GLADSTONE LAND Corp Q1 FY2024 earnings call

• Own about 112,000 acres on 168 farms and 49,000 acre feet of water assets, valued at ~$1.5 billion. Farms in 15 states, 29 growing regions, leased to 90 tenants growing 60 crops. - Tenant issues: Two vacant farms, 11 farms in direct operating via management, two tenants on non-accrual (one now current). Discussions ongoing with potential buyers/tenants for vacant/farms. - Financing: Repaid ~$16 million of bonds, raised ~$250,000 net proceeds from Series E preferred stock sales. - Revaluation: 35 farms revalued, portfolio valued at $1.5 billion. Net asset value per common share decreased due to change in preferred securities and farm valuations. - Liquidity: Over $200 million of liquidity, ~$60 million cash on hand, over $130 million unpledged properties. - Dividends: Common dividend raised to $0.466 cents per share per month, 34th increase in 37 quarters.

For the first quarter, net income was about $13.6 million and net income to common shareholders was $7.4 million, or $0.21 per share. Adjusted FFO was approximately $5.1 million, or $0.143 per share. Net asset value per common share at March 31st was $18.50, down from $19.06 at December 31st. The portfolio was valued at about $1.5 billion as of March 31st, with valuations supported by third-party appraisals or purchase prices.

• Acquisition activity remains slow due to high cost of capital. - Expect inflation in food sector to continue, driving farmland value increases. - Continue focus on water security for California farms, projects expected to provide water for at least 1-2 years. - Anticipate resolving tenant and property issues within next 6 months.

• Tenant-related issues impacting net operating income. - Potential impacts from inflation, interest rates, and government regulations. - Uncertainty in farm sales and leases due to market conditions and farmer sentiment. - Valuation differences between current valuations and potential sale prices of farms.

Q: Are all of the 14 Michigan farms leased to the same operator that had the accident?

A: There are multiple operators, down to two now.

Q: Are all five of the California farms nut farms?

A: Yes, all are nut farms.

Q: What is the Washington farm growing that’s in the non-accruals?

A: That was cherries, apples, and wine grapes.

Q: Does the water get marked-to-market on a regular basis?

A: Water is held at cost on books; acquired water is below market even in wet years.

Q: How are you thinking about selective pruning in the portfolio?

A: Not actively looking to sell all farms, but may consider selling some identified farms, but it's not a daily activity.