Farmland Partners(FPI)2025-02-20 20:20Financial Data and Key Metrics Changes - For the full year ended December 31, 2024, net income was 1.19 per share, an increase from the previous year due to asset dispositions, significant debt reductions, and strong lease renewals [21][22] - AFFO was 0.29 per weighted average share, significantly higher than the same period in 2023, positively impacted by lower property taxes, reduced interest expenses, and increased sales of specialty crops [21][22][30] Business Line Data and Key Metrics Changes - The gain on disposition of assets was higher due to the sale of 54 properties in 2024, resulting in an aggregate gain of 36.1 million in 2023 [22] - Direct operations revenue increased due to higher sales of citrus, avocado, and walnuts, along with lower impairment and cost of sales [26][30] Market Data and Key Metrics Changes - The company noted a plateau in land values in Illinois, with strong prices for quality properties, while expressing concerns about the California market due to water and regulatory challenges [34][40][41] - The company is monitoring the California farmland market, which is currently dislocated, with many properties available but few large investors entering the market [96][99] Company Strategy and Development Direction - The company has focused on asset sales to return cash to shareholders, evidenced by a 0.25 and 0.24 [17][31] Other Important Information - The company has no debt subject to interest rate resets during 2025, and it had undrawn capacity on lines of approximately $167 million at the end of the year [24][25] - General and administrative expenses increased due to a one-time severance expense and a special bonus to executive officers [23] Q&A Session Summary Question: Thoughts on pricing environment for net acquisitions in 2025 - Management indicated a strong focus on Illinois, with a plateau in valuations but strong prices for quality properties, while expressing caution about California due to various challenges [34][40] Question: Thoughts on Ohio Deere dealerships and potential expansion - Management sees potential in the dealership business for current yield and long-term appreciation but will proceed cautiously [46][50] Question: Incremental borrowing rate for new debt - The current incremental borrowing rate is around 6% [55] Question: Impact of USDA funding freezes on tenants - Management does not have tenants exposed to funding freezes and remains focused on quality tenants without reliance on government payments [68][72] Question: Renewal lease terms and asking rates for new renewals - The three-year average on renewal rates is up 12.4%, but 2024 saw a slight decline of 0.8% due to property sales [76][78] Question: Farmers' income outlook and its impact on dividends - Management noted that farm income is climbing back up, driven by grain prices and direct payments, which could support rent increases [87][90] Question: Demand for the FPI loan program - There has been an uptick in demand for the loan program, driven by operators feeling squeezed in 2024 [111]