Gladstone Land(LAND) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Adjusted FFO for Q4 2024 was approximately $3.4 million or$ 0.09 per share, down from $5.4 million or$ 0.15 per share in the prior year quarter [36] - Annual adjusted FFO for 2024 was approximately $16.7 million, compared to$ 20.3 million in 2023, with AFFO per share decreasing from $0.57 in 2023 to$ 0.47 in 2024 [36] - Year-over-year fixed base cash rents decreased by about $4.9 million on a quarterly basis and$ 9.7 million on an annual basis [37] Business Line Data and Key Metrics Changes - Participation rents recorded during Q4 were approximately $4.8 million, compared to$ 3.3 million in the prior year quarter, with annual participation rents increasing from $5.9 million to$ 9.4 million [38] - The company executed four new lease agreements and amendments, primarily in the West, with a shift towards crop share components instead of fixed rent payments [18][20] Market Data and Key Metrics Changes - The company sold 11 blueberry farms in Michigan, which had a negative impact on net operating income of about $400,000 in 2024 [15] - The sale of five farms in Florida resulted in a gain of about 40% over the purchase price, indicating a strong appreciation in farmland values in that region [16] Company Strategy and Development Direction - The company remains cautious with new investments due to high capital costs and low cap rates on most row crops and farmlands [13][52] - The strategy includes adjusting lease structures to minimize fixed costs while allowing for greater participation in crop sales [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed hope for a reduction in interest rates, which would improve acquisition opportunities [53] - The company anticipates stable to strong demand for prime farmland, particularly for crops that contribute to healthy lifestyles [55][58] Other Important Information - The net asset value per common share decreased from$ 15.57 at the end of Q3 to $14.91 at the end of Q4, primarily due to decreases in valuations of certain farms [45] - The company has access to over$ 195 million of capital, including about $50 million in cash on hand [46] Q&A Session Summary Question: Clarification on participation and fixed base rent amendments - The$ 3 million to $3.5 million lower fixed base rent refers to the average base rent for the year in 2024 compared to 2025 [64] Question: Expectations around interest patronage in Q1 - Expectation is for about 10% less interest patronage due to the payoff of a portion of loans [75] Question: Details on lease expirations this year - Most leases expiring in the next six months are row crop farms, with a significant portion of remaining expirations being permanent crop farms [76][78] Question: Impact of property operating expenses - The increase in property operating expenses is related to vacant and directly operated properties, with expectations for a decrease in 2025 [88] Question: NAV decision and future reporting - The company will not provide NAV calculations quarterly due to high costs, but may consider internal assessments [110][112]