Gladstone LAND (LAND) risk factors, FY2024 10-K

Risks Relating to Our Business and Operations

1. 01Our real estate portfolio is concentrated across a limited number of states, which subjects us to an increased risk of significant loss if adverse weather, economic, or regulatory changes or developments in the markets in which our properties are located occur
2. 02We may operate farms on certain of our properties, which will increase our operating costs and expose us to additional farming and related operational risks
3. 03We may not be successful in identifying and consummating additional suitable acquisitions that meet our investment criteria, which may impede our growth and negatively affect our results of operations
4. 04We currently lease many of our properties to medium-sized, independent farming operations and agricultural businesses, which may have limited financial and personnel resources and, therefore, may be less stable than larger companies, which could impact our ability to generate rental revenue
5. 05Furthermore, the success of a medium-sized business may also depend on the management talents and efforts of one or a small group of persons. The death, disability or resignation of one or more of these persons could have a material adverse impact on our tenant and, in turn, on us
6. 06Our cash available for distribution to stockholders may not be sufficient to pay anticipated distributions, nor can we assure you of our ability to make distributions in the future, and we may need to borrow to make such distributions or may not be able to make such distributions at all
7. 07Some of our tenants may be unable to pay rent, which could adversely affect our cash available to make distributions to our stockholders or otherwise impair the value of your investment
8. 08Adverse 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
9. 09Some of our tenants could be susceptible to bankruptcy, which would affect our ability to generate rents from them and therefore negatively affect our results of operations
10. 10Because we expect to continue to enter into some short-term leases, we may continue to be more susceptible to any decreases in prevailing market rental rates than would be the case with long-term leases, which could have a material adverse effect on our results of operations
11. 11Our investments in farmland used for permanent crops have a higher risk profile than farmland used for annual row crops
12. 12Market conditions for certain permanent crops may continue at depressed levels for the foreseeable future
13. 13Our real estate investments will consist of agricultural properties that may be difficult to sell or re-lease upon tenant defaults or early lease terminations, either of which would adversely affect returns to stockholders
14. 14Illiquidity of our farmland investments may make it difficult for us to sell properties in response to market conditions and could harm our financial condition and ability to make distributions to our stockholders
15. 15If we sell properties and provide financing to purchasers, defaults by the purchasers would decrease our cash flows and limit our ability to make distributions
16. 16If our properties do not have access to adequate water supplies, it could harm our ability to lease the properties for farming, thereby adversely affecting our ability to generate returns on our properties
17. 17Our agricultural properties are subject to adverse weather conditions, seasonal variability, crop disease and other contaminants, which may affect our tenants’ ability to pay rent and thereby have an adverse effect on our results of operations and our ability to make distributions to stockholders
18. 18Our operating results and the value of our properties may be impacted by future climate changes, adversely impacting the value of our properties and our ability to generate rental revenue
19. 19We may not be able to raise sufficient capital or borrow money in sufficient amounts or on sufficiently favorable terms necessary to attain the optimal degree of leverage to operate our business, which may have an adverse effect on our operations and ability to pay distributions
20. 20Our income from operations may not be enough to cover our debt service obligations, which may affect distributions to stockholders or cause us to incur losses
21. 21We have secured borrowings, which would have a risk of loss of the property securing such loan upon foreclosure
22. 22As we consider additional debt financing from third-party lenders, our assets may become highly leveraged, which may result in losses
23. 23We face a risk from the fact that certain of our properties are cross-collateralized
24. 24Competition for the acquisition of agricultural real estate may impede our ability to make acquisitions, increase the cost of these acquisitions or decrease or prevent increases in the occupancy and rental rates of our current properties
25. 25We operate as a holding company dependent upon the assets and operations of our subsidiaries, and because of our structure, we may not be able to generate the funds necessary to make distributions on our common stock
26. 26Some 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
27. 27Failure to succeed in new markets may have adverse consequences
28. 28We may not ultimately be able to sell our agricultural real estate to developers in connection with the conversion of such properties to urban or suburban uses, especially in light of the current uncertain market for real estate development
29. 29Liability for uninsured or underinsured losses could adversely affect our financial condition
30. 30Potential liability for environmental matters could adversely affect our financial condition
31. 31If our tenants fail to comply with applicable labor regulations, it could have an adverse effect on our ability to make distributions to our stockholders
32. 32The presence of endangered or threatened species on or near our acquired farmland could restrict the activities of our agricultural tenants, which could in turn have a material adverse impact on the value of our assets and our results of operations
33. 33We may be required to permit the owners of the mineral rights to our properties to enter and occupy parts of the properties for the purposes of drilling and operating oil or gas wells, which could adversely impact the rental value of our properties
34. 34Interest rate fluctuations may adversely affect our results of operations
35. 35We cannot predict the impact future actions by regulators or government bodies, including the U.S. Federal Reserve, will have on real estate debt markets, the market value of our capital stock or on our business, and any such actions may negatively impact us
36. 36Any public health emergency, including any outbreak of COVID-19, SARS, H1N1/09 flu, avian flu, other coronavirus, Ebola or other existing or new epidemic diseases, or the threat thereof, could have a significant adverse impact on us and could adversely affect our ability to fulfill our investment objectives
37. 37We are dependent upon our key management personnel for our future success, particularly David Gladstone, Bill Reiman, Lewis Parrish, and Jay Beckhorn
38. 38Our success will continue to depend on the performance of our Adviser and if our Adviser makes inadvisable investment or management decisions, our operations could be materially adversely impacted
39. 39We may have conflicts of interest with our Adviser and other affiliates, which could result in investment decisions that are not in the best interests of our stockholders
40. 40Our financial condition and results of operations will depend on our Adviser’s ability to effectively manage our future growth
41. 41Our Adviser is not obligated to provide a waiver of the incentive fee, which could negatively impact our earnings and our ability to maintain our current level of, or increase, distributions to our stockholders
42. 42We may be obligated to pay our Adviser quarterly incentive compensation even if we incur a net loss during a particular quarter
43. 43Certain provisions contained in our charter and bylaws and under Maryland law may prohibit or restrict attempts by our stockholders to change our management and hinder efforts to effect a change of control of us, and the market price of our common stock may be lower as a result
44. 44We may enter into tax protection agreements in the future in connection with the issuance of OP Units to acquire additional properties, which could limit our ability to sell or otherwise dispose of certain properties
45. 45Our redemption of OP Units could result in the issuance of a large number of new shares of our common stock and/or force us to expend significant cash, which may limit our funds necessary to make distributions on our common stock
46. 46Our charter grants our Board of Directors the right to classify or reclassify any unissued shares of capital stock, increase or decrease the authorized number of shares and establish the preference and rights of any preferred stock without stockholder approval
47. 47We may not have sufficient earnings and profits to pay distributions on our currently-designated preferred securities or common stock to be treated as dividends
48. 48We may not be able to maintain our qualification as a REIT for federal income tax purposes, which would subject us to federal income tax on our taxable income at regular corporate rates, thereby reducing the amount of funds available for paying distributions to stockholders
49. 49Complying with REIT requirements may cause us to forgo or liquidate otherwise attractive investments
50. 50Failure to make required distributions, both prior to and following our REIT election, would jeopardize our REIT status, which could require us to pay taxes and negatively impact our cash available for future distribution
51. 51Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends
52. 52If we fail to meet stock ownership diversification requirements, we would fail to maintain our qualification as a REIT, which could require us to pay taxes and negatively impact our cash available for future distribution
53. 53We will not seek to obtain a ruling from the Internal Revenue Service (the “IRS”) that we qualify as a REIT for federal income tax purposes
54. 54The IRS may treat sale-leaseback transactions as loans, which could jeopardize our REIT status
55. 55Investments in our common stock may not be suitable for pension or profit-sharing trusts, Keogh Plans or individual retirement accounts (“IRAs”)
56. 56If our Operating Partnership fails to maintain its status as a partnership for federal income tax purposes, its income may be subject to taxation
57. 57Our ownership of, and relationship with, TRSs will be limited, and our failure to comply with the limits would jeopardize our REIT status and could result in the application of a 100% excise tax
58. 58Legislative or regulatory income tax changes related to REITs could materially and adversely affect us
59. 59Future issuances and sales of shares of our common stock, our currently-designated preferred securities, future series of preferred securities, or the perception that such issuances will occur, may have adverse effects on the trading prices of our shares
60. 60An increase in market interest rates may have an adverse effect on the market price of our common stock
61. 61Shares of our currently-designated preferred securities are subordinated to existing and future debt, and your interests could be diluted by the issuance of additional preferred stock or by other transactions
62. 62We operate as a holding company dependent upon the assets and operations of our subsidiaries, and because of our structure, we may not be able to generate the funds necessary to make distributions on our currently-designated preferred securities
63. 63We will be required to terminate the Series E Offering (as defined elsewhere in this Form 10-K) if our common stock and our publicly-traded, currently-designated preferred securities are all no longer listed on Nasdaq or another national securities exchange
64. 64Our currently-designated preferred securities all bear a risk of redemption by us