Gladstone Land Announces Second Quarter 2022 Results
August 9, 2022 | Gladstone Land Corporation
Gladstone Land Corporation (NASDAQ:LAND) (“Gladstone Land” or the “Company”) today reported financial results for the second quarter ended June 30, 2022. A description of funds from operations (“FFO”), core FFO (“CFFO”), adjusted FFO (“AFFO”), and net asset value (“NAV”), all non-GAAP (generally accepted accounting principles in the United States) financial measures, appear at the end of this press release. All per-share references are to fully-diluted, weighted-average shares of the Company’s common stock, unless noted otherwise. For further detail, please refer to the Company’s Quarterly Report on Form 10-Q (the “Form 10-Q”), which is available on the Investors section of the Company’s website at www.GladstoneLand.com.
Second Quarter 2022 Activity:
Portfolio Activity:
• Property Acquisitions: Acquired a 1,374-acre farm in California and a 15-acre parcel in Florida adjacent to an existing farm for a total of approximately $24.6 million. On a weighted-average basis, these acquisitions will yield an initial, minimum net capitalization rate of 5.84%; however, the leases on these farms contain certain provisions (e.g., annual rent escalations, CPI adjustments, or participation rents) that are expected to drive cash rents higher in future years.
• Lease Renewals: Executed one new lease agreement on a farm in Colorado that is expected to result in an increase in annual net operating income of approximately $170,000 from that of the prior lease. In addition, we also entered into a renewable energy lease to allow for the development of both wind and solar energy facilities on 16,595 acres in Colorado that is expected to provide annual rental payments of approximately $332,000.
Debt Activity – New Long-term Borrowings: Received $4.8 million in long-term loan proceeds previously secured from an existing lender. This loan will bear interest at an expected effective interest rate of 2.89% and is fixed for the next 4.9 years.
Equity Activity – Series C Preferred Stock: Sold 1,479,544 shares of our 6.00% Series C Cumulative Redeemable Preferred Stock (the “Series C Preferred Stock”) for net proceeds of approximately $33.7 million.
Increased and Paid Distributions: Increased the distribution run rate on our common stock (including OP Units held by non-controlling OP Unitholders) by a total of 0.22% and paid monthly cash distributions totaling $0.1362 per share of common stock during the quarter ended June 30, 2022.
Second Quarter 2022 Results:
Net income for the quarter was approximately $613,000, compared to approximately $1.2 million in the prior quarter. Net loss to common stockholders during the quarter was approximately $3.9 million, or $0.11 per share, compared to approximately $2.7 million, or $0.08 per share, in the prior quarter. AFFO was approximately $4.5 million for the current quarter, compared to $6.4 million in the prior quarter, while AFFO per common share was approximately $0.13 for the current quarter, compared to $0.19 for the prior quarter. Common stock dividends declared were approximately $0.136 for both quarters. The decrease in AFFO was primarily driven by approximately $2.8 million of interest patronage recorded during the prior quarter related to our borrowings with Farm Credit, partially offset by a decrease in related-party fees for the current quarter.
Total cash lease revenues increased by approximately $344,000, primarily driven by an increase in fixed base cash rents of approximately $323,000, or 1.7%, primarily due to additional rental receipts attributable to recent acquisitions and certain new leases, amendments, and renewals executed at higher rental rates. Aggregate related-party fees decreased by approximately $1.1 million from the prior quarter, primarily driven by an incentive fee earned by our investment advisor in the prior quarter, versus no fee earned during the current quarter. Excluding related-party fees, our recurring core operating expenses increased by approximately $77,000 from the prior quarter, primarily due to higher general and administrative costs. The increase in general and administrative expenses was primarily due to additional costs incurred related to the annual shareholders’ meeting, partially offset by certain director fees expensed during the previous quarter. Additionally, dividends declared on our Series C Preferred Stock increased due to additional stock issuances during and since the prior quarter.
Cash flows from operations for the current quarter increased by approximately $4.2 million from the prior quarter, primarily due to a decrease in the amount of cash payments made for interest and related-party fees and an increase in cash rental payments received due to the timing of when such payments are scheduled to be paid pursuant to their respective leases, partially offset by interest patronage received during the prior quarter from Farm Credit. Our estimated NAV per share increased by $0.06 from the prior quarter to $15.60 at June 30, 2022, primarily due to a decrease in the net fair value of our fixed, long-term borrowings due to increases in market interest rates, partially offset by costs associated with the issuance of our Series C Preferred Stock and ongoing capital improvements made on certain of our farms, which will not be reflected in the properties’ fair values until the respective projects are complete.
Subsequent to June 30, 2022:
Portfolio Activity:
• Property Acquisitions: Acquired four new farms, consisting of 1,317 total acres in two different states (WA and OR), and a 40-acre parcel in Arizona adjacent to an existing farm for a total of approximately $37.4 million. On a weighted-average basis, these acquisitions will yield an initial, weighted-average, minimum net capitalization rate of 6.23%; however, the leases on these farms contain certain provisions (e.g., annual rent escalations, CPI adjustments, or participation rents) that are expected to drive cash rents higher in future years.
• Leasing Activity: Executed one lease renewal on a farm in California that is expected to result in an increase in annual net operating income of approximately $9,000, or 3.1%, over that of the prior lease.
Debt Activity – Loan Repayments: Repaid approximately $16.9 million of maturing loans. On a weighted-average basis, these borrowings bore interest at an effective interest rate (after interest patronage) of 2.89%.
Equity Activity – Series C Preferred Stock: Sold 1,579,580 shares of our Series C Preferred Stock for net proceeds of approximately $35.9 million.
Increased Distributions: Increased our distribution run rate by 0.44%, declaring monthly cash distributions of $0.0456 per share of common stock (including OP Units held by non-controlling OP Unitholders, if any) for each of July, August, and September 2022. This marks our 27th distribution increase over the past 30 quarters, during which time we have increased the distribution run rate by 52.0%.
Comments from David Gladstone, President and CEO of Gladstone Land: “Given the cyclical nature of the second quarter – that is, no interest patronage and very little participation rent to record – we were pleased with the operating results for the quarter, as we were able to increase top-line revenues while keeping our property – operating expenses relatively flat when compared to the first quarter. And while the year began slowly for us on the acquisition front, we have been able to complete over $60 million of new farm acquisitions over the past couple of months that we think will be accretive for shareholders for many years to come. We continue to look for new farms that meet our investment criteria; however, we also continue to act conservatively with our capital and be a bit more selective with acquisitions in light of the continued uncertainty surrounding the current economic environment. Regarding our California farmland, none of our farms are being impacted by the current wildfires there, and all of our farms continue to have sufficient water at this time. We are looking forward to finalizing the amount of participation rents for 2022 and reporting those numbers over the next two quarters.”
Conference Call for Stockholders: The Company will hold a conference call on Wednesday, August 10, 2022, at 8:30 a.m. (EDT) to discuss its earnings results. Please call (877) 407-9046 to join the conference call. An operator will monitor the call and set a queue for any questions. A conference call replay will be available after the call and will be accessible through August 17, 2022. To hear the replay, please dial (877) 660-6853, and use playback conference number 13730111. The live audio broadcast of the Company’s conference call will also be available online at the Company’s website, www.GladstoneLand.com.
About Gladstone Land Corporation:
Founded in 1997, Gladstone Land is a publicly traded real estate investment trust that acquires and owns farmland and farm-related properties located in major agricultural markets in the U.S. and leases its properties to unrelated third-party farmers. The Company, which reports the aggregate fair value of its farmland holdings on a quarterly basis, currently owns 169 farms, comprised of over 115,000 acres in 15 different states and 45,000 acre-feet of banked water in California, valued at a total of over $1.5 billion. Gladstone Land’s farms are predominantly located in regions where its tenants are able to grow fresh produce annual row crops, such as berries and vegetables, which are generally planted and harvested annually. The Company also owns farms growing permanent crops, such as almonds, apples, cherries, figs, lemons, olives, pistachios, and other orchards, as well as blueberry groves and vineyards, which are generally planted every 10 to 20-plus years and harvested annually. Approximately 40% of the Company’s fresh produce acreage is either organic or in transition to become organic, and over 10% of its permanent crop acreage falls into this category. The Company may also acquire property related to farming, such as cooling facilities, processing buildings, packaging facilities, and distribution centers. Gladstone Land pays monthly distributions to its stockholders and has paid 114 consecutive monthly cash distributions on its common stock since its initial public offering in January 2013. The Company has increased its common distributions 27 times over the prior 30 quarters, and the current per-share distribution on its common stock is $0.0456 per month, or $0.5472 per year. Additional information, including detailed information about each of the Company’s farms, can be found at www.GladstoneLand.com.
Owners or brokers who have farmland for sale in the U.S. should contact:
• Western U.S. – Bill Reiman at (805) 263-4778 or Bill.R@GladstoneLand.com, or Tony Marci at (831) 225-0883 or Tony.M@GladstoneLand.com;
• Mid-Atlantic U.S. – Joey Van Wingerden at (703) 287-5914 or Joe.V@GladstoneLand.com; or
• Southeastern U.S. – Bill Frisbie at (703) 287-5839 or Bill.F@GladstoneLand.com.
For stockholder information on Gladstone Land, call (703) 287-5893. For Investor Relations inquiries related to any of the monthly dividend-paying Gladstone funds, please visit www.GladstoneCompanies.com.
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS:
Certain statements in this press release, including, but not limited to, the Company’s ability to maintain or grow its portfolio and FFO, expected increases in capitalization rates, benefits from increases in farmland values, increases in operating revenues, and the increase in NAV per share, are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements inherently involve certain risks and uncertainties, although they are based on the Company’s current plans that are believed to be reasonable as of the date of this press release. Factors that may cause actual results to differ materially from these forward-looking statements include, but are not limited to, the Company’s ability to procure financing for investments, downturns in the current economic environment, the performance of its tenants, the impact of competition on its efforts to renew existing leases or re-lease real property, and significant changes in interest rates. Additional factors that could cause actual results to differ materially from those stated or implied by its forward-looking statements are disclosed under the caption “Risk Factors” within the Company’s Form 10-K for the fiscal year ended December 31, 2021, as filed with the SEC on February 22, 2022, and certain other documents filed with the SEC from time to time. The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.
Gladstone Land Corporation, +1-703-287-5893
