Farmland Partners (FPI) risk factors, FY2024 10-K

Risks Related to Our Business and Properties

1. 01As a result, any downturn in the profitability of the farming operations of our tenants or a downturn in the farming industry as a whole could have a material adverse effect on our financial condition, results of operations, cash flow and ability to make distributions to our stockholders
2. 02We have a substantial amount of indebtedness outstanding, which may expose us to the risk of default under our debt obligations, restrict our operations and our ability to grow our business and revenues and restrict our ability to pay distributions to our stockholders
3. 03Mortgage debt obligations expose us to the possibility of foreclosure, which could result in the loss of our investment in a property or group of properties subject to mortgage debt
4. 04Our debt financing agreements restrict our ability to engage in certain business activities, including our ability to incur additional indebtedness, make capital expenditures and make certain investments
5. 05Increases in benchmark interest rates will increase our borrowing costs, which will negatively impact our financial condition, results of operations, growth prospects and ability to make distributions to stockholders
6. 06Increases in interest rates will increase our tenants’ borrowing costs and make it more difficult for them to obtain credit and may cause land prices to decline
7. 07Global economic conditions, including elevated levels of inflation and supply chain disruptions, could materially and adversely affect our and our tenants’ operations
8. 08Approximately 60% of our portfolio is comprised of properties used to grow primary crops such as corn, soybeans, wheat, rice and cotton, which subjects us to risks associated with primary row crops
9. 09Investments in farmland used for permanent/specialty crops have a higher risk profile than farmland used for annual row crops
10. 10Failure to succeed in new markets may have adverse consequences
11. 11We do not continuously monitor and evaluate tenant credit quality, and our financial performance may be subject to risks associated with our tenants' financial condition and liquidity position
12. 12Our short-term leases make us more susceptible to any decreases in prevailing market rental rates than would be the case if we entered into longer-term leases, which could have a material adverse effect on our results of operations and ability to make distributions to our stockholders
13. 13We may be unable to collect balances due on our leases from any tenants in financial distress or bankruptcy, which could materially and adversely affect our financial condition, results of operations and cash flow
14. 14Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our properties and harm our financial condition
15. 15Some state laws prohibit or restrict the ownership of agricultural land by business entities, which could impede the growth of our portfolio and our ability to diversify geographically
16. 16become overly burdensome or expensive, to acquire properties in these states, which could impede the growth of our portfolio and our ability to diversify geographically in states that might otherwise have attractive investment opportunities
17. 17The market prices of the crops that our tenants may produce on our agricultural properties have exhibited periods of volatility, which may affect our tenants' ability to pay rent and thereby have a material adverse effect on our results of operations and our ability to make distributions to stockholders
18. 18Adverse changes in government policies related to farming could affect the prices of crops and the profitability of farming operations, which could materially and adversely affect the value of our properties and our results of operations
19. 19We may be subject to unknown or contingent liabilities related to acquired properties and properties that we may acquire in the future, which could have a material adverse effect on us
20. 20The loss of key management personnel, particularly Paul A. Pittman and Luca Fabbri, could have a material adverse effect on our ability to implement our business strategy and to achieve our investment objectives
21. 21Joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on co-venturers’ financial condition and disputes between us and our co-venturers
22. 22We are exposed to risks associated with the management of third-party owned farmland and ancillary agricultural business activities and failure to succeed in new markets and these new lines of business may have adverse consequences
23. 23If we fail to maintain effective internal controls over financial reporting, we may not be able to accurately report our financial results, which may adversely affect investor confidence in our Company and, as a result, the value of our common stock
24. 24Under the FPI Loan Program, we provide loans to third-party farmers and landowners, which exposes us to risks associated with being a lender, including the risk that borrowers default on their obligations to us, which could adversely affect our results of operations and financial condition
25. 25Liability for uninsured or underinsured losses could materially and adversely affect our financial condition and cash flow
26. 26We have previously been subject to, and may in the future be subject to, litigation or threatened litigation, which may require us to pay damages and expenses or restrict the operation of our business
27. 27We may incur significant unrecoverable costs if we are not successful in connection with the litigation we have filed against Sabrepoint
28. 28A cybersecurity incident and other technology disruptions could result in a violation of law or negatively impact our reputation and relationships with our tenants, any of which could have a material adverse effect on our results of operations and our financial condition
29. 29Potential liability for environmental matters could materially and adversely affect our results of operations and financial condition
30. 30We may be required to permit the owners of certain third-party access rights on our properties to enter and occupy parts of the properties, including owners of mineral rights and power generation and transportation infrastructure, which could materially and adversely impact the rental value of our properties
31. 31We are subject to risks associated with public health crises, such as pandemics and epidemics which may have a material adverse effect on our business. The nature and extent of future impacts are highly uncertain and unpredictable

Risks Related to Our Organizational Structure

1. 32Conflicts of interest may exist or could arise in the future between the interests of our stockholders and the interests of holders of units in our Operating Partnership, which may impede business decisions that could benefit our stockholders
2. 33Our charter contains certain provisions restricting the ownership and transfer of our stock that may delay, defer or prevent a change of control transaction that might involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interests
3. 34We could increase the number of authorized shares of stock, classify and reclassify unissued stock and issue stock without stockholder approval, which may delay, defer or prevent a transaction that our stockholders believe to be in their best interests
4. 35Certain provisions of Maryland law could inhibit changes in control, which may discourage third parties from conducting a tender offer or seeking other change of control transactions that could involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interests
5. 36Certain provisions in the partnership agreement may delay or prevent unsolicited acquisitions of us
6. 37Our Board of Directors may change our strategies, policies and procedures without stockholder approval
7. 38Our rights and the rights of our stockholders to take action against our directors and officers are limited, which could limit your recourse in the event that we take certain actions which are not in our stockholders' best interests
8. 39Our charter contains provisions that make removal of our directors difficult, which could make it difficult for our stockholders to effect changes to our management
9. 40Certain aspects of our Series A preferred units may limit our ability to make distributions to our common stockholders
10. 41U.S. Federal Income Tax Risks
11. 42As a result of all these factors, our failure to qualify as a REIT could impair our ability to expand our business and raise capital, and would substantially reduce our ability to make distributions to our stockholders
12. 43Future sales of properties may result in penalty taxes or may be made through TRSs, each of which would diminish the return to you
13. 44principal requirement of the safe harbor is that the REIT must hold the applicable property for not less than two years prior to its sale for the production of rental income. It is entirely possible that a future sale of one or more of our properties will not fall within the prohibited transaction safe harbor
14. 45In certain circumstances, we may be subject to U.S. federal and state income taxes as a REIT, which would reduce our cash available for distribution to our stockholders
15. 46The ability of our Board of Directors to revoke or otherwise terminate our REIT qualification without stockholder approval may cause adverse consequences to our stockholders
16. 47If our Operating Partnership were classified as a “publicly traded partnership” taxable as a corporation for U.S. federal income tax purposes, we would fail to qualify as a REIT and would suffer other adverse tax consequences
17. 48Complying with the REIT requirements may cause us to forego otherwise attractive opportunities or sell properties earlier or later than we wish
18. 49You may be restricted from acquiring or transferring certain amounts of our common stock
19. 50Dividends paid by REITs generally do not qualify for the favorable tax rates available for some dividends
20. 51Changes to the U.S. federal income tax laws, including the enactment of certain tax reform measures, could have an adverse impact on our business and financial results

Risks Related to the Market for Our Capital Stock

1. 52We may be unable to make distributions at expected levels, which could result in a decrease in the market price of our common stock
2. 53Elevated market interest rates may have an adverse effect on the market price of our common stock
3. 54The market price and trading volume of our common stock may be highly volatile and low, respectively
4. 55Our common stock is subject to trading risks created by the spread of false information and manipulative trading
5. 56The number of shares of our common stock available for future issuance or sale may have adverse effects on the market price of our common stock