Gladstone Land Announces Fourth Quarter and Year Ended 2023 Results
- Strong property disposition returns with a 343% ROI on a Florida land sale.
- Decrease in annual net operating income due to new lease agreements and vacant properties.
- Challenges from 2023 California floods and property damages.
- Acquisition of additional water assets in California to enhance water supply.
- Debt repayments and interest patronage recorded for 2022 borrowings.
- Equity activities include listing Series C Preferred Stock and common stock sales.
- Increased distribution run rate on common stock and monthly cash distributions.
- Net income for Q4 2023 was $1.8 million, with AFFO at $5.4 million.
- Total cash lease revenues decreased by 4.7% in Q4 2023.
- Decrease in participation rents offset by an increase in fixed base cash rents.
- NAV per share increased to $19.06 at December 31, 2023.
- Net income for FY 2023 was $14.6 million, with AFFO at $20.3 million.
- Lower participation rents and increased preferred dividends affected AFFO.
- Cash flows from operations decreased by $3.3 million in Q4 2023.
- Net loss to common stockholders in FY 2023 was $9.9 million.
- Sold a 3,748-acre farm in Florida for $65.7 million post-December 31, 2023.
- Challenges from 2024 California floods affected certain farms.
- Debt repayments and Series E Preferred Stock sales post-December 31, 2023.
- David Gladstone comments on tenant issues, vacant properties, and high borrowing costs.
- Quarterly summary shows a decrease in total operating revenues and an increase in net income.
- Total assets decreased by 4.8% post-December 31, 2023.
- Occupancy rate decreased to 99.5% in Q4 2023.
- NAV per common share increased to $19.06 at December 31, 2023.
- Challenges with vacant properties impacting net operating income.
- Decrease in total operating revenues in Q4 2023.
- Net loss to common stockholders in FY 2023.
- Decrease in cash flows from operations in Q4 2023.
- Lower participation rents affecting AFFO in FY 2023.
Insights
The disclosed financial results from Gladstone Land Corporation reveal several key points of interest to investors and stakeholders. The reported return on equity of 343% from the sale of a parcel of land and a net gain of $6.4 million is a significant highlight, indicating a robust capital gain from property disposition. Additionally, the decrease in annual net operating income due to new or amended lease agreements, despite lease renewals expected to increase income, suggests a mixed performance in portfolio management.
The California water activity, including the acquisition of water rights and construction of groundwater recharge facilities, represents strategic moves to secure long-term resources, crucial in a state where water rights can significantly affect agricultural land values. The decrease in AFFO (adjusted funds from operations) by 17.7% year-over-year and the reduction in participation rents due to lower crop yields and prices, particularly in almonds, highlight the challenges faced in the agricultural sector, including the impacts of alternate-bearing crops and market oversupply.
The extension of debt maturity dates with Farmer Mac and MetLife indicates a strong credit profile and the ability to negotiate favorable terms with lenders. The equity activity, including the listing of Series C Preferred Stock and the sales of Series E Preferred Stock, suggests a proactive approach to capital raising and liquidity management. The increase in the distribution run rate by 1.32% for 2023 and the subsequent increase by 0.22% in early 2024 reflect a commitment to returning value to shareholders.
The real estate investment trust (REIT) sector and specifically agricultural land REITs like Gladstone Land Corporation, are often seen as stable, long-term investments due to the essential nature of farmland and its historical resistance to economic downturns. However, the reported decrease in net operating income and participation rents underscores the volatility that can arise from agricultural production and market conditions, such as the mentioned drought and oversupply issues.
The impact of natural disasters, such as the California floods, poses a risk to agricultural REITs, although Gladstone Land's proactive measures to mitigate such risks through insurance and infrastructure investments are noteworthy. The acquisition of additional water rights and involvement in groundwater recharge programs are strategic decisions that may provide a competitive advantage in regions where water scarcity is a growing concern.
The shift towards fixed-rate borrowings is a prudent risk management strategy in the current rising interest rate environment, as it protects the company from the fluctuations in borrowing costs. The net asset value (NAV) per share increase of 11.6% is a positive indicator of the company's underlying asset value growth, which is an essential metric for REIT investors.
The financial results from Gladstone Land Corporation provide insights into the economic forces at play in the agricultural sector. The alternate-bearing nature of tree crops such as almonds and pistachios, coupled with market price fluctuations, has led to decreased participation rents. This is indicative of the cyclical and unpredictable nature of agricultural incomes, which can be affected by biological factors and global market trends.
The investment in water assets is a strategic response to the critical issue of water scarcity in agriculture, particularly in California. The company's approach to securing long-term water supplies through acquisitions and infrastructure development reflects an understanding of the importance of water as a limiting factor in agricultural productivity and land value.
The operating expense increase due to property taxes and management fees, particularly on vacant or self-operated properties, highlights the cost pressures that can affect profitability in the sector. The legal fees associated with rent collection and re-leasing efforts point to the complexities of tenant management in agricultural real estate.
Please note that the limited information that follows in this press release is a summary and is not adequate for making an informed investment decision.
MCLEAN, VA / ACCESSWIRE / February 20, 2024 / McLean, VA, February 20, 2024: Gladstone Land Corporation (Nasdaq:LAND) ("Gladstone Land" or the "Company") today reported financial results for the fourth quarter and year ended December 31, 2023. 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 Annual Report on Form 10-K (the "Form 10-K"), which is available on the Investors section of the Company's website at www.GladstoneLand.com .
Highlights for Fiscal Year 2023:
- Portfolio Activity:
- Property Disposition: Sold a 138-acre parcel of unfarmed land in Florida for
$9.6 million , which, after accounting for closing costs, resulted in a return on equity of343% and a net gain of approximately$6.4 million . We still own and lease the remaining acreage of this farm. - Lease Activity: Executed 30 new or amended lease agreements on farms in six different states that are expected to result in an aggregate decrease in annual net operating income of approximately
$617,000 from the prior leases. This includes new leases executed on properties to replace tenants who had previously been placed on non-accrual status. Excluding these leases, the remaining lease renewals are expected to result in an annual increase in annual net operating income of approximately$1.6 million , or8.7% , over the prior leases. - Vacant, Direct-operated, and Non-accrual Properties: During a portion of 2023, we had 22 farms (7 in California, 14 in Michigan, and 1 in Washington) that were either vacant, direct-operated (via management agreements with unrelated third-parties), or on which lease revenues were recognized on a cash basis (due to credit issues with three tenants causing us to determine that the full collectibility of the remaining rental payments under the respective leases were not deemed to be probable). The year-over-year impact on our operations as a result of these properties was a decrease in net operating income of approximately
$1.7 million . - 2023 California Floods: Due to periods of heavy rainfall and the resulting flooding experienced in California in January 2023, certain structures on one of our farms were damaged. We estimated the amount of damage on this farm to be approximately
$855,000 and recognized such loss during the first quarter. None of our other farms were materially impacted as a result of the floods. - California Water Activity:
- Acquired an additional 1,003 acre-feet of banked water held by a water district in Kern County, California, which was received from one of our tenants as partial consideration for a rent payment.
- Invested approximately
$1.8 million to construct groundwater recharge facilities on two of our farms to allow us to capture and store surplus water. - Participated in a groundwater recharge program established by a water district in Fresno County, California, whereby the water district pays for surplus surface water to be delivered to our groundwater recharge facility in exchange for allowing us to keep
50% of the net amount of groundwater credits generated under the program. Thus far, we have obtained 397 acre-feet of water credits under this program at minimal cost to us. - Secured a long-term water supply contract with a water district in Contra Costa County, California, that will provide an additional source of water in the future for several of our farms in the western San Joaquin Valley.
- Entered into various other agreements with both local water districts and private individuals that are expected to result in additional water credits by allowing water to be stored in our groundwater recharge facilities.
- Property Disposition: Sold a 138-acre parcel of unfarmed land in Florida for
- Debt Activity:
- Loan Repayments: Repaid approximately
$36.0 million of loans scheduled to mature or reset. - Interest Patronage: Recorded approximately
$2.3 million of interest patronage, or refunded interest, related to our 2022 borrowings from various Farm Credit associations. Including approximately$113,000 of 2022 interest patronage that was received during the third quarter of 2022, total 2022 interest patronage resulted in a24.1% reduction (approximately 109 basis points) to the interest rate of such borrowings. - Farmer Mac Facility: Amended our agreement with Federal Agricultural Mortgage Corporation ("Farmer Mac") to extend the date through which we may issue new bonds to December 31, 2026. Additionally, the final maturity date for new bonds issued under the facility will be the date that is 10 years from the applicable issuance date.
- MetLife Facility: Extended the maturity dates of our lines of credit (
$75.0 million in aggregate) with Metropolitan Life Insurance Company ("MetLife") to December 15, 2033.
- Loan Repayments: Repaid approximately
- Equity Activity:
- Series C Preferred Stock: Listed our
6.00% Series C Cumulative Redeemable Preferred Stock (the "Series C Preferred Stock") on Nasdaq under the ticker symbol, "LANDP." Trading of the Series C Preferred Stock commenced on June 8, 2023. - Series E Preferred Stock: Commenced sales of our
5.00% Series E Cumulative Redeemable Preferred Stock (the "Series E Preferred Stock"). Sold 237,441 shares of our Series E Preferred Stock for net proceeds of approximately$5.3 million . - Common Stock-ATM Program: Sold 788,045 shares of our common stock for net proceeds of approximately
$15.1 million under our "at-the-market" program (the "ATM Program"). - Registration Statement: Filed a new registration statement (which the SEC declared effective on April 13, 2023), permitting us to issue up to an aggregate of
$1.5 billion in securities over the next three years.
- Series C Preferred Stock: Listed our
- Increased and Paid Distributions: Increased the distribution run rate on our common stock (including OP Units held by non-controlling OP Unitholders, if any) by a total of
1.32% and paid monthly cash distributions totaling$0.55 35 per share of common stock during the year ended December 31, 2023.
Fourth Quarter 2023 Results:
Net income for the quarter was approximately
Total cash lease revenues decreased by approximately
Aggregate related-party fees decreased by approximately
Cash flows from operations for the current quarter decreased by approximately
Fiscal Year 2023 Results:
Net income for the year was approximately
The decrease in AFFO was primarily driven by lower participation rents (for the reasons noted above) and an increase in preferred dividends (due to additional share issuances), partially offset by a decrease in interest expense (due to certain loan repayments made over the past year). Revenue from participation rents was approximately
Subsequent to December 31, 2023:
- Portfolio Activity:
- Property Disposition: Sold a 3,748-acre farm in Florida for approximately
$65.7 million , which after accounting for closing costs, resulted in a return on equity of60% and a net gain of approximately$10.4 million . - 2024 California Floods: In February 2024, certain parts of California, particularly the southern part of the state, again experienced heavy rains that caused widespread flooding and mudslides in multiple areas. Certain of our farms in the state suffered minor damage as a result of the storms, but no farms were materially impacted.
- Property Disposition: Sold a 3,748-acre farm in Florida for approximately
- Debt Activity-Loan Repayments: Repaid approximately
$16.2 million of maturing loans. - Equity Activity-Series E Preferred Stock: Sold 10,340 shares of our Series E Preferred Stock for net proceeds of approximately
$233,000. - Increased Distributions: Increased our distribution run rate by
0.22% , declaring monthly cash distributions of$0.04 65 per share of common stock for each of January, February, and March. This marks our 33 rd distribution increase over the past 36 quarters, during which time we have increased the distribution run rate by55.0% .
Comments from David Gladstone, President and CEO of Gladstone Land: "Results for the quarter were largely as expected but remained slightly down from last year as we continue to work through issues with a few of our tenants. We currently have five properties (encompassing 15 of our 168 farms) that are vacant. We are in discussions with various groups to either buy or lease these farms, and we hope to have these situations resolved during the first half of the year. Our balance sheet remains strong, with nearly
Quarterly Summary Information
(Dollars in thousands, except per-share amounts)
| For and As of the Quarters Ended | Change | Change | ||||||||||||||
| 12/31/2023 | 12/31/2022 | ($/#) | (%) | |||||||||||||
Operating Data: | ||||||||||||||||
Total operating revenues | $ | 24,452 | $ | 24,791 | $ | (339 | ) | (1.4 | )% | |||||||
Total operating expenses | (15,638 | ) | (15,224 | ) | (414 | ) | 2.7 | % | ||||||||
Other expenses, net | (6,995 | ) | (8,457 | ) | 1,462 | (17.3 | )% | |||||||||
Net income | $ | 1,819 | $ | 1,110 | $ | 709 | 63.9 | % | ||||||||
Less: Aggregate dividends declared on and charges related to cumulative redeemable preferred stock(1) | (6,114 | ) | (5,916 | ) | (198 | ) | 3.3 | % | ||||||||
Net loss attributable to common stockholders and non-controlling OP Unitholders | (4,295 | ) | (4,806 | ) | 511 | (10.6 | )% | |||||||||
Plus: Real estate and intangible depreciation and amortization | 9,754 | 9,482 | 272 | 2.9 | % | |||||||||||
Plus: Losses on dispositions of real estate assets, net | 702 | 1,660 | (958 | ) | (57.7 | )% | ||||||||||
Adjustments for unconsolidated entities(2) | 24 | 19 | 5 | 26.3 | % | |||||||||||
FFO available to common stockholders and non-controlling OP Unitholders | 6,185 | 6,355 | (170 | ) | (2.7 | )% | ||||||||||
Plus: Acquisition- and disposition-related expenses, net | 24 | 268 | (244 | ) | (91.0 | )% | ||||||||||
Plus: Other nonrecurring charges, net(3) | 89 | 220 | (131 | ) | (59.5 | )% | ||||||||||
CFFO available to common stockholders and non-controlling OP Unitholders | 6,298 | 6,843 | (545 | ) | (8.0 | )% | ||||||||||
Net adjustment for normalized cash rents(4) | (930 | ) | (841 | ) | (89 | ) | 10.6 | % | ||||||||
Plus: Amortization of debt issuance costs | 299 | 268 | 31 | 11.6 | % | |||||||||||
Less (plus): Other non-cash charges (receipts), net(5) | (261 | ) | 301 | (562 | ) | (186.7 | )% | |||||||||
AFFO available to common stockholders and non-controlling OP Unitholders | $ | 5,406 | $ | 6,571 | $ | (1,165 | ) | (17.7 | )% | |||||||
Share and Per-Share Data: | ||||||||||||||||
Weighted-average common stock outstanding | 35,838,442 | 34,834,804 | 1,003,638 | 2.9 | % | |||||||||||
Weighted-average common non-controlling OP Units outstanding | - | - | - | - | % | |||||||||||
Weighted-average shares of common stock outstanding, fully diluted | 35,838,442 | 34,834,804 | 1,003,638 | 2.9 | % | |||||||||||
Diluted net loss per weighted-average common share | $ | (0.120 | ) | $ | (0.138 | ) | $ | 0.018 | (13.0 | )% | ||||||
Diluted FFO per weighted-average common share | $ | 0.173 | $ | 0.182 | $ | (0.010 | ) | (5.5 | )% | |||||||
Diluted CFFO per weighted-average common share | $ | 0.176 | $ | 0.196 | $ | (0.021 | ) | (10.7 | )% | |||||||
Diluted AFFO per weighted-average common share | $ | 0.151 | $ | 0.189 | $ | (0.038 | ) | (20.1 | )% | |||||||
Cash distributions declared per total common share | $ | 0.139 | $ | 0.137 | $ | 0.002 | 1.5 | % | ||||||||
Balance Sheet Data: | ||||||||||||||||
Net investments in real estate, at cost(6) | $ | 1,340,092 | $ | 1,370,564 | $ | (30,472 | ) | (2.2 | )% | |||||||
Total assets | $ | 1,387,324 | $ | 1,457,251 | $ | (69,927 | ) | (4.8 | )% | |||||||
Total indebtedness(7) | $ | 637,414 | $ | 690,329 | $ | (52,915 | ) | (7.7 | )% | |||||||
Total equity | $ | 719,613 | $ | 731,362 | $ | (11,749 | ) | (1.6 | )% | |||||||
Total common shares outstanding (fully diluted) | 35,838,442 | 35,050,397 | 788,045 | 2.2 | % | |||||||||||
Other Data: | ||||||||||||||||
Cash flows from operations | $ | 17,424 | $ | 20,715 | $ | (3,291 | ) | (15.9 | )% | |||||||
Farms owned | 169 | 169 | - | - | % | |||||||||||
Acres owned | 115,584 | 115,731 | (147 | ) | (0.1 | )% | ||||||||||
Occupancy rate(8) | 99.5 | % | 100.0 | % | (0.5 | )% | (0.5 | )% | ||||||||
Farmland portfolio value | $ | 1,566,474 | $ | 1,568,272 | $ | (1,798 | ) | (0.1 | )% | |||||||
NAV per common share | $ | 19.06 | $ | 17.08 | $ | 1.98 | 11.6 | % | ||||||||
(1) Includes (i) cash dividends paid on our cumulative redeemable preferred stock, (ii) the value of additional shares of Series C Preferred Stock issued pursuant to the dividend reinvestment program, and (iii) the pro-rata write-off of offering costs related to shares of cumulative redeemable preferred stock that were redeemed.
(2) Represents our pro-rata share of depreciation expense recorded in unconsolidated entities.
(3) Consists primarily of (i) net property and casualty losses (recoveries) recorded and the cost of related repairs expensed as a result of the damage caused to certain improvements by natural disasters on certain of our farms, and (ii) costs related to the amendment, termination, and listing of shares from the offering of our Series C Preferred Stock that were expensed.
(4) This adjustment removes the effects of straight-lining rental income, as well as the amortization related to above-market lease values and certain noncash lease incentives and accretion related to below-market lease values, deferred revenue, and tenant improvements, resulting in rental income reflected on a modified accrual cash basis. The effect to AFFO is that cash rents received pertaining to a lease year are normalized over that respective lease year on a straight-line basis, resulting in cash rent being recognized ratably over the period in which the cash rent is earned. During the three months ended December 31, 2023, we adjusted our definition of AFFO to exclude from this adjustment the removal of lease incentives that were a result of previous cash disbursements made by us to or on behalf of our tenants. The results of all periods presented, including those of prior periods, have been adjusted to conform with this new definition.
(5) Consists of (i) the amount of dividends on the Series C Preferred Stock paid via issuing new shares (pursuant to the dividend reinvestment program), (ii) the pro-rata write-off of offering costs related to shares of cumulative redeemable preferred stock that were redeemed, which were noncash charges, (iii) our remaining pro-rata share of (income) loss recorded from investments in unconsolidated entities, and (iv) less noncash income recorded during 2023 as a result of additional water assets received as consideration in certain transactions.
(6) Consists of the initial acquisition price (including the costs allocated to both tangible and intangible assets acquired and liabilities assumed), plus subsequent improvements and other capitalized costs associated with the properties, and adjusted for accumulated depreciation and amortization.
(7) Consists of the principal balances outstanding of all indebtedness, including our lines of credit, notes and bonds payable, and our Series D Term Preferred Stock.
(8) Based on farmable acreage; includes certain farms that were self-operated (on a temporary basis) as of December 31, 2023.
Annual Summary Information
(Dollars in thousands, except per-share amounts)
| For and As of the Years Ended | Change | Change | ||||||||||||||
| 2023 | 2022 | ($/#) | (%) | |||||||||||||
Operating Data: | ||||||||||||||||
Total operating revenues | $ | 90,398 | $ | 89,236 | $ | 1,162 | 1.3 | % | ||||||||
Total operating expenses | (56,915 | ) | (55,315 | ) | (1,600 | ) | 2.9 | % | ||||||||
Other expenses, net | (18,918 | ) | (29,205 | ) | 10,287 | (35.2 | )% | |||||||||
Net income | $ | 14,565 | $ | 4,716 | $ | 9,849 | 208.8 | % | ||||||||
Less: Aggregate dividends declared on and charges related to cumulative redeemable preferred stock(1) | (24,417 | ) | (19,718 | ) | (4,699 | ) | 23.8 | % | ||||||||
Net loss attributable to common stockholders and non-controlling OP Unitholders | (9,852 | ) | (15,002 | ) | 5,150 | (34.3 | )% | |||||||||
Plus: Real estate and intangible depreciation and amortization | 37,161 | 35,366 | 1,795 | 5.1 | % | |||||||||||
(Less) plus: (Gains) losses on dispositions of real estate assets, net | (5,208 | ) | 3,760 | (8,968 | ) | (238.5 | )% | |||||||||
Adjustments for unconsolidated entities(2) | 92 | 57 | 35 | 61.4 | % | |||||||||||
FFO available to common stockholders and non-controlling OP Unitholders | 22,193 | 24,181 | (1,988 | ) | (8.2 | )% | ||||||||||
Plus: Acquisition- and disposition-related expenses, net | 149 | 438 | (289 | ) | (66.0 | )% | ||||||||||
Plus: Other nonrecurring charges, net(3) | 1,418 | 1,023 | 395 | 38.6 | % | |||||||||||
CFFO available to common stockholders and non-controlling OP Unitholders | 23,760 | 25,642 | (1,882 | ) | (7.3 | )% | ||||||||||
Net adjustment for normalized cash rents(4) | (4,519 | ) | (3,371 | ) | (1,148 | ) | 34.1 | % | ||||||||
Plus: Amortization of debt issuance costs | 1,065 | 1,085 | (20 | ) | (1.8 | )% | ||||||||||
Less (plus): Other non-cash charges (receipts), net(5) | 17 | 907 | (890 | ) | (98.1 | )% | ||||||||||
AFFO available to common stockholders and non-controlling OP Unitholders | $ | 20,323 | $ | 24,263 | $ | (3,940 | ) | (16.2 | )% | |||||||
Share and Per-Share Data: | ||||||||||||||||
Weighted-average common stock outstanding | 35,733,742 | 34,563,460 | 1,170,282 | 3.4 | % | |||||||||||
Weighted-average common non-controlling OP Units outstanding | - | 61,714 | (61,714 | ) | (100.0 | )% | ||||||||||
Weighted-average shares of common stock outstanding, fully diluted | 35,733,742 | 34,625,174 | 1,108,568 | 3.2 | % | |||||||||||
Diluted net loss per weighted-average common share | $ | (0.276 | ) | $ | (0.433 | ) | $ | 0.158 | (36.5 | )% | ||||||
Diluted FFO per weighted-average common share | $ | 0.621 | $ | 0.698 | $ | (0.077 | ) | (11.0 | )% | |||||||
Diluted CFFO per weighted-average common share | $ | 0.665 | $ | 0.741 | $ | (0.076 | ) | (10.3 | )% | |||||||
Diluted AFFO per weighted-average common share | $ | 0.569 | $ | 0.701 | $ | (0.132 | ) | (18.8 | )% | |||||||
Cash distributions declared per total common share | $ | 0.554 | $ | 0.546 | $ | 0.007 | 1.3 | % | ||||||||
Balance Sheet Data: | ||||||||||||||||
Net investments in real estate, at cost(6) | $ | 1,340,092 | $ | 1,370,564 | $ | (30,472 | ) | (2.2 | )% | |||||||
Total assets | $ | 1,387,324 | $ | 1,457,251 | $ | (69,927 | ) | (4.8 | )% | |||||||
Total indebtedness(7) | $ | 637,414 | $ | 690,329 | $ | (52,915 | ) | (7.7 | )% | |||||||
Total equity | $ | 719,613 | $ | 731,362 | $ | (11,749 | ) | (1.6 | )% | |||||||
Total common shares outstanding (fully diluted) | 35,838,442 | 35,050,397 | 788,045 | 2.2 | % | |||||||||||
Other Data: | ||||||||||||||||
Cash flows from operations | $ | 40,081 | $ | 43,788 | $ | (3,707 | ) | (8.5 | )% | |||||||
Farms owned | 169 | 169 | - | - | % | |||||||||||
Acres owned | 115,584 | 115,731 | (147 | ) | (0.1 | )% | ||||||||||
Occupancy rate(8) | 99.5 | % | 100.0 | % | (0.5 | )% | (0.5 | )% | ||||||||
Farmland portfolio value | $ | 1,566,474 | $ | 1,568,272 | $ | (1,798 | ) | (0.1 | )% | |||||||
NAV per common share | $ | 19.06 | $ | 17.08 | $ | 1.98 | 11.6 | % | ||||||||
(1) Includes (i) cash dividends paid on our cumulative redeemable preferred stock, (ii) the value of additional shares of Series C Preferred Stock issued pursuant to the dividend reinvestment program, and (iii) the pro-rata write-off of offering costs related to shares of cumulative redeemable preferred stock that were redeemed.
(2) Represents our pro-rata share of depreciation expense recorded in unconsolidated entities.
(3) Consists primarily of (i) net property and casualty losses (recoveries) recorded and the cost of related repairs expensed as a result of the damage caused to certain improvements by natural disasters on certain of our farms, (ii) costs related to the amendment, termination, and listing of shares from the offering of our Series C Preferred Stock that were expensed, and (iii) the write-off of certain unallocated costs related to a prior universal registration statement.
(4) This adjustment removes the effects of straight-lining rental income, as well as the amortization related to above-market lease values and certain noncash lease incentives and accretion related to below-market lease values, deferred revenue, and tenant improvements, resulting in rental income reflected on a modified accrual cash basis. The effect to AFFO is that cash rents received pertaining to a lease year are normalized over that respective lease year on a straight-line basis, resulting in cash rent being recognized ratably over the period in which the cash rent is earned. During the three months ended December 31, 2023, we adjusted our definition of AFFO to exclude from this adjustment the removal of lease incentives that were a result of previous cash disbursements made by us to or on behalf of our tenants. The results of all periods presented, including those of prior periods, have been adjusted to conform with this new definition.
(5) Consists of (i) the amount of dividends on the Series C Preferred Stock paid via issuing new shares (pursuant to the dividend reinvestment program), (ii) the pro-rata write-off of offering costs related to shares of cumulative redeemable preferred stock that were redeemed, which were noncash charges, (iii) our remaining pro-rata share of (income) loss recorded from investments in unconsolidated entities, and (iv) less noncash income recorded during 2023 as a result of additional water assets received as consideration in certain transactions.
(6) Consists of the initial acquisition price (including the costs allocated to both tangible and intangible assets acquired and liabilities assumed), plus subsequent improvements and other capitalized costs associated with the properties, and adjusted for accumulated depreciation and amortization.
(7) Consists of the principal balances outstanding of all indebtedness, including our lines of credit, notes and bonds payable, and our Series D Term Preferred Stock.
(8) Based on farmable acreage; includes certain farms that were self-operated (on a temporary basis) as of December 31, 2023.
Conference Call for Stockholders: The Company will hold a conference call on Wednesday, February 21, 2024, at 8:30 a.m. (Eastern Time) 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 February 28, 2024. To hear the replay, please dial (877) 660-6853, and use playback conference number 13742739. The live audio broadcast of the Company's conference call will also be available online on the Investors section of 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. The Company currently owns 168 farms, comprised of approximately 112,000 acres in 15 different states and 46,400 acre-feet of water assets in California, valued at a total of approximately
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;
- Mid-Atlantic U.S. - Joey Van Wingerden at (703) 287-5914 or Joe.V@GladstoneLand.com; or
- Southeastern U.S. - Brett Smith at (904) 687-5284 or Brett.S@GladstoneLand.com.
Lenders who are interested in providing us with long-term financing on farmland should contact Jay Beckhorn at (703) 587-5823 or Jay.Beckhorn@GladstoneCompanies.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.
Non-GAAP Financial Measures:
FFO: The National Association of Real Estate Investment Trusts ("NAREIT") developed FFO as a relative non-GAAP supplemental measure of operating performance of an equity REIT in order to recognize that income-producing real estate historically has not depreciated on the basis determined under GAAP. FFO, as defined by NAREIT, is net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property and impairment losses on property, plus depreciation and amortization of real estate assets, and after adjustments for unconsolidated partnerships and joint ventures. The Company believes that FFO per share provides investors with an additional context for evaluating its financial performance and as a supplemental measure to compare it to other REITs; however, comparisons of its FFO to the FFO of other REITs may not necessarily be meaningful due to potential differences in the application of the NAREIT definition used by such other REITs.
CFFO: CFFO is FFO, adjusted for items that are not indicative of the results provided by the Company's operating portfolio and affect the comparability of the Company's period-over-period performance. These items include certain non-recurring items, such as acquisition- and disposition-related expenses, the net incremental impact of operations conducted through our taxable REIT subsidiary, income tax provisions, and property and casualty losses or recoveries. Although the Company's calculation of CFFO differs from NAREIT's definition of FFO and may not be comparable to that of other REITs, the Company believes it is a meaningful supplemental measure of its sustainable operating performance. Accordingly, CFFO should be considered a supplement to net income computed in accordance with GAAP as a measure of our performance. For a full explanation of the adjustments made to arrive at CFFO, please read the Form 10-K, filed today with the SEC.
AFFO: AFFO is CFFO, adjusted for certain non-cash items, such as the straight-lining of rents and amortizations into or against rental income (resulting in cash rent being recognized ratably over the period in which the cash rent is earned). Although the Company's calculation of AFFO differs from NAREIT's definition of FFO and may not be comparable to that of other REITs, the Company believes it is a meaningful supplemental measure of its sustainable operating performance on a cash basis. Accordingly, AFFO should be considered a supplement to net income computed in accordance with GAAP as a measure of our performance. For a full explanation of the adjustments made to arrive at AFFO, please read the Form 10-K, filed today with the SEC.
A reconciliation of FFO (as defined by NAREIT), CFFO, and AFFO (each as defined above) to net income (loss), which the Company believes is the most directly-comparable GAAP measure for each, and a computation of fully-diluted net income (loss), FFO, CFFO, and AFFO per weighted-average share is set forth in the Quarterly Summary Information table above. The Company's presentation of FFO, CFFO, or AFFO, does not represent cash flows from operating activities determined in accordance with GAAP and should not be considered an alternative to net income as an indication of its performance or to cash flow from operations as a measure of liquidity or ability to make distributions.
NAV: Pursuant to a valuation policy approved by our board of directors, our valuation team, with oversight from the chief valuation officer, provides recommendations of value for our properties to our board of directors, who then review and approve the fair values of our properties. Per our valuation policy, our valuations are derived based on either the purchase price of the property; values as determined by independent, third-party appraisers; or through an internal valuation process, which process is, in turn, based on values as determined by independent, third-party appraisers. In any case, we intend to have each property valued by an independent, third-party appraiser at least once every three years, or more frequently in some instances. Various methodologies are used, both by the appraisers and in our internal valuations, to determine the fair value of our real estate, including the sales comparison, income capitalization (or a discounted cash flow analysis), and cost approaches of valuation. NAV is a non-GAAP, supplemental measure of financial position of an equity REIT and is calculated as total equity available to common stockholders and non-controlling OP Unitholders, adjusted for the increase or decrease in fair value of our real estate assets and encumbrances relative to their respective cost bases. Further, we calculate NAV per share by dividing NAV by our total shares outstanding (inclusive of both our common stock and OP Units held by non-controlling third parties). A reconciliation of NAV to total equity, to which the Company believes is the most directly-comparable GAAP measure, is provided below (dollars in thousands, except per-share amount):
Total equity per balance sheet | $ | 719,613 | ||||||
Fair value adjustment for long-term assets: | ||||||||
Less: net cost basis of tangible and intangible real estate holdings(1) | $ | (1,340,092 | ) | |||||
Plus: estimated fair value of real estate holdings(2) | 1,566,474 | |||||||
Net fair value adjustment for real estate holdings | 226,382 | |||||||
Fair value adjustment for long-term liabilities: | ||||||||
Plus: book value of aggregate long-term indebtedness(3) | 637,214 | |||||||
Less: fair value of aggregate long-term indebtedness(3)(4) | (586,722 | ) | ||||||
Net fair value adjustment for long-term indebtedness | 50,492 | |||||||
Estimated NAV | 996,487 | |||||||
Less: aggregate fair value of cumulative redeemable preferred stock(5) | (313,524 | ) | ||||||
Estimated NAV available to common stockholders and non-controlling OP Unitholders | $ | 682,963 | ||||||
Total common shares and non-controlling OP Units outstanding | 35,838,442 | |||||||
Estimated NAV per common share and non-controlling OP Unit | $ | 19.06 | ||||||
(1) Consists of the initial acquisition price (including the costs allocated to both tangible and intangible assets acquired and liabilities assumed), plus subsequent improvements and other capitalized costs associated with the properties, and adjusted for accumulated depreciation and amortization.
(2) As determined by the Company's valuation policy and approved by its board of directors.
(3) Includes the principal balances outstanding of all long-term borrowings (consisting of notes and bonds payable) and the Series D Term Preferred Stock.
(4) Long-term notes and bonds payable were valued using a discounted cash flow model. The Series D Term Preferred Stock was valued based on its closing stock price as of December 31, 2023.
(5) The Series B Preferred Stock and Series C Preferred Stock were each valued based on their respective closing stock prices as of December 31, 2023, while the Series E Preferred Stock was valued at its liquidation value.
Comparison of our estimated NAV and estimated NAV per share to similarly-titled measures for other REITs may not necessarily be meaningful due to possible differences in the calculation or application of the definition of NAV used by such REITs. In addition, the trading price of our common shares may differ significantly from our most recent estimated NAV per share calculation. The Company's independent auditors have neither audited nor reviewed our calculation of NAV or NAV per share. For a full explanation of our valuation policy, please read the Form 10-K, filed today with the SEC.
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, 2023, as filed with the SEC on February 20, 2024, 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, (703) 287-5893
SOURCE: Gladstone Land Corporation
View the original press release on accesswire.com
FAQ
What was Gladstone Land Corporation's ticker symbol mentioned in the press release?
What was the return on equity for the 138-acre parcel of unfarmed land in Florida that was sold?
How many new or amended lease agreements were executed on farms in six different states?
What was the impact on net operating income due to vacant, direct-operated, and non-accrual properties in 2023?
What was the estimated amount of damage on a farm in California due to the 2023 floods?
How much additional banked water did Gladstone Land Corporation acquire in Kern County, California?
What was the net gain from selling a 3,748-acre farm in Florida post-December 31, 2023?
Who commented on tenant issues, vacant properties, and high borrowing costs in the press release?
What was the NAV per common share at December 31, 2023?
How many distribution increases have been implemented by Gladstone Land Corporation over the past 36 quarters?
