Gladstone Land(LAND) - 2025 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION Financial Statements (Unaudited) For the six months ended June 30, 2025, Gladstone Land Corporation reported a net income of $7.2 million, a decrease from $12.7 million in 2024, with total assets decreasing to $1.26 billion and net cash from operating activities at $8.4 million Condensed Consolidated Balance Sheets As of June 30, 2025, total assets decreased to $1.26 billion from $1.31 billion, with liabilities falling to $588.5 million and equity slightly decreasing to $670.1 million Condensed Consolidated Balance Sheets (in thousands) | | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $1,258,585 | $1,312,195 | | Total real estate, net | $1,129,449 | $1,156,850 | | Real estate and related assets held for sale, net | $14,496 | $46,314 | | Cash and cash equivalents | $30,481 | $18,275 | | Total Liabilities | $588,512 | $625,013 | | Notes and bonds payable, net | $496,184 | $523,922 | | Total Equity | $670,073 | $687,182 | Condensed Consolidated Statements of Operations and Comprehensive Income For the six months ended June 30, 2025, total operating revenues decreased to $29.1 million, resulting in a net income of $7.2 million and a net loss attributable to common stockholders of $4.8 million Condensed Consolidated Statements of Operations (in thousands, except per-share data) | | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total operating revenues | $29,099 | $41,549 | | Lease revenue, net | $29,098 | $41,096 | | Total operating expenses | $25,637 | $26,424 | | Net income | $7,230 | $12,744 | | Net (loss) income attributable to common stockholders | $(4,774) | $795 | | Basic and diluted (loss) income per common share | $(0.13) | $0.02 | Condensed Consolidated Statements of Equity Total equity decreased from $687.2 million to $670.1 million, primarily due to $22.1 million in distributions and a $2.2 million comprehensive loss, partially offset by net income Changes in Equity for the Six Months Ended June 30, 2025 (in thousands) | Description | Amount | | :--- | :--- | | Balance at December 31, 2024 | $687,182 | | Net income | $7,230 | | Dividends—cumulative redeemable preferred stock | $(12,004) | | Distributions—OP Units and common stock | $(10,139) | | Comprehensive loss | $(2,174) | | Other equity changes | $(22) | | Balance at June 30, 2025 | $670,073 | Condensed Consolidated Statements of Cash Flows Net cash from operating activities decreased to $8.4 million, while investing activities provided $57.4 million and financing activities used $53.6 million, resulting in a $12.2 million net increase in cash Condensed Consolidated Statements of Cash Flows (in thousands) | | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $8,416 | $19,333 | | Net cash provided by investing activities | $57,395 | $61,678 | | Net cash used in financing activities | $(53,605) | $(49,825) | | Net increase in cash and cash equivalents | $12,206 | $31,186 | | Cash and cash equivalents at end of period | $30,481 | $49,757 | Notes to Condensed Consolidated Financial Statements The notes detail the company's agricultural REIT business, accounting policies, financial statement components, and subsequent events including a new share repurchase program - As of June 30, 2025, the company owned 150 farms totaling 103,001 acres across 15 states and 55,306 acre-feet of water assets in California[20] - In January and February 2025, the company sold seven farms in Florida and Nebraska for aggregate sales prices of approximately $64.5 million, recognizing a total net gain of about $15.7 million[44][45] - On July 11, 2025, the Board of Directors approved a new share repurchase program authorizing the repurchase of up to $20.0 million of Series B Preferred Stock and up to $35.0 million of Series C Preferred Stock, expiring July 10, 2026[123] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses a decrease in operating revenues to $29.1 million due to property sales and lease modifications, while highlighting $153.6 million in liquidity and key business environment factors Overview The company operates as an agricultural REIT with 150 diversified farms across 15 states, totaling 103,001 acres, and 55,306 acre-feet of California water assets Portfolio Geographic Diversification as of June 30, 2025 | State | No. of Farms | Total Acres | % of Total Acres | % of Total Lease Revenue (6 Months) | | :--- | :--- | :--- | :--- | :--- | | California | 63 | 34,845 | 33.8% | 58.8% | | Florida | 20 | 13,090 | 12.7% | 16.2% | | Washington | 6 | 2,520 | 2.4% | 7.5% | | Other | 61 | 50,546 | 51.1% | 17.5% | | TOTALS | 150 | 103,001 | 100.0% | 100.0% | - As of June 30, 2025, leases covering 15,002 acres (14.6% of total acreage) are scheduled to expire during the remainder of 2025, with the company exploring renewal, new lease, or sale options[138] Business Environment The business environment is characterized by moderating inflation, elevated interest rates, trade tensions impacting export crops, and a favorable California water outlook - Over 99.9% of the company's borrowings are at fixed rates, with a weighted-average effective interest rate of 3.39% for another 3.3 years, insulating the existing portfolio from recent interest rate hikes[141] - Trade tensions and tariffs pose risks to export-oriented crops like almonds and pistachios, which constitute a significant portion of U.S. agricultural exports, though strong domestic demand for fresh produce provides a buffer[142] - The California water outlook is favorable for the 2024-2025 water year, with above-average precipitation and high reservoir levels leading to positive surface water allocations, despite ongoing SGMA pumping restrictions[147][148][150] Results of Operations Operating revenues decreased to $29.1 million due to property sales and lease restructurings, resulting in operating income of $3.5 million and a net loss attributable to common stockholders of $4.8 million Comparison of Operating Results (in thousands) | | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total operating revenues | $29,099 | $41,549 | | Total operating expenses | $25,637 | $26,424 | | Operating income | $3,462 | $15,125 | | Gain on dispositions of real estate assets, net | $13,261 | $7,473 | | Net income | $7,230 | $12,744 | | Net (loss) income attributable to common stockholders | $(4,774) | $795 | - The decrease in same-property fixed lease payments was primarily due to lease modifications that reduced or eliminated fixed base rent in exchange for significantly increased participation rent components, with revenue recognition expected in late 2025[175] Liquidity and Capital Resources The company maintains $153.6 million in available liquidity, with over 99.9% of borrowings at fixed rates, while cash flow from operations decreased to $8.4 million - As of the report date, the company has available liquidity of approximately $153.6 million, consisting of about $7.3 million in cash and $146.3 million of availability under its credit facilities[201] Summary of Cash Flows (in thousands) | | For the Six Months Ended June 30, 2025 | For the Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash from operating activities | $8,416 | $19,333 | | Net cash from investing activities | $57,395 | $61,678 | | Net cash from financing activities | $(53,605) | $(49,825) | | Net change in Cash and cash equivalents | $12,206 | $31,186 | Non-GAAP Financial Information The company utilizes FFO, CFFO, and AFFO as supplemental measures, with all three metrics showing a decrease for Q2 2025 compared to Q2 2024 Reconciliation of Net (Loss) Income to FFO, CFFO, and AFFO (in thousands) | | For the Three Months Ended June 30, 2025 | For the Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net (loss) income attributable to common stockholders | $(13,880) | $(6,654) | | FFO available to common stockholders | $(3,346) | $4,974 | | CFFO available to common stockholders | $(3,562) | $5,011 | | AFFO available to common stockholders | $(3,450) | $3,703 | Non-GAAP Per Share Metrics | | For the Three Months Ended June 30, 2025 | For the Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | FFO per share | $(0.09) | $0.14 | | CFFO per share | $(0.10) | $0.14 | | AFFO per share | $(0.10) | $0.10 | | Distributions declared per common share | $0.14 | $0.14 | Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate risk, which is minimal due to over 99.9% of borrowings being at fixed rates - The company's exposure to interest rate risk is low, with over 99.9% of borrowings at fixed rates. The weighted-average effective interest rate is 3.39% with a remaining fixed term of 3.3 years[233] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - As of June 30, 2025, management concluded that the company's disclosure controls and procedures were effective[236] - No material changes to internal control over financial reporting occurred during the quarter ended June 30, 2025[238] PART II OTHER INFORMATION Legal Proceedings The company is not currently subject to any material legal proceedings, nor is it aware of any threatened material legal proceedings - The company reports no material known or threatened litigation[240] Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024, and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 - The company refers to its previously filed Form 10-K and Form 10-Q for a discussion of risk factors and notes no material changes[241] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None[242] Defaults Upon Senior Securities Not applicable Mine Safety Disclosures Not applicable Other Information During the three months ended June 30, 2025, no officer or director of the company adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - No officer or director adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements in Q2 2025[245] Exhibits This section lists the exhibits filed with the Form 10-Q, including articles of incorporation, bylaws, forms of stock certificates, officer certifications pursuant to the Sarbanes-Oxley Act, and XBRL data files