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EFTA01384956

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We generally use fixed leases of one to three years for our specialty/vegetable and commodity row crop farms, which typically include annual percentage or dollar escalators in some casts for leases of more than one year in duration. These fixed leases provide stability for our revenues and a level of protection against many risks inherent in farming operations, such as weather, drought or shorter-term crop fluctuations. These events generally have only a short-term adverse impact on the farmland because of the ability to replant crops or switch crops the next year. Rental payments for fixed leases on row crops are typically made on an annual basis prior to harvest or semi-annually, with 50% being made in advance of harvest and 50% being paid post-harvest. However, due to the short term nature of these fixed leases on specialty/vegetable and commodity row crop farms, in any given year we may have multiple leases up for renewal or extension. We have nine leases (Sandpiper Ranch, Condor Ranch, Pleasant Plains Farm, lillar Farm and Kane County Farms), with some farms having multiple leases, expiring in 2015 that collectively accounted for 28.6% of our total annual rent for 2014 and 20.3% of our fixed and participating rent for the first six months of 2015. With the exception of Condor Ranch, which is a permanent crop farm that is predominantly in development, each of the farms is a commodity or specialty/vegetable row crop farm, and we expect lease negotiations with respect to these farms to commence in the third and fourth quarter of 2015 as is customary with respect to leases for these types of farms in their reqpettive geographies. We currently expect to renew each of these leases with the existing farmer tenant, though no assurances can be given that we will be successful in doing so. In general and based on our prior experience, lease renewal rates are impacted by a variety of factors including: (i) typically being renewed in a manner that follo

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