LAND

• Portfolio Overview & Transactions

  • The firm holds 98,000 acres across 142 farms in 14 U.S. states, plus 56,000 acre-feet of water assets (all located in California)
  • No acquisitions or dispositions during Q2; post-quarter, a 2-citrus-farm Florida property was sold for $3 million after tenant default and low rental market conditions; proceeds will be used to pay down debt
  • Management is open to additional property sales over coming quarters, with proceeds earmarked for debt paydown and preferred stock buybacks; the firm will resume active portfolio growth once interest rates decline
  • Modified lease structures for permanent nut and wine grape properties, with higher crop share participation to reduce grower fixed costs while allowing Gladstone to capture upside from higher crop prices

• Crop Market & Operational Updates

  • 2025 almond and pistachio harvest yields exceeded expectations; 2025 pistachio final prices are expected to be higher year-over-year, with additional revenue to be recognized in Q4 2026; modified crop share arrangements are extended to the 2026 crop
  • Almond prices are at 10-year highs, with 2026 initial pistachio pricing 67% higher than 2025; 2026 almond yields are expected to match or exceed 2025 levels, while industry-wide lower yields are supporting higher prices
  • The wine grape market is emerging from oversupply, as 2026 crop volumes are expected to be lower and bulk wine inventories have fallen to manageable levels, setting up potential improved pricing
  • Crop insurance limits downside risk for the portfolio, and management plans to transition modified crop share leases back to traditional fixed-rent structures once crop conditions, water availability and input costs stabilize
  • The cyclospora produce outbreak has temporarily reduced demand for all fresh produce, though management expects this to be a short-term disruption if the issue is resolved quickly

• Financing & Liquidity

  • Post-quarter, the $3 million mortgage connected to the sold Florida property was repaid; adding unencumbered properties to existing credit facilities increased available capital by $50 million
  • $14 million in common stock was issued via the ATM program earlier in the quarter at an average 5.5% cost of capital; no new shares have been issued since April 2026 due to current stock price levels
  • $13 million in preferred stock has been repurchased since April 2026 at an average 7.2% repurchase yield, generating a $1.1 million total gain
  • The firm currently has $125 million in immediately available capital, with an additional $110 million in unpledged properties available for collateral; over 95% of borrowings are fixed rate with a 3.45% weighted average interest rate, locked in for an average 2.3 years
  • The monthly common dividend was held flat at 4.67 cents per share for Q3 2026, representing a 6.8% annualized yield at the current $8.21 share price

• Water Strategy

  • 2026 winter snowpack and federal water allocations were lower than expected, though a recent 3% allocation increase reduced water costs for the portfolio; the firm remains conservative in water purchases, only acquiring water at prices that fit crop economics
  • Management is preparing for a forecast strong El Niño winter, to capitalize on potential water acquisition opportunities and excess flood flows to improve portfolio water security
  • The firm continues to invest in water delivery and storage infrastructure to create synergies across its farm assets

• Real Estate Market Conditions

  • Management believes most western U.S. farmland markets have bottomed and are starting to improve; properties with secured water access and strong cash flow are seeing high demand
  • Coastal California farmland values remain flat with elevated inventory, while the Pacific Northwest market is stable with high-quality properties transacting quickly
  • Stable interest rates and higher tree nut prices have increased agricultural lending activity, making it easier for growers to access credit

• Management expects 2025 crop year results to outperform original budget projections, with 2026 crop tracking in line with projections
• Management expects participation rent revenue in the second half of 2026 to be higher than prior year, driven by much stronger almond and pistachio pricing, though a final specific range is not provided due to unresolved yield and final pricing uncertainty
• The firm expects to renew all 6 expiring leases (representing 3.5% of 2026 annual leasing revenue) over the next six months at roughly flat terms, with no material impact to overall revenue
• Water operating expenses are expected to face downward pressure into the 2026 winter due to higher federal allocations and expected excess supply ahead of the forecast El Niño, reversing earlier expectations of upward cost pressure
• The 2026 pistachio initial $2.50 per pound guaranteed price will be recognized in 2026, with any additional price bonus recognized in Q4 2027
• Management expects the worst of recent permanent crop pricing weakness is behind it, though it is too early to confirm a full recovery; long-term, management expects farmland values to rise driven by food inflation and growing consumer demand for healthy fresh produce, nuts and fruits

Gladstone Land operates as a single diversified farmland and water asset portfolio, with no distinct product segments reported. For Q2 2026, the firm reported a net loss of $8.5 million, and a net loss to common shareholders of $13.5 million ($0.32 per share). Adjusted FFO was negative $1.6 million ($-0.04 per share), an improvement from the negative $3.5 million ($-0.10 per share) in Q2 2025. Fixed base cash rents increased $900,000 year-over-year, driven by collections from non-accrual tenants and new leases, partially offset by revenue from sold farms. Participation rents saw a slight increase, primarily due to higher 2025 almond prices. Direct farming operations generated a net profit of $590,000, driven by the sale of an orange crop from a terminated Florida lease and higher almond prices. Recurring cash operating expenses increased $560,000 year-over-year, while total operating cash flow increased due to higher crop participation receipts, lower cash allowances to tenants and lower interest payments.

• The firm faces uncertainty around 2026 pistachio and almond yields, which could offset the positive impact of much higher current crop prices on revenue
• Water availability and pricing volatility remains a key risk for California operations, though long-term El Niño is expected to improve water supplies
• Non-accrual tenant rent payments collected in Q2 are not guaranteed to be recurring, creating uncertainty for future fixed revenue streams
• The current fresh produce demand disruption from the cyclospora outbreak could become a material negative impact if it extends into the winter season
• $148 million in fixed-rate loans are scheduled to reprice over the next year, including $130 million from the MetLife facility set to reprice in January 2027, which could increase interest costs if market rates are higher at reset
• 2026 pistachio yields are expected to be down significantly due to poor pollination from a March heat wave and the crop's natural off-year cycle, creating revenue uncertainty

Q: An analyst asked how much participation rent Gladstone expects to recognize in H2 2026, if there were any non-recurring items in Q2 fixed revenue, and for details on the Arizona impairment charge. / A: Management said they cannot give a final number because 2025 pistachio pricing is not finalized and 2026 yields are still unknown, though they do expect higher participation revenue than prior year due to much stronger crop pricing. Q2 fixed revenue included a one-off $700,000 cash payment from a previously non-accrual tenant, which is not guaranteed to recur. The impairment charge marked down a 4-farm Arizona property to the agreed sale price under a PSA signed post-quarter; the transaction is expected to close in late Q3 or early Q4 2026.

Q: An analyst asked if 2025 pistachio bonus payments are now expected to land at the upper end of the prior 40-90 cent per pound range, and how 2026 pistachio revenue will be timed. / A: Management confirmed 2025 bonuses are on track to hit the upper end of the prior range, as processors expect a final 2025 price of at least $2.70 per pound, implying at least a 70 cent per pound additional bonus. For 2026, the $2.50 per pound initial guaranteed price will be recognized in 2026, while any additional bonus will be recognized in Q4 2027. Yields are expected to be down significantly due to a natural off-year and March heat wave pollination damage, so it is unclear if higher pricing will fully offset lower volumes.

Q: An analyst asked for updates on the firm's vacant/bacon farm assets, expectations for upcoming lease expirations, and potential water-driven operating expense volatility. / A: Management stated most of the 10 vacant farms are close to finalizing alternative new leases (solar, cattle, conservation), expected to be completed by the end of Q3. The 6 upcoming expiring leases, totaling 3.5% of annual rent, are expected to be renewed at flat terms with existing tenants. A recent 3% increase in federal water allocations moved the portfolio into a lower water pricing tier, creating downward pressure on water expenses through the end of the year, reversing earlier expectations of rising costs.

Q: An analyst asked if the recent cyclospora outbreak impacted Gladstone's leafy green and fresh produce tenants. / A: Management confirmed the outbreak has created a temporary negative impact, as broad consumer uncertainty has reduced demand for all domestic fresh produce (even though no domestic produce has been linked to the outbreak). Management expects this to be a minor, short-term disruption if the issue is resolved quickly, with any lasting impact depending on how long the demand downturn continues.