GLADSTONE LAND Corp Q1 FY2025 earnings call

• Farmland holdings: About 103,000 acres on 50 farms and 55,000 acre-feet of water assets in California, diversified across 15 states and 29 growing regions.
• Leasing activities: Executed 7 new leases or amended existing ones in 2025, adjusting lease structures to reduce base rent and increase participation rent, with most participation rent to be recognized in Q4 2025.
• Market conditions: Almond prices rising, pistachios doing well; tariffs impact nut exports, with demand shifting to other countries; fresh produce somewhat insulated from tariffs.
• Liquidity: Access to over $180 million of capital, including ~$40 million cash on hand, and nearly $150 million of unpledged properties; over 99.9% of borrowings are fixed rate with an average rate of 3.41%.

For the first quarter, net income was approximately $15.1 million, and net income to common shareholders was $9.1 million, or $0.25 per share. Adjusted FFO was approximately $2 million, or $0.06 per share, compared to $5.1 million, or $0.14 per share in the same quarter last year. Fixed base cash rents decreased by about $5.7 million compared to the prior year quarter. This was partially offset by a $2.4 million lease termination fee received from an outgoing tenant and about $465,000 of participation rents recorded during the current quarter. The year-over-year decrease in FFO was primarily driven by changes in lease structures on certain farms, tenancy issues, and lost revenues from farms sold. The company expects a total year-over-year decline of about $17 million in fixed base rents for fiscal year 2025 compared to 2024, with most participation rent proceeds to be recognized in the fourth quarter of 2025 and the remaining in the second half of 2026.

• Expect a total year-over-year decline of about $17 million in fixed base rents for fiscal year 2025 compared to 2024, with most participation rent proceeds recognized in Q4 2025 and remaining in H2 2026.
• Earnings in 2025 are expected to be more heavily weighted towards Q4.
• Declared a monthly dividend of $0.0467 per share for the second quarter of 2025, equating to an annualized yield of 5.8%.

• High interest rates affecting acquisition activity and borrowing costs for farmers.
• Fluctuations in crop prices, particularly for permanent crops like nuts.
• Impact of tariffs on nut exports, affecting demand and pricing.
• Risk of crop losses relying on crop insurance coverage.
• Uncertainty in Federal Reserve policy affecting interest rates.

Q: Gaurav Mehta wanted to clarify the comments around $17 million of lower revenues in 2025 versus 2024, asking if more farms were added to the participation rent structure.

A: Lewis Parrish said there was one additional farm with a lease incentive and one farm taken over to be direct operated, adding lost revenues from those two farms and the lease incentive to the number.

Q: Rob Stevenson asked about additional sales, vacant assets, and share repurchases.

A: David Gladstone said some farms were listed for sale but no contracts executed; two vacant assets are open ground with low costs, and the other three have trees at the end of their life; on share repurchases, they are staying highly liquid to meet needs and will evaluate based on harvest results.

Q: John Massocca asked about the Series D term preferred stock due in 2026, water holdings.

A: Lewis Parrish said they are looking at options like farm sales or refinancing but no decision made yet; David Gladstone said they are in good water shape currently but worry about interest rates and farmland lending conditions.