Company Overview - Gladstone Land (NASDAQ:LAND) is a farmland owning REIT with a portfolio of 111,836 acres across the US, primarily in California, Florida, and Colorado, producing grains, fruits, tree nuts, and wine grapes [2] - The total portfolio value has increased from $75 million at its IPO in 2013 to approximately $1.5 billion today, representing a 15-fold growth [4] Company Performance - Despite significant portfolio growth, Gladstone Land has produced a negative 7.2% price return since its IPO, with total returns being modestly positive due to dividends [4][6] - The REIT has seen a 489.1% increase in shares outstanding and a 1,670% increase in total long-term debt from 2014 to 2024 [6] Market Demand and Yield - Farmland demand remains high globally, with a downward trend in arable land per capita, while yields per acre for crops like corn and wheat continue to rise [7] - Gladstone Land maintains high occupancy levels, with a weighted average of 99.8%, although it recently hit its lowest level since the IPO at 98.8% [8] Rental Income and Financial Stability - Rental income growth has been inconsistent, with no net gains in 2022 and 2023, but 2024 is projected to improve [8] - The REIT has a stable debt maturity profile and lease expirations, navigating interest rate changes without significant disruption [10][14] Valuation and Returns - The REIT trades at about 23 times funds from operations (FFO), with expectations of flat growth from 2023 to 2026 [14][17] - Preferred shares of Gladstone Land yield 7.1% and are currently undervalued, providing a more attractive return compared to common shares, which have returned about 4% [20]

Financial Data and Key Metrics Changes - The company reported a net loss of $823,000 for the second quarter, with a net loss to common shareholders of $6.7 million or $0.19 per share [22] - Adjusted FFO for the current quarter was approximately $3.7 million or $0.103 per share, compared to $3.6 million or $0.102 per share in the prior year quarter [22] - Dividends declared per common share increased to $0.140 in the current quarter from $0.138 in the prior year quarter [22] Business Line Data and Key Metrics Changes - Fixed base cash rents decreased by about $1.1 million year-over-year, primarily due to lost revenue from a sold farm and other properties [23] - Participation rents increased by $1.1 million during the current quarter, largely due to additional information related to prior harvests [23] Market Data and Key Metrics Changes - The company owns approximately 112,000 acres on 168 farms, with a total value of about $1.5 billion [7] - The company executed 11 new or amended leases, resulting in an expected increase in annual net operating income of about $465,000 [8] Company Strategy and Development Direction - The company remains cautious on acquisition activity due to high capital costs and is focused on evaluating profitability outlooks for certain permanent crop farms [29] - The company is actively acquiring water assets to enhance farm desirability and mitigate water supply issues [10][14] Management's Comments on Operating Environment and Future Outlook - Management noted that while crop prices for almonds and pistachios have been depressed, there are signs of recovery, particularly in exports [11][12] - The company is optimistic about future price increases for almonds and pistachios, driven by strong demand, especially in India [13][31] Other Important Information - The company has access to about $180 million in liquidity, including over $30 million in cash [26] - The net asset value per common share decreased to $17.59 from $18.50 due to decreases in valuations of certain farms [26] Q&A Session Summary Question: What is the exposure of the portfolio to almonds and pistachios? - Approximately 20% of revenue is from pistachios and about 8-9% from almonds [36] Question: What are the current interest rates for refinancing the $46 million debt expiring in the next 12 months? - The weighted average interest rate is about 3.4%, with potential refinancing rates expected to be around 200 basis points higher [38] Question: Are the vacant farms all related to nuts? - Yes, all the vacant farms are related to nuts [40] Question: What is the outlook for participation rents in the second half of 2024? - Participation rents collected in 2023 were minimal, and expectations for 2024 are uncertain but may be similar to previous years [44][50] Question: What assets are being considered for potential dispositions? - The company is evaluating assets, particularly those with poor performance due to current market conditions for almonds and pistachios [52]

Core Insights - Gladstone Land (LAND) reported quarterly funds from operations (FFO) of $0.10 per share, missing the Zacks Consensus Estimate of $0.12 per share, and down from $0.11 per share a year ago, indicating a -14.17% surprise [1] - The company posted revenues of $21.3 million for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 4.04%, compared to $21.21 million in the same quarter last year [1] - Gladstone has not surpassed consensus FFO estimates in the last four quarters, while it has topped revenue estimates three times in the same period [1] Financial Performance - The FFO for the previous quarter was expected to be $0.15 per share, but the actual was $0.14, resulting in a -6.67% surprise [1] - Current consensus FFO estimate for the upcoming quarter is $0.17 on revenues of $22.89 million, and for the current fiscal year, it is $0.60 on revenues of $87.22 million [4] Market Performance - Gladstone shares have declined approximately 4.4% since the beginning of the year, contrasting with the S&P 500's gain of 9% [2] - The Zacks Industry Rank for REIT and Equity Trust - Other is in the top 39% of over 250 Zacks industries, indicating a favorable industry outlook [5] Future Outlook - The sustainability of the stock's price movement will depend on management's commentary during the earnings call and the trends in estimate revisions [2][3] - The current Zacks Rank for Gladstone is 3 (Hold), suggesting that shares are expected to perform in line with the market in the near future [4]

Financial Performance - Net loss for Q2 2024 was approximately $823,000, a significant decline from net income of approximately $7.9 million in Q2 2023[3] - AFFO for the quarter was approximately $3.7 million, or $0.103 per share, compared to approximately $3.6 million, or $0.102 per share, in the prior-year quarter, reflecting a 1.5% increase[3][8] - Cash flows from operations decreased by approximately $2.0 million from the prior-year quarter, largely due to timing of cash rental receipts[6] Revenue and Income - Total cash lease revenues remained relatively flat, with fixed base cash rents decreasing by approximately $1.1 million, offset by an increase in participation rents of approximately $1.1 million[4] - The company executed three amended lease agreements expected to increase annual net operating income by approximately $70,000[2] - The distribution run rate on common stock was increased by 0.22%, with monthly cash distributions totaling $0.1398 per share during Q2 2024[2] - The company increased its distribution run rate by 0.21%, marking the 35th distribution increase over the past 38 quarters, with a total increase of 55.7%[7] Asset Valuation - The estimated NAV per share decreased by $1.56 to $17.59 at June 30, 2024, primarily due to valuation decreases in certain farms[6][8] - The estimated NAV available to common stockholders and non-controlling OP unitholders is $630.465 million, with an estimated NAV per share of $17.59[19] - The fair value adjustment for long-term assets is $213.801 million, while the fair value adjustment for long-term indebtedness is $50.778 million[18][19] Company Operations - Gladstone Land Corporation owns 168 farms across approximately 112,000 acres in 15 states, with total assets valued at approximately $1.5 billion[11] - The company owns approximately $1.5 billion of farmland and water assets, with ongoing discussions to lease or sell six properties[7] - Gladstone Land's farms primarily grow annual row crops and permanent crops, with a focus on fresh produce such as berries and vegetables[11] - Approximately 30% of the company's fresh produce acreage is organic or in transition to organic, while over 20% of its permanent crop acreage falls into this category[11] Shareholder Returns - The company has paid 138 consecutive monthly cash distributions since its IPO in January 2013, with a current monthly distribution of $0.0467 per share, equating to $0.5604 annually[11] - The company repurchased 140,777 shares of its Series B and C Preferred Stock at an average price of $20.56 per share, resulting in a total gain on repurchase of approximately $274,000[2] Future Outlook - The company anticipates benefits from increases in farmland values and operating revenues, as well as expected increases in capitalization rates[20] - The company is committed to maintaining or growing its portfolio and FFO, despite potential risks and uncertainties in the economic environment[20] Performance Metrics - The company’s FFO, CFFO, and AFFO metrics are adjusted for non-cash items and non-recurring expenses, providing a clearer picture of sustainable operating performance[13][14][15] - Gladstone Land has increased its common distributions 35 times over the past 38 quarters[11]

Farm Portfolio and Operations - The company owns 168 farms comprising 111,836 acres across 15 states in the U.S. and 53,975 acre-feet of water assets in California [115]. - California farms account for 31.2% of total acres and generated lease revenue of $27,628,000, which is 67.2% of total lease revenue [118]. - The farmland portfolio is diversified with 93 different tenants growing over 60 types of crops [116]. - The company has a focus on farmland suitable for fresh produce and permanent crops, with an ancillary focus on commodity crops [116]. - The company operates through an externally-managed structure, with Gladstone Management Corporation managing the real estate portfolio [115]. - The company has 103 farms leased on a pure triple-net basis, with 49 on a partial-net basis, and 12 farms directly operated [119]. - The company had 22 farms that were either vacant, direct-operated, or placed on non-accrual during all or a portion of the reporting periods [144]. - The company did not acquire any new farms from January 1, 2023, through June 30, 2024, and had one farm disposition [144]. Financial Performance - Total lease revenue for the six months ended June 30, 2024, was $41,096,000, representing 100% of total revenue [121]. - Total lease revenue for the six months ended June 30, 2024, was $41,096, a decrease of 3.1% from $42,412 in 2023 [148]. - For the three months ended June 30, 2024, total operating revenues increased to $21,297, a 0.4% increase from $21,210 in the same period of 2023 [147]. - Operating income for the three months ended June 30, 2024, was $7,864, reflecting a 0.5% increase from $7,827 in 2023 [147]. - Net loss attributable to common stockholders for the three months ended June 30, 2024, was $(6,654) million, a decrease of 485.3% compared to a net income of $1,727 million in the same period last year [168]. - Net income for the six months ended June 30, 2024, was $12,744 million, representing a 32.7% increase from $9,605 million in the same period last year [168]. - Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO) are key non-GAAP measures used to assess operational performance, with adjustments made for non-recurring charges and cash rent normalization [190][194]. Lease and Revenue Details - 9.9% of total acreage (11,079 acres) is scheduled to expire in 2024, contributing $5,079,000 or 12.4% of total lease revenue for the six months ended June 30, 2024 [121]. - The company is exploring options for nine agricultural leases expiring within the next six months, including negotiating new terms and potential sales [122]. - During the six months ended June 30, 2024, lease revenue from vacant, direct-operated, and non-accrual properties was approximately $561,000, a decrease from approximately $1.8 million in the prior-year period [124]. - Lease revenue from vacant, direct-operated, or non-accrual properties decreased by 43.3% to $561 for the three months ended June 30, 2024 [151]. - Fixed lease payments for the three months ended June 30, 2024, decreased to $20,068, down 5.0% from $21,118 in 2023 [147]. Expenses and Costs - Property operating expenses for the three months ended June 30, 2024, increased by 37.4% to $1,219 compared to $887 in 2023 [147]. - The company experienced a 198.2% increase in tenant-reimbursed property operating expenses for the six months ended June 30, 2024, totaling $328 million compared to $110 million in 2023 [159]. - General and administrative expenses decreased due to lower stockholder-related expenses and acquisition-related costs, contributing to overall cost management [167]. - Property operating expenses for properties acquired or disposed of decreased significantly due to the sale of a farm in Florida [161]. Capital and Financing - The company repaid approximately $6.0 million of loans with a weighted-average interest rate of 4.31% and an effective rate of 3.06% [128]. - The Series E Preferred Stock offering raised net proceeds of approximately $90,000 from the sale of 3,995 shares at an average price of $24.90 per share [129]. - The company approved a share repurchase program for up to $20.0 million of Series B Preferred Stock and $35.0 million of Series C Preferred Stock [130]. - Current available liquidity is approximately $179.2 million, consisting of $32.7 million in cash and $146.5 million available under a credit facility [170]. - The company plans to use a significant portion of available liquidity to purchase additional farms and farm-related facilities as opportunities arise [173]. - The company expects to enter into additional borrowing agreements with existing and new lenders for potential acquisitions in the future [186]. Market and Valuation - The total fair value of the real estate portfolio as of June 30, 2024, was $1,485,653 million, with 97.4% derived from third-party appraisals [200]. - The estimated NAV per common share as of June 30, 2024, is $17.59, down from $18.50 as of March 31, 2024 [207]. - The closing price of common stock on June 30, 2024, was $13.69 per share, significantly lower than the estimated NAV per share [207]. - The fair value of long-term borrowings as of June 30, 2024, is approximately $503.0 million, compared to a carrying value of approximately $551.9 million [203]. - The company plans to have each property valued by an independent appraiser at least once every three years to ensure accurate fair value assessments [199]. Cash Flow - Net cash flow from operating activities decreased by 14.4% to $19,333,000 in 2024 from $22,577,000 in 2023 [180]. - Cash flow from investing activities increased significantly by 1,889.0% to $61,678,000 in 2024, primarily due to proceeds from the sale of a 3,748-acre farm in Florida for approximately $65.7 million [180][182]. - Cash flow from financing activities decreased by 29.0% to $(49,825,000) in 2024, attributed to a reduction in net cash proceeds from equity offerings [180][183]. - The total net change in cash and cash equivalents was $31,186,000 in 2024, a substantial increase compared to $(12,933,000) in 2023, representing a change of 341.1% [180].

Investment Thesis - The Gladstone Land Corp. (NASDAQ:LAND) REIT is positioned as a potential growth opportunity within a stagflationary economic environment, with farmland values and food prices likely to outperform inflation [1] - Current valuation levels suggest that the REIT is a buy, with plans to increase holdings if prices dip further [1] Company Overview - Gladstone Land REIT owns over 115,000 acres of farmland, with a market cap of approximately $545 million, translating to a valuation of about $4,700 per acre based on market cap [3] - The estimated market value of its acreage is $1.5 billion, indicating an average value of $13,000 per acre, which is three times higher than the average U.S. farmland price [3][4] Financial Performance - The REIT generated $90.32 million in revenues from land leases, resulting in a revenue-to-market cap ratio of just over 6x as of 2023 [4] - Net income for Q1 was $13.6 million, covering quarterly shareholder payouts of $11.1 million, with interest expenses at $5.6 million, indicating a fragile financial situation [4] - Total debt stands at $615 million, reflecting a 7.2% decline year-over-year, but poses risks given current high-interest rates [5] Market Trends - The share price of Gladstone Land is positively correlated with soft commodities markets, although it has significantly declined from its 2022 highs of over $40 per share [6] - The REIT's land portfolio peaked in 2022, with a slight decline attributed to higher interest rates making borrowing less attractive [7] - Long-term appreciation of farmland values is supported by declining global arable land per capita, projected to decrease from 0.44 acres in 2020 to 0.38 acres by 2040, a 15% decline [8] Demand Factors - Demand for cropland-derived products, including biofuels and animal protein, is expected to rise, driven by an increasing global middle class and population growth [9][10][11] - The REIT's revenues are likely to benefit from rising land prices, which can lead to higher leasing fees and increased earnings [12] Conclusion - Gladstone Land Corp. is positioned to potentially outperform in a stagflationary market, with long-term trends favoring farmland appreciation and increasing demand for agricultural products [12] - The company presents an opportunity for investors to engage in the consolidation of farmland ownership, despite potential short-term challenges related to an aging farmer demographic [13]

Core Viewpoint - Gladstone Land (NASDAQ:LAND) is a REIT focused on owning farmland and leasing it to farmers, with a significant emphasis on the performance of its Series D preferred shares as the mandatory call date approaches in January 2026 [1][16]. Financial Performance - The net income for the quarter ended March 31, 2024, was reported at $13.57 million, a substantial increase of 675.3% compared to the previous year [4][5]. - Total operating revenues decreased by 4.5% to $20.25 million, while total operating expenses also saw a reduction of 5.6% to $12.99 million [5]. - The Adjusted Funds From Operations (AFFO) was $5.1 million, which includes $6.1 million in preferred dividends, resulting in a payout ratio of approximately 54% [6][18]. Balance Sheet Strength - Gladstone Land's total assets are valued at $1.36 billion, with liabilities amounting to $640 million, leading to an equity to assets ratio exceeding 50% [6][7]. - The company has approximately $720 million in equity, indicating a robust balance sheet that mitigates risks associated with the high payout ratio [6][10]. Asset Valuation - The fair value of Gladstone Land's assets is estimated at just under $1.5 billion, which is $270 million higher than the book value, providing a significant cushion for investors [11][13]. - The estimated NAV available to common stockholders is approximately $662.92 million, translating to an estimated NAV per common share of $18.50 [14][15]. Preferred Shares Insights - The Series D preferred shares offer a dividend of $1.25 per year, with a mandatory redemption by January 2026; failure to redeem will increase the dividend to $2 per share [16][17]. - Current trading yields for the preferred shares suggest a yield to maturity of 6.65% if called, which is competitive compared to US treasury bills [17][18].

Core Viewpoint - Gladstone Land (NASDAQ:LAND) is a Real Estate Investment Trust (REIT) that provides exposure to farmland investments across the USA, despite facing a significant 45% price reduction over the last three years primarily due to rising interest rates [3][4]. Portfolio & Strategy - LAND owns approximately 168 farms covering over 112,000 acres across 15 states, with a total portfolio value of about $1.5 billion [5]. - The company employs a triple net lease strategy, transferring most responsibilities to tenants, which enhances profitability margins and provides a steady income stream [6]. - LAND's properties are currently leased at a 99.4% occupancy rate, indicating strong income generation potential [7]. Financial Performance - In Q1, LAND reported a revenue decline of 4.5% year-over-year, totaling $20.25 million, while funds from operations (FFO) were $0.167 per share, beating estimates by $0.02 [11]. - The company has a strong liquidity position with cash and cash equivalents at a decade high of $51.6 million, while long-term debt stands at approximately $612 million [13]. Dividend Information - LAND's current dividend yield is 4.15%, with a payout ratio of about 83%, indicating a typical range for REITs [17]. - The dividend has grown at a compound annual growth rate (CAGR) of only 1.09% over the last three years, suggesting limited growth potential [18]. Valuation & Market Outlook - LAND's price to AFFO ratio is 23.06x, higher than the sector median of 14.81x, indicating potential overvaluation [21]. - The average price target from Wall Street is $15.20 per share, suggesting a potential upside of about 12% from current levels [22]. - The fresh produce market, valued at $119.9 billion, is expected to grow at a CAGR of approximately 7% through 2028, indicating a favorable long-term market opportunity for LAND [24]. Risks & Challenges - LAND faces challenges from upcoming lease expirations that could impact revenue, as well as potential increases in tenant defaults due to high interest rates [25][26]. - The company’s occupancy rate has slightly decreased but remains above 98%, reflecting ongoing challenges in the sector [27].

Gladstone Land Corporation (NASDAQ:LAND) Q1 2024 Earnings Conference Call May 8, 2024 8:30 AM ET Company Participants David Gladstone - Chief Executive Officer Michael LiCalsi - General Counsel Lewis Parrish - Chief Financial Officer Conference Call Participants Rob Stevenson - Janney John Massocca - B. Riley Operator Greetings and welcome to the Gladstone Land Corporation First Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure ...

Gladstone Land (LAND) came out with quarterly funds from operations (FFO) of $0.14 per share, missing the Zacks Consensus Estimate of $0.15 per share. This compares to FFO of $0.17 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an FFO surprise of -4.67%. A quarter ago, it was expected that this real estate investment trust specializing in farmland would post FFO of $0.18 per share when it actually produced FFO of $0.15, delivering a surprise of -16. ...