FPI - Earnings call transcript Q1 2024

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Operator

Thank you for standing by. My name is Cath, and I will be your conference operator today. At this time, I would like to welcome everyone to the Farmland Partners Inc.

First Quarter 2024 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Luca Fabbri, President and Chief Executive Officer. ahead. go Please

Luca Fabbri

Good call Cath. night. Welcome our to Thank the morning, announcement update after last of quarterly you, everybody. our earnings

Before General the the we Christine? some into will remarks. just over turn customary call, preliminary call Christine Counsel, I our Garrison for to jump

Christine Garrison

of press distributed has Luca, you, section after Presentation. sub-header Investor yesterday. supplemental package The market posted the you our to first Relations on the to closed website Thank announcing everyone quarter been Events the thank call. and under release our earnings was The and

presentation, listen remind herein For the May not call. those who to of subsequent as that recording X, made of remarks updated this and will this be we the XXXX, today, you to are

including of and financing future our to During the this our well statements dispositions of opportunities, call, related agricultural as business, our markets. rents potential comments acquisitions our as we performance identified dispositions, and impact business development and acquisitions, on statements, the activities will broader for portfolio, forward-looking outlook and make

XX, press are also measures our exhibit subject is company's April is furnished Form cautioned certain as adjusted income, first Executive and to in to risk measures, our adjusted SEC. I financial these and release the on are FFO, the Paul in with discuss included XXXX our comparable would furnished or as non-GAAP including EBITDAre operating Definitions that in statements our Pittman. available most to release documents the review call our control. listeners GAAP XXXX. Listeners can and announcing website risks and our predict measures earnings, difficult to net yesterday like dated as many FFO, generally reconciliations to which cause differ to of X-K non-GAAP an well quarter now we beyond these to Chairman, on to turn current farmlandpartners.com and are current from report the EBITDAre. uncertainties will and advise expectations, Paul? have which are risks materially filed we to uncertainties, discussed certain distributed actual results factors of press These We and

Paul Pittman

quarter transaction deposits This Thank to the things quarterly quarter received a you, the some where about talk minute. The really come company. we going a materially the increased we guidance. a P&L, important in for ran through the minute really back nonrefundable Christine. that I'm I'll that but to about are we the in annual is strong

gone XX%, assets our asset down Our by year cost all around working with last With XX%. control efforts but around X% decreased we rents overheads our have are our the overall. sales, only about down

about one we to through assets company. The I that's deposits So several is unusual of to accomplish I an have clearly, the twice reports the on and following. something And strongly that is event. really a to in performing higher here, call reaction ones a was it our transaction event, yes, one-time saw efficiencies sort that the make sense, And annual of AFFO as we sold that, the immediate into there what off an like the about P&L. in an we're held as drive but that year the runs we analyst weren't trying that to want with to. comment nonrefundable

a our rents. way various major So every to some quarter approximately not estate yes, reason the it's unusual we which disclosed wanted negotiate traditional any case, particular this not we in It's And related who But to is we the true, the of get it did. real them kept we transactions. In toward make payment context given the a was quarter. of we they could to buy way we had company eventually from it's fourth their that payout not it complete someone purchase, a us. negotiated solar decided a farm from large a the quarter because nonrefundable onetime of construction. payment the payment them they they when and similarly we down purchase farm had initiated XXXX, money. In from We the required and other

on and so forth. so And

to a So wanted little bit I of add just clarity.

I'm over these disclose always to things again will make our is the and that happen good. With them are going further an pull kind turn to We unusual, immediately and I'm appropriate sure over because out quarter. these quite not that, which things us, for comments to but over of Luca if to you're P&L, it of about over analyst it's equity

Luca Fabbri

to There strategy of and Paul. our in And that what you, minute is and kind of vis-a-vis changing of spend items round one also drivers a acquisitions first strategy Thank really on, are and those areas XXXX questions want are because the XXXX. meetings a a I year. dispositions our up. is that this with spoke of came the -- couple is with how investors, this there some we And of just were some in

appropriate to a bit clarity. Even might think these some some to I it's you. why draw of that's So though obvious little items of more be

had transactions intend do of fundamentally activity I the transactions. believe those buying So dollar both in in we use and paying down same debt thing to a and very back very stock. of significant in proceeds XXXX. volume in disposition we well those terms XXXX, We number very, of

follow. However, to constraints, have some regulatory we

harbor estate that we we number And transactions. very small a terms year. dollar real -- a safe year. Last X-year in to relied rely can year, subject in led on given aggregate any a average. we amount That this is investment harbors to in are had limitations a we as year. of a safe harbor would number of on different certain disposition on the Specifically, to really the really have aggregate safe a dispositions related in of based of It is dollar total trust, activity

fund of "used" those aggregate through transactions. We actually relying safe because number equity XX% opportunity which of -- individual for which asset a interest, amount in those dispositions equity as X, hold So kind that an which the we harbor, purely in dollar counted a of namely in that of are transaction zone manager, we different hold which of of transactions us. is we interest we a the on transactions, already disposition regardless a XX% or are one and

therefore, transactions X front have we and of have only that came be prioritizing our effectively So can disposition year, to we in bit This were remaining attention and them being year, that last pursue whenever the away. to thoughtful opportunities to we right on thoughtful are we and more decided while them, bit we we complete. And more opportunities we us. transactions little a various disposition need because a -- planning little executing

any at and of So cover publicly any we to I I wanted so of any of later kind so expected timing completed some management far haven't this point is and Although the share to expect related regions we so these other year transactions forth. One while to item, volume information of that on have to the specific into on transactions preempt dispositions, will the or I don't questions, in side. cost enter

I job think good we some costs. did reducing a in G&A by pretty XXXX

been We to the some year company's senior approach in James? some executive compensation either capped, We will for over continue now has -- his reduced year reductions. performance. the will staff are to course had continuing we some whenever turn at of I or opportunities and had pursue James we with compensation this further level, that, this expenses the of overview financial we to with call reduce the can. And that

James Gilligan

to structure the website I capital of quarter the interest and mentioned, as and Events Luca. of our sub-header of updated for supplemental cover under the you, my today, and Christine first Thank including section am in on going XXXX, the Relations few XXXX. guidance comments, is review be available a package items referring Investor to a I'll summary of which rates Presentations.

a that X. financial share on appear few I'll Page First, metrics

is For lower same last share per the March XXXX, than million net impact and the available common largely occurred X million of for to net period per was $X.X share higher period than ended $X.XX, XXXX, and significantly months that to for average stockholders XXXX. was year. AFFO income $X.X same weighted the was the XX, dispositions due $X.XX, AFFO income

While Paul which forfeited impacted income in further million that impacted the AFFO was to, it of a minute. was I'll QX positively also bit explain that from a XXXX, negatively sales by occurred little XXXX deposits referred by in $X.X

and the lower QX some periods. the had by lower was operating amortization lower review expenses repair and property a that sale And accounting lower dispositions XXXX, administrative fixed the was in recognized where farm due to in between quarter and service. QX in of expenses small were in farms XXXX, the termination, over a slightly $X.X the and items expenses. General properties. depletion million the as Depreciation, Paul legal I'll time. The deposits, X. expenses Interest and of in XXXX Next, was first down a no expense quarter of mutual we Page changes due forfeited as other only Gain insurance XXXX. QX nonrefundable terminated small property on and of were caused XXXX, taxes, we as sold of to expenses Property series of assets lower increased shown depreciable first agreement assets on in operating by fewer the sale to result from XXXX in higher sale of on Income deposits. was rates. deposits that few described, received a forfeited initiated back relates

out. XX. million. Total Page total swap, shares. $XXX to at a few Fully capital There a of percent rate point debt was April of moving XX.X as as March XX, net items share XX, approximately XX%. Floating diluted million was to count was structure debt Next, of the XXXX, are debt

table of reimbursements periods. A the tenant note first approximately recreation; of and variable that on years. The that of is reset undrawn the in quarter eliminated. XX XXXX. 'XX quarter differences That's rate in for of next the Rabobank $XXX and now facility end That Note Tenant also components XXXX, and #XX. capacity spread. statement, blocks at the effective XX-K had generate have a Rabobank show quarter #XX the on and XXXX. debt at the our bottom overview fourth had income, statement of reimbursements solar, million totaling we $X.X agreed The of on on fixed and X rental for the the XX million first revenue farm reset shown Please X.XX% rent; resets expected, describe XX-Q. In also building quarter. building quarter X at The The been credit the the the of provides X the in few on the fixed change of presentation Page income the sold. included the remained a has the the spread to reflected new with financials blocks spread its between amortization these decreased have small next rent. as X. the of May and dispositions first an is GAAP in rental #X, 'XX, and The that K to XXXX. In income of million. are annual QX Q, cost and our years. Rutledge goods the maintained the on income We MetLife change to XXXX. we debt within X to the are: points highlight of as rent due first Page wind shows in rate comments MetLife beginning farm of #X, loan the rate debt quarter We the the spread is next for loan same, lines of $XX approximately

recreation with its that end of was construction very changes from 'XX solar rent to caused in the operational phase 'XX, and than Illinois project XXXX. wind as its in phase primarily Solar, the at moved large higher land were on a project by

onetime slightly rent in this and QX number a quarter. see dispositions the the to especially in It outstanding. Variable fee is in will Other greater QX sold. last tenant income throughout the and sales, receivables grapes. were increased higher and to excuse crop decreased and the small a excuse leases that me, fixed due in insurance due first of lower Direct -- crop up XXXX the reimbursements reimbursement payments reimbursements. Management goods due to impact We items XXXX decreased first decreased citrus. periods. year, loans to of difference combination higher quarter exchange this of in of XXXX, that with me, relative year, was interest a occurred Tenant for with -- largely and throughout fourth between XXXX, in cost tax financing operations renewed of

XX, page, next using the Page show as outlook pages. format the we previous for the On XXXX same the

in of quarter the Assumptions X are the listed these We other are included at transactions first out projections. had XXXX. acquisitions bottom. No in

On insurance the a sold, revenue side, crop to first the expected operations, lease year X, up acquisitions in operations. in full and that crop of changes of plus quarter XXXX. Direct of cost impact citrus few QX plus plus direct rent changes fixed occurred farm higher XXXX that's due transactions farms XXXX sales, again, is performance goods under the

side, curves. expense quarter and spend lower in general the forward administrative a On higher decreases Interest expense of the slightly updated XXXX. to due is first

participating. in keep the comments our entire last AFFO to for morning. or $X.XX don't updated we Q&A session. outlook per keep income forecasted impact progress here, you $X.XX as over forfeited increase please now throughout quarter. This And million the deposits you that range today, to AFFO. where but you mind, Thank from an This statement is we included $XX.X in the we QX summarizes Operator, show the million all of the begin The for note up will year. stand can is $X.X the we share, this wraps and

Operator

question And Scott of from [Operator Instructions] the with your first ROTH Fortune comes line MKM.

Scott Fortune

to did $XX.X want in up XQ, on the you acquisitions real million. Just Farmland follow quick

Just kind geography here from kind spread was you farmland and and liquidity side. out standpoint? on into what of a as some Just Obviously, mix opportunistically color rates type looking seeing going strategic higher XXXX the but forward? on for are and acquiring of is an just difficult, acquisition how at you're of interest your there you kind what opportunities the sense acquisition of look

Paul Pittman

I'm location than different today in Paul, is the of I'm a -- and team. the rest going to This Sure.

so question. I'll that answer on Luca, can take that thoughts if located, And So you where gather your specifics of of general parts you farms those of the bought would piece the we it. were

we to So amount either this expand or the we price that, is up acquisitions can properties our acquisitions scale farmers assuming on where a that borrowing of point, our limiting to already just to a almost own own, on to on are year, in to we'll firmly and profitability adds to literally is comes one believe given the that already great therefore, opportunity largely general our do we of rent the charge we high place very for we farms the close want add always fair costs farm. When a because those increased farms. adjoining of the that posture

really plus Farmland as cost debt long-term current of yield appreciation. we do is is we So side annum, will a that's combination XX%. the least high the kind today, yield. Return recognize of to though plus XX% current is below acquisitions Farmland current to capital not that And yield. And It's this at just obviously as of current average, return year. appreciation is important to plus is on yield per so we've got appreciation which think way the or

where rate yield to So we are from versus on time, they still current where located. negative do interest transactions a overall. as $XX the I we in they address believe time net are you specifics to that even X bit were little to of as basis, a were want transactions they there a do think small -- positive will value if and million long addition address Luca,

Luca Fabbri

Sure, Scott.

to were the all So acquisitions. very, little were Illinois. farms did immediate acquisitions, overwhelming, adjoining really of one X majority owned. strong very the the It to that more one that and and therefore, next significant either we large These something very on acquisition combined we own. That -- right pay to the more X was better and a that directly offers large in ability was have farms small of was the that offers Especially already another we assets. -- those stability rent or all scale combined value farm combined significant vicinity and economies for very us was large operator

absolutely value long portfolio for is as kind despite term, a this why the cost -- So pursue that adds we're we this whole. we slamdown our because acquisitions in these thought capital of is the of

Scott Fortune

follow-up. helpful, appreciate just spread the the That's especially And really obviously right on I tough a now. color. going with environment

remarks here. it your mentioned in You

potential transactions you've put at the mentioned, you size to for hit kind You X color assets around know type or is of the probably second of assets. could timing potentially standpoint, have 'XX $XX figure of looking year. in you at been million. of mark, sales that I the more kind you've looking sales but for decent any XXXX? on sales mentioned around a little call you're asset just of I of know a kind left half $XX million detail -- last but Can

Paul Pittman

So again, is Paul. this

would can want want to we and the couple we no more. Those say transactions, in of in to optionality, to coming it or maintain think of up year. we something -- there. a we in the We maybe optionality to we'll speaking transaction and own, preserve the some year. $XX and us I with don't to transactions comments relatively sales make but too of those that wanting certainty present million calendar do early late year, I be the We to burn that, so down. only really me will calendar have is likely don't X own that Let end highly turn and around the want somebody

of year. set of will the So that relatively to in be concentrated likely fourth X are we the for sales fall of year. probably be do They quarter, asset we it larger only late do can events. given third Think the in size, as the quarter

buy this stock I us I view value in it. what's assets continue going fact than the back $X if as look and price to other is mean stock, so any to of asset to our is what more crazy. And we that's the kind drive late we're sales how of But toward portfolio, we going maintain in sell underlying a our or versus year discount greater at

own all to narrowed. X% valuation you As needs I of that be know, and company, gap almost the

a yesterday well we've and valuable and and today, -- highly in got we're highly, after terms the between of and that's work of uptick liquid. the trading it's even assets a value. think highly stock $XX are And underlying something discount crazy. The I asset in excess like $X nice

And -- planet so to to by on everybody own the this gap jokingly year, our still if stock. we're the late try there, going in create cheapest for value I is is as farmland say, the

So that's Hope that what want to we helps. buy.

Operator

line question Stevenson of next from with Your comes Janney. Rob the

Robert Stevenson

or changing and assuming is changing anything banks? of forfeited I'd margin for given the farms? the at some the these to I'm specific of longer guess, availability Paul, what's ask, anything deposit financing if Luca terms rates in I was the of with people But for happened the surrounding figured buy person. that issues higher that to days

Paul Pittman

answer the market, drives small market, country, for ownership farmers more transactions the done the California, market real much a the is It's power particularly our the market institutional little a and a itself bulk is difficult. But holders by that's grain is is of thousands the thousands are the there overwhelming any largely themselves weakness. seen the So, in more around farmland strong. producing which we regions. getting incredibly haven't dominated of the of farmland portfolio, who

That one the potential to relatively have large. been transaction. transaction specific would Turning

I'm wanted, kind their financing the thought And about, the the so that money. just those much mind. also need. desperately that decided incredibly of talking challenges. don't huge that wasn't that were for know of It property amount didn't a sure. asset they the we purchase guessing they some decided And away the they price they it's not of have an the deposits transaction, just of We entire walked overall money. I'm of context as in they person thinking from they changed that they percentage

Robert Stevenson

you're of some not on seeing reticence programs... of the type But of government the Okay. standpoint any banks or

Paul Pittman

yes, that XX farms was rerent question and out Not cause there We've "Hey, to an question the having you able else?" everybody's really, there's a I months And farmer I'm into than this we're more or to seeing it it getting the is we've price us little in regret is, way someone come occasional a going been but at to for answer trouble the economy cases, to had to ago. And you though in view even little the ask going farm occur, us. your expand that's benefit. farm that can really say, problems a some in your same question for bit trouble there to higher. didn't

problems, what's really So we're interest in the is problems. And commodity factor prices hearing suffering course, for are environment. not -- crop particularly single face of about a is relatively somewhat yet but row that, lower sorts of rate the from those high driving the biggest those of guys, we higher

bit you the market. to a of up know, little As show starting distress in

people farms scramble company vacant in ever And end have that Now occasionally had recognize in bad money. and with trouble. will very, vacancy the or still This we not get worst with last and tenant the tiny. we will asset a up not to X any a lose very to tenant debt unrented farms, but downturn this we're is was class, going replace

those harvest. growing the paid almost in those you the you of lien we you're the have jurisdiction have For of every the growing if interest rent security seize if at story, scared crop, can you interest called a getting that new of crop. And to revenues what's time in first security your in

we helps, economy gets low And so have that's bad farm debt even a the Rob. wobbly. hope when little why numbers that incredibly I

Robert Stevenson

on farms, $XX you you in dispositions a $XX farm clarification remaining that? million do. that bought transactions X the count and a of sold helps. is accepted? And could Do Yes, then if guys that XXXX that million So

Paul Pittman

for those, that A doesn't. may some not XXXX reason. It does us And do you exactly of see count.

Robert Stevenson

X that grown to going what's just is last the days? that being they assets then up bought, Luca, there wind are you what on these clarification. forward? going growing And Illinois Okay. And

Luca Fabbri

crops. row It's

So corn rotation. soybean and

Robert Stevenson

potentially there it you're Midwest mean, pricing-wise? where I acquisitions? any do row And Okay. else? something out opportunities crops? to it you guys Is looking are more As best seeing Is the

Paul Pittman

Yes.

that REIT years portfolio, looked -- farms have a you kind of of public when of the decade ago we so data, got the the the owned to as linear across a into over last long have speak. And case in the personally the our back certainly set founded company. we've that So REIT, XX went XX-year I have we

which That's that $XXX operates lower is the other and property core efficiency and by the who else are which appreciation Our Corn and we our really best lower River core human the the regions Belt Mississippi in has current not most X the the of surprise. rates of the Illinois Valley, in portfolio appreciation single rates We manager, current one the U.S. And have Corn operating say. a our leads personnel company, and experience the about the is of long-term the the the assets, best second things. been Midwest Delta. have for Belt have run yield, farming been And holdings. best why Those overheads a upper anywhere the following to but the don't It's Upper efficient farming returns regions a Those the is the a the in the are important and level in combination combination what country, and higher assets of of lower say long-term X operations. In ease farm I country. costs million Nebraska operations, lower things yield, the has our our Midwest being. and overall I of incredibly of

has Belt return us says that's term, a because history the love treated long-term of the assets what the buying long we financial So best core perspective. Corn from

Operator

Securities. [Operator of from line Instructions] question B. Riley with next Your the John comes Massocca

John Massocca

today? of region, farms own of Western How they I a know still you Or are kind touching some market? kind kind region. farming mean, those maybe Corn challenged that does on California with the say, a So the in to kind the abate and issues all? of remain about of talked lot farms, have you at trending kind but of the of starting particularly, Belt are I let's some -- tree-nut of

Paul Pittman

to really the you When break you crop look have out at farms crop. California, by

for water said year by California challenging. exposure region West are we they're yes, In a to calls, water they're our gradually water probably in also politics U.S. Coast availability Colorado as the now and issues, to conference continues or as for So actual because negative frankly, caused to well, be of limitations. we or lessen water. the case, whether High these that's will why, more of the of either There Plains farmers. And

problems there that's in an really in crops unique that of on in in location are that to best the So good California. with actually will overlay world grow places own quite all those continue, good a farms we and The terms the farms It crops appreciating lead really very rapidly. is other water. California and few a other North high-value climate and in there can you a no America. certainly places region,

and challenged challenged place and are walnuts. They're in America, from example, of so only. nearly the a Pistachios there's although are Walnuts, mediocre is for supply-demand South a of, in supply-demand because little window hand, going they're a much farms, to tough And so to worldwide U.S. competition. citrus water. And rapidly. to some basis. own they're at a on get not certain which country becomes not much but available, the U.S. some a in recover, We challenged, that characteristics. crop lot be almonds appreciate this because but and as of those crop, depending harvest market of they are be then over much probably the on there's certainly more there really challenged local going we planting those to the crops. But are firms okay worldwide out best a very Citrus other continue going on

a pretty think, quite for year, farm so and so and forth. We, vegetable/strawberry own going continue will be to quite on is successful California, So us I be. is, and citrus in this crop that and farm good one to example, profitable, for

than the over We'll we own Colorado for do we think sort map, all reduce it on Western of time U.S. -- water, less but of markets kind the of reason it's general probably of So gradually over will now. the as on West. right that exposure

John Massocca

I kind given months seen California mean, now, sell of market all and specific tree-nut particular a stress recent a there is crop, years? in just just farms the right industry has kind maybe of to that

Paul Pittman

there a there. It's yes, at little But is a a while point might I mean Yes. been properties have market move market. out a than lower there's price ago. to it

team or We think general the right -- a long It team isn't portfolio. thrilled property our we where long rid me, given been think just just it not time. crop, get to time really and much up question this I super value that farm somewhere We let next Florida loss, sold I in And particular at -- year, a not give the particular had in now. everything doing term, in blueberries are right X we California farm management not long-term sold XX this and we We're years? It's believe If recovery Florida Michigan you do do a the those point the else. in happen and particular, at in patient. become we've deploy a a is crop and citrus capital farm not anything for a gains. But us, back in and loss. of that Last about rare next will farms will and did citrus the value And something. We a management over generate have examples. with -- meaningful about you rest sold last going I'll in we year, occasion that the of take X we convinced to on given the to going you It's And pretty there it's months. in your will bounce was the what's a question it in this are blueberries. big term we a go. you else at small is this Michigan medium because in had mean to up very long, now. X

So, hope that helps.

John Massocca

in reduction part I of that in was cost for up went kind can it then the And operated of does. farms you saw kind of definitely do kind and just gross was year that It goods the up for for of expectations maybe notable the a profits went of that sold. what

Just driving what's some color can you that? provide on

Paul Pittman

Luca, that don't they're the leave right because in you, of to to specific, fact front me. Denver office facts James I going and the it's in you or I'm have

James Gilligan

of with to prior kind chance John, of revised the for from there's beginning with year, by of Yes, was In control spend of spend be some manager going the decreased year. it rolled a before over caused change cost our if more sharpen for in will. And years and the the you mostly kind of those associated that up, budgets had kind on outlook, to farms. time was

what's that's change causing the So there.

John Massocca

season, of as the guess, opportunity growing the kind maybe budget reduction season more into there's probably get there into now that as thing line finalized of is I more is closer more that in frankly. we Or item -- for clarity? kind growing

James Gilligan

available converge. Yes, potential, there's always small changes or [indiscernible] the it's pretty of but outcome think range sort we of

expect don't But later So it's there narrowing. for are now, we the be that made we some But tweaks changes. think year. any big in little can

Operator

I now Fabbri will That Q&A session. closing over Luca back to turn conference concludes for the remarks. our

Luca Fabbri

and tuned time in Thank everybody, day. a stay company for updates Have to quarters further great your for our the you, in and come. your interest

Operator

Ladies for and gentlemen, today's conference joining. call. you all Thank that concludes

disconnect. now may You

Farmland Partners (FPI) 1 May 242024 Q1 Earnings call transcript