Gladstone Land Corporation Q2 FY2025 earnings call

• Farmland holdings: About 103 acres on 150 farms in 15 states, 55,000 acre feet of water in California, leased to 80+ tenants growing 60+ crops.
• Lease structure modifications: Adjusted lease structure on 6 properties to accept percentage of gross crop sales instead of fixed rent, operating 2 properties with third-party operators; aim to revert to traditional fixed base rents depending on external factors.
• Operating properties: 8 properties under modified leases/third-party operation, 3 wine grape vineyards, 2 pistachio orchards, 2 almond orchards; crops in good condition, above-average yields expected.
• Water assets: Western U.S. in normal to wet cycle, allowing water buying opportunities; spent on improving delivery/storage infrastructure, water security of portfolio enhanced.
• Financing activity: Refinanced $10M maturing loan with MetLife, repaid $10M maturing bond post-quarter, no new equity issued.

Gladstone Land Corporation has about 103 acres on 150 different farms across 15 states, with over 55,000 acre feet of water in California. For the second quarter, the company recorded a net loss of approximately $7.9 million and a net loss to common shareholders of $13.9 million or $0.38 per share. Adjusted FFO was negative $3.4 million or $0.10 per share compared to a positive $3.7 million or $0.10 per share in the same quarter last year. Fixed base cash rents were down by about $6.8 million from the prior year quarter due to vacancies and structural lease changes. Participation rents were also down, with results from crop share components to be known at harvest.

• Dividend: Declared monthly dividend of $0.0467 per share for Q3 2025, maintaining current level and reevaluating based on 2025 harvest results.
• Participation rents: Expect higher levels in Q4 2025 from lease modifications on permanent crop farms, with proceeds recognized in Q4 2025 and remainder in H2 2026.
• Sales: One property in Florida set to sell due to housing boom; considering selling couple of farms or reverting leases to fixed base rents.

• Interest rates: High cost of capital poses challenges for acquisitions and operations.
• Crop production: Uncertainties in crop yields, pricing, and market demand for permanent crops like nuts.
• Water availability: Regulatory changes (Sigma) in California affecting some properties; potential impact of droughts on water supply and property values.
• Market volatility: Trading activity affecting stock price, and uncertainties in recognizing projected income from crop shares.

Q: Follow-up on participation rents, how much of the $17M expected in 2025 is in 4Q '25?

A: Lewis Parrish said it's difficult to say precisely, but likely about 60%-65% in 4Q '25 with the rest throughout the year.

Q: Expectations for Series D redemption in Jan '26?

A: Lewis Parrish said they're assessing options, including paying off with property sales proceeds or line of credit.

Q: Impact of Sigma on properties?

A: Bill Ryman said Sigma is still causing changes, with properties having weak water access dropping in value and those with good water infrastructure maintaining/increasing; West Coast team spends much time on Sigma-related issues.

Q: Cash balance and debt repayment?

A: Lewis Parrish said they have ~$150M available liquidity, want to maintain at least $50M availability for next 12 months, well covered with undrawn lines of credit and unpledged properties.