FPI

General Performance Overview

• Management characterized Q2 2026 as a strong, uneventful quarter with performance in line with prior projections, with no major unexpected events.
• The company is actively evaluating non-core asset dispositions through the end of 2026, with a focus on non-core California properties.

Capital Structure Updates

• As of quarter-end, the company had $122 million in undrawn line of credit capacity. No new borrowings occurred in Q2, and $8 million in debt was repaid.
• One MetLife loan reset its interest rate, and one loan was extended by one year; the average interest rate on these loans decreased from 5.64% to 5.25%.

Operational Leasing Strategy

• Management has held off on launching next year's lease renewals due to currently strained tenant financial conditions, but noted the company's overall tenant pool remains very strong.
• Management expects 2026 lease renewals to result in mostly flat rents with modest increases embedded in existing cost-of-living adjustment clauses, with upside potential if market conditions improve before fall renewal activity begins.

Loan Program Management

• The company's $60 million FPI loan program focuses on lending to distressed borrowers with high interest rates (15-20%) and strong collateral; the company has not experienced any loan defaults in the 12-year history of the program.
• Management is building credit loss reserves gradually as a prudent precaution against the risk that distressed borrowers lose control of their situations (e.g., via bankruptcy), even though management expects to collect 100% of outstanding loans.

Non-Core Asset Strategy

• Management remains long-term bearish on California agriculture due to unfavorable state policy, reduced water availability, and sharply rising labor costs, and will continue gradual liquidation of California exposure to reinvest in core Midwest farmland.

• Updated 2026 AFFO guidance is set at a range of $13.5 million to $15.3 million, or 31 cents to 35 cents per share. The low end of the range was increased from prior guidance, while the high end remains unchanged.
• Guidance changes include an increase in projected variable lease payments driven by improved visibility on almond yields and pricing, partially offset by higher projected expenses including additional credit loss provisions on loans receivable and increased impairment for a West Coast property.
• The guidance includes a $3.6 million gain from a Q2 2026 property disposition, which offset the expense increases.

The company does not break out formal product segment reporting in this call. For the three months ended June 30 2026: net income was $3.1 million (7 cents per common share), compared to $7.8 million (15 cents per share) in Q2 2025. Adjusted Funds From Operations (AFFO) was $1.7 million ($0.04 per weighted average share), compared to $1.3 million ($0.03 per weighted average share) in Q2 2025. For the six months ended June 30 2026: net income was $3.8 million ($0.08 per share), compared to $9.9 million ($0.18 per share) in the prior year period. AFFO was $3.8 million ($0.09 per weighted average share), compared to $3.6 million ($0.08 per weighted average share) in the first half of 2025. Revenue was positively impacted by higher interest income from the FPI loan program, increased point amortization, and higher oil and gas royalty proceeds, partially offset by lower rental income from prior-year asset dispositions. Operating expenses declined year-over-year due to property dispositions, lower G&A, lower legal fees, and reduced property impairment charges, partially offset by higher provisions for credit losses on FPI loan program loans. The net income decline is primarily driven by fewer asset dispositions and lower net gain on asset sales compared to 2025.

• Strained financial conditions for farm tenants could create pressure on rental revenue and lease renewal rates, though management notes the company's tenant pool remains strong.
• The FPI loan program, while currently performing with no historical defaults, carries inherent high risk as it lends to distressed borrowers, with the key risk being that borrowers could enter bankruptcy or lose control of their assets, complicating collection even with collateral backing.
• California agricultural assets face significant structural headwinds from unfavorable state policy, declining water availability, and rising labor costs, creating ongoing valuation and disposition challenges, though the company has reduced its California exposure relative to peer investors.
• Macroeconomic volatility and elevated energy prices continue to pressure farmer financial performance, contributing to uncertainty around lease renewal outcomes.
• Borrowing costs in the mid-5% range create a negative spread relative to the company's dividend yield, limiting the appeal of leveraged share buybacks.

Q: Is the additional credit loss provision tied to the same previously troubled borrower, or a new loan? / A: The bulk of the additional reserve relates to the same troubled borrower the company discussed previously. Management evaluates all borrowers, and continues to monitor this situation. While the loan has strong collateral and steep terms, and the company has never had a default in its 12-year loan program, management is building reserves as a precaution against the borrower losing control of their situation (e.g., via bankruptcy), which would complicate collection. /

Q: Where was the Q2 property disposition that generated the $3.6 million gain located, and what drove the strong gain? / A: The disposition was an Illinois farm, not a California non-core asset. The strong gain came from selling the property to a solar developer, who valued the land far higher than its traditional agricultural value, allowing the company to lock in an attractive premium. /

Q: How is management approaching share buybacks, and will the program use disposition proceeds or leverage? / A: The buyback program is prioritized by stock price (current prices are seen as accretive) and then cash availability. Management is willing to borrow occasionally for disciplined buybacks, but borrowing costs in the mid-5% range are higher than the company's ~3.4% dividend yield, creating a negative spread. The company prefers to backfill any buyback borrowing with asset sale proceeds to avoid maintaining this negative spread long-term. /

Q: What is the outlook for California non-core asset disposition, and has the market improved? / A: The California transaction market is less challenged than it was six months ago, but it remains difficult overall. California agriculture is in the worst state management has seen, driven by poor policy, water restrictions, and rising labor costs. The recent uptick in variable almond rent only improves near-term cash flow, it does not fix the long-term structural challenges. The company will continue its gradual liquidation of California exposure to reinvest in core Midwest assets.