Gladstone Land(US:LAND)2024-11-06 21:04Farm Ownership and Operations - The company owns 168 farms comprising 111,836 acres across 15 states in the U.S. and 53,787 acre-feet of water assets in California[109]. - California accounted for 68.1% of total lease revenue in the nine months ended September 30, 2024, generating $43.33 million[112]. - The company has 114 leases in place, with 42 leases expiring thereafter, representing 50.2% of total acreage[114]. - The company’s portfolio is diversified with 94 different tenants growing over 60 types of crops[110]. - The company’s farmland investment focus includes fresh produce and permanent crops, with an ancillary focus on commodity crops[110]. - The company has 29 farms leased under agreements with a variable rent component based on gross revenues, ensuring a minimum rental income[113]. - The lease terms generally range from 3 to 10 years for row crops and 7 to 15 years for permanent crops, with options to extend[113]. - The company is exploring options for nine agricultural leases scheduled to expire within the next six months, including negotiating new lease terms[115]. Financial Performance - Lease revenue for the nine months ended September 30, 2024, was $63.67 million, a significant increase from $65.95 million for the same period in 2023[112]. - For the three months ended September 30, 2024, total operating revenues decreased by 4.1% to $22,571,000 compared to $23,534,000 in the same period of 2023[143]. - For the nine months ended September 30, 2024, total operating revenues decreased by 2.8% to $64,120,000 from $65,946,000 in 2023[144]. - Operating income for the three months ended September 30, 2024, decreased by 26.9% to $6,872,000 compared to $9,398,000 in the same period of 2023[143]. - Operating income for the nine months ended September 30, 2024, decreased by 10.8% to $21,997,000 from $24,670,000 in 2023[144]. - Fixed lease payments for the three months ended September 30, 2024, were $18,913,000, down 10.4% from $21,102,000 in 2023[143]. - Fixed lease payments for the nine months ended September 30, 2024, were $58,578,000, a decrease of 7.3% from $63,180,000 in 2023[144]. - Total operating expenses for the three months ended September 30, 2024, rose by 11.1% to $15,699,000 from $14,136,000 in 2023[143]. - Total operating expenses for the nine months ended September 30, 2024, increased by 2.1% to $42,123,000 compared to $41,276,000 in 2023[144]. - An impairment charge of $2,106,000 was recorded for the three and nine months ended September 30, 2024, with no similar charge in 2023[143][144]. Revenue and Income Metrics - The company recorded lease revenue of approximately $778,000 from 20 farms during the nine months ended September 30, 2024, a decrease from approximately $2.1 million in the prior-year period[118]. - Variable lease payments from participation rents increased by 47.3% to $3,512,000 for the three months ended September 30, 2024, compared to $2,385,000 in 2023[143]. - Participation rents increased significantly by 132.6% to $3,512,000 for the three months ended September 30, 2024, compared to $1,510,000 in the same period of 2023[146]. - Net income attributable to common stockholders for the three months ended September 30, 2024, was a loss of $5,787,000, compared to a loss of $2,964,000 in the same quarter of 2023, representing a 95.2% increase in loss[164]. - Funds from Operations (FFO) available to common stockholders for the three months ended September 30, 2024, was $5,970, down from $6,306 in 2023, reflecting a decrease of approximately 5.3%[191]. - Core Funds from Operations (CFFO) for the three months ended September 30, 2024, was $6,268, slightly down from $6,389 in 2023, a decrease of about 1.9%[191]. - Adjusted Funds from Operations (AFFO) for the three months ended September 30, 2024, was $4,526, compared to $5,369 in 2023, representing a decline of approximately 15.7%[191]. Debt and Interest Rates - The company repaid approximately $13.3 million of loans with a weighted-average interest rate of 4.28% during the period from July 1, 2024, to the date of the filing[122]. - Over 99.9% of the company's borrowings are at fixed rates, with a weighted-average effective interest rate of 3.40% for another 3.7 years, providing protection against rising interest rates[131]. - Interest expense for the three months ended September 30, 2024, was $5,402,000, a decrease of 7.8% from $5,856,000 in the same quarter of 2023[164]. - The fair value of fixed-rate borrowings outstanding as of September 30, 2024, was approximately $500.0 million[204]. - A 2% increase in market interest rates would decrease the fair value of fixed-rate borrowings by approximately $57.2 million[205]. - The company aims to limit the impact of interest rate changes on earnings and cash flows by primarily borrowing at fixed rates[204]. Asset Management and Valuation - As of September 30, 2024, the total fair value of the portfolio is estimated at $1,462,362,000, with third-party appraisals contributing 97.4% of this value[195]. - The estimated net asset value (NAV) per common share is $15.57, calculated based on total equity adjustments and fair value of real estate holdings[199]. - The total equity per balance sheet is reported at $691,204,000[201]. - The net fair value adjustment for real estate holdings is $188,783,000, reflecting the difference between estimated fair value and net cost basis[201]. - The market capitalization rate for the properties is reported at 2.20% to 6.20%, with a weighted average of 4.44%[197]. - The total acres valued in the portfolio amount to 111,836, with 92,397 acres classified as farm acres[195]. - The net change in unrealized fair value of the farmland portfolio resulted in a decrease of $0.65 per share due to net depreciation[202]. - Management believes that the values presented reflect current market conditions, but actual realized values may vary[202]. Liquidity and Cash Flow - Current available liquidity is approximately $164.4 million, consisting of $19.8 million in cash and $144.6 million available under the credit facility with MetLife[169]. - Cash provided by operating activities decreased by 20.7% to $17.966 million for the nine months ended September 30, 2024, compared to $22.657 million in the prior-year period[174]. - Cash from investing activities increased significantly due to proceeds from the sale of the Florida farm, resulting in a net gain of approximately $10.4 million[177]. - Cash used in financing activities increased by 44.6% to $(83.363) million, primarily due to a decrease in net cash proceeds from equity offerings[178]. - The MetLife Facility has $212.9 million of undrawn commitment remaining, with $110.2 million currently available[179]. - The Farmer Mac Facility allows for bond issuances up to $225.0 million by December 31, 2026, with approximately $100.1 million already issued[180].