INDUS REALTY TRUST, INC. - Annual Report: 2014 (Form 10-K)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

Commission file number 1-12879

GRIFFIN LAND & NURSERIES, INC.
(Exact name of registrant as specified in its charter)

(212) 218-7910
(Registrant's telephone number, including area code)

         SECURITIES REGISTERED PURSUANT TO SECTION 12 (b) OF THE ACT:

         SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT: None

         Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act. Yes o    No ý

         Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o    No ý

         Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

         Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý    No o

         Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    ý

         Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

         Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o    No ý

         The aggregate market value of the Common Stock held by non-affiliates of the registrant was approximately $73,673,000 based on the closing sales price on The NASDAQ Stock Market LLC on May 30, 2014, the last business day of the registrant's most recently completed second quarter. Shares of Common Stock held by each executive officer, director and persons or entities known to the registrant to be affiliates of the foregoing have been excluded in that such persons may be deemed to be affiliates. This assumption regarding affiliate status is not necessarily a conclusive determination for other purposes.

         As of February 6, 2015, 5,149,574 shares of common stock were outstanding.

FORWARD-LOOKING STATEMENTS

        This Annual Report on Form 10-K (the "Annual Report") contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). For this purpose, any statements contained in this Annual Report that relate to future events or conditions, including without limitation, the statements in Part I, Item 1. "Business" and Item 1A. "Risk Factors" and in Part II Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" as well as located elsewhere in this Annual Report regarding industry prospects or Griffin Land & Nurseries, Inc.'s ("Griffin") plans, expectations, or prospective results of operations or financial position, may be deemed to be forward-looking statements. Without limiting the foregoing, the words "believes," "anticipates," "plans," "expects," and similar expressions are intended to identify forward-looking statements. Such forward-looking statements represent management's current expectations and are inherently uncertain. There are a number of important factors that could materially impact the value of Griffin's common stock or cause actual results to differ materially from those indicated by such forward-looking statements. Such factors include: adverse economic conditions and credit markets; a downturn in the commercial and residential real estate markets; risks associated with concentration of real estate holdings; risks associated with entering new real estate markets; potential environmental liabilities; competition and governmental regulations; inadequate insurance coverage; risks of environmental factors; risks associated with the cost of raw materials or energy costs; regulatory risks; risks of investing in a foreign company; litigation risks; and the concentrated ownership of Griffin common stock by members of the Cullman and Ernst families. These and the important factors discussed under the caption "Risk Factors" in Part I, Item 1A of this Annual Report for the fiscal year ended November 30, 2014, among others, could cause actual results to differ materially from those indicated by forward-looking statements made in this Annual Report and presented elsewhere by management from time to time. Any such forward-looking statements represent management's estimates as of the date of this Annual Report. While Griffin may elect to update such forward-looking statements at some point in the future, Griffin disclaims any obligation to do so, even if subsequent events cause Griffin's views to change. These forward-looking statements should not be relied upon as representing Griffin's views as of any date subsequent to the date of this Annual Report.

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PART I

ITEM 1.    BUSINESS.

        Griffin Land & Nurseries, Inc. ("Griffin") operates a real estate business through its wholly owned subsidiary, Griffin Land, LLC ("Griffin Land") that is principally engaged in developing, managing and leasing industrial and commercial properties. Griffin Land also seeks to add to its property portfolio through the acquisition and development of land or purchase of buildings. Periodically, Griffin Land may sell certain portions of its undeveloped land that it has owned for an extended time period and the use of which is not consistent with Griffin Land's core development and leasing strategy. The headquarters for Griffin Land is in Bloomfield, Connecticut.

        Until January 8, 2014, Griffin also operated a landscape nursery business through its wholly owned subsidiary, Imperial Nurseries, Inc. ("Imperial"). Imperial was engaged in the growing of containerized plants for sale principally to independent retail garden centers and rewholesalers, whose main customers are landscape contractors. On January 8, 2014, Griffin and Imperial entered into an Asset Purchase Agreement pursuant to which Imperial's inventory and certain of its assets were sold to Monrovia Connecticut LLC ("Monrovia"), a subsidiary of Monrovia Nursery Company, for approximately $0.7 million in cash, before transaction and severance costs, and a non-interest bearing note receivable of $4.25 million (the "Imperial Sale"). Monrovia paid $2.75 million of the note receivable on June 1, 2014, as scheduled, and the balance is due on June 1, 2015. Concurrently with the Imperial Sale, Imperial and River Bend Holdings, LLC, a wholly owned subsidiary of Griffin, entered into a Lease and Option Agreement and an Addendum to such agreement (the "Imperial Lease", and together with the Imperial Sale, the "Imperial Transaction") with Monrovia, pursuant to which Monrovia agreed to lease Imperial's Connecticut production nursery for a ten-year period, with options to extend for up to an additional fifteen years exercisable by Monrovia. The Imperial Lease also grants Monrovia an option to purchase the land, land improvements and other operating assets that were used by Imperial in its Connecticut growing operations during the first thirteen years of the lease period for $10.5 million, or $7.0 million if only a certain portion of the land is purchased, subject in each case to certain adjustments as provided for in the Imperial Lease.

        Through fiscal 2009, all of Griffin Land's real estate assets, including buildings and undeveloped land, were located in the north submarket of Hartford, Connecticut. In fiscal 2010, Griffin Land started the expansion of its real estate holdings to areas outside of Hartford by purchasing an industrial building and undeveloped land in the Lehigh Valley of Pennsylvania (see Lehigh Valley on page 9). Griffin Land expects to continue to seek to acquire and develop properties that are consistent with its core strategy of developing and leasing industrial and commercial properties. Griffin Land expects that most of such potential acquisitions of either undeveloped land or land and buildings will likely be located outside of the Hartford area.

        In the greater Hartford area, there are a number of warehouse facilities and office buildings, some of which are fully or partially vacant, that are competitive with Griffin Land's industrial/warehouse buildings and office/flex buildings. Additional capacity or an increase in vacancies in either the industrial or office market could adversely affect Griffin Land's operating results by potentially resulting in longer times to lease vacant space, eroding lease rates in Griffin Land's properties or hindering renewals by existing tenants.

        The greater Hartford industrial market had been slow in recent years, but experienced some recovery in 2014. A national real estate services company reported that the overall vacancy rate in the greater Hartford industrial market decreased from 13.3% at the end of 2013 to 12.3% at the end of 2014. Market activity for office/flex space in the north submarket of Hartford was slow in 2014, with overall vacancy, availability and asking rates remaining relatively flat. Griffin Land believes that it benefits from its reputation as a stable landlord with sufficient resources to meet its obligations and deliver space to tenants timely and in accordance with the terms of their lease agreements. The

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industrial/warehouse market in the Lehigh Valley region of Pennsylvania has experienced a fairly strong level of leasing activity during the past several years and reported vacancy rates are low. A national real estate services company reported that the overall vacancy rate in the Lehigh Valley industrial market was less than 5% in 2014. As a result of the relatively strong market, there has been an increase in industrial/warehouse space in the Lehigh Valley. There can be no assurances as to the directions of the Hartford and Lehigh Valley real estate markets in the near future.

        As of November 30, 2014, Griffin Land owned thirty one buildings comprising approximately 2.8 million square feet. Approximately 84% of this square footage is industrial/warehouse space, with the balance principally being office/flex space. As of November 30, 2014, approximately 84% of Griffin Land's industrial/warehouse space was leased and approximately 93% of Griffin Land's office/flex space was leased. As detailed in "Item 2. Properties" below, Griffin Land uses nonrecourse mortgages to finance some of its real estate development activities, and as of November 30, 2014, approximately $70.2 million was outstanding under such loans. In fiscal 2014, Griffin Land's rental revenue, less operating expenses of rental properties, was approximately $12.8 million, while debt service on Griffin Land's nonrecourse mortgages was approximately $6.0 million.

        In fiscal 2014, Griffin Land entered into three new leases of industrial/warehouse space for an aggregate of approximately 371,000 square feet and three new leases of office/flex space for an aggregate of approximately 38,000 square feet. The leasing of industrial space in fiscal 2014 included a five-year lease of approximately 201,000 square feet in an industrial building developed by Griffin Land in fiscal 2014 on land in the Lehigh Valley acquired in fiscal 2010. In fiscal 2014, Griffin Land also entered into a ten-year full building lease for approximately 138,000 square feet in one of its industrial buildings in New England Tradeport ("Tradeport"), Griffin Land's industrial park in Windsor and East Granby, Connecticut. In fiscal 2014, leases of industrial space aggregating approximately 43,000 square feet expired and were not renewed, and a tenant's lease of industrial space increased by approximately 47,000 square feet as the remaining vacant space in the building leased was added to its leased space in accordance with the lease terms. The net effect of these transactions was an increase of approximately 374,000 square feet in industrial space under lease in fiscal 2014, while office/flex space under lease was essentially unchanged at the end of fiscal 2014 as compared to the end of fiscal 2013. Griffin Land also renewed and extended several leases aggregating approximately 27,000 square feet of office/flex space and approximately 11,000 square feet of industrial space in fiscal 2014.

        In fiscal 2013, Griffin Land entered into three new leases of industrial space for an aggregate of approximately 259,000 square feet and several new leases of office/flex space for an aggregate of approximately 49,000 square feet. The new leasing of industrial space reflected a five-year full building lease of the approximately 228,000 square foot industrial building in the Lehigh Valley and approximately 31,000 square feet in Griffin Land's Tradeport industrial/warehouse buildings. Also in fiscal 2013, several leases of industrial space aggregating approximately 168,000 square feet expired and were not renewed. The net effect of these transactions was an increase of approximately 92,000 square feet of industrial space under lease as of November 30, 2013 as compared to December 1, 2012. In fiscal 2013, two leases for office/flex space aggregating approximately 24,000 square feet expired and were not renewed or terminated early. In fiscal 2013, Griffin Land renewed and extended several leases aggregating approximately 116,000 square feet of industrial space and approximately 20,000 square feet of office/flex space. Included in the fiscal 2013 lease renewals was a full building lease of approximately 100,000 square feet that was scheduled to expire in fiscal 2014 but was extended for ten years.

        In fiscal 2012, Griffin Land entered into three new leases of industrial/warehouse space for an aggregate of approximately 151,000 square feet and two new leases of office/flex space for an aggregate of approximately 32,000 square feet. The new leases for industrial/warehouse space included a three-year lease (with two one-year renewal options) for an entire building, approximately 127,000 square feet in Tradeport. In connection with this new full building lease, Griffin Land entered into a lease termination agreement with an existing tenant that had leased approximately 42,000 square feet in

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that building, but had previously vacated its space and was seeking to sublease. Griffin Land received $325,000 in connection with the early termination of that lease, which was scheduled to expire in 2014. In fiscal 2012, Griffin Land renewed and extended several leases aggregating approximately 87,000 square feet of industrial space and approximately 70,000 square feet of office/flex space. In fiscal 2012, leases aggregating approximately 98,000 square feet expired and were not renewed. Of such space, approximately 85,000 square feet was industrial space (including the approximately 42,000 square foot lease that was terminated early and is now subject to a new, full building lease) and approximately 13,000 square feet was office/flex space.

        Periodically, Griffin Land may sell certain portions of its undeveloped land that it has owned for an extended time period and the use of which does not fit into Griffin Land's core strategy of developing and leasing industrial and commercial properties. Such sale transactions may take place either before or after obtaining development approvals and building basic infrastructure.

        In fiscal 2014, Griffin Land completed one land sale for approximately $562,000. In fiscal 2013, Griffin Land completed three land sales, the principal one of which was the sale of approximately 90 acres of undeveloped land in Windsor, Connecticut (the "Windsor Land Sale") for cash proceeds of approximately $9.0 million, before transaction expenses. The land sold under the Windsor Land Sale is part of an approximately 253 acre parcel of undeveloped land that had been held by Griffin Land for an extended time period. Under the terms of the Windsor Land Sale, Griffin Land and the buyer are constructing roadways connecting the land parcel that was sold to existing town roads. The roads being built also provide access to the remaining acreage in Griffin Land's land parcel. As a result of Griffin Land's continuing involvement with the land sold, the Windsor Land Sale is being accounted for under the percentage of completion method, under which the revenue and gain on sale are recognized as the total costs related to the property sold are incurred. At the closing of the Windsor Land Sale, the cash proceeds were placed in escrow for the potential purchase of a replacement property in a like-kind exchange under Section 1031 of the Internal Revenue Code of 1986, as amended. Griffin Land did not acquire a replacement property, therefore, the cash proceeds that were held in escrow were returned to Griffin in fiscal 2014. Griffin Land also closed on two smaller land sales in fiscal 2013 for aggregate net cash proceeds of approximately $0.3 million.

        In fiscal 2012, Griffin Land completed three property sales. The largest of these was the sale of its fully leased 308,000 square foot warehouse building in Manchester, Connecticut (the "Raymour Building"). Under the terms of the full building lease with Raymour & Flanigan ("Raymour") for that building, Griffin Land gave notice to Raymour in fiscal 2011 that Griffin Land was exercising the put option under its lease to sell the facility to Raymour. The proceeds of approximately $16.0 million from that sale were placed in escrow for the potential acquisition of a replacement property in a like-kind exchange under Section 1031 of the Internal Revenue Code of 1986, as amended. As Griffin Land did not acquire a replacement property, the proceeds from the sale of the Raymour Building were returned to Griffin Land in fiscal 2012. The sale of this property and all operating results for this property are reported as a discontinued operation for all periods presented in Griffin's consolidated statements of operations in this Annual Report.

        Also in fiscal 2012, Griffin Land sold approximately 93 acres of undeveloped land in Tradeport that Griffin Land had held for an extended time period to Dollar Tree Distribution, Inc. for cash proceeds of $7.0 million (the "Dollar Tree Sale"). Because Griffin Land was required, under the terms of the Dollar Tree Sale, to construct a sewer line to service the land sold, the Dollar Tree Sale was accounted for under the percentage of completion method, under which the revenue and gain on sale were recognized as the total costs related to the property sold were incurred. The proceeds from the Dollar Tree Sale were placed in escrow for the purchase of a replacement property under a Section 1031 like-kind exchange. On December 28, 2012, Griffin Land closed on the purchase of an approximately 49 acre parcel of undeveloped land in the Lehigh Valley of Pennsylvania using the proceeds from the Dollar Tree Sale that had been held in escrow to complete the Section 1031

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like-kind exchange. In fiscal 2012, Griffin Land also completed the sale of approximately 14 acres of undeveloped land in Windsor, Connecticut for cash proceeds of approximately $1.0 million.

        The weakness in the residential real estate market has adversely affected Griffin Land's residential real estate development activities. The continued weakness of the residential real estate market could result in lower selling prices for Griffin Land's land intended for residential use or delay the sale of such land.

        Griffin Land's development of its land is affected by regulatory and other constraints. Subdivision and other residential development may also be affected by the potential adoption of initiatives meant to limit or concentrate residential growth. Commercial and industrial development activities of Griffin Land's undeveloped land may also be affected by traffic considerations, potential environmental issues, community opposition and other restrictions to development imposed by governmental agencies.

        Griffin does not maintain a corporate website. Griffin's Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and the proxy statement for Griffin's Annual Meeting of Stockholders can be accessed through the SEC website at www.sec.gov. Griffin will provide electronic or paper copies of its foregoing filings free of charge upon request. Griffin was incorporated in 1970.

Commercial and Industrial Developments

New England Tradeport

        A significant portion of Griffin Land's commercial and industrial development effort has been focused on Tradeport, a master-planned industrial park near Bradley International Airport and Interstate 91, located in Windsor and East Granby, Connecticut. Within Tradeport, Griffin Land built and currently owns approximately 1,466,000 square feet of warehouse and light manufacturing space in thirteen buildings, of which approximately 79% was leased as of November 30, 2014.

        Within Tradeport, Griffin Land holds the rights to 795,000 square feet available for development under the State Traffic Certificate ("STC") which relates to four approved building sites and an approved addition to one of Griffin Land's existing buildings. In addition, Griffin Land owns the remaining 95 acres of undeveloped land within Tradeport, 60 acres of which are located in Windsor and the abutting 35 acres of which are located in East Granby. There are no STC or other approvals currently in place (other than zoning in the case of Windsor) for the development of this remaining land for industrial use, particularly the portions in East Granby. Griffin Land believes that additional infrastructure improvements, which may be significant, may be required to obtain approvals to develop portions of this land, particularly the portions in East Granby. As part of the Dollar Tree Sale, a sewer line was brought to an accessible point near the edge of this 95 acre combined parcel. Griffin Land intends to continue to direct much of its real estate efforts in Connecticut on the construction and leasing of its industrial/warehouse and light manufacturing facilities at Tradeport.

        In fiscal 2014, Griffin Land leased approximately 216,000 square feet of previously vacant space in Tradeport and renewed two leases for a total of approximately 10,000 square feet, while leases totaling approximately 43,000 square feet expired and were not renewed. As of November 30, 2014, approximately $55.4 million was invested (net book value) in buildings owned by Griffin Land that are located in Tradeport and approximately $4.4 million was invested (net book value) by Griffin Land in the undeveloped land there. As of November 30, 2014, ten of Griffin Land's Tradeport buildings were mortgaged for an aggregate of approximately $43.3 million. Two Tradeport buildings built in fiscal 2007 and an older Tradeport building, aggregating, for the three buildings, approximately 373,000 square feet, are currently not mortgaged. A summary of Griffin Land's square footage owned and leased in

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Tradeport at the end of each of the past three fiscal years and leases in Tradeport scheduled to expire during each of the next three fiscal years are as follows:

        Griffin Land has received favorable indications as to the renewal of much of the Tradeport space under leases scheduled to expire in fiscal 2015 as well as receiving favorable indications as to the leasing of some of the vacant space in Tradeport as of November 30, 2014. Subsequent to November 30, 2014, Griffin Land entered into a ten-year lease for approximately 42,000 square feet of previously vacant space in Tradeport. There is no guarantee that such favorable indications will result in the renewal of leases scheduled to expire in fiscal 2015 or in the additional leasing of space that was vacant as of November 30, 2014.

Griffin Center and Griffin Center South

        Griffin Land's other substantial commercial development in Connecticut is the combination of its buildings in Griffin Center in Windsor and Bloomfield, Connecticut and Griffin Center South in Bloomfield. Griffin Land owns approximately 617,000 of the 2,165,000 square feet of developed space in these master planned developments.

Griffin Center

        Within Griffin Center, Griffin Land owns two multi-story office buildings that have an aggregate of approximately 161,000 square feet; a single story office building of approximately 48,000 square feet; a 165,000 square foot industrial building (the "NU Building"), which is used principally as office, data center and call center space; and a small restaurant building.

        In fiscal 2014, a lease for approximately 16,000 square feet in Griffin Center expired and was not renewed, and a tenant that leases approximately 29,000 square feet in one of Griffin Land's multi-story office buildings exercised its early termination option that will terminate its lease in fiscal 2015, two years earlier than the original lease expiration date. Currently there are approximately 207 acres of undeveloped land in Griffin Center owned by Griffin Land. In the fiscal 2014 third quarter, Griffin Land entered into an agreement to sell approximately 29 acres of an approximately 45 acre land parcel of the undeveloped land in Griffin Center for a purchase price of a minimum of $3.25 million, subject

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to adjustment based on the actual number of acres conveyed. Completion of this transaction is subject to significant contingencies, including the satisfactory completion of due diligence by the purchaser (a public educational authority in the state of Connecticut) and the purchaser obtaining a commitment from the State of Connecticut to fund the land acquisition and develop the property as planned by the purchaser. If this sale were to be completed, the development potential of the remaining approximately 16 acres of that land parcel may be severely limited. The due diligence period does not expire until fiscal 2016. There is no guarantee that this transaction will be completed under the current terms, or at all.

        As of November 30, 2014, approximately $17.0 million was invested (net book value) in Griffin Land's buildings in Griffin Center and approximately $0.9 million was invested by Griffin Land in the undeveloped land there. Griffin Land's two multi-story office buildings and the NU Building in Griffin Center are separately mortgaged for an aggregate of approximately $14.1 million, and Griffin Land's single story office building is included as collateral under Griffin's $12.5 million revolving line of credit. There were no borrowings under the revolving line of credit as of November 30, 2014.

        As of November 30, 2014, approximately 357,000 square feet of Griffin Land's buildings in Griffin Center were leased, comprising approximately 93% of Griffin Land's total space in Griffin Center. A summary of Griffin Land's square footage owned and leased in Griffin Center at the end of each of the past three fiscal years and leases in Griffin Center scheduled to expire during each of the next three fiscal years are as follows:

Griffin Center South

        Griffin Land currently owns nine buildings in Griffin Center South with an aggregate of approximately 235,000 square feet, of which approximately 217,000 square feet is single story office and flex space and approximately 18,000 square feet is storage space. In fiscal 2014, Griffin Land leased approximately 38,000 square feet in a Griffin Center South building (approximately 19,000 square feet had been vacant and the balance became vacant when the lease with the previous tenant was terminated early because of the tenant's bankruptcy and subsequently re-leased to a successor company) and renewed three leases with an aggregate of approximately 28,000 square feet.

        As of November 30, 2014, approximately $7.0 million was invested (net book value) in Griffin Land's buildings in Griffin Center South and approximately $0.4 million was invested by Griffin Land in the undeveloped land there. As of November 30, 2014, Griffin Land's nine properties in Griffin Center South are included as collateral under Griffin's $12.5 million revolving line of credit. There were no borrowings under the revolving line of credit as of November 30, 2014. Griffin Land believes that the approximately 66 acres of undeveloped land remaining that it owns in Griffin Center South is sufficient to build at least two additional buildings aggregating approximately 175,000 square feet.

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        As of November 30, 2014, approximately 227,000 square feet of space in the Griffin Center South buildings owned by Griffin Land was leased, comprising 97% of Griffin Land's total space in Griffin Center South. In the fiscal 2014 fourth quarter, Griffin Land received notice from a tenant that has a full building lease for approximately 40,000 square feet in Griffin Center South that it was exercising its early termination option and will terminate its lease in fiscal 2016 (three years earlier than the original lease expiration date). In accordance with the lease terms, Griffin Land received approximately $557,000 from the tenant when the early termination notice was rendered. A summary of Griffin Land's square footage owned and leased in Griffin Center South at the end of each of the past three fiscal years and leases in Griffin Center South scheduled to expire during each of the next three fiscal years are as follows:

Lehigh Valley Industrial Properties and Other Property

Lehigh Valley

        In fiscal 2010, Griffin Land completed its first acquisition of property outside of the Hartford, Connecticut area, when it acquired a fully leased approximately 120,000 square foot industrial building (the "Olympus Building") in Breinigsville, Pennsylvania, which is located in the Lehigh Valley. Subsequent to the purchase of the Olympus Building, Griffin Land and the tenant in that building agreed to a nine year extension of the lease, through 2025. Also in fiscal 2010, Griffin Land acquired approximately 51 acres of undeveloped land in Lower Nazareth, Pennsylvania, a major industrial area of the Lehigh Valley, which Griffin Land named Lehigh Valley Tradeport. The land acquired had approvals for the development of two industrial buildings totaling approximately 530,000 square feet. In fiscal 2012, Griffin Land completed construction, on speculation, of an approximately 228,000 square foot industrial building, the first of two buildings built in Lehigh Valley Tradeport. In fiscal 2013, Griffin Land entered into a five-year full building lease of this building. In fiscal 2014, Griffin Land completed construction, also on speculation, of an approximately 303,000 square foot industrial building, the second of two buildings in Lehigh Valley Tradeport. In the fiscal 2014 fourth quarter, Griffin Land entered into a five-year lease of approximately 201,000 square feet of the most recently completed building in Lehigh Valley Tradeport. Tenant occupancy and lease commencement is expected in the fiscal 2015 first quarter upon completion of tenant improvements. As of November 30, 2014, Griffin Land invested approximately $13.2 million in the development of this new building, not including the land and leasing related costs.

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        As of November 30, 2014, Griffin Land owned three industrial buildings in the Lehigh Valley, the Olympus Building and the two Lehigh Valley Tradeport industrial buildings discussed above, which are collectively approximately 651,000 square feet. Approximately $30.1 million was invested (net book value) in these three buildings as of November 30, 2014. The Olympus Building in Pennsylvania is mortgaged for approximately $3.8 million as of November 30, 2014, and the 228,000 square foot industrial building in Lehigh Valley Tradeport was mortgaged for approximately $8.9 million as of November 30, 2014. On December 31, 2014, Griffin Land refinanced the existing mortgage loan on its Lehigh Valley Tradeport building into a new mortgage loan on both of its Lehigh Valley Tradeport buildings that generated additional mortgage proceeds of approximately $10.9 million. An additional $1.9 million of mortgage proceeds will be received when a portion of the vacant space in the most recently completed Lehigh Valley Tradeport industrial building is leased.

        In fiscal 2013, Griffin Land acquired a 49 acre parcel of undeveloped land in Hanover Township, Pennsylvania, also in the Lehigh Valley, and in fiscal 2014 Griffin Land acquired an additional adjacent one acre of undeveloped land. The total cost of these parcels was approximately $7.6 million. The funds used to acquire the 49 acre parcel were principally the proceeds from the Dollar Tree Sale in fiscal 2012 that were used to acquire a replacement property as part of a like-kind exchange under Section 1031 of the Internal Revenue Code of 1986, as amended. In the latter part of fiscal 2014, Griffin Land started construction on an approximately 280,000 square foot industrial building, the first of two industrial buildings approved for this site that is expected to have a total of approximately 530,000 square feet of industrial space when fully developed. Subsequent to the end of fiscal 2014, Griffin Land entered into a five-year lease for approximately 196,000 square feet of the building being built. The tenant has an option to lease the balance of the building as specified under the terms of the lease. Griffin Land expects the completion of construction of this building and commencement of the lease to take place in the third quarter of fiscal 2015.

Other Property

        Griffin Land owns a 31,000 square foot warehouse building (fully leased) in Bloomfield, Connecticut on an approximately 5 acre site that is part of an approximately 253 acre land parcel known as Phoenix Crossing, located partly in Bloomfield and partly in Windsor, Connecticut. In fiscal 2013, Griffin Land sold approximately 90 acres of the Phoenix Crossing land in the Windsor Land Sale. Griffin Land owns the remaining approximately 159 acres of undeveloped land in Phoenix Crossing which is zoned for industrial and commercial development.

        A summary of Griffin Land's square footage owned and leased in Griffin Land's Lehigh Valley Industrial Properties and Other Property at the end of each of the past three fiscal years and leases in Griffin Land's Lehigh Valley Industrial Properties and Other Property scheduled to expire during each of the next three fiscal years are as follows:

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        Griffin Land may seek to acquire additional properties and/or undeveloped land parcels to expand the industrial/warehouse portion of its real estate business. Griffin Land continues to examine potential properties in the northeast and mid-Atlantic areas for potential acquisition.

Residential Developments

Simsbury

        Several years ago, Griffin Land filed plans for the creation of a residential community, called Meadowood, on a 363 acre site in the Town of Simsbury, Connecticut ("Simsbury"). After several years of litigation with the town regarding this proposed residential development, a settlement was reached. The settlement terms included, among other things, approval for up to 296 homes, certain remediation measures and offsite road improvements to be performed by Griffin Land and the purchase by Simsbury of a portion of the Meadowood land for open space. The sale of land to Simsbury closed in fiscal 2008. In fiscal 2012, Griffin Land performed a portion of the required remediation work on the site and completed the required offsite road improvements. In fiscal 2014, Griffin Land completed the required remediation work. As of November 30, 2014, the book value of the land for this development, including design, development and legal costs, was approximately $8.5 million. Griffin Land anticipates seeking offers for this property.

        Griffin Land owns another approximate 432 acres of undeveloped land in Simsbury, portions of which are zoned for residential use and other portions of which are zoned for industrial use. Not all of this land is developable. The land currently zoned for industrial use is probably more suited to commercial or mixed-use development. Griffin Land may seek to develop or sell such land.

Suffield

        In fiscal 2006, Griffin Land completed the infrastructure for a fifty lot residential subdivision in Suffield, Connecticut called Stratton Farms. Griffin Land sold twenty-five residential lots in Stratton Farms to a local homebuilder in fiscal 2006 and fiscal 2007. In fiscal 2010, Griffin Land entered into an agreement with a privately owned regional homebuilder under which in exchange for a payment of $100,000, the homebuilder obtained an option to purchase the remaining twenty-five residential lots of Stratton Farms. The option agreement terminated after four lots were sold. Subsequently, Griffin Land sold one Stratton Farms residential lot in fiscal 2013. As of November 30, 2014, Griffin Land held twenty Stratton Farms residential lots. The book value for Griffin Land's Stratton Farms holdings was approximately $1.1 million at November 30, 2014.

Other

        In fiscal 2014, Griffin Land leased approximately 424 acres of undeveloped land in Connecticut and Massachusetts to local farmers. Approximately 512 acres and 542 acres were leased to local farmers in fiscal 2013 and fiscal 2012, respectively. The revenue generated from the leasing of farmland is not material to Griffin Land's total revenue.

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        Griffin Land is evaluating its other properties for development or sale in the future. Griffin Land anticipates that obtaining subdivision approvals for residential development in many of the towns where it owns residentially-zoned land will be an extended process.

Landscape Nursery Business

        Griffin and Imperial entered into a Purchase Agreement with Monrovia, effective January 8, 2014, pursuant to which Imperial's inventory and certain of its assets were sold to Monrovia for approximately $0.7 million in cash (before transaction and severance costs) and a non-interest bearing note receivable (the "Promissory Note") of $4.25 million that is secured by an irrevocable letter of credit. A payment of $2.75 million on the Promissory Note was received on June 1, 2014 and the balance of $1.5 million is due on June 1, 2015. Pursuant to the terms of the Imperial Sale, Griffin and Imperial agreed to indemnify Monrovia for any potential environmental liabilities relating to periods prior to the effective date of the Purchase Agreement.

        Concurrently with the completion of the Imperial Sale, Imperial and River Bend Holdings, LLC, a wholly owned subsidiary of Griffin, entered into the Imperial Lease with Monrovia, pursuant to which Monrovia agreed to lease Imperial's Connecticut production nursery for a ten-year period, with an option to extend for up to an additional fifteen years exercisable by Monrovia. The Imperial Lease provides for a net annual rent payable to Griffin of $500,000 for each of the first five years, with rent for subsequent years determined in accordance with the Imperial Lease. The Imperial Lease also grants Monrovia an option to purchase the land, land improvements and other operating assets that were used by Imperial in its Connecticut growing operations, during the first thirteen years of the lease period for $10.5 million, or $7.0 million if only a certain portion of the land is purchased, subject in each case to certain adjustments as provided for in the Imperial Lease.

        Imperial's Florida farm is also being leased to another private company grower of landscape nursery plants. Imperial shut down its growing operations on its Florida farm in 2009 and entered into a six-year lease of that facility. The annual rent payable is $600,000 and that lease is scheduled to expire on July 31, 2015. The tenant has an option to purchase the facility any time during the lease term.

Investments

Centaur Media plc

        Centaur Media plc ("Centaur Media") is a publicly traded company listed on the London Stock Exchange. As of November 30, 2014, Griffin held 1,952,462 shares of Centaur Media and accounts for its investment in Centaur Media as an available-for-sale security. Accordingly, changes in the fair value of Griffin's investment in Centaur Media, including both changes in the stock price and changes in the foreign currency exchange rate, are not included in Griffin's net income but are included in Griffin's other comprehensive income. In fiscal 2014, Griffin sold 500,000 shares of its Centaur Media common stock for total cash proceeds of approximately $566,000.

Shemin Nurseries Holding Corp.

        Shemin Nurseries Holding Corp. ("SNHC") is a privately held company that operates a landscape nursery distribution business. At the beginning of fiscal 2013, Griffin held an approximately 14% equity interest in SNHC and accounted for its investment in SNHC under the cost method of accounting for investments. In fiscal 2013, Griffin sold its entire investment in SNHC for cash proceeds of approximately $3.4 million.

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Employees

        As of November 30, 2014, Griffin employed 26 people on a full-time basis. Presently, none of Griffin's employees are represented by a union. Griffin believes that its relations with its employees are satisfactory.

Competition

        Numerous real estate developers operate in the portions of Connecticut, Massachusetts and the Lehigh Valley region of Pennsylvania in which Griffin's real estate holdings are concentrated. Some of these competitors have greater financial resources than Griffin. Griffin's real estate business competes on the bases of location, price, availability of space, convenience and amenities.

Regulation: Environmental Matters

        Under various federal, state and local laws, ordinances and regulations, an owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances or petroleum product releases at such property and may be held liable to a governmental entity or to third parties for property damage and for investigation and clean-up costs incurred by such parties in connection with contamination. The cost of investigation, remediation or removal of such substances may be substantial, and the presence of such substances, or the failure to remediate properly such substances, may adversely affect the owner's ability to sell or rent such property or to borrow using such property as collateral. In connection with the ownership (direct or indirect), operation, management and development of real estate properties, Griffin Land may be considered an owner or operator of such properties or as having arranged for the disposal or treatment of hazardous or toxic substances and, therefore, potentially liable for removal or remediation costs, as well as certain other related costs, including governmental fines and injuries to persons and property. The value of Griffin's land may be affected by the presence of residual chemicals from the prior use of the land for farming, principally on a portion of the land that is intended for residential use. In the event that Griffin Land is unable to remediate adequately any of its land intended for residential use, Griffin Land's ability to develop such property for its intended purposes would be materially affected.

        Griffin Land periodically reviews its properties for the purpose of evaluating such properties' compliance with applicable state and federal environmental laws. In connection with the Imperial Transaction, Griffin has incurred a small amount of costs to remediate a small area of the Connecticut farm that is leased to Monrovia under the Imperial Lease. At this time, Griffin Land does not anticipate experiencing, in the next twelve months, any material expense in complying with such laws. Griffin Land may incur remediation costs in the future in connection with its development operations. Such costs are not expected to be significant as compared to expected proceeds from development projects or property sales.

ITEM 1A.    RISK FACTORS.

        Griffin's real estate business has a number of risk factors. The risk factors discussed below are those that management deems to be material, but they may not be the only risks facing Griffin. Additional risks not currently known or currently deemed not to be material may also impact Griffin.

Adverse Economic Conditions and Credit Markets

        Griffin Land's real estate business may be affected by market conditions and economic challenges experienced by the U.S. economy as a whole, conditions in the credit markets or by local economic

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conditions in the markets in which its properties are located. Such conditions may impact Griffin's results of operations, financial condition or ability to expand its operations as a result of the following:

•

The financial condition of Griffin Land's tenants may be adversely affected, which may result in tenant defaults under leases due to bankruptcy, lack of liquidity, operational failures or for other reasons;



•

Significant job losses may occur, which may decrease demand for Griffin Land's office and industrial space, causing market rental rates and property values to be negatively impacted;



•

Griffin's ability to borrow on terms and conditions that it finds acceptable, or at all, may be limited, which could reduce its ability to pursue acquisition and development opportunities, refinance existing debt, and/or increase future interest expense;



•

Reduced values of Griffin Land's properties may limit its ability to obtain debt financing collateralized by its properties or may limit the proceeds from such potential financings; and



•

A weak economy may limit sales of land intended for commercial/industrial use.

Downturn in the Residential Real Estate Market

        Weakness in the residential real estate market may adversely affect Griffin Land's residential real estate development activities, including delaying the development and/or sale of Griffin Land's undeveloped land intended for residential use. The continued weakness of the residential real estate market could result in lower selling prices for Griffin Land's land intended for residential use or delay the sale of such land.

Risks Associated with Concentration of Real Estate Holdings

        Griffin Land's real estate operations are concentrated primarily in the Hartford, Connecticut area, with additional operations in the Lehigh Valley of Pennsylvania. Adverse changes in the local economies, state or local governmental regulations or real estate markets, including the market's ability to absorb newly constructed space, could impact Griffin Land's real estate operations including Griffin Land's ability to re-tenant vacant space and have an adverse effect on rental rates.

        Griffin Land's real estate operations compete with other properties in the areas where it operates. The construction of new facilities by competitors would increase capacity in the marketplace, and an increase in the amount of vacancies in competitors' properties and negative absorption of space could result in Griffin Land experiencing longer times to lease vacant space, eroding lease rates or hindering renewals by existing tenants.

Risks Associated with Entering New Real Estate Markets

        In fiscal 2010, Griffin Land acquired a fully-leased approximately 120,000 square foot industrial building in Breinigsville, Pennsylvania and a 51 acre parcel of undeveloped land in Lower Nazareth, Pennsylvania, known as Lehigh Valley Tradeport. Subsequently, Griffin Land built, on speculation, two industrial buildings in Lehigh Valley Tradeport and has started construction of another industrial building on approximately 50 acres of undeveloped land in Hanover Township, Pennsylvania that was acquired in fiscal 2013 and fiscal 2014. These acquisitions were Griffin Land's first purchases of properties outside of the Hartford, Connecticut market where Griffin Land's core real estate holdings are located. Griffin Land expects to continue to seek to acquire properties outside of the Hartford, Connecticut market. Operating in a real estate market that is new for Griffin Land creates additional risks and uncertainties to Griffin's operations.

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Potential Environmental Liabilities

        Griffin Land has extensive land holdings in Connecticut and Massachusetts and, in fiscal 2010, started acquiring properties in the Lehigh Valley of Pennsylvania. Under federal, state and local environmental laws, ordinances and regulations, Griffin Land may be required to investigate and clean up the effects of releases of hazardous substances or petroleum products at its properties because of its current or past ownership or operation of the real estate. If previously unidentified environmental problems arise, Griffin Land may have to make substantial payments, which could adversely affect its cash flow. As an owner or operator of properties, Griffin Land may have to pay for property damage and for investigation and clean-up costs incurred in connection with a contamination. The law typically imposes clean-up responsibility and liability regardless of whether the owner or operator knew of or caused the contamination. Changes in environmental regulations may impact the development potential of Griffin Land's undeveloped land or could increase operating costs due to the cost of complying with new regulations.

Governmental Regulations

        Griffin Land's real estate operations are subject to governmental regulations that affect real estate development, such as local zoning ordinances. Any changes in such regulations may impact the ability of Griffin Land to develop its properties or increase Griffin Land's costs of development. Subdivision and other residential development may also be affected by the potential adoption of initiatives meant to limit or concentrate residential growth. Commercial and industrial development activities of Griffin Land's undeveloped land may also be affected by traffic considerations, potential environmental issues, community opposition and other restrictions to development imposed by governmental agencies.

Insurance Coverage Does Not Include All Potential Losses in the Real Estate Business

        Griffin Land carries comprehensive insurance coverage, including property, fire, terrorism and loss of rental revenue. The insurance coverage contains policy specifications and insured limits. Griffin Land believes its properties are adequately insured. However, there are certain losses that are not generally insured against or that are not fully insured against. If an uninsured loss or a loss in excess of insured limits occurs with respect to one or more of Griffin Land's properties, Griffin Land could experience a significant loss of capital invested and potential revenue from the properties affected.

Risks Associated with the Cost of Raw Materials and Energy Costs

        Griffin Land's construction activities could be adversely affected by increases in raw materials or energy costs. As petroleum and other energy costs increase, products used in the construction of Griffin Land's facilities, such as steel, masonry, asphalt, cement and building products may increase. An increase in the cost of building new facilities could negatively impact Griffin Land's future operating results through increased depreciation expense. An increase in construction costs would also require increased investment in Griffin Land's real estate assets, which may lower the return on investment in new facilities in the real estate business. An increase in energy costs could increase Griffin Land's building operating expenses and thereby lower Griffin Land's operating results.

Investment in a Foreign Company

        Griffin has an investment in Centaur Media plc, a public company based in the United Kingdom. The ultimate liquidation of that investment and conversion of proceeds into United States currency is subject to future foreign currency exchange rates.

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Griffin is Subject to Litigation That May Adversely Impact Operating Results

        Griffin is, and may in the future be, a party to a number of legal proceedings and claims arising in the ordinary course of business which could become significant. Given the inherent uncertainty of litigation, we can offer no assurance that a future adverse development related to existing litigation or any future litigation will not have a material adverse impact on Griffin's business, consolidated financial position, results of operations or cash flows.

The Concentrated Ownership of Griffin Common Stock by Members of the Cullman and Ernst Families

        Members of the Cullman and Ernst families (the "Cullman and Ernst Group"), which include Frederick M. Danziger, Griffin's Chairman and Chief Executive Officer, Michael S. Gamzon, Griffin's President and Chief Operating Officer, David M. Danziger, a director of Griffin and John J. Kirby, Jr., a director of Griffin who is married to a member of the Cullman family, members of their families and trusts for their benefit, partnerships in which they own substantial interests and charitable foundations on whose boards of directors they sit, owned, directly or indirectly, approximately 45.9% of the outstanding common stock of Griffin as of November 30, 2014. There is an informal understanding that the persons and entities included in the Cullman and Ernst Group will vote together the shares owned by each of them. As a result, the Cullman and Ernst Group may effectively control the determination of Griffin's corporate and management policies and may limit other Griffin stockholders' ability to influence Griffin's corporate and management policies.

ITEM 1B.    UNRESOLVED STAFF COMMENTS.

        Not applicable.

ITEM 2.    PROPERTIES.

Land Holdings

        Griffin is a major landholder in the state of Connecticut, owning approximately 2,960 acres. Griffin also owns approximately 422 acres of land in Massachusetts, approximately 117 acres of land in Pennsylvania and approximately 1,066 acres in northern Florida. Griffin believes the fair market value of such land is substantially in excess of its book value.

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        Listings of the locations of Griffin's land holdings, a portion of which, principally in Bloomfield, East Granby and Windsor, Connecticut and Breinigsville, Lower Nazareth Township and Hanover Township, Pennsylvania have been (or are being) developed, are as follows:

Land Holdings

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Developed Properties

        As of November 30, 2014, Griffin Land owned thirty-one buildings, comprised of nineteen industrial/warehouse buildings, eleven office/flex buildings and a small restaurant building. A listing of those facilities is as follows:

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        As with many companies engaged in real estate investment and development, Griffin holds its real estate portfolio subject to mortgage debt. See Note 8 to Griffin's consolidated financial statements for information concerning the mortgage debt associated with Griffin's properties.

ITEM 3.    LEGAL PROCEEDINGS.

        Griffin is involved, as a defendant, in various litigation matters arising in the ordinary course of business. In the opinion of management, based on the advice of legal counsel, the ultimate liability, if any, with respect to these matters is not expected to be material to Griffin's financial position, results of operations or cash flows.

ITEM 4.    MINE SAFETY DISCLOSURES.

        Not applicable.

PART II

ITEM 5.    MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market Information

        The following are the high and low prices of common shares of Griffin Land & Nurseries, Inc. as traded on The NASDAQ Stock Market LLC:

        On February 6, 2015, the number of record holders of common stock of Griffin was approximately 197 which does not include beneficial owners whose shares are held of record in the names of brokers or nominees. The closing market price as quoted on The NASDAQ Stock Market LLC on such date was $31.62 per share.

Dividend Policy

        Griffin's dividend policy is to consider the payment of an annual dividend at the end of its fiscal year, which enables the Board of Directors to evaluate both Griffin's prior full year results and its cash needs for the succeeding year when determining whether to declare an annual dividend. In fiscal 2014 and fiscal 2013, Griffin declared an annual dividend of $0.20 per share in each year.

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Stock Performance Graph

        The following graph compares the total percentage changes in the cumulative total stockholder return (assuming the reinvestment of dividends) on Griffin's Common Stock with the cumulative total return of the Russell 2000 Index from November 28, 2009 to November 30, 2014. It is assumed in the graph that the value of each investment was $100 at November 28, 2009. Griffin is not aware of any other company that substantially participated in both the landscape nursery and real estate businesses during that period, and would therefore be suitable for comparison to Griffin as a "peer issuer" within Griffin's lines of business.

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ITEM 6.    SELECTED FINANCIAL DATA.

        The following table sets forth selected statement of operations data for fiscal years 2010 through 2014 and balance sheet data as of the end of each fiscal year. The selected statement of operations data for fiscal 2012, fiscal 2013 and fiscal 2014 and the selected balance sheet data for fiscal 2013 and fiscal 2014 are derived from the audited consolidated financial statements included in Item 8 of this report. The selected statement of operations data for fiscal 2010 and fiscal 2011 and the balance sheet data for fiscal 2010, fiscal 2011 and fiscal 2012 were derived from the audited consolidated financial statements for those years. This selected financial data should be read in conjunction with the consolidated financial statements and accompanying notes, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and other financial information included elsewhere in this Annual Report. Historical results are not necessarily indicative of future performance.

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ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Overview

        The consolidated financial statements of Griffin Land & Nurseries, Inc. ("Griffin") reflect Griffin's real estate business which is conducted through its wholly-owned subsidiary, Griffin Land, LLC ("Griffin Land"), and Griffin's wholly-owned subsidiary in the landscape nursery business, Imperial Nurseries, Inc. ("Imperial"). Imperial's growing operations are reflected as a discontinued operation in Griffin's consolidated financial statements for all periods presented as a result of the sale (the "Imperial Sale") of Imperial's growing operations to Monrovia Connecticut LLC ("Monrovia") and the lease of Imperial's Connecticut farm to Monrovia (the "Imperial Lease", and together with the Imperial Sale, the "Imperial Transaction") that was effective January 8, 2014. In addition to the growing operations of Imperial, Griffin's results of discontinued operations also include the operating results and gain on the sale of the warehouse building that was owned by Griffin Land and sold in fiscal 2012.

        The notes to Griffin's consolidated financial statements included in Item 8 of this Annual Report contain a summary of the significant accounting policies and methods used in the preparation of Griffin's consolidated financial statements. In the opinion of management, because of the relative magnitude of Griffin's real estate assets, accounting methods and estimates related to those assets are critical to the preparation of Griffin's consolidated financial statements. Griffin uses accounting policies and methods under accounting principles generally accepted in the United States of America ("U.S. GAAP"). The following are the critical accounting estimates and methods used by Griffin:

        Income taxes:    In accounting for income taxes under Financial Accounting Standards Board ("FASB") ASC 740, "Income Taxes," management estimates future taxable income from operations, the sale of appreciated assets, the remaining years before the expiration of loss credit carryforwards, future reversals of existing temporary differences and tax planning strategies in determining if it is more likely than not that Griffin will realize the benefits of its deferred tax assets.

        Impairment of long-lived assets:    Griffin reviews annually, as well as when conditions may indicate, its long-lived assets to determine if there are any indications of impairment, such as a prolonged vacancy in one of Griffin Land's rental properties. If indications of impairment are present, Griffin evaluates the carrying value of the assets in relation to undiscounted cash flows or the estimated fair value of the underlying assets. In connection with Griffin's real estate business, development costs that have been capitalized are reviewed periodically for future recoverability.

        Revenue and gain recognition:    In the real estate business, revenue includes rental revenue from Griffin Land's commercial and industrial properties and proceeds from property sales. Rental revenue is accounted for on a straight-line basis over the applicable lease term in accordance with the Lease Topic (FASB ASC 840). Gains on property sales are recognized in accordance with the Property, Plant and Equipment—Real Estate Sales Topic (FASB ASC 360-20) based on the specific terms of each sale. When the percentage of completion method is used to account for a sale of real estate, costs included in determining the percentage of completion include the costs of the land sold, allocated master planning costs, selling and transaction costs and estimated future costs related to the land sold.

        Stock based compensation:    Griffin determines stock based compensation based on the estimated fair values of stock options as determined on their grant dates using the Black-Scholes option-pricing model. In determining the estimated fair values of stock options issued, Griffin makes assumptions on expected volatility, risk free interest rates, expected option terms and dividend yields.

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        Derivative instruments:    Griffin evaluates each interest rate swap agreement to determine if it qualifies as an effective cash flow hedge. Changes in the fair value of each interest rate swap agreement that management determines to be an effective cash flow hedge are recorded as a component of other comprehensive income. The fair value of each interest rate swap agreement is determined based on observable market participant data, such as yield curves, as of the fair value measurement date.

Summary

        In fiscal 2014, Griffin incurred a net loss of approximately $1.1 million as compared to a net loss of approximately $5.8 million in fiscal 2013. The lower net loss in fiscal 2014 as compared to fiscal 2013 reflects a significant loss from discontinued operations in fiscal 2013 and a loss from continuing operations in fiscal 2014 as compared to income from continuing operations in fiscal 2013. Griffin incurred a loss from continuing operations of approximately $1.2 million in fiscal 2014 as compared to income from continuing operations of approximately $1.9 million in fiscal 2013. The lower results from continuing operations in fiscal 2014 as compared to fiscal 2013 is due in large part to a decrease in the gain from investment sales and lower gain on land sales in fiscal 2014 as compared to fiscal 2013, partially offset by lower general and administrative expenses in fiscal 2014 as compared to fiscal 2013. Rental revenue less the operating expenses of rental properties increased from approximately $12.6 million in fiscal 2013 to approximately $12.8 million in fiscal 2014.

        Griffin's discontinued operations in fiscal 2014 and fiscal 2013 reflect the results of the growing operations of Imperial's landscape nursery business. The results from discontinued operations in fiscal 2012 reflect Imperial's landscape nursery growing operations along with the results of operations and gain on the sale of Griffin Land's 308,000 square foot warehouse building in January 2012. The loss from discontinued operations in fiscal 2013 principally reflects a pretax charge of $10.4 million to reduce the carrying value of Imperial's inventories to its fair value, which was the net realizable value based on the terms of the Imperial Sale.

Results of Operations

Fiscal 2014 Compared to Fiscal 2013

        Total revenue decreased from approximately $25.5 million in fiscal 2013 to approximately $24.2 million in fiscal 2014, reflecting a decrease of approximately $1.8 million in revenue from property sales, partially offset by an increase of approximately $0.5 million in rental revenue in fiscal 2014 as compared to fiscal 2013.

        The net increase of approximately $0.5 million in rental revenue in fiscal 2014 as compared to fiscal 2013 reflects occupancy changes that resulted in: (a) an increase of approximately $1.8 million of rental revenue from leasing previously vacant space; (b) approximately $0.5 million in revenue from the Imperial Lease; and (c) an increase of approximately $0.1 million in revenue from work done for tenants; partially offset by (d) a decrease in rental revenue of approximately $1.9 million from leases that expired and were not renewed. The increase in rental revenue due to leasing previously vacant space includes an increase in rental revenue of approximately $0.9 million from the full building lease of the 228,000 square foot industrial building in the Lehigh Valley of Pennsylvania that was completed in fiscal 2012 and leased in the third quarter of fiscal 2013.

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        A summary of the square footage of Griffin Land's real estate portfolio is as follows:

        The increase in total square footage as of November 30, 2014 as compared to November 30, 2013 reflects the completion in fiscal 2014 of an approximately 303,000 square foot industrial building in the Lehigh Valley of Pennsylvania that was built on speculation. This building is located adjacent to the 228,000 square foot building built in fiscal 2012 and fully leased in fiscal 2013. These two industrial buildings comprise Lehigh Valley Tradeport, which was developed on land acquired in fiscal 2010. In the fiscal 2014 fourth quarter, Griffin Land entered into a five year lease for approximately 201,000 square feet in the recently completed industrial building in Lehigh Valley Tradeport.

        The increase in leased square footage as of November 30, 2014 as compared to November 30, 2013 principally reflects the leasing of approximately 201,000 square feet described above and a full building lease of an approximately 138,000 square foot building within New England Tradeport ("Tradeport"), Griffin Land's industrial park located in Windsor and East Granby, Connecticut with a tenant that is presently leasing an approximately 57,000 Tradeport industrial building under a short-term lease after its long-term lease in that building expired on August 31, 2014. Griffin Land expects the tenant to terminate the current short-term lease in fiscal 2015. In addition, the increase in space leased also reflects an increase of approximately 47,000 square feet leased to Tire Rack, Inc. ("Tire Rack") in a Tradeport industrial building. Under the terms of the existing lease with Tire Rack, effective August 1, 2014, the start of the sixth year of its lease, Tire Rack was required to lease the entire Tradeport building in which they are located. The balance of the change in leased square footage as of November 30, 2014 as compared November 30, 2013 reflects leasing approximately 31,000 square feet of previously vacant industrial/warehouse space and the expiration of leases aggregating approximately 43,000 square feet that were not renewed. The leasing market where Griffin's Connecticut properties are located (the north submarket of Hartford) remained competitive throughout fiscal 2014. Activity by prospective tenants was muted during most of fiscal 2014; however, there was an increase in inquiries from prospective tenants in the latter part of the year. Griffin Land has received favorable indications as to the renewal of much of the approximately 326,000 square feet of space in Tradeport under leases that are scheduled to expire in fiscal 2015 as well as to the leasing of a portion of the vacant space in Tradeport as of November 30, 2014. Subsequent to November 30, 2014, Griffin Land entered into a ten-year lease for approximately 42,000 square feet of previously vacant space in Tradeport. There is no guarantee that such favorable indications will result in the renewal of leases scheduled to expire in fiscal 2015 or that the recent increase in inquiries from prospective tenants or favorable indications as to the leasing of vacant space in Tradeport as of November 30, 2014 will result in the additional leasing of space that was vacant as of November 30, 2014.

        Revenue from property sales decreased from approximately $5.5 million in fiscal 2013 to approximately $3.7 million in fiscal 2014. Property sales revenue in fiscal 2014 includes the recognition of approximately $3.1 million of revenue related to the sale of approximately 90 acres of undeveloped land in Windsor, Connecticut (the "Windsor Land Sale") for cash proceeds of approximately $9.0 million (before transaction expenses) that closed in fiscal 2013. Under the terms of the Windsor Land Sale, Griffin Land is required to construct roadways that will connect the land sold to existing town roadways. Accordingly, because of Griffin Land's continuing involvement with the land that was sold, the Windsor Land Sale is being accounted for under the percentage of completion method. Through fiscal 2014, Griffin Land has recognized approximately $5.8 million of the approximately $9.0 million of total revenue that will be recognized on the Windsor Land Sale when all of the required road work is completed. The balance of the revenue from the Windsor Land Sale will be recognized as

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the costs of the required road construction are incurred, which is expected to be mostly by the second quarter of fiscal 2015. In addition to the revenue recognized from the Windsor Land Sale, property sales revenue in fiscal 2014 also included approximately $0.6 million from the sale of a land parcel that was once part of Imperial's growing operations in Connecticut but was not part of the Imperial Lease.

        Revenue from property sales in fiscal 2013 included: (a) approximately $2.7 million from the initial recognition of revenue from the Windsor Land Sale; (b) approximately $2.5 million from the recognition of revenue from the sale of approximately 93 acres of undeveloped land in Tradeport to Dollar Tree Distribution, Inc. (the "Dollar Tree Sale") that closed in fiscal 2012; and (c) approximately $0.3 million from two sales of small parcels of undeveloped land. Under the terms of the Dollar Tree Sale, Griffin Land was required to construct a sewer line to service the property sold. Accordingly, because of Griffin Land's continuing involvement with the land that was sold, Griffin Land accounted for the Dollar Tree Sale using the percentage of completion method, under which the revenue and the gain on sale were recognized as the total costs related to the property sale were incurred. All of the revenue from the Dollar Tree Sale was recognized as of the end of fiscal 2013 as the required construction of the sewer line was completed. Property sales occur periodically, and changes in revenue from year to year from those transactions may not be indicative of any trends in Griffin's real estate business.

        Operating expenses of rental properties increased from approximately $7.5 million in fiscal 2013 to approximately $7.8 million in fiscal 2014. The net increase of approximately $0.3 million principally reflects an increase of approximately $0.2 million in property maintenance expenses, principally snow removal, and increases in real estate taxes and utility expenses aggregating approximately $0.2 million in fiscal 2014 as compared to fiscal 2013, partially offset by a net decrease of approximately $0.1 million in all other expenses. The increase in snow removal expenses reflected more severe winter weather in fiscal 2014 as compared to fiscal 2013. The increase in real estate taxes principally reflects real estate taxes being fully assessed on the 228,000 square foot industrial building in the Lehigh Valley that was completed in fiscal 2012 and fully leased in fiscal 2013.

        Depreciation and amortization expense was approximately $6.7 million in both fiscal 2013 and fiscal 2014. Depreciation and amortization expense increased by approximately $0.2 million in fiscal 2014 as compared to fiscal 2013 due to tenant improvements on the full building lease of the 228,000 square foot industrial building in the Lehigh Valley that commenced in fiscal 2013 and approximately $0.2 million related to the approximately 303,000 square foot industrial building in the Lehigh Valley that was completed and placed in service in fiscal 2014. These increases were essentially offset by decreases in depreciation and amortization expense on tenant improvements of approximately $0.3 million related to leases that expired and approximately $0.1 million for real estate assets becoming fully depreciated.

        Griffin's general and administrative expenses decreased from approximately $7.8 million in fiscal 2013 to approximately $7.1 million in fiscal 2014. The lower general and administrative expenses in fiscal 2014 as compared to fiscal 2013 principally reflect a decrease of approximately $0.5 million of expenses related to Griffin's non-qualified deferred compensation plan and a decrease in donation and contributions expense of approximately $0.2 million, partially offset by a net increase of approximately $0.1 million in all other general and administrative expenses. The decrease in expenses of the non-qualified deferred compensation plan reflects the effect on participant balances of generally lower stock market performance during fiscal 2014 as compared to fiscal 2013.

        Griffin's total gain from the sale of investments decreased from approximately $4.5 million in fiscal 2013 to approximately $0.3 million in fiscal 2014. In fiscal 2013, the gain reflected the sale of Griffin's investment in Shemin Nurseries Holding Corp. ("SNHC") and the sale of a portion of Griffin's holdings in Centaur Media plc ("Centaur Media"). In fiscal 2013, Griffin completed the sale of its investment in SNHC and received cash proceeds of approximately $3.4 million. Because of the low

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carrying cost of its investment in SNHC, Griffin's gain on sale was also approximately $3.4 million. Also in fiscal 2013, Griffin sold 2,824,688 shares of its common stock of Centaur Media for cash proceeds of approximately $2.5 million and a gain of approximately $1.1 million. In fiscal 2014, Griffin's approximately $0.3 million gain from the sale of investments reflected the sale of 500,000 shares of its common stock in Centaur Media for cash proceeds of approximately $0.6 million. As of November 30, 2014, Griffin held 1,952,462 shares of Centaur Media common stock. Management expects that it will continue to sell its Centaur Media common stock when it believes that sales terms and conditions are favorable.

        Griffin's interest expense decreased from approximately $3.8 million in fiscal 2013 to approximately $3.5 million in fiscal 2014. The decrease of approximately $0.3 million in fiscal 2014 as compared to fiscal 2013 is principally due to: (a) approximately $0.6 million of interest capitalized in fiscal 2014 as compared to approximately $0.1 million of interest capitalized in fiscal 2013; and (b) a decrease of approximately $0.1 million of interest expense on mortgage loans outstanding in both periods, due to the payment of principal; partially offset by (c) an increase of approximately $0.3 million of interest expense related to a full year's interest in fiscal 2014 from a nonrecourse mortgage loan on the 228,000 square foot industrial building in the Lehigh Valley that was outstanding for only one fiscal quarter in fiscal 2013.

        Griffin's loss on debt extinguishment decreased from approximately $0.3 million in fiscal 2013 to approximately $0.1 million in fiscal 2014. In fiscal 2013, Griffin incurred a loss on debt extinguishment related to a loan modification agreement on a mortgage loan with First Niagara Bank ("First Niagara") due in January 2020 (the "2020 First Niagara Mortgage"). On April 1, 2013, Griffin Land and First Niagara entered into an agreement that reduced the interest rate on the 2020 First Niagara Mortgage from a fixed rate of 5.25% to a variable rate of the one month LIBOR rate plus 2.5%. Because the difference between the present value of future payments under the existing loan was greater than 10% of the present value of the payments under the modified loan, the loan modification was accounted for as a debt extinguishment. As such, all deferred costs related to the existing 2020 First Niagara Mortgage (approximately $0.2 million) and the fee paid to First Niagara for the loan modification (approximately $0.1 million) are reflected as a loss on debt extinguishment. Concurrent with that agreement, Griffin also entered into an interest rate swap agreement with First Niagara to fix the interest rate on the 2020 First Niagara Mortgage at 3.91% for the remainder of the loan term.

        The loss on debt extinguishment in fiscal 2014 was related to the refinancing of two nonrecourse mortgage loans by two of Griffin's subsidiaries with Farm Bureau Life Insurance Company ("Farm Bureau"). The mortgage loans that were refinanced had original maturity dates of April 1, 2016 and October 1, 2017 and interest rates of 8.13% and 7.0%, respectively. The refinancings generated additional mortgage proceeds, reduced the interest rates to 5.09% for both mortgage loans and extended the maturities of both mortgage loans for fifteen years from the date of the refinancing. The two loan refinancings with Farm Bureau were also accounted for as debt extinguishments and new financings. As such, all deferred costs related to the existing mortgage loans with Farm Bureau are reflected as a loss on debt extinguishment in Griffin's fiscal 2014 consolidated statement of operations.

        Griffin's effective tax rate was (8.3%) in fiscal 2014 as compared to 34.2% in fiscal 2013. The change in effective tax rate in fiscal 2014 as compared to fiscal 2013 principally reflects the effect in fiscal 2014 of reductions to certain state income tax benefits based on management's projections of the expected realization rate that those state tax benefits will provide to Griffin. As a result of such adjustments, the amount of the state income tax provision exceeded the federal income tax benefit, resulting in an overall income tax provision for fiscal 2014. To the extent that actual results differ from current projections, the projected realization rate would be different than the rate presently being used.

        Income from discontinued operations, net of tax, of approximately $0.1 million in fiscal 2014 principally reflects the effect of the termination of Griffin's postretirement benefits program and

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reclassification of actuarial gains previously reflected in other comprehensive income into net income, partially offset by the loss from the growing operations of the landscape nursery business through the date of the Imperial Sale and the loss on the Imperial Sale. As substantially all of the former participants in Griffin's postretirement benefits program were formerly employed in the growing operations of the landscape nursery business that is now reported as a discontinued operation, most of the amount of the reclassification of the actuarial gains is included in the results of discontinued operations in fiscal 2014. The loss from discontinued operations, net of tax, of approximately $7.7 million in fiscal 2013 principally reflects the loss from the growing operations of the landscape nursery business in fiscal 2013, including a pretax charge of $10.4 million to reduce inventory that was sold in the Imperial Sale to fair value, which was the net realizable value based on the terms of the Imperial Sale.

Fiscal 2013 Compared to Fiscal 2012

        Griffin's revenue increased from approximately $24.2 million in fiscal 2012 to approximately $25.5 million in fiscal 2013, reflecting an increase of approximately $1.6 million in rental revenue in fiscal 2013 as compared to fiscal 2012, partially offset by a decrease of approximately $0.3 million of revenue from property sales in fiscal 2013 as compared to fiscal 2012. The increase in rental revenue in fiscal 2013 as compared to fiscal 2012 was almost entirely due to higher occupancy in Griffin Land's rental properties in fiscal 2013 as compared to fiscal 2012. The net increase in rental revenue principally reflected: (a) an increase of approximately $2.1 million of rental revenue in fiscal 2013 due to leasing previously vacant space in buildings that were in service the entire year in both fiscal 2013 and fiscal 2012; and (b) an increase of approximately $0.5 million of rental revenue in fiscal 2013 from the commencement of a full building lease of the Lehigh Valley industrial building that was completed at the end of the fiscal 2012 third quarter; partially offset by (c) a decrease of approximately $0.9 million in rental revenue from leases that expired and were not renewed or terminated early.

        A summary of the square footage of Griffin Land's real estate portfolio is as follows:

        The increase in square footage leased as of November 30, 2013, as compared to December 1, 2012, reflected a new full building lease in fiscal 2013 for the approximately 228,000 square foot Lehigh Valley industrial building and the leasing of several other previously vacant spaces aggregating approximately 81,000 square feet (approximately 50,000 square feet of office/flex space and approximately 31,000 square feet of industrial/warehouse space) in fiscal 2013, partially offset by leases aggregating approximately 192,000 square feet that expired in fiscal 2013 and were not renewed or terminated early. The greater Hartford industrial market had been slow, but experienced some recovery in 2012 and 2013. Market activity for office/flex space in the north submarket of Hartford was slow in 2013, with overall vacancy, availability and asking rates remaining relatively flat. Griffin Land believes that it was able to secure new leases for office/flex space because of its reputation as a stable, well capitalized landlord that maintains its properties to a high standard, meets its obligations and can deliver space to tenants timely and in accordance with the tenant's requirements and budget.

        Revenue from property sales decreased from approximately $5.8 million in fiscal 2012 to approximately $5.5 million in fiscal 2013. Property sales occur periodically, and changes in revenue from year to year from those transactions may not be indicative of any trends in the real estate business. Property sales in fiscal 2013 included the closing of the Windsor Land Sale for cash proceeds of approximately $9.0 million (before transaction expenses). Griffin Land is required, under the terms

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of the Windsor Land Sale, to construct roadways that will connect the land sold to existing town roadways. Accordingly, because of Griffin Land's continuing involvement with the land that was sold, the Windsor Land Sale is being accounted for under the percentage of completion method, under which the revenue and the gain on sale are recognized as the total costs related to the property sale are incurred. In fiscal 2013, Griffin Land recognized approximately $2.7 million of revenue from the Windsor Land Sale. In addition to the revenue from the Windsor Land Sale, revenue from property sales in fiscal 2013 also included the recognition of approximately $2.3 million of previously deferred revenue from the Dollar Tree Sale that closed in fiscal 2012. As Griffin Land was required, under the terms of the Dollar Tree Sale, to construct a sewer line to service the property sold, Griffin Land accounted for the Dollar Tree Sale under the percentage of completion method. In addition to the recognition of previously deferred revenue on the Dollar Tree Sale, Griffin Land reported approximately $0.2 million of additional revenue from the Dollar Tree Sale in fiscal 2013 and also had a total of approximately $0.3 million of revenue from two smaller land sales. Property sales revenue in fiscal 2012 principally reflected the recognition of approximately $4.7 million of revenue from the Dollar Tree Sale and approximately $1.0 million of revenue from the sale of approximately 14 acres of undeveloped land in Windsor for cash.

        Operating expenses of rental properties increased from approximately $6.7 million in fiscal 2012 to approximately $7.5 million in fiscal 2013. The increase of approximately $0.8 million in operating expenses of rental properties principally reflected an increase of approximately $0.3 million of snow removal expenses and increases of approximately $0.1 million in both real estate taxes on rental properties and repair and maintenance expenses. The increase in snow removal expenses reflected the effect of relatively mild winter weather in fiscal 2012, when there was a minimal amount of snowfall, as compared to a higher amount of snowfall in fiscal 2013.

        Depreciation and amortization expense increased from approximately $6.3 million in fiscal 2012 to approximately $6.7 million in fiscal 2013. The increase in depreciation and amortization expense of approximately $0.4 million in fiscal 2013 as compared to fiscal 2012 was due principally to an increase of approximately $0.3 million in fiscal 2013 on the 228,000 square foot Lehigh Valley industrial building that was completed and placed in service at the end of the fiscal 2012 third quarter, an increase of approximately $0.1 million related to new tenant improvements in several of Griffin Land's buildings and an increase of approximately $0.1 million in fiscal 2013 from accelerating depreciation on tenant improvements as a result of a tenant exercising its early lease termination option effective at the end of the fiscal 2013 third quarter. These increases in depreciation expense were partially offset by a decrease in depreciation expense of approximately $0.1 million in fiscal 2013 from certain tenant improvements becoming fully depreciated.

        Griffin's general and administrative expenses increased from approximately $6.8 million in fiscal 2012 to approximately $7.8 million in fiscal 2013. The increase of approximately $1.0 million in general and administrative expenses principally reflected an increase of approximately $0.5 million in expenses related to Griffin's non-qualified deferred compensation plan, an increase of approximately $0.2 million in real estate taxes on undeveloped land and smaller increases in other general and administrative expenses that aggregate to approximately $0.3 million. The higher expenses of the non-qualified deferred compensation plan reflected the effect on participant balances of higher stock market performance in fiscal 2013 as compared to fiscal 2012.

        In fiscal 2013, the sale of Griffin's investment in SNHC was completed, and Griffin received cash proceeds of approximately $3.4 million. Because of the low carrying cost of its investment in SNHC, Griffin's gain on the sale was approximately $3.4 million, essentially equal to the cash proceeds received. Also in fiscal 2013, Griffin sold 2,824,688 shares of its common stock of Centaur Media for cash proceeds of approximately $2.5 million. Griffin's gain from the sale of its Centaur Media common stock in fiscal 2013 was approximately $1.1 million. After the sales of Centaur Media common stock, Griffin owned 2,452,462 shares of Centaur Media common stock as of November 30, 2013. There were no sales of investments in fiscal 2012; however, fiscal 2012 did include investment income of approximately $0.6 million principally from a cash distribution from SNHC.

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        Griffin's interest expense increased from approximately $3.5 million in fiscal 2012 to approximately $3.8 million in fiscal 2013, principally due to approximately $0.6 million of interest being capitalized in fiscal 2012 as compared to only approximately $0.1 million of interest capitalized in fiscal 2013 and interest expense of approximately $0.1 million on a nonrecourse mortgage loan entered into in fiscal 2013 on the Lehigh Valley industrial building that became fully leased in fiscal 2013. Partially offsetting these increases was a decrease in interest expense of approximately $0.2 million in fiscal 2013 as compared to fiscal 2012 due to lower interest rates on mortgage loans with Webster Bank and First Niagara Bank that were refinanced in the fiscal 2012 fourth quarter and fiscal 2013 second quarter, respectively. Interest capitalized in fiscal 2012 was on the construction projects ongoing during that year, principally the Lehigh Valley industrial building that was built by Griffin Land.

        In fiscal 2013, Griffin incurred a loss on debt extinguishment of approximately $0.3 million, related to a loan modification agreement on a mortgage loan with First Niagara Bank due in January 2020 (the "2020 First Niagara Mortgage"). On April 1, 2013, Griffin Land and First Niagara Bank entered into an agreement that reduced the interest rate on the 2020 First Niagara Mortgage from a fixed rate of 5.25% to a variable rate of the one month LIBOR rate plus 2.5%. Because the difference between the present value of the future payments under the existing loan was greater than 10% of the present value of the payments under the modified loan, the loan modification was accounted for as a debt extinguishment. As such, all deferred costs related to the existing 2020 First Niagara Mortgage (approximately $0.2 million) and the fee paid to First Niagara Bank for the loan modification (approximately $0.1 million) are reflected as a loss on debt extinguishment. Concurrent with that agreement, Griffin also entered into an interest rate swap agreement with First Niagara Bank to fix the interest rate on the 2020 First Niagara Mortgage at 3.91% for the remainder of the loan term.

        Griffin's effective tax rate was 34.2% in fiscal 2013 as compared to an effective tax rate of 57.9% in fiscal 2012. The lower effective tax rate in fiscal 2013 as compared to fiscal 2012 reflected the impact of permanent differences between pretax income for book purposes and tax purposes being greater in fiscal 2012 than fiscal 2013 due to the lower amount of pretax income in fiscal 2012 as compared to fiscal 2013.

        The loss from discontinued operations, net of tax, of approximately $7.7 million in fiscal 2013, is entirely from the growing operations of the landscape nursery business. The income from discontinued operations, net of tax, of approximately $0.7 million in fiscal 2012 principally reflected the gain, net of tax, of approximately $1.5 million on the sale of an approximately 308,000 square foot warehouse building (the "Manchester Warehouse") and income from operations, net of tax, before the Manchester Warehouse was sold, partially offset by a loss, net of tax, from the growing operations of the landscape nursery business of approximately $0.9 million. The higher loss from the growing operations of the landscape nursery business in fiscal 2013 as compared to fiscal 2012 principally reflected a pretax charge of $10.4 million incurred in fiscal 2013 to reduce inventory that was sold in the Imperial Sale to fair value, which was the net realizable value based on the terms of the Imperial Sale.

Off Balance Sheet Arrangements

        Griffin does not have any off balance sheet arrangements.

Liquidity and Capital Resources

        Net cash provided by operating activities was approximately $4.3 million in fiscal 2014 as compared to net cash used in operating activities of approximately $0.6 million in fiscal 2013. Net cash provided by operating activities of continuing operations was approximately $4.2 million in fiscal 2014, as compared to approximately $1.2 million in fiscal 2013. The increase in net cash provided by operating activities of continuing operations in fiscal 2014 as compared to fiscal 2013 principally reflects an increase of approximately $3.2 million in deferred rental revenue in fiscal 2014 as compared to fiscal

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2013, including cash of approximately $2.4 million received in fiscal 2014 from the new tenant in the approximately 138,000 square foot Tradeport building, that will be recognized as rental revenue over the lease term. The cash received was used for Griffin Land's investment in tenant improvements to the approximately 138,000 square foot Tradeport building, included in additions to Griffin's real estate assets (see below). In addition, the increase in cash provided by operating activities of continuing operations in fiscal 2014 as compared to fiscal 2013 reflects higher income from continuing operations, after adjustments for gains on property sales and gains on sales of investments.

        Net cash used in investing activities increased from approximately $1.2 million in fiscal 2013 to approximately $2.8 million in fiscal 2014. The net cash used in investing activities in fiscal 2014 reflects cash payments of approximately $15.6 million for additions to real estate assets and approximately $0.1 million for additions to property and equipment, substantially offset by cash proceeds from the Windsor Land Sale of approximately $8.9 million that were returned from escrow, cash proceeds of approximately $2.8 million from collecting the amount due on the note receivable from Monrovia on the Imperial Sale, cash proceeds of approximately $0.6 million from sales of Centaur Media common stock, cash proceeds of approximately $0.6 million from property sales closed in fiscal 2014 and cash proceeds (after payment of severance and transaction expenses) of approximately $0.2 million from the Imperial Sale. At the closing of the Windsor Land Sale in fiscal 2013, the cash proceeds of approximately $8.9 million were placed in escrow for the potential acquisition of a replacement property in a like-kind exchange under Section 1031 of the Internal Revenue Code of 1986, as amended. As Griffin Land did not acquire a replacement property, the cash proceeds were returned to Griffin in the fiscal 2014 second quarter.

        The additions to Griffin Land's real estate assets in fiscal 2014 principally reflect approximately $9.6 million for the development, on speculation, of the approximately 303,000 square foot industrial building in the Lehigh Valley Tradeport on land contiguous to the 228,000 square foot industrial building that Griffin Land developed in fiscal 2012 and fully leased in fiscal 2013. Griffin Land expended a total of approximately $13.2 million (excluding land and leasing costs) on the Lehigh Valley Tradeport industrial building completed in fiscal 2014. Additions to Griffin Land's real estate assets in fiscal 2014 also include approximately $1.7 million for tenant improvements related to new leases (including the approximately 138,000 square foot Tradeport building that was fully leased in fiscal 2014), approximately $2.0 million for required remediation and site work on a residential project, approximately $0.9 million for road construction work related to the Windsor Land Sale, approximately $0.6 million for the start of site work on the undeveloped Lehigh Valley land acquired in fiscal 2013 and fiscal 2014 and approximately $0.3 million related to the acquisition of a parcel of undeveloped land adjacent to undeveloped land in the Lehigh Valley that was acquired in fiscal 2013.

        The net cash used in investing activities in fiscal 2013 principally reflects approximately $13.5 million of cash used for additions to real estate assets, a net of approximately $2.8 million of cash deposited in escrow and approximately $0.1 million of cash used for additions to property and equipment, offset by approximately $9.4 million of proceeds from property sales, approximately $3.4 million of proceeds from the sale of SNHC and approximately $2.5 million of proceeds from the sale of Centaur Media common stock. The cash deposited into escrow reflects the approximately $8.9 million of proceeds from the Windsor Land Sale that were placed in escrow for a potential acquisition of a replacement property in a like-kind exchange under Section 1031 of the Internal Revenue Code of 1986, as amended, and approximately $0.9 million of cash deposited in escrow to be used for a portion of the road construction related to the Windsor Land Sale; offset by approximately $6.9 million of cash that was returned from escrow from the Dollar Tree Sale. The funds returned from escrow from the Dollar Tree Sale were used for the acquisition of an approximately 49 acre parcel of undeveloped land in the Lehigh Valley. In addition to the acquisition of undeveloped land in fiscal 2013, Griffin Land's additions to its real estate assets included approximately $2.9 million for tenant improvements related to new leases, approximately $1.4 million for development costs, site work and

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the start of construction (completed in fiscal 2014) of a 303,000 square foot industrial building in Lehigh Valley Tradeport and approximately $0.8 million of expenditures for the construction of a sewer line related to the Dollar Tree Sale.

        Net cash provided by financing activities was approximately $1.4 million in fiscal 2014 as compared to approximately $5.7 million in fiscal 2013. The net cash provided by financing activities in fiscal 2014 reflects net proceeds of approximately $4.5 million from the refinancing of two nonrecourse mortgage loans by Griffin Land and approximately $0.1 million received from the exercise of stock options; partially offset by approximately $2.0 million for payments of principal on Griffin Land's nonrecourse mortgages, payment of approximately $1.0 million for a dividend on Griffin's common stock that was declared in the fiscal 2013 fourth quarter and paid in the fiscal 2014 first quarter and approximately $0.1 million for payments of debt issuance costs. The net cash provided by financing activities in fiscal 2013 reflects proceeds of approximately $9.1 million from a nonrecourse mortgage loan and cash of approximately $0.1 million received from the exercise of stock options. These were partially offset by approximately $1.9 million for payments of principal on Griffin Land's nonrecourse mortgages, a dividend payment of approximately $1.0 million for the dividend on Griffin's common stock that was declared in the fiscal 2012 fourth quarter and paid in the fiscal 2013 first quarter, approximately $0.4 million for payment of debt issuance costs related to the new nonrecourse mortgage loan and Griffin's revolving credit agreement, both of which closed in fiscal 2013, and approximately $0.1 million related to the modification of a mortgage loan with First Niagara Bank ("First Niagara").

        In fiscal 2014, Griffin Land refinanced two nonrecourse mortgage loans with Farm Bureau; the 8.13% mortgage that was due April 1, 2016 and the 7.0% mortgage that was due October 1, 2017. These two mortgage loans had a combined balance of approximately $9.0 million just prior to the refinancing. The combined balance after refinancing was $14.5 million, with both loans having a fixed interest rate of 5.09%. The refinanced mortgage loans each have a term of fifteen years with payments based on a fifteen year amortization schedule. $1.0 million of the mortgage loan proceeds from the refinancing of one of the mortgage loans with Farm Bureau is being held in escrow. The escrowed funds will be released to Griffin if an approximately 57,000 square foot industrial building that is part of the collateral for that mortgage loan, and is expected to become vacant after the current short-term full building lease expires, is re-leased under terms agreed upon with Farm Bureau. If a replacement lease on the terms agreed upon with Farm Bureau is not obtained, the proceeds being held in escrow are required to be used to make a partial prepayment, without penalty, on the mortgage loan.

        On December 31, 2014, two subsidiaries of Griffin closed on a new mortgage ("the 2025 First Niagara Mortgage") for $21.6 million with First Niagara. The 2025 First Niagara Mortgage refinanced the existing mortgage loan with First Niagara on the approximately 228,000 square foot industrial building in Lehigh Valley Tradeport and added the other approximately 303,000 square foot Lehigh Valley Tradeport industrial building to the collateral. The existing mortgage loan with First Niagara had a maturity date of September 1, 2023 and a floating rate of the one month LIBOR rate plus 1.95%. Griffin had entered into an interest rates swap agreement with First Niagara to fix the rate on that loan at 4.79%. Griffin received net cash proceeds from the 2025 First Niagara Mortgage of approximately $10.9 million at closing (before transaction costs), reflecting approximately $8.9 million used to refinance the existing mortgage loan with First Niagara Mortgage and $1.85 million that will not be advanced by First Niagara until a portion of the vacant space in the approximately 303,000 square foot building is leased. The 2025 First Niagara Mortgage has a ten-year term with monthly payments based on a twenty-five year amortization schedule. The interest rate for the 2025 First Niagara Mortgage is a floating rate of the one month LIBOR rate plus 1.95%. At the time the 2025 First Niagara Mortgage closed, Griffin entered into an interest rate swap agreement, that combined with the existing interest rate swap agreement with First Niagara, effectively fixes the rate of the 2025 First Niagara Mortgage at 4.43% at over the mortgage loan's ten-year term.

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        In the fiscal 2014 fourth quarter, Griffin started site work on the Lehigh Valley land acquired in fiscal 2013 and fiscal 2014, and subsequent to the end of fiscal 2014 started construction on an approximately 280,000 square foot industrial building on that land. This is expected to be the first of two industrial buildings approved for this site that is expected to have a total of approximately 530,000 square feet of industrial space when fully developed. Griffin Land expects to spend a total of approximately $3.5 million (including the approximately $0.6 million spent in fiscal 2014) on site work on the Lehigh Valley land acquired in fiscal 2013 and fiscal 2014 that is expected to support the development of the two industrial buildings. Griffin Land also expects to spend approximately $10.0 million in fiscal 2015 for construction of this new building. Subsequent to the end of fiscal 2014, Griffin Land entered into a five-year lease for approximately 196,000 square feet of the Lehigh Valley industrial building being built. The tenant has an option to lease the balance of the building as specified under the lease terms. Griffin Land expects the completion of construction of this building and commencement of the lease of approximately 196,000 square feet to take place in the fiscal 2015 third quarter.

        Griffin's 5.73% nonrecourse mortgage loan with a balance of approximately $18.2 million as of November 30, 2014 matures on August 1, 2015 with a payment of approximately $18.0 million due on that date. Three industrial buildings in Tradeport, with an aggregate of approximately 392,000 square feet, collateralize this mortgage loan. Griffin expects to refinance this mortgage at its maturity. There is no guarantee that such refinancing will be available for the entire amount of the nonrecourse mortgage loan that is due or on terms acceptable to Griffin.

        In fiscal 2014, Griffin Land entered into an agreement to sell approximately 29 acres of an approximately 45 acre land parcel of undeveloped land in Griffin Center for a purchase price of a minimum of $3.25 million, subject to adjustment based on the actual number of acres conveyed. Completion of this transaction is subject to significant contingencies, including the satisfactory completion of due diligence by the purchaser (a public educational authority in the state of Connecticut) and the purchaser obtaining a commitment from the State of Connecticut to fund the land acquisition and develop the property as planned by the purchaser. If this sale were to be completed, the development potential of the remaining approximately 16 acres of that land parcel may be severely limited. The due diligence period does not expire until fiscal 2016. There is no guarantee that this transaction will be completed under the current terms, or at all.

        Griffin's payments (including principal and interest) under contractual obligations as of November 30, 2014 are as follows:

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        In the near-term, Griffin plans to continue to invest in its real estate business, including the construction of additional buildings on its undeveloped land, expenditures to build out interiors of its buildings as new leases are signed, infrastructure improvements required for future development of its real estate holdings and the potential acquisition of additional properties and/or undeveloped land parcels in New England or the mid-Atlantic states to expand the industrial/warehouse portion of Griffin Land's real estate business. Real estate acquisitions may or may not occur based on many factors, including real estate pricing. Griffin Land does not expect to commence any speculative construction projects for its Connecticut real estate portfolio until a substantial portion of its currently vacant space there is leased, but would construct a build-to-suit facility on its undeveloped land in Connecticut if the lease terms are favorable.

        As of November 30, 2014, Griffin had cash and cash equivalents of approximately $17.1 million. Management believes that its cash and cash equivalents as of November 30, 2014, cash generated from operations, proceeds from new mortgage loans and borrowing capacity under its $12.5 million revolving credit agreement with Webster Bank will be sufficient to meet Griffin's working capital requirements, the continued investment in Griffin's real estate assets, including completion of the Lehigh Valley industrial building under construction as of November 30, 2014 and the payment of dividends on its common stock, when and if declared by the Board of Directors. Griffin may also continue to seek additional financing secured by nonrecourse mortgages on its properties. Griffin Land's real estate portfolio currently includes five buildings located in Connecticut aggregating approximately 411,000 square feet that are not mortgaged.

Forward-Looking Information

        The above information in Management's Discussion and Analysis of Financial Condition and Results of Operations includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended. These forward-looking statements include, but are not limited to, Griffin's expectations regarding the leasing of currently vacant space, completion and timing of construction on the Lehigh Valley industrial building under construction as of November 30, 2014, completion of the sale of approximately 29 acres of an approximately 45 acre land parcel in Griffin Center in Bloomfield, Connecticut under contract as of November 30, 2014, construction of additional facilities in the real estate business, the ability to obtain mortgage financing on Griffin Land's unleveraged properties and refinancing of Griffin's nonrecourse mortgage loan collateralized by three industrial buildings in Tradeport, Griffin's anticipated future liquidity, and other statements with the words "believes," "anticipates," "plans," "expects" or similar expressions. Although Griffin believes that its plans, intentions and expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such plans, intentions or expectations will be achieved. The forward-looking statements made herein are based on assumptions and estimates that, while considered reasonable by Griffin as of the date hereof, are inherently subject to significant business, economic, competitive and regulatory uncertainties and contingencies, many of which are beyond the control of Griffin. Griffin's actual results could differ materially from those anticipated in these forward-looking statements as a result of various important factors, including those set forth under the heading Item 1A. "Risk Factors" and elsewhere in this Annual Report.

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

        Market risk represents the risk of changes in the value of a financial instrument, derivative or non-derivative, caused by fluctuations in interest rates, foreign exchange rates and equity prices. Changes in these factors could cause fluctuations in earnings and cash flows.

        For fixed rate mortgage debt, changes in interest rates generally affect the fair market value of the debt instrument, but not earnings or cash flows. Griffin does not have an obligation to prepay any fixed rate debt prior to maturity and, therefore, interest rate risk and changes in the fair market value of

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fixed rate debt should not have a significant impact on earnings or cash flows until such debt is refinanced, if necessary. Griffin's mortgage interest rates and related principal payment requirements are described in Note 8 to the consolidated financial statements included in Item 8. "Financial Statements and Supplementary Data."

        For variable rate debt, changes in interest rates generally do not impact the fair market value of the debt instrument, but do affect future earnings and cash flows. As of November 30, 2014, Griffin had a total of approximately $37.7 million of variable rate debt outstanding, for which Griffin has entered into interest rate swap agreements which effectively fix the interest rate on that debt. There were no other variable rate borrowings outstanding as of November 30, 2014.

        Griffin is exposed to market risks from fluctuations in interest rates and the effects of those fluctuations on the market values of Griffin's cash equivalents. These investments generally consist of overnight investments that are not significantly exposed to interest rate risk.

        Griffin does not have foreign currency exposure in operations. However, Griffin does have an investment in a public company, Centaur Media plc, based in the United Kingdom. The ultimate liquidation of that investment and conversion of proceeds into United States currency is subject to future foreign currency exchange rates involving the UK pound sterling. A 10% decrease in the foreign currency exchange rate at November 30, 2014 would have resulted in an approximately $0.2 million reduction of the fair value of that investment.

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8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

GRIFFIN LAND & NURSERIES, INC.

Consolidated Balance Sheets

(dollars in thousands, except per share data)

See Notes to Consolidated Financial Statements.

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GRIFFIN LAND & NURSERIES, INC.

Consolidated Statements of Operations

(dollars in thousands, except per share data)

See Notes to Consolidated Financial Statements.

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GRIFFIN LAND & NURSERIES, INC.

Consolidated Statements of Comprehensive Income (Loss)

(dollars in thousands)

See Notes to Consolidated Financial Statements.

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GRIFFIN LAND & NURSERIES, INC.

Consolidated Statements of Changes in Stockholders' Equity

For the Fiscal Years Ended November 30, 2014, November 30, 2013 and December 1, 2012

(dollars in thousands)