GLADSTONE LAND Corp Q3 FY2024 earnings call

• Land and water assets: Own ~112,000 acres, 168 farms in 15 states (29 growing areas), and 54,000 acre-feet of water in California, total value ~$1.5B.
• Leasing: Executed 21 new/amended leases in 8 states; annual row crop renewals increased NOI by ~$309k (11%); permanent crop leases: 13 renewals, some adjusted to participation rents (decreasing NOI by ~$441k), sold 11 blueberry farms in MI for ~$5M.
• Financing: Repaid ~$13M in loans, raised ~$80k from Series E preferred stock and ~$4.5M from common stock ATM, repurchased 176k+ preferred shares at ~$3.7M.
• Valuation: Portfolio revalued via third-party appraisals, net asset value per share down to $15.57; liquidity: Over $160M available, ~$20M cash on hand, ~$160M unpledged properties.

Gladstone Land Corporation operates on ~112,000 acres with 168 farms in 15 states across 29 growing areas and 54,000 acre-feet of water assets in California, valued at ~$1.5 billion total. Annual row crops make up about half the portfolio, while permanent crops are the other half. For the third quarter, net income was $6,000, net loss to common shareholders was $5.8 million ($0.16 per share). Adjusted FFO was approximately $4.5 million ($0.13 per share). Net asset value per common share at September 30 was $15.57, down from $17.59 at June 30. The portfolio valuation decreased by ~$23 million (4.5%) due to revaluations of certain permanent crop farms, while annual row crops continued to appreciate.

• Lease structure: Expect $20M year-over-year swing in fixed base rents, reducing by $3.5M-$4.5M per quarter from Q4 2024, with participation rents recognized in 2025-2026.
• Dividend: Declared $4.67 per share per month for Q4.

• Market conditions: Lower crop prices, higher inputs, borrowing costs affecting permanent crop leases.
• Tenant issues: Some farms vacant, direct operated, non-accrual; potential lease expirations may require participation rent adjustments.
• Interest rates: Minimal impact so far, but future rates could affect refinancing.

Q: Gaurav Mehta asked about lease expirations in 2025, including number and type of crops.

A: Lewis Parrish responded that ~17 leases expire in 2025, ~20% of revenue, with about half being permanent crops.

Q: Rob Stevenson inquired about the Blueberry Farms sale and its impact on vacant/direct operated/non-accrual properties.

A: Lewis Parrish said the sale should close this year, reducing vacant/direct operated/non-accrual properties to one vacant, one direct operated, and five on non-accrual.

Q: Craig Kucera asked about crop types and lease restructuring impact.

A: Lewis Parrish replied 2 pistachio and 2 wine grape farms were restructured, with impact on fixed rent in Q4 and next year.

Q: Craig Kucera asked about participation rent strength and crops involved.

A: Lewis Parrish said strength came from pistachio production, but final pricing components unknown until later months.

Q: John Massocca asked about the NOI impact of Michigan Blueberry Farms and California permanent crop market.

A: Lewis Parrish said they were an NOI drag, and pricing in California permanent crops is stabilizing with focus on dual-source water properties.