LAND - Earnings call transcript Q1 2020 | Gladstone Land Corporation

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Gladstone Land Corporation’s First Quarter Ended March 31, 2020 Earnings Call and Webcast Conference. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

to conference like speaker to now Mr. today would hand over the your I Gladstone. David sir. you, Thank Please ahead. go

David Gladstone

General Okay. Dexter. of that welcome We to to thank Thank you Gladstone for always LiCalsi. end. we and our the David we some the you, administrator you the start have Gladstone to time is hopefully quarterly Nice appreciate He introduction. Administration, and taking conference the Counsel to in listen the call funds. at calling will of We Gladstone have He some with also Michael and is and Land today. This questions talk good and always for presentation the Gladstone all is is Secretary. President which

So, Michael, take away. it

Michael LiCalsi

morning. the our based report statements involve forward-looking the to be good forward-looking certain those reasonable. XXXX, and XXXX These and Today's Securities are which of Exchange our uncertainties include under on Act Securities of statements current believe risks regarding plans, including may Thanks, we David, performance. Act future and that

Many XX-K, that the results risk materially in future Forms from any including other and implied to expressed with forward-looking factors actual factors or cause different results all by our be we these may file documents XX-Q our statements, SEC.

as all result or publicly Investor whether or of statements, and find that’s to And by of on Relations can www.sec.gov. a go except obligation these is the any future the which update website SEC's new You undertake these events page, our as can law. www.gladstonefarms.com, specifically website, otherwise, to or you revise we information, forward-looking required no

losses a accounting sale gains losses Funds net defined assets. amortization we From term impairment estate discussion, from will the which income, today’s discuss property, plus excluding Operations. and FFO estate of real from depreciation any is real is non-GAAP and In the of or as FFO,

FFO, to cash which discuss non-cash as non-recurring and for believe FFO further FFO as performance we and better of performance. adjusted period-over-period certain also GAAP that expenses, indications better adjusted allow adjusts we items, are which normalized core rents our revenues our rents will for of certain and results core We FFO, comparability operating these and such generally define converting

everyone the once website, ask again, visit to you sign the notification everything that to for that opportunity stay e-mail goes so We take up-to-date service, our on. company up gladstonefarms.com, can and on

our find Today's is Twitter You on on there Facebook, The there Companies, handle simply and can us keyword call is @glatstonecomps. Gladstone and we’re results. the overview of is also an even

our page for find press So the our release Form information. and on Investor Again, issued XX-K, of that we you review yesterday website. can both ask more Relations detailed them you

David I'll that, the back David? over Gladstone. turn with presentation And to

David Gladstone

has just thank for terrific XXXX to standpoint, year, way, Michael. off Okay, was a acquisitions. by from you, acquisition slow year a getting an like the Much last begun start.

farms company's are signs these that the in value are However, to strong we believe and strong of we team existing and the that do operationally the in levels. the continue We leases in seeing demand rental to be rates and appreciation of at increased for renew farms renewals quarter continued with our on continues farms success able increases own. indicative to have lease also the another have we're

been produce where words, Walmart – about and most. is to little restaurants on this be having impact industry, similar hurt significant XX% not a grown to impact of food top and seems government is of few including just the XX% sales schools, Now, and that the just of all farms to because farmers Costco the and of our and to touch produce sold are sold is in Kroger like on Very closings institutions have to the the which where are and tenants being Safeway closings mind servicing of grocery in the our everybody stores like and outlets. the and a produce

little has no spending grocery grocery food almost food of for to from our been first consumer the buying shortage and eating shift forced of There's are are several less, grocery they stores the that. of closings, demand of tremendous take grocery now at stores. to in been farmers the a able on businesses. produce There's foods to from other in restaurants most the weeks their exclusively not the People produce all price bit as mostly a store advantage and from spike related were but stores at

believe to more come has don't to While fall normal I going level, down it's pricing anymore.

just lot of The hearing Regarding supply higher logistics large trucks control Companies remained to have a have not food have fine. sell – large stores. – available our disruptions and farmers. produce logistics shipping has who from to delivery of over in we're like the grocery and supply Kroger are with transportation over and farmers, steady. in their Walmart of stores, falls problems demand chains, Most for

the outside. their and first produce take before as contracts have of In outside have and addition, – begins. are produce tenants delivery for of we're sale This is contract floor here the can shutdown well delivery the is our most tenants of contracts in – for for going – their of a the in where sale lawnmower lawnmowers season the place contracted we addition, most on

business our we don't part to some the seeing as we're are Most were sales see and the before they so, grocery year to to anything like maybe commit another significant, the to of have of lease. market of along stores, were new set If well we've contract slight the for on some come shut transactions. but And it's people, into for this come as who slowdown seen in entering more begins. even other contracts this over start this as season but delivery place place of or continue disruption to of in the down the before happening are selling and our these seen been selling only waiting produce pivot time. just or will well But the who – a businesses the farms, long-term we on at an participations impact where acquisition certainty a

at next and in already, on looking for be year, signed I We're months, the know over couple get going but several it's the new I’ve be buying future a process sure to I'm off will but several farm acquisitions the we'll strong. I what don't the think

acres farm the farms. the third-party on we at about appraisals new total different farms or paid Looking currently based XXX on for land states own XX in prices we XX,XXX ownership, either

total the number in. more than of of have farms value estimated that we're fair States and Our a $XXX about million importantly

that are we're some do different overdue XX Our operate tenants, farms XX a slow little there his because get be guy about We've soon process types history he and area. so we payment farms is that of are located growing That the regions he's leased to in one great late and in month us cure in still different is have very, tenants owes XX for one mostly The different us are credit along occupied a are to XXX% that. us. and their with with bump we excellent. this behind where to sold news recent all whom is well and are over payers, years for We harvest is this farmers doing hasn't of he growing these crops. unrelated and about paid continue know that some seven our of is them, farmer’s little payment. farms while bit This pay very been one slow, been a

enough regions the and We there's sufficient good the types farmers number now and paying in and with so of to thus different dividends for they safety we're many diversification flows provide coming crops, different in own cash out our a of shareholders. many are to different farms that

we're growing I but And to forward different regard we're some I there. looking do we at same – funny, forward, as diversification. to – it's we're outside, want in and it, to different pretty We're I'm states the think getting with time some the areas. diversification, go to always looking always to improve but trying looking improve

a of the contained annual higher on mostly be leases. these respective in just provisions the yield future that expenses first expenses certain team as you also And escalations that does new years many us. the of million. net, the too if reminder they yield figure quarter, the leases $X.X And cash During shouldn't we're $X.X account so X.X% for operating as that to as – incurred the show two has kick even figure farms escalations lease push about farms, the are triple million under in. such us for These acquired initial by on responsible need

and extended March end, either of during on lease our after we front, or leases amended new and quarter leasing executed the some On properties. XX, XX a XXXX, existing the

net from double lease paying for comes tax changed with of We single the well. we were up can some two responsibility tax maybe our Now, and changed other taxes few and repairs a expenses. a net over these property the to that only only structure that move of over property lease with leases the a as is – next time and property us

are these that expecting prior XX.X%. of about of total $XXX,XXX about these income lease leases in net an that increase the increase operating in changes, over annual for on new to accounting After or result expenses, some of lease a

tenant and wanted received on $X During get out to farming the They of quarter, old million we termination business. long-term lease had terminated The farms the payment. lease. the a four

These they So, downturn. unrelated cancel third to something a with as party lease. a farms to tenant us the no new re-leased paid result, were

less in Looking of the last ahead, leases annualized it's revenue. these is think lease expire X% and they're XXXX, makeup to December and than we quarter, of I four in the expire all think in I total late total have XXXX, fourth more scheduled our in month

for in and the are both existing properties. negotiations to of tenants new tenants actually these We some with potential talking

the from important farms. how fee estate advisor downturn the fee – responsible and this any by is different a the one amount because the make assets are rather Fund. recently amended should equity management than expecting agreement calculating seemed change sense more that the our is common aren’t in the is you is These based just the for. the real that We on We know the It to this of on advisor is on owned Fund. the fee to an of assets We people. these with lot calculated recently

by board about set of X% assets amount these changed So the estate real is real estate the cost field. like owned the the not determining with gross this your think half formula This fair one as the new and of expenses being from of to same intangible the these The amount more the in under is at fee assets – old be management – under calculated Fund. is of of paid the annually on managers paid fees this formula. fee in and historical the line We fee based their value. formula asset

our as So as value, the of not increase will farms increased an it almost the advisor. fee farms past, in the have result to in in all

next about preferred million talk B series raised we And important sale XXXX, aftermarket this X, also during about sold offering let's because about $X non-traded that proceeds our through the net of Now, $XX quarter, net XX we capital months completes that's stock. year. of proceeds for registered we the ago. January about Since And that program. through our in some raising the million

nice a put to in $XXX proceeds, that about of which all we was So work. of million quick raise

sold stock, almost offering series the able stock, in with identical preferred had plan over series to farms B, of find did the next new years, our the from preferred to since the that the series a small we several offering. be series being buy C come offering the launched are But proceeds C aside in. series on better And we we so B as a with to larger are course we just success as amounts we of to C called returns that series B

before think we have a now agreements few probably about we've So pretty we we'll C, of in XX place, sales far start small I have ramping because only heavily. selling up didn't and have sold the XX we series

the proceeds Just everyone C which of to Gladstone broker selling under shares Securities, that is that affiliated B want paid this now dealer. to the certain an company series and fees is commissions remind series the to

Gladstone sell greater other Securities XX% Gladstone the to including out this who are Gladstone the Securities. for kept the of the to Securities it it just prospectuses, than rest wholesalers additional by the of a pays earns as retained brokers However, expenses, the fees conduit offering fees parties by and cetera. the And fee In are related about third actually used cover is to is shares. expenses printing selling total, all these et of helping

than public And thing. stock. non-traded of of folks, avoid good to very to a not we stock, one overnight the stock but use sell dilution typical is a those is reason costly much preferred It's more common not Dilution offerings.

fee As you largest all most I I and take the buy included also has in the unless the stock don't in by five it. adviser in like stockholder maintain to stockholders, the want and of my common want preferred common like is money And know, that additional stock equity I'm by position. and with paid advisor farms forward certainly dilution and calculation that just the note not resulted because going fees never we please paid

numbers. to Lewis of enough the to the so sort over I'll about operation, Parrish, that's Officer, our Well turn Louis? you it to Financial Chief talk of

Lewis Parrish

you, everyone. sheet. going begin thank David, morning I over the good balance by right, All and

total rate as a given at of fair a years. relative increased an During interest to financing addition fixed million loan our earlier. XX. about four also proceeds this on mentioned of equity perspective, $XX the total leverage will and due in level farmland million, comfortable equity $X the X.XX% overall value about carry primarily a the these loan-to-value from We're ratio high-quality basis, first issuances, quarter, one for XX% standpoint for at From class. farmland new assets about next issuances, of our March which the by holdings we secured asset David From low-risk was to the our a and

XX% are volumes our rates In at six are another addition, average currently years and weighted basis fixed our at rates fixed X.XX% these for of over out.

believe years issues protected we liquidity also volatility. we're hit. the that recession maturity currently interest are should debt potential any we And the rate weighted plus we out, these XX So on well-protected side average against borrowings with of future against feel a being

in will now now, discussions a remains Right at with readily based terms. and lenders, generally credit to credit on had near-term there right be we us do freeze But we've our not believe favorable future. available

about coming have we XX maturities, due months. debt $XX upcoming the Regarding million next over

million about of the end due the the maturities year. $XX three loans of However, coming of towards that bullet represents

same since have increased lenders. in we or lender properties acquisitions, refinancing million by potentially loans foresee The loans three the these not collateralizing value with about respective new any their problems do $X.X these so either

over amortizing maturities, So of $XX outstandings. removing X% only payments total months the or about principle XX we next those debt our about have of million coming due

Now move to on the for our operating quarter. results

shareholders note in Dividends compared in share a per $X.XXX quarter On about I'll to about up by per share share, last million the First, that we current of had common quarter-over-quarter for or and quarter share. XX%. $X.X net income or increased FFO about income adjusted first $X.XXX our per common million, AFFO per $X.XXX the about a basis, comparison, $X.X per share by to $XXX,XXX of were per to net $X.XXX On increased $X.XXX each quarter. share quarter. declared

both perspective we and loans increases drivers rent excluding and termination received rental $XXX,XXX, quarter-over-quarter from on in expenses. lease operating early additional partially on AFFO earned Credit, cash basis, with by rents payments, primarily in X%, patronage behind a income increase payment acquisitions. interest due recent increased about main lease revenue to termination and a or participation offset were our certain received by the Farm The From

balances After tenant, transaction. related $X.X recognized of lease – writing $X.X due. of lease net the $X million to termination we an leases, And about from related about by our timing quarter-over-quarter off prior decreased lease revenues farms. about to who rates received such payment an leased early payments this when of are Participation outgoing due also million million of the to certain additional we four

Farm $X.X We the and interest loans points. patronage also XX reduced by received refunded our interest about them from of Overall, with or them. associations million various Credit interest patronage borrowings from basis our to related about rates this

pre-incentive by quarter-over-quarter termination required quarter. during about incentive the in we by related on primarily party basis. FFO rate surpassing a fees. increase amount fee the On This our to prior by course $XXX,XXX certain about by of the increased the fee by expenses core quarter in expense payment during side, a this and increased was by the earned $XXX,XXX, our And operating current an advisors our The than increase the the lease patronage received interest larger was due driven quarter. hurdle driven

only In increased fees quarter. well party were was by with related addition, slightly quarter property consecutive associated by quarter-over-quarter shareholders and appraisal relatively third incurred assets our to operating costs this fee for the expenses quarter. prior quarter additional a the core as acquired on due management our upcoming $XX,XXX the about current annual during operating due during primarily the from Removing basis. base our as meeting flat $XXX,XXX note about the additional increased fees, higher the now, Of to prior expenses

value. Now asset $X.X the revalued these which move had their about all on valuations, the a these appraisals. farms via quarter, were – We the about million, year net Overall, increased values over XX third on farms to farms independent of ago. X.X%, party during prior or by

the So of farms March on either as was appraisals actual and million prices. or third-party based all of XXst, at valued were purchase $XXX this our

the share preferred our net farms up main of improvements during on which capital on of debt were all by by impact at in based and of was The net valuations issuances updated appreciation $XX.XX, ongoing for properties. equity value stocks, and fair from offset and the certain dilutive So common these increase quarter. largely the March asset our last $X.XX is of certain drivers value the quarter including XXst value the

lines cash our over into $XXX of on $XX powder million and credit, million of power for of have availability dry over acquisitions. translates buying including straight liquidity, to currently that Turning we

issue intent the Units purchases as OP ability have to new should and arise. also we the opportunity consideration for However,

availability And we our facility potential finally to through recent added and amendment, MetLife we additional new capacity largest with the borrowings. facility discussions ample continue in our have borrowing with on our lenders under for be

and So to our that we meet continue room borrowing ability plenty and new investment up farms of have buying criteria.

lastly here again month. And dividend per on to touch We I'll $X.XXXX our raised share distributions. recently per our common common

monthly we shareholders over common an the XX distributions total common XX% resulting of share Since dividend increase overall in common dividends paid XX times, we XX monthly raised in our past in per quarters, consecutive XXXX, to time. Over distributions. this totaling $X.XX our

our about believe plan. to our stock dividend is we're is to and compelling And dividends the this yield continues is security current to relative to rate rate paramount a business today, the shareholders it At outpaces run goal price at considering our the Paying the distribution the our and We stock with be increase inflation. a offers X% underlying where investment alternative. in assets. and stock stability of that

over back David. that with to turn program I'll And the

David Gladstone

right, you, All Lewis. thank

list able fruits points growing that next We billion nuts year. that to be couple following trend we believe very do Our few markets farmland seeing lifestyle buy today. report final just we're and as to crops and of we'll to is in healthy some contribute to continue And in investing we and be get farms expected the a be in assets remains active healthy and questions. vegetables think the to and time such of before over over We I to potential $X positive quarters. should very you next news the this that

We – among organic farms either comes our out are this type section fall total organic toward is are foods. produce local these our organic trend this your growing revenue these Currently nuts we that trees have fresh acreage either growing transitioning be of XX% nut our of growing consider a and permanent to these in crops, that can among grocery organic about continue Over type about find and produce, are or category. XX% you the a the to see there that we food into that the of XX% foods that store. foods the of healthiest from to of

organic believe continue area. a will We strong growing be sector to

our of time In that to GMO less addition, zero. and than X% change over on crops I classified as farmland think grown being will

with Another produce of the CPI is to inflation Labor annual Bureau to major strategy focus to generally why food business fresh the reason farmland our of According keeps segment. growing the Statistics, effects inflation. particular pace due in on this overall

However, multiple past the has and outpaced the X.X over by total fruits segment the times. a category food fresh years, the vegetable XX CPI of of food

are – the our So in inflation pay we because consumed supplies because global for we from of global and crops typically get more to are – short are of like us and them insulated demand corn make rents farmers good wheat more after hope harvest. susceptible and is and and mainly volatile to commodity hope while crops within generally volatility, and money fresh soy the can produce prices And to mostly a us. way them pay time more locally

be where consumers into United competing low Brazil or the rates we with come do have of we are you would at. corn, growing area, all we And we lower of other that telling much we're – the that we States farmers clear because can prices of we I'm those confused and can some because win with and this often or staying very to are are at the grow compete. in wheat. than If Ukraine soy they

especially XX.X% per for downturns, S&P worth lower overall growing Overall index. And and even classes. farmland vegetables demand areas has XXX compares all recent of almost made return prime our Coast, stable Florida. and some $XX.X XX to for of are along That the located, with Despite farms of index, most past XX.X% over REIT compared overall other about NCREIF perform is but up particularly California, berries the well remains of to year farmland, of the the East continues years. farmland where an including our currently the including billion favorably the asset agricultural averaged than the annual and properties, about strong Coast, and West for to own, Washington which in Oregon the

negative farmland index a has the never years, XX had year. those During

same that's farmland in S&P, which think Unlike a have turbulent prices, very during rise haven over land for especially three period, safe with and fresh It's as generally unbelievable, steadily. produce, to provided that's had that markets years both continue the food not. but prices financial negative investors has I true. times

long-term in really two stock is investment parts. in farmland in company thinking this Purchasing stock is investment a our

similar a it's cash of in hard limited gold. all, an especially farmland, to having It's urban dirt California investors. it's a goal of asset, its up assets, active alternative value we there's and have and an used it second Florida is First and investment unlike is flows amount intrinsic with where that by development, because being to many farms. And other

dividend we're that kind it's than believe We dividend, approach. keeping not keep fund better the we flat because a increasing of just bond a so that forever

We values underlying increase the particularly food farmland expect the expect in and to a result. section inflation, and grow to the we as

especially foods. this be eating food fresh toward true healthy produce the in expect sector We to in the are as trending more people U.S.

a these of our it's all looking [ph] at against good forward the look considering much the hedge front are first, farmland to how spending I government I inflation that us days. think way a and money think to

will to It's is index in we I fun. REITs, bring daily which size once very stock. the increase get in just this RMZ additional and a of think listed institutional the asset a ownership and on hopeful larger terms get little great for we'll that great a bit of stock our liquidity I'm own

it's the but we and very like operating easy, it. a farmland anything without complex good sounds leasing business. be and wouldn't it's have But Buying people Gladstone Land managing

doing, fresh eating So and some please like if we're you stock certainly what vegetables. fruits and buy keep

from Dexter, who you in. out questions. let's will listening If on, you operator of our Now we'll some some have are those come are there? questions have

Operator

you for Yes, Mr. Thank Instructions] [Operator Gladstone. that.

David Gladstone

Any questions?

Operator

Instructions] [Operator

David Gladstone

going we any any income are questions. and much have guess time. to aren't this much happy and so ask dividends, needing produce not to people just questions We I just so

you up. calling I call. Thank of for And That's Dexter, in. close think you. thank So this it all the end we'll

Operator

participating. welcome, Gladstone. for call. this You're concludes today's Thank gentlemen, you and Mr. conference Ladies

may You disconnect. now

Gladstone Land (LAND) 7 May 202020 Q1 Earnings call transcript