GLADSTONE LAND Corp Q1 FY2026 earnings call

• Portfolio Overview

  • Gladstone Land owns ~99,000 acres across 144 farms in 14 states, plus 56,000 acre-feet of water assets all located in drought-prone California.
  • No acquisition or sale activity occurred during Q1 2026, though management is evaluating potential sales of 2 to 5 farms over the next few quarters.
  • Proceeds from any planned sales will primarily be used to pay down debt and repurchase outstanding preferred stock, continuing the company's recent capital allocation strategy.

• Lease and Tenancy Updates

  • Modified lease structures were implemented for permanent crop (nut, wine grape) farms to shift to higher crop share participation, allowing the company to capture more upside while accepting additional growing risk; two properties are operated directly with third-party grower support.
  • The 2025 harvest exceeded both USDA and internal projections, especially for almonds and pistachios, with strong revenue collections; most farms have been re-signed to similar lease agreements for 2026.
  • 5 leases representing 4% of 2026 year-to-date total lease revenue are scheduled to expire in the next six months; management is in discussions with existing and prospective tenants and expects to fill all vacancies by year-end.
  • Currently 8 farms are wholly or partially vacant, with management expecting to resolve most vacancies before the end of 2026; 4 tenants are recognized on a cash basis due to missed rent payments (one resolved in Q1, two added during the quarter).
  • Management's long-term goal is to transition all farms back to traditional fixed-rent leases, with timing dependent on lower market interest rates and improved grower access to working capital.

• 2026 Growing Season Update

  • Winter 2025/2026 produced meager Western U.S. snowpack, but above-normal early spring rainfall left high spring soil moisture, giving crops a strong start; almond bloom was complete by April 1 with stronger initial set than 2025 at Gladstone's locations.
  • A mid-bloom heat spell in March reduced pistachio crop set across California, but the impact is expected to be minimal because 2026 is a natural low-yield (down) year for alternate-bearing pistachios; any resulting supply reduction is also expected to put upward pressure on prices that may offset lower yields.
  • All capital-invested crop properties are tracking to budget, with only minor potential water expense increases on a small number of ranches that will not impact full-year budget targets.

• Market Conditions

  • Western U.S. agricultural real estate markets appear to have bottomed, with slightly increased transaction activity; strategic buyers are paying higher prices for well-located orchards with strong cash flow potential, while coastal California values remain flat with high inventory and Pacific Northwest values are stable.
  • A permanent value divergence is now in place between farm properties with secure water rights and those without, driven by regulation and drought conditions.
  • Nut crops have shown strong resilience amid geopolitical and trade uncertainty; global demand for pistachios (the company's largest portfolio crop) is growing rapidly, with 2026 minimum pricing expected to be significantly higher than 2025, and the industry sees long-term under-planting relative to demand.
  • Almond prices have trended upward after lower-than-expected crop size projections were released; wine grape markets remain underperform, but gradual supply reduction through vineyard removals has created short supply for some white varietals, the first encouraging sign in several years.
  • Fertilizer and fuel price increases have limited impact on the company's portfolio, as fertilizer makes up a small share of total cultural costs, and most operated farm inputs were purchased prior to recent price increases.

• Financing and Liquidity

  • No new borrowings or debt repayments occurred in Q1, but adding unencumbered properties to existing credit facilities increased immediately available liquidity by $50 million.
  • The company redeemed all Series D term preferred stock in January 2026 to avoid a 5% to 8% coupon step-up, funded via ATM common stock issuance and a line of credit draw that has since been fully repaid.
  • Year-to-date 2026, the company has raised ~$50 million via its ATM program; most capital has been used for balance sheet deleveraging, including Series D redemption, line of credit repayment, and preferred stock buybacks.
  • Year-to-date 2026, over $6 million of preferred stock has been repurchased at an average 7.4% yield, generating a nearly $700,000 gain.
  • The company currently holds ~$150 million in immediately available capital, with over $110 million in unpledged properties available for additional collateral; 99% of borrowings are fixed-rate with a 3.41% weighted average rate locked in for 2.5 years, insulating the company from interest rate volatility.
  • A monthly dividend of 4.67 cents per common share was declared for Q2 2026, representing a 5.9% annualized yield at the current $9.44 share price, above the sector average.

Gladstone Land operates as a single-segment farmland REIT focused on owning and leasing farmland across 14 U.S. states, with water assets located entirely in California. For Q1 2026: the company reported a net loss of ~$4.3 million, and a net loss to common shareholders of $10 million (24 cents per share). Adjusted FFO (AFFO) was $3.1 million (8 cents per share), up from $2 million (6 cents per share) in Q1 2025. Year-over-year fixed base cash rents decreased by $2.4 million, driven by lost revenue from one property transitioned to direct operations, two tenants placed on cash-basis revenue recognition, and a $2.4 million tenant termination fee received in the prior year quarter. This decrease was offset by a $4.4 million increase in participation rents, primarily from an early partial 2025 pistachio marketing bonus payment received in Q1 2026. Net income from direct operated farm crop sales was $1.9 million, also driven by the early bonus recognition. Recurring cash operating expenses increased by $750,000 year-over-year, driven by higher property operating costs (supplemental water, water rights legal protection) and higher G&A (legal and accounting fees), partially offset by a slight decline in related party management fees.

• Management expects 2025 full-year final crop revenue and profit to beat original projections, due to higher-than-forecast yields and firming prices for almonds and pistachios, with half of the 2025 nut marketing season complete as of the Q1 call.
• It will be difficult to match or exceed the very strong 2025 earnings performance in 2026, per management commentary.
• Management expects the long-term trends of food sector inflation and increasing farmland values to continue, especially for high-demand healthy permanent crops (nuts, fresh fruits and vegetables) driven by shifting consumer dietary preferences.
• Transition of participation-based leases back to fixed-rent leases is not expected for the 2026 crop year, and is likely delayed at least through the 2027 crop year due to constrained grower working capital from past market downturns.
• Management expects to return at least half of the vacant farm acreage to income-producing status within the next 3 to 6 months, via either traditional leasing or alternative income streams (conservation incentives, water leases, solar leases).

• Uncertain crop yield and price outcomes are inherent to farmland ownership, with growing season weather (such as the 2026 March heat spell) able to impact crop output in unpredictable ways.
• Persistently high interest rates have delayed the planned transition back to fixed-rent leases, as constrained capital and working capital limit the pool of growers willing to take on fixed-rent lease risk.
• Western U.S. drought and water access risks remain a long-term structural issue, with a permanent value gap between properties with secure water rights and those without.
• Persistent drought conditions in Florida in 2026 have not yet impacted Gladstone's Florida operations, but create ongoing regional operational uncertainty.
• Geopolitical instability (including conflict in Iran and Strait of Hormuz disruption risk) and ongoing trade tensions create price volatility for nut export markets.
• Some growers still carry credit risk from the multi-year almond pricing downturn, and full credit recovery will take multiple years of strong nut prices, despite recent price rebounds.
• Vacancies and tenant rent delinquency create near-term revenue headwinds, with 8 farms currently wholly or partially vacant and 4 tenants on cash-basis revenue recognition due to missed payments.

Q: The 2025 pistachio marketing bonus was partially recognized in Q1 2026, earlier than expected. When will the remaining portion be recognized, and what is the expected total size of the bonus? / A: Management expects to recognize the full remaining portion of the bonus in Q4 2026. The early payment received in Q1 equated to $0.50 per pound, and the 2024 crop bonus was $0.90 per pound. Management expects the full 2025 bonus to be higher than the 2024 level, with the remaining payout ranging from $0.40 to $0.90 per pound.

Q: Management has noted potential farm sales over the next few quarters. Can you provide a range for how many properties or what total sales value you expect? / A: Sales are difficult to predict because farm transactions take significant time to complete, and there is no guaranteed closing timeline. Management currently expects to sell between 2 and 5 farms over coming quarters, primarily non-performing or problem properties that do not have strong existing tenants. There is no set target for total sales value at this time.

Q: What is the outlook for re-leasing currently vacant properties? / A: Management is close to finalizing new income agreements for several of the largest vacant farms, and expects to return at least half of the total vacant acreage to income production within 3 to 6 months. Many of the new agreements are for alternative non-traditional income streams, including conservation incentives, water leases, and solar leases, rather than traditional farm crop leases.

Q: When do you expect to transition participation lease farms back to fixed-rent leases? / A: The transition cannot happen for the 2026 crop year, and is very likely delayed through the 2027 crop year. Growers face widespread working capital constraints after years of market downturns, so the pool of growers willing and able to take on the fixed cost risk of traditional fixed-rent leases has not recovered yet. The timeline will also depend on interest rates falling back to lower levels that support easier grower borrowing.