Company: LANDO
Filing Date: 2025-02-19
Form Type: 10-K
Source: 0001495240-25-000005
Chunk: 21

Company: GLADSTONE LAND Corp
Filing Date: 2025-02-19
Form: 10-K
Item: Item 1
Chunk 21
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 on the gross revenues earned on the respective farm.  In these types of agreements, we will generally require the lease to include the guarantee of a minimum amount of rental income that satisfies our investment return criteria.  From time to time, we may also explore alternative leasing options with tenants on certain of our farms, including entering into agreements where we finance a portion of the planting, growing, and harvesting costs on certain farms in exchange for receiving a larger share of the resulting crop sales.

We believe that we can acquire farmland that we will be able to lease at annual rental rates providing net capitalization rates generally ranging from 4% to 7% or more of the properties’ market values.  However, there can be no assurance that we will be able to achieve this level of rental rates.  Since rental contracts in the farming business for annual row crops are customarily short-term agreements, rental rates are typically renegotiated regularly to then-current market rates.

Underwriting Criteria and Due Diligence Process

Selecting the Property

We consider selecting the right properties to purchase or finance as one of the most important aspects of our business.  Buying quality farmland that can be used to grow a variety of different crops and that is located in desirable locations is essential to our success.

Our Adviser works with real estate contacts in agricultural markets throughout the U.S. to assess available properties and farming areas.  We believe that our Adviser is experienced in selecting valuable farmland and will use this expertise to identify promising properties.  The following is a list of important factors in our selection of farmland:

•Water availability.  Availability of water is essential to farming.  We seek to purchase properties with ample access to water through an operating well on site or rights to use a well or other source that is located nearby.  Additionally, we may, in the future, consider acquiring properties that rely on rainfall for water if the tenant on that property mitigates the drought risk by purchasing drought insurance.  Typically, leases on properties that would rely on rainfall would be longer term in nature.

•Soil composition.  In addition to water, for farming efforts to be successful, the soil must be suitable for growing crops.  We will not buy or finance any real property that does not have soil conditions that we believe are favorable for growing the crops farmed on the property, except to the extent that a portion of an otherwise suitable property, while not favorable for growing the crops farmed on the property, may be utilized to build structures used in the farming