Gladstone Land(US:LAND)2021-08-11 17:50Financial Data and Key Metrics Changes - Total assets increased by approximately $67 million due to new acquisitions, with no new borrowings incurred during the quarter [20] - Net loss for the second quarter was about $531,000, with a net loss to common shareholders of $3.5 million or $11.07 per common share [21] - Adjusted FFO for the second quarter was approximately $3.7 million compared to about $4.7 million in the first quarter, with AFFO per share decreasing from $17.04 to $12.06 [21] Business Line Data and Key Metrics Changes - Fixed base cash rents increased by about $830,000 or 5% quarter-over-quarter, primarily driven by additional revenues from recent acquisitions [22] - The overall initial net cash yield on new investments was about 5.1%, with lease renewals expected to result in an operating income increase of about $168,000, approximately 10% over prior leases [10][11] Market Data and Key Metrics Changes - The company currently owns 105,000 acres of farmland valued at about $1.3 billion, with farms located in 14 different states and leased to 79 different tenants [8] - The demand for products grown on the farms remains high, particularly for berries, vegetables, and nuts, which contribute to a stable revenue stream [9][30] Company Strategy and Development Direction - The company plans to continue acquiring farmland and has a pipeline of properties under signed PSAs totaling over $100 million, aiming for $250 million to $300 million in acquisitions for the year [51] - The focus on organic and non-GMO crops aligns with market trends towards healthier food options, with 40% of fresh produce acreage being organic or transitioning to organic [30][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of income from farms, with only three leases scheduled to expire over the next six months, representing about 2% of total annualized lease revenue [12] - The company is actively monitoring the impact of drought conditions in the Western U.S. but reported that all farms currently have sufficient water resources [12][14] Other Important Information - The company raised its common dividend to $4.51 per share per month, marking a 50.3% increase in monthly distributions over the past 26 quarters [27] - The company is working on developing formal ESG policies and expects to meet new board diversity standards set by NASDAQ [17] Q&A Session Summary Question: How significant are any of the participating rents likely to be this year? - Management indicated that indications will be clearer in the third quarter, with more definitive numbers expected in the fourth quarter and first quarter of the following year [38] Question: Where have the biggest increases in NAV occurred over the past year? - California has seen the most significant increases, followed by Oregon and Florida, while Washington and Arizona are experiencing slower appreciation [42][44] Question: Can you provide additional color on the current acquisition pipeline? - The company has completed about $85 million in acquisitions so far and is on pace to surpass the previous year's target, with several properties under signed PSAs [51] Question: What are the potential tax implications with the loss of the 1031 exchange? - Management is promoting the up-REIT structure to farmers, but adoption has been slow due to conservative attitudes within the farming community [56][58] Question: Can you elaborate on the water rights purchased? - The company acquired actual water rather than rights, with valuation tied to market indices, and any decrease in value would be treated similarly to real estate impairments [62][63]