Farmland Partners Inc. Q4 FY2024 earnings call

• 2024 was a strong year with robust branch renewals contributing to base rent revenue and strong performance from specialty crop farms in rental and direct operation revenue.
• Significant asset sales in 2024 enabled a $1.15 special dividend to shareholders, debt reduction, and stock buybacks.
• Structural cost reductions were achieved in 2024.
• Deleveraging occurred, leading to reduced interest expense, and benefited from lower interest rates.

For the full year ended December 31st, 2024, net income was $61.5 million or $1.19 per share available to common stockholders, which was higher than the prior year due to dispositions, debt reductions, and strong lease renewals. AFFO was $14.1 million or $0.29 per weighted average share, positively impacted by lower property taxes, interest expense, increased citrus/avocado sales, and variable farm rents. Gain on disposition of assets was $54.1 million in 2024 compared to $36.1 million in 2023, driven by dispositions of 54 properties.

• For 2025, AFFO per share is expected to range between $0.25 and $0.30, which is above the current dividend rate of $0.24.
• The board will evaluate dividend decisions on a quarter-by-quarter basis.

• Uncertainties regarding USDA program funding and potential impact on farmers' cash flow.
• Market dislocations in California farmland due to water limitations, regulatory challenges, and overplanting concerns.
• Risks associated with forward-looking statements and potential deviations from actual results.

Q: What is the pricing environment for net acquisitions in 2025 and preferred regions?

A: Paul Pittman discussed Illinois as strong with plateaued valuations, potential exit from Colorado due to water issues, attraction to Delta regions, and concerns about California.

Q: Thoughts on deployment of capital in Ohio Deere dealerships?

A: Paul Pittman said they may do a few more but not aggressively, as it's a different asset class.

Q: Incremental borrowing rate?

A: Susan Landy said it's right around 6%.

Q: USDA program funding impact on farmers in portfolio?

A: Paul Pittman said the company stays away from tenants abusing programs, and impact on them is unique.

Q: Renewal lease terms and rent increases?

A: Paul Pittman discussed 12.4% three-year average renewal rate, 0.8% negative in 2024, and expected rent increases with rising grain prices.

Q: FPI loan program demand?

A: Paul Pittman and Luca Fabbri discussed growth in loan program due to portfolio shrinkage and need for cash flow, serving farmers with asset-rich but cash-poor situations.