Gladstone Land(LAND) - 2023 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION Financial Statements Gladstone Land Corporation's unaudited condensed consolidated financial statements for Q2 and six months ended June 30, 2023, detail balance sheets, operations, equity, and cash flows Condensed Consolidated Balance Sheets As of June 30, 2023, total assets slightly decreased to $1.43 billion, liabilities decreased to $693.8 million, and total equity increased to $734.9 million Condensed Consolidated Balance Sheets (in thousands) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Assets | $1,428,732 | $1,457,251 | | Total real estate, net | $1,309,414 | $1,325,428 | | Cash and cash equivalents | $48,208 | $61,141 | | Total Liabilities | $693,798 | $725,889 | | Notes and bonds payable, net | $593,656 | $626,400 | | Total Equity | $734,934 | $731,362 | Condensed Consolidated Statements of Operations and Comprehensive Income Net income significantly increased to $7.9 million in Q2 2023, driven by a $6.4 million gain on real estate disposition, with lease revenue showing modest growth Key Operating Results (in thousands, except per share data) | Metric | Q2 2023 | Q2 2022 | Six Months 2023 | Six Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Total operating revenues | $21,210 | $20,293 | $42,412 | $40,236 | | Total operating expenses | $13,383 | $12,160 | $27,141 | $25,525 | | Gain (loss) on dispositions | $6,394 | $(305) | $5,914 | $(1,280) | | Net Income | $7,855 | $613 | $9,605 | $1,800 | | Net Income (Loss) to Common Stockholders | $1,727 | $(3,873) | $(2,593) | $(6,610) | | EPS (Basic and Diluted) | $0.05 | $(0.11) | $(0.07) | $(0.19) | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2023, operating cash flow was $22.6 million, investing provided $3.1 million, and financing used $38.6 million, resulting in a $12.9 million net cash decrease Six Months Ended June 30, Cash Flow Summary (in thousands) | Cash Flow Category | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $22,577 | $19,355 | | Net cash provided by (used in) investing activities | $3,101 | $(35,147) | | Net cash (used in) provided by financing activities | $(38,611) | $47,528 | | Net (Decrease) Increase in Cash | $(12,933) | $31,736 | Notes to Condensed Consolidated Financial Statements The notes detail the real estate portfolio of 169 farms, $593.8 million in borrowings, equity issuance activities, and related-party transactions - The company's portfolio consisted of 169 farms totaling 115,593 acres as of June 30, 2023, with California (63 farms) and Florida (26 farms) being the most significant locations[31][32] - On June 23, 2023, the company sold a 138-acre parcel of unfarmed land in Florida for $9.6 million, recognizing a net gain of approximately $6.4 million[43] - Total borrowings stood at $593.8 million as of June 30, 2023, with a weighted-average stated interest rate of 3.79%[53] - Subsequent to June 30, 2023, the company sold 41,600 shares of Series E Preferred Stock for gross proceeds of $1.04 million and 58,360 shares of common stock under its ATM program for gross proceeds of $1.01 million[110][111] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses financial performance, portfolio activity, and liquidity, noting a 5.4% revenue increase, $185.4 million in liquidity, and an estimated NAV per common share of $19.15 Overview Gladstone Land, an agricultural REIT, owns 169 farms across 15 states, diversified with 92 tenants and over 60 crop types, focusing on fresh produce and permanent crops - The company owns 169 farms comprised of 115,593 acres in 15 states, leased to 92 different, unrelated third-party tenants[118][119] - California and Florida represent the largest geographic concentrations, accounting for 64.0% and 17.7% of total lease revenue, respectively, for the six months ended June 30, 2023[121] Results of Operations Total operating revenues increased 4.5% in Q2 2023 and 5.4% for the six-month period, driven by acquisitions, with operating expenses rising and net income benefiting from a property sale gain Comparison of Operating Results (in thousands) | Metric | Q2 2023 | Q2 2022 | Six Months 2023 | Six Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Total operating revenues | $21,210 | $20,293 | $42,412 | $40,236 | | Total operating expenses | $13,383 | $12,160 | $27,141 | $25,525 | | Operating income | $7,827 | $8,133 | $15,271 | $14,711 | - Lease revenue from properties acquired or disposed of increased significantly, contributing an additional $1.0 million in Q2 2023 and $2.1 million in the first six months of 2023 compared to the prior year periods[154] - The base management fee paid to the Adviser increased due to a larger asset base, while no incentive fee was earned in the first half of 2023, compared to a $1.1 million fee in the first half of 2022[167] Liquidity and Capital Resources The company has $185.4 million in available liquidity, with over 99.9% of debt at fixed rates, and will meet future capital needs via cash flow, debt, and equity issuances - Current available liquidity is approximately $185.4 million, consisting of cash on hand and availability under the MetLife credit facility[174] - Over 99.9% of borrowings are at fixed rates, with a weighted-average effective interest rate of 3.35% for another 4.6 years[174] - Since January 1, 2023, the company has raised gross proceeds of $4.4 million from its Series E Preferred Stock offering and $15.2 million from its common stock ATM program[189][190] Non-GAAP Financial Information The company provides non-GAAP metrics, with Diluted AFFO per share at $0.11 for Q2 2023, and an estimated Net Asset Value (NAV) per common share of $19.15 as of June 30, 2023 Non-GAAP Performance Metrics (per share) | Metric | Q2 2023 | Q2 2022 | Six Months 2023 | Six Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Diluted FFO | $0.12 | $0.14 | $0.27 | $0.33 | | Diluted CFFO | $0.13 | $0.14 | $0.31 | $0.33 | | Diluted AFFO | $0.11 | $0.13 | $0.28 | $0.31 | | Distributions Declared | $0.14 | $0.14 | $0.28 | $0.27 | Estimated NAV per Common Share | Date | Estimated NAV per Share | | :--- | :--- | | June 30, 2023 | $19.15 | | March 31, 2023 | $17.12 | Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate risk, largely mitigated by over 99.9% of borrowings at fixed rates with a 3.35% weighted-average effective rate for 4.6 years - The company's primary market risk is interest rate risk, which is mitigated by having over 99.9% of its borrowings at fixed rates[215] - The weighted-average effective interest rate on fixed-rate debt is 3.35%, with a remaining fixed term of 4.6 years[215] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2023, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2023[217] - No material changes were made to the internal control over financial reporting during the quarter ended June 30, 2023[219] 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 is not currently subject to any material legal proceedings[221] 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, 2022 - No material changes to risk factors have occurred since the last Annual Report on Form 10-K[222] Exhibits This section provides an index of all exhibits filed with the Form 10-Q, including certifications by the CEO and CFO, and interactive data files (XBRL)