Financial Data and Key Metrics Changes - Total assets increased by approximately $53 million, or 9%, primarily due to new acquisitions funded through equity issuances and fixed-rate borrowings [16] - Net income for the quarter was about $174,000, with a net loss to common shareholders of approximately $720,000, or $0.04 per common share [19] - Adjusted FFO decreased by about $127,000, or 5%, with AFFO per share decreasing to $0.125 from $0.133 in the prior quarter [19] - Rental income increased by about 6% compared to the prior quarter, primarily due to recent acquisitions [20] Business Line Data and Key Metrics Changes - The company acquired four new farms for about $46 million during the quarter, with a focus on crops such as pistachios, blueberries, cranberries, and olives [10] - The initial net yield on new farms is about 6%, with leases containing provisions for annual escalations and participation rents [12] - New leases executed or extended resulted in an increase in minimum fixed cash rent of about $294,000, or 21% over prior leases [12] Market Data and Key Metrics Changes - The company owns approximately 80,000 acres across 92 farms in 10 states, valued at about $735 million [9] - The farms are 100% occupied, with 64 different tenants, all unrelated to the company [10] - The NCREIF Farmland Index has shown an average annual return of 14.7% over the past 15 years, outperforming the S&P index [26] Company Strategy and Development Direction - The company focuses on farmland growing fresh produce, with over 85% of total revenue coming from crops found in grocery stores [24] - The strategy includes a strong emphasis on organic farming, with over 40% of fresh produce acreage being organic or in the process of becoming organic [24] - The company aims to continue increasing dividends at a rate that outpaces inflation, having raised dividends 15 times over the past 55 months [27] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding strong crop yields and participation rents in the upcoming months [9] - The company is comfortable with its loan-to-value ratio of about 49%, given the low risk associated with high-quality farmland [17] - Management noted that the demand for prime farmland remains strong and stable, particularly in California, Oregon, and Washington [26] Other Important Information - The company raised about $22 million through the sale of Series B preferred stock and $26 million of common stock [13] - The net asset value per share decreased to $11.61, down by $0.69 or 5.9% from the previous quarter, primarily due to decreases in longer-term market interest rates [22] - The company has about $45 million available in liquidity, translating to roughly $115 million in buying power for acquisitions [22] Q&A Session Summary Question: What crops were acquired in the $112 million of acquisitions? - The company acquired a mixture of crops, including a strawberry and vegetable farm, and is looking at both row crops and permanent plantings for future acquisitions [30][31] Question: How are farm prices trending compared to two years ago? - Generally, farm prices are seeing year-over-year increases, particularly in California and other key regions [36] Question: How are farmers' balance sheets faring today? - Farmers are generally doing well, continuing to sell their produce without significant issues, especially in organic farming [38] Question: What was the impact of debt fair value on NAV? - The bulk of the NAV decrease was attributed to debt fair value, accounting for approximately $0.39 or $0.40 of the decrease [42] Question: What are the expected expenses for generators in Q3? - Generators cost about $200,000 in Q2, with expectations for a significant reduction in Q3 expenses [44] Question: What is the limit for Series B preferred stock? - The maximum for Series B preferred stock is set at $150 million, with plans to reach that limit within the next year [46]
Gladstone Land(LAND) - 2019 Q2 - Earnings Call Transcript