Company: LANDO
Filing Date: 2025-02-19
Form Type: 10-K
Source: 0001495240-25-000005
Chunk: 42

Company: GLADSTONE LAND Corp
Filing Date: 2025-02-19
Form: 10-K
Item: Item 1A
Chunk 42
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 to make distributions to our stockholders.

We own several farms subject to leases that include a participation rent component based on the annual gross revenues earned on the respective farm; however, the majority of these leases also include a guarantee of a minimum amount of rental income that generally satisfies our investment return criteria.  While we do not generally intend for participation rents to make up a significant portion of our overall leased portfolio, we anticipate entering into additional leases with participation rent components.  Such leases will still be impacted by factors related to the success of the farmer-tenant’s harvest, including, but not limited to, declining crop prices and lower-than-average crop production, that may result in us receiving less rent than anticipated or projected when entering into such leases.  A reduction in the rent we receive could have a material adverse effect on our cash flow and ability to make distributions to our stockholders.

Our investments in farmland used for permanent crops have a higher risk profile than farmland used for annual row crops.

Since our IPO, we have expanded our investment focus to include farms used for permanent crops, and we intend to continue to add to our investments in farmland used for permanent crops in the future.  Permanent crops have plant structures (such as trees, vines, or bushes) that produce yearly crops without being replanted.  Examples include almonds, apples, blueberries, figs, pistachios, oranges, and table and wine grapes.  Permanent crops generally involve more risk than annual row crops because permanent crops require more time and capital to plant and cultivate.  As a result, permanent crops are generally more expensive to replace and more susceptible to disease and poor weather.  If a farmer loses a permanent crop to any natural disaster, such as drought, hurricane, flooding, fire, or disease, there would generally be significant time and capital needed to return the land to commercial production because a tree, bush, or vine may take years to grow before bearing fruit.

Permanent crop farmland also prevents the farmer from being able to rotate crop types to keep up with changing market conditions or changes in the weather or soil.  If demand for one type of permanent crop decreases, the permanent crop farmer cannot easily convert the farm to another type of crop because permanent crop farmland is dedicated to one crop during the lifespan of the trees, bushes, or vines and therefore cannot easily be rotated to adapt to changing environmental or market conditions.

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In addition, permanent crops, which can generally endure long periods of time from harvest to consumption, allow for global shipment and trade.