EFTA Document EFTA01384958

of $98,104 relating to our acquisitions made in the fourth quarter of 2014 (the second and larger tranche of Kimberly Vineyard and Falcon Farms), and $34,665 relating to our existing Golden Eagle Ranch property. Management and performance fees-related party increased by $865,409 due to higher total assets for purposes of the management fees and increased performance fees due to the higher funds from operations and capital appreciation generated in 2015. Such costs arc not expected to continue following the Internalization. Property operating expenses increased by $106,475 during the six months ended Junc 30, 2015. Of the $106,475 increase in property operating expenses, $150,928 related to our acquisitions made in the fourth quarter of 2014 ($45,735 in management fees, $92.166 in real estate taxes, $9,644 in repairs and maintenance, and $3,382 in insurance) and $34,382 related to increased management fees commensurate with the increased revenues from our same-property portfolio. This was partially offset by property operating oasts incurred in 2014 relating to the Hawk Creek Ranch and Pintail Vineyards properties from which we were entitled to participating revenues related to leases assumed at the time the properties were purchased. As a result, our development properties incurred management fees and real estate taxes associated with this revenue in 2014. which ceased once the leases expired. These expenses are currently being capitalized, as these two properties arc under development. Total Other Expense Total other expense increased $171,463, or 416.89%, from $41,129 for the six months ended June 30, 2014 to $212,592 for the six months ended June 30, 2015. The increase in total other expense arises from interest paid on the original credit facility, which was drawn down in the fourth quarter of 2014, and the increased deferred financing costs incurred in establishing the additional credit facility in the first quarter of 2015. Permanent Crop Segment Our permanent crop segment operating revenues for the periods presented were impacted by acquisitions made during the last quarter of 2014. To highlight the effect of changes due to acquisitions, we have separately discussed the components of operating revenues and property-specific operating expenses for our same-property portfolio, which includes the first tranche for Kimberly Vineyard, Golden Eagle Ranch, Quail Run Vineyard and Blue Heron Farm, permanent crop farnts owned by us for the entirety of both periods presented. In the fourth quarter of 2014, we closed two acquisitions of permanent crop properties, Falcon Farms and a second and larger tranche for the Kimberly Vineyard property. OPERATING REVENUES: For the Six Months Ended June 30, $ Change Champ 2015 2014 Fixed rent $1.109,005 S 228,561 S 880,444 385.21% Same-property portfolio 843,575 228,561 615,014 269.08% Participating rent 2,331,486 1,927,909 403,577 20.93% Samepropetty portfolio 2,331,486 4927,909 403.577 2a93% Recovery of expenses 178,203 99,630 78,573 78.86% Same-property portfolio 118,952 99630 19,322 19.39% Other income 20,000 — 20,000 — 'Ibtal operating revenues 3,638,694 2,256,100 1,382,594 61.28% Same-property portfolio 3,294,013 2.256100 1,037,913 4600% OPERATING EXPENSES: Depreciation 730,570 582,276 148,294 25.47% Same-property portfolio 632,466 582276 54190 8.62% Property operating expenses 418,924 228,360 190,564 83.45% Same-property portfolio 267.996 228,360 39636 17.36% Acquisition-related expenses — 220 (220) (100.001% Professional fees 1,931 5,952 (4,021) (67.56)% 'Nal operating expenses 1.151.425 816,808 334,617 40.97% OPERATING INCOME $2,487,269 $1,439,292 51,047,977 72.81% 83 CONFIDENTIAL - PURSUANT TO FED. R. CRIM P 6(e) DB-SDNY-0085646 CONFIDENTIAL SDNY_GM_00231830 EFTA01384958