Gladstone Land(US:LAND)2023-08-08 17:28Financial Data and Key Metrics Changes - For Q2 2023, the company reported net income of approximately $7.9 million, with net income to common shareholders of $1.7 million or $0.05 per common share [19] - Adjusted FFO for the current quarter was approximately $3.8 million, or $10.7 per share, compared to $4.5 million, or $12.9 per share in the prior year quarter, primarily due to higher costs incurred to carry uninvested capital [20] - Total related party fees increased by about $156,000, primarily driven by additional assets added to the portfolio over the past year [23] Business Line Data and Key Metrics Changes - The company owns about 116,000 acres across 69 different farms, valued at approximately $1.6 billion, including 45,000 acre-feet of bank water [7] - The total year-over-year impact on operations due to tenant issues resulted in a decrease in net operating income of about $318,000 for Q2 and about $613,000 for the total year so far [9] - Fixed base cash rents increased by about $512,000, or 3% over the prior year quarter, primarily driven by additional revenues from new farms acquired [21] Market Data and Key Metrics Changes - Food prices in grocery stores are showing signs of cooling but continue to outpace inflation, with the "food at home" category up by 4.7% for the 12 months ending June 30 [15] - The overall farmland portfolio continues to perform as expected, with the NCREIF farmland index showing a return of 11.4% over the past 25 years, outperforming both the S&P index and overall REIT indexes [30] Company Strategy and Development Direction - The company is being more selective in farm acquisitions due to high prices and rising interest rates, focusing on farms that contribute to healthy lifestyles, such as fruits and vegetables [10][29] - The company is actively working on water improvement projects in California to ensure long-term water supplies and compliance with state groundwater restrictions [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding acquisitions due to high borrowing costs and the current pricing of farms, indicating a preference for a conservative capital approach [10][29] - The expectation is that inflation, particularly in the food sector, will continue to increase, positively impacting the values of underlying farmland [32] Other Important Information - The company raised its common dividend to $0.462 per share per month, marking the 31st increase over the past 34 quarters, resulting in a total increase of 54% over that period [27] - The net asset value for common shares at June 30 was $19.15, up by over $2 from the value at March 31, primarily due to changes in the valuation of fixed-rate debt and preferred securities [25] Q&A Session Summary Question: Any acquisitions on your contract today? - The company currently has no acquisitions under contract but is in discussions with farmers. The focus remains on amassing assets in the farming area despite high prices [34] Question: Where are the issues with the operators showing up? - Issues are reflected in both revenue and property operating expenses, with a year-over-year impact on net operating income of about $600,000 due to tenant issues and increased legal fees [38] Question: How should we be thinking about the seasonality of revenues in the back half of the year? - The revenue increase in the second half of the year is expected to be less than in prior years due to the lack of acquisitions, with participation rents being the primary source of revenue growth [41] Question: Can you go through the change in the BC and Series E quickly? - The majority of the change in net asset value calculation comes from the Series C preferred stock, which was marked down significantly after being listed [46]