GLADSTONE LAND(LANDO) - 2025 Q2 - Quarterly Report

Company Overview - The company owns 150 farms totaling 103,001 acres across 15 states in the U.S., with 55,306 acre-feet of water assets in California [130]. - The company has 102 leases in place, with 14 leases expiring in 2025, representing 14.6% of total leased acreage [138]. - The company focuses on farmland suitable for growing fresh produce and certain permanent crops, with an ancillary focus on commodity crops [133]. Financial Performance - For the six months ended June 30, 2025, total lease revenue was $29.1 million, a decrease of 29.2% compared to $41.1 million for the same period in 2024 [135]. - California farms accounted for 58.8% of total lease revenue in 2025, down from 67.2% in 2024 [135]. - Total operating revenues for Q2 2025 decreased to $12.296 million, down 42.3% from $21.297 million in Q2 2024 [172]. - Operating income for the first half of 2025 was $3.462 million, a decline of 77.1% from $15.125 million in the first half of 2024 [172]. - Lease revenue from vacant, direct-operated, and non-accrual farms was approximately $3.5 million for the six months ended June 30, 2025, down from $3.9 million in the prior-year period [153]. - Same-property occupancy decreased approximately 3.4% to 95.9% as of June 30, 2025, compared to 99.3% as of June 30, 2024, with 17 farms classified as vacant, direct-operated, or on non-accrual status [171]. - Total lease revenues for the first half of 2025 were $29.098 million, down 29.2% from $41.096 million in the same period of 2024 [174]. Expenses and Costs - Fixed lease payments for Q2 2025 were $12.121 million, a decrease of 39.6% compared to $20.068 million in Q2 2024 [172]. - Property operating expenses for Q2 2025 increased by 1.9% to $1.242 million compared to $1.219 million in Q2 2024 [183]. - General and administrative expenses decreased by 32.6% to $520,000 in Q2 2025 from $772,000 in Q2 2024 [172]. - Depreciation and amortization expenses decreased by 5.0% to $8.374 million in Q2 2025 from $8.813 million in Q2 2024 [172]. Debt and Liquidity - 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 [141]. - A new loan agreement was entered into for $10.6 million at a fixed interest rate of 6.31%, primarily used to repay a maturing loan of $10.3 million at 3.85% [156]. - Approximately $20.7 million of maturing loans were repaid at a weighted-average interest rate of 4.15% during the same period [157]. - Current available liquidity is approximately $153.6 million, consisting of $7.3 million in cash and $146.3 million available under the credit facility with MetLife [201]. Market Conditions - The consumer price index (CPI) rose at an annual rate of 2.7% through June 30, 2025, while food prices increased at an annual rate of 3.0% [139]. - U.S. agricultural export markets face uncertainty due to ongoing trade tensions and new tariffs, particularly affecting almonds and pistachios, which see 60% to 80% of production exported annually [142]. - The strength of the U.S. dollar is a key factor affecting export demand, with a weaker dollar potentially enhancing the competitiveness of U.S. agricultural exports [146]. - The company continues to monitor tariff discussions and trade policy developments, with potential impacts on crop prices and grower economics remaining uncertain [145]. Crop Production and Outlook - The USDA projects a larger-than-expected almond harvest for 2025, initially putting downward pressure on prices, but prices have since rebounded and remain above last year's levels [143]. - The 2025 U.S. pistachio crop is expected to be the largest on record, driven by increased bearing acreage, although new orchard development has slowed [144]. Shareholder Metrics - Pre-Incentive Fee FFO for the three months ended June 30, 2025, was $5,988 million, compared to $4,974 million for the same period in 2024, reflecting an increase of 20.3% [194]. - Net loss attributable to common stockholders for the three months ended June 30, 2025, was $(13,880) million, representing an increase of 108.6% from $(6,654) million in 2024 [194]. - Funds from Operations (FFO) available to common stockholders for the six months ended June 30, 2025, was $(1,207) million, a decrease from $10,962 million in 2024 [231]. - The weighted-average shares of common stock outstanding were 36,184,658 for both the three and six months ended June 30, 2025 [231]. Future Plans - The company intends to use a significant portion of future liquidity to acquire additional farms and farm-related assets [206]. - As of June 30, 2025, the company has committed to capital improvements totaling approximately $7.0 million across various farms, with completion dates ranging from Q4 2025 to Q3 2034 [207]. - Future minimum lease payments under non-cancelable ground leases total approximately $1.2 million, with a present value of $770,000 as of June 30, 2025 [208].