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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended
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Jun. 30, 2025
Accounting Policies [Abstract] |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Interim Financial Information Our interim financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q in accordance with Article 10 of Regulation S-X. Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with GAAP are omitted. The interim financial statements and accompanying notes should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 19, 2025 (the “Form 10-K”). The results of operations for the three and six months ended June 30, 2025, are not necessarily indicative of the results that may be expected for other interim periods or for the full fiscal year. Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect our reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and our reported amounts of revenues and expenses during the reporting periods. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making certain judgments. Actual results may materially differ from these estimates. Reclassifications Certain line items on the accompanying Condensed Consolidated Balance Sheet as of December 31, 2024 and the Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2024, have been reclassified to conform to the current period’s presentation. These reclassifications had no impact on previously-reported stockholders’ equity, net income, or net change in cash and cash equivalents. Crop Inventory Through certain of our wholly-owned subsidiaries and via a management agreement with a third-party operator, we currently manage a 2,409-acre farm located in Kern County, California, which includes 2,293 acres of bearing almond and pistachio orchards. Through June 30, 2025, we have incurred approximately $4.3 million in growing costs, primarily related to pollination, fertilization, pesticide application, irrigation, and labor. These costs have been capitalized as crop inventory and are included in “Other assets, net” on the accompanying Condensed Consolidated Balance Sheets at the lower of cost or net realizable value. As the related crops are harvested and sold later in 2025 and throughout 2026, these costs will be charged to cost of products sold. In addition, as the crops are harvested and sold, we anticipate incurring additional costs (including harvesting costs, crop insurance, and post-harvest handling fees), which will also be expensed to the cost of products sold. Income taxes We have operated and intend to continue to operate in a manner that will allow us to qualify as a REIT under Sections 856-860 of the Internal Revenue Code of 1986, as amended (the “Code”). As a REIT, we generally are not subject to federal corporate income taxes on amounts that we distribute to our stockholders (except income from any foreclosure property), provided that, on an annual basis, we distribute at least 90% of our REIT taxable income (excluding net capital gains) to our stockholders and meet certain other conditions. As such, in general, as long as we qualify as a REIT, no provision for federal income taxes will be necessary, except for taxes on undistributed REIT taxable income, taxes from foreclosure property, and taxes on income generated by a TRS (such as Land Advisers), if any. During the six months ended June 30, 2025, we began directly operating one property (consisting of three farms) that qualifies as foreclosure property under the Code and thus is subject to corporate income taxes on any income. We account for any income taxes in accordance with the provisions of Accounting Standards Codification (“ASC”) 740, “Income Taxes” (“ASC 740”), using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized based on differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases (including for operating loss, capital loss, and tax credit carryforwards) and are calculated using the enacted tax rates and laws expected to be in effect when such amounts are realized or settled. In addition, we will establish valuation allowances for tax benefits when we believe it is more-likely-than-not (defined as a likelihood of more than 50%) that such assets will not be realized. Pretax loss from foreclosure property during each of the three and six months ended June 30, 2025, was approximately $1.6 million. We did not have any federal or state income tax expense (current or deferred) during either of the three or six months ended June 30, 2025. Our deferred income taxes relate to the net tax effects of federal and state net operating losses, as well as temporary differences arising between the carrying amounts of assets and liabilities of our foreclosure property. As of June 30, 2025, we had a full valuation allowance resulting in a net deferred tax asset of $0. Management has assessed the future realizability of the tax benefits below and determined that such assets are not likely to be realized after considering all sources of income. The following table summarizes our deferred income tax assets and liabilities as of June 30, 2025 (dollars in thousands):
| June 30, 2025 |  | December 31, 2024
Deferred income tax assets, net: |  |  |
Fixed asset depreciation | $ | 250 |  |  | $ | — |
Net operating loss | 435 |  |  | — |
Total Gross deferred income tax assets | 685 |  |  | — |
Less: Valuation allowance | (685) |  |  | — |
Total Deferred income tax assets, net | $ | — |  |  | $ | — |
We did not have any deferred income tax liabilities as of either June 30, 2025, or December 31, 2024. As of June 30, 2025, our foreclosure property had an indefinite-lived net operating loss carryforward of $1.7 million for federal income tax purposes. State net operating loss carryforwards have varying expirations. The following table illustrates the difference between the effective tax rate of the foreclosure property’s expense (benefit) for income taxes and the federal statutory rate (dollars in thousands):
|  | Actual |  | Expected Expense (Benefit) at Federal Statutory Rate(1) |  | Items as a Percentage of Pre-Tax Income
Tax Rate Reconciliation: |  |  |  |  |  |
Pre-tax income (loss) |  | $ | (1,579) |  |  | $ | (332) |  |  | 21.0 | %
State tax expense: |  |  |  |  |  |
Current |  | — |  |  | — |  |  | — | %
Deferred |  | — |  |  | (83) |  |  | 5.3 | %
Meals & Entertainment |  | — |  |  | — |  |  | — | %
Change in Valuation allowance |  | — |  |  | 415 |  |  | (26.3) | %
Income tax expense |  |  |  | $ | — |  |  | — | %
Total current federal tax benefit |  |  |  | $ | — |  |  |
Total current state tax benefit |  |  |  | — |  |  |
Total deferred tax benefit |  |  |  | — |  |  |
(1)The current federal statutory rate is 21%. Segment Reporting Our current business strategy includes one operating segment: Real Estate Rental Operations. We generate revenues, earnings, net income, and cash flows through our single segment by collecting rents from our tenants through operating leases, including reimbursements for certain of our property operating costs. We expect to generate earnings growth by increasing rents, maintaining high occupancy rates, and controlling expenses. The primary driver of our revenue growth will be the renewal of existing leases at current market rental rates upon expiration and the acquisition of new properties. We further believe our active portfolio management, combined with the skills of our asset management team, will allow us to maximize net income across our portfolio. Our Chief Operating Decision Maker (“CODM”) is our President and CEO. Our CODM uses net income to make decisions about allocating resources to individual properties and assessing performance. The CODM will sometimes reference other metrics, including net operating income; however, as net income is the measure most consistent with the amounts disclosed in the consolidated financial statements, only net income is disclosed. Recently-Issued Accounting Pronouncements In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” (“ASU 2024-03”). ASU 2024-03 requires public entities to disaggregate specific types of expenses, including disclosures for depreciation, intangible asset amortization, and selling expenses. The pronouncement is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Prospective application is required, and retrospective application or early adoption is permitted. We are currently assessing the impact of the requirements on our consolidated financial statements and disclosures.

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