Gladstone Land Corporation Q1 FY2025 earnings call

• Farmland Holdings: Currently has about 103,000 acres on 50 farms and 55,000 acre-feet of water in California, diversified across 15 states and 29 growing regions.
• Lease Structures: In 2025, executed 7 new leases/amended existing ones, adjusting to participation rents for some farms to help tenants and participate in upside. 16 lease schedules to expire in 2025, some with no fixed rent base or cash leases led to negative lease revenues in Q1 2025.
• Tariffs Impact: Fresh produce somewhat insulated from tariffs, nut sector vulnerable due to exports, but demand shifts to other countries and weak dollar help stabilize prices.
• Tenant Issues: 8 properties shifted to participation leases, 5 farms vacant, 4 direct operating, in discussions with buyers/tenants to resolve issues.

For the first quarter, net income was approximately $15.1 million, with net income to common shareholders at $9.1 million or $0.25 per share. Adjusted FFO was around $2 million or $0.06 per share, down from $5.1 million or $0.14 per share in the same quarter last year. Dividends declared per common share were $0.14 in both quarters. The year-over-year decrease in FFO was driven by changes in lease structures, farm vacancies, and lost revenues from farm sales. Fixed base cash rents decreased by $5.7 million, partially offset by a $2.4 million lease termination fee and $465,000 in participation rents.

• Expect a year-over-year decline of about $17 million in fixed base rents for 2025 compared to 2024, with participation rents mostly recognized in Q4 2025 and some in H2 2026.
• Liquidity: Access to over $180 million of capital, including $40 million cash on hand, and nearly $150 million unpledged properties.
• Dividend: Declared monthly dividend of $0.0467 per share for Q2 2025, annualized yield 5.8%, will evaluate based on 2025 harvest.

• Interest Rates: High cost of capital and uncertain rate cuts impact acquisition activity.
• Crop Insurance: Dependence on crop insurance if there are total crop losses, though hope is for good production.
• Tariffs: Impact on nut exports, with changing demand and market dynamics.

Q: Clarify $17 million lower revenues in 2025 vs 2024.

A: Yes, there was one additional farm with a lease incentive and one direct operated farm, with participation rents expected to be recognized in Q4 2025 and H2 2026.

Q: Thoughts on additional sales and vacant assets.

A: Some farms listed for sale, vacant assets are open ground or trees at end of life, evaluating options like leasing or new crops.

Q: Share repurchasing and debt maturity.

A: Skittish on using cash for repurchases, considering farm sales and bank options for Series D term preferred stock due in 2026.

Q: Water holdings and permanent crop market.

A: Water holdings are sufficient, permanent crop market showing improvements in almond prices, but high interest rates affect transactions.