  |  | (5,296) |  |  | 14,192 |  |  | (3,691) |
|  | $ | 12,949 |  |  | $ | (4,918) |  |  | $ | 13,516 |  |  | $ | (3,328) |
(1)Included as part of Other assets, net on the accompanying Condensed Consolidated Balance Sheets, and the related amortization is recorded as a reduction of Lease revenue, net on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income. (2)Included as a part of Other liabilities, net on the accompanying Condensed Consolidated Balance Sheets, and the related accretion is recorded as an increase to Lease revenue, net on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income. (3)Lease incentives are included as part of Other assets, net on the accompanying Condensed Consolidated Balance Sheets, and the related amortization is recorded as a reduction of Lease revenue, net on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income. Other deferred revenue primarily is primarily attributable to tenant-funded improvements and is included as a part of Other liabilities, net on the accompanying Condensed Consolidated Balance Sheets, and the related accretion is recorded as an increase to Lease revenue, net on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income. For each of the three months ended March 31, 2025 and 2024, total amortization related to above-market lease values was approximat ely $19,000; total accretion related to below-market lease values was approxima tely $34,000 and $41,000, respectively; and total net amortization related to lease incentives and other deferred revenue, net was approximately $3.3 million and $513,000, respectively. Acquisitions We did not acquire any new farms during either of the three months ended March 31, 2025 or 2024. Property Sales 2025 Property Sales In January 2025, we completed the sale of five farms in Florida totaling 5,630 gross acres for an aggregate sales price of approximately $52.5 million. Including closing costs, we recognized a net gain on the sale of approximately $14.1 million. In February 2025, we completed the sale of two farms in Nebraska totaling 2,559 gross acres for an aggregate sales price of $12.0 million. Including closing costs, we recognized an aggregate net gain on these sales of approximately $1.6 million. 2024 Property Sales In January 2024, we completed the sale of a 3,748-acre farm in Florida for approximately $65.7 million. Including closing costs, we recognized a net gain on the sale of approximately $10.4 million. Investments in Unconsolidated Entities In connection with the acquisition of certain farmland located in Fresno County, California, we also acquired an ownership in a related limited liability company (the “Fresno LLC”), the sole purpose of which is to own and maintain a pipeline conveying water to our and other neighboring properties. In addition, in connection with the acquisition of certain farmland located in Umatilla County, Oregon, we also acquired an ownership in a related limited liability company (the “Umatilla LLC”), the sole purpose of which is to own and maintain an irrigation system providing water to our and other neighboring properties. As of March 31, 2025, our aggregate ownership interest in the Fresno LLC and the Umatilla LLC was 50.0% and 20.5%, respectively. As our investments in the Fresno LLC and Umatilla LLC are both deemed to constitute “significant influence,” we have accounted for these investments under the equity method. During the three months ended March 31, 2025 or 2024, w e rec orded an aggregate loss of approximately $136,000 and $85,000, respectively (included in Loss from investments in unconsolidated entities on our Condensed Consolidated Statements of Operations and Comprehensive Income), which represents our pro-rata share of the aggregate loss recognized by the Fresno LLC and Umatilla LLC. As of March 31, 2025, and December 31, 2024, our combined ownership interest in the Fresno LLC and the Umatilla LLC had an aggregate carrying value of approximately $5.6 million and $5.7 million, respectively, and is included within Other assets, net on the accompanying Condensed Consolidated Balance Sheets. Investments in Water Assets Semitropic Water Storage District Banked Water In connection with the acquisition of certain farmland located in Kern County, California, in 2021, we also acquired three contracts to purchase an aggregate of 45,000 acre-feet of banked water held by Semitropic Water Storage District (“SWSD”), a water storage district located in Kern County, California. Subsequently in 2021, we executed all three contracts to purchase all 45,000 acre-feet of banked water for an aggregate additional cost of approximately $2.8 million. In addition, since the initial acquisition, additional contracts to purchase banked water held by SWSD were conveyed to us by one of our tenants as partial consideration for rent payments owed. The following table summarizes the total acre-feet of banked water obtained through exercising these contracts as of March 31, 2025 (dollars in thousands):
Period Acquired |  | Acre-feet of Banked Water Available to Purchase per Contract |  | Acre-feet of Banked Water Purchased(1) |  | Value Attributed to Contract(2) |  | Cost to Exercise Contract |  | Total Carrying Value of Banked Water Purchased
Three months ended December 31, 2023 |  | 1,003 |  | 1,003 |  | $ | 401 |  |  | $ | 62 |  |  | $ | 463 |
Three months ended March 31, 2024 |  | 2,306 |  | 2,306 |  | 923 |  |  | 141 |  |  | 1,064 |
Total |  | 3,309 |  | 3,309 |  | $ | 1,324 |  |  | $ | 203 |  |  | $ | 1,527 |
(1)All contracts to purchase additional banked water were exercised in the same quarter in which the respective contract was conveyed to us. (2)Represents noncash income received during the respective periods. The straight-line impact of these receipts is included within Lease revenue, net on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income. All banked water acquired was recognized at cost, including the subsequent cost to execute the contracts and any administrative fees necessary to transfer the water to our banked water account. As of March 31, 2025, the 48,309 acre-feet of banked water held by SWSD was recognized as a long-term water asset and had an aggregate carrying value of approximately $35.5 million (included within Other assets, net on our Condensed Consolidated Balance Sheets). Westlands Water District Groundwater Credits In addition, from May 2023 through March 2024, we elected to participate in a groundwater recharge program established by Westlands Water District (“WWD”), a water district located in Fresno County, California. Under the program, WWD paid for surplus surface water to be delivered to individual landowners’ properties with district-approved groundwater recharge facilities, also known as “water banks.” The landowner was allowed to keep 50% of the net amount of groundwater credits generated under the program (after allowing for certain leave-behind and evaporative losses), and the remaining 50% was used to recharge the aquifer and retained by WWD. Delivery of water under this program was subject to surplus water availability at WWD’s discretion. WWD terminated the program for the 2024 water year effective March 5, 2024. Through March 31, 2025, we have recognized 2,660 acre-feet of water credits, which represents 50% of the total net water credits generated and confirmed by WWD under the program as of such date. As of March 31, 2025, these water credits were recognized as a long-term water asset and had an aggregate carrying value of approximately $753,000 (included within Other assets, net on our Condensed Consolidated Balance Sheets). In addition, as a result of being granted these water credits in exchange for transferring and storing this surplus water on behalf of WWD, we recognized approximately $0 and $426,000 of non-cash revenue during the three months ended March 31, 2025 and 2024, respectively, which represents the estimated fair value of the water credits obtained during the period. Other Groundwater Credits Since 2023, we have also entered into various other agreements with certain third parties (including local water districts and private individuals) to either buy water directly, buy a portion of other water districts’ surface water allocations in future years in which allocations are granted, or to store surface water on others’ behalf in one of our groundwater recharge facilities in exchange for a portion of the net groundwater credits produced and recognized by the respective water district. Through March 31, 2025, we have obtained 4,382 acre-feet of water credits as a result of these agreements, which were recognized as a long-term water asset with an aggregate carrying value of approximately $862,000 (included within Other assets, net on our Condensed Consolidated Balance Sheets). Total Long-term Water Assets As of March 31, 2025, we owned a total of 55,350 acre-feet of long-term water assets, and our investments in these assets had an aggregate carrying value of approximately $37.2 million and are included within Other assets, net on our Condensed Consolidated Balance Sheets. We have invested approximately $1.4 million to construct groundwater recharge facilities on two of our farms, which is included within Real estate, at cost on our Condensed Consolidated Balance Sheets. In addition, through March 31, 2025, we have invested an additional $3.8 million in the aggregate in connection with these agreements that are expected to result in additional groundwater credits in the future; however, the amount and timing of these credits, if any, is currently unknown and is dependent upon and subject to the recognition of such credits by the respective water districts, in their sole discretion. Such costs are held in a deferred asset account (also included within Other assets, net on our Condensed Consolidated Balance Sheets) until the related net water credits become estimable and are recognized by the respective water district, at which time the costs would be reclassed to investments in long-term water assets. Portfolio Concentrations Credit Risk As of March 31, 2025, our farms were leased to various different, unrelated third-party tenants, with certain tenants leasing more than one farm. Due primarily to a lease termination payment received from an outgoing tenant (“Tenant A”) during the three months ended March 31, 2025, aggregate lease revenue attributable to Tenant A accounted for approximately $2.4 million, or 14.2% of the total lease revenue recorded during the three months ended March 31, 2025. As of March 31, 2025, we are no longer a party to any contractual agreements with Tenant A. In addition, one unrelated third-party tenant (“Tenant B”) leases six of our farms under leases expiring in 2030 or later. During the three months ended March 31, 2025, aggregate lease revenue attributable to Tenant B accounted for approximately $1.9 million, or 11.2% of the total lease revenue recorded during the three months ended March 31, 2025. If Tenant B fails to make rental payments or elects to terminate its leases prior to their expirations (and we cannot re-lease the farms on satisfactory terms), there could be a material adverse effect on our financial performance. No other individual tenant represented greater than 10% of the total lease revenue recorded during the three months ended March 31, 2025. Geographic Risk Farms located in California and Florida accounted for approximately $10.5 million (62.4%) and $2.6 million (15.3%), respectively, of the total lease revenue recorded during the three months ended March 31, 2025. We seek to continue to further diversify geographically, as may be desirable or feasible. If an unexpected natural disaster (such as an earthquake, wildfire, flood, or hurricane) occurs or climate change impacts the regions where our properties are located, there could be a material adverse effect on our financial performance and ability to continue our operations. To date, none of our farms have been materially impacted by natural disasters, including the January 2025 wildfires that occurred in southern California. See “—Southeastern U.S. Hurricanes” below for a discussion on damage caused on certain of our farms by the hurricanes that occurred in the Southeastern U.S. in September and October 2024. Besides California and Florida, no other single state accounted for more than 10.0% of the total lease revenue recorded during the three months ended March 31, 2025. Southeastern U.S. Hurricanes In September and October 2024, Hurricanes Helene and Milton caused widespread destruction across many states in the Southeastern U.S., including areas where several of our farms are located. As a result of Hurricane Helene in September 2024, one of our farms in Georgia suffered damage to certain permanent plantings on the farm. At the time, we estimated the carrying value of such plantings to be approximately $275,000, and during the three months ended September 30, 2024, we wrote down the carrying value of these plantings and also recorded a corresponding property and casualty loss. During the three months ended March 31, 2025, after further inspection of the property, it was determined that the damage was not as extensive as originally estimated, and we recorded an adjustment to our original estimate, which is included within Property and casualty recovery, net on our Condensed Consolidated Statements of Operations and Comprehensive Income. Certain of our other farms in the region suffered minor damage as a result of Hurricanes Helene and Milton, but none of our other farms were materially impacted. Impairment We evaluate our entire portfolio each quarter for any impairment indicators and perform an impairment analysis on those select properties and water assets that have an indication of impairment. If this analysis indicates that the carrying value may not be recoverable, an impairment loss is recorded in earnings equal to the amount by which the carrying value exceeds the fair value of the asset. As of March 31, 2025, and December 31, 2024, we concluded that none of our properties or water assets were impaired.

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- Definition The entire disclosure for long-lived, physical asset used in normal conduct of business and not intended for resale. Includes, but is not limited to, work of art, historical treasure, and similar asset classified as collections. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 360 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/360/tableOfContent Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Name Accounting Standards Codification -Section 50 -Paragraph 6 -SubTopic 360 -Topic 958 -Publisher FASB -URI https://asc.fasb.org/1943274/2147477798/958-360-50-6 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (d) -SubTopic 360 -Topic 958 -Publisher FASB -URI https://asc.fasb.org/1943274/2147477798/958-360-50-1 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Name Accounting Standards Codification -Section 50 -Paragraph 7 -SubTopic 360 -Topic 958 -Publisher FASB -URI https://asc.fasb.org/1943274/2147477798/958-360-50-7 + Details
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