管理層發言
Greetings, and welcome to the Gladstone Land Corporation Second Quarter 2026 Earnings Call. Operator instructions were given. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Mr. David Gladstone, Chief Executive Officer. Please go ahead, sir.
Well, thank you, Melissa, for that nice introduction. This is David Gladstone, and this is the quarterly call for Gladstone Land. Thank you all for calling in today. We appreciate you taking time out of your busy day to listen to our presentation and get some updates from us. First, we'll hear from Catherine Gerkis, she is our Director of Investor Relations, to provide a brief disclosure regarding certain regulatory matters concerning this call. Catherine, go ahead.
Thank you, David, and good morning, all. Today's call may include forward-looking statements, which are based on management's estimates, assumptions and projections. There are no guarantees of future performance, and actual results may differ materially from those expressed or implied in these statements due to various uncertainties, including the risk factors set forth in our SEC filings, which you can find on the Investors page of our website, gladstoneland.com. We assume no obligation to update any of these statements unless required by law. Please visit our website for a copy of our Form 10-Q and earnings press release, both issued yesterday for more detailed information. You can also sign up for our e-mail notification service and find information on how to contact our Investor Relations department. We are also on X at Gladstone Comp as well as Facebook and LinkedIn; the keyword for both is the Gladstone Company. Today, we'll discuss FFO, which is funds from operations, a non-GAAP accounting term defined as net income, excluding gains or losses from the sale of real estate and any impairment losses on property plus depreciation and amortization of real estate assets. We may also discuss core FFO, which we generally define as FFO adjusted for certain nonrecurring revenues and expenses, and adjusted FFO, which further adjusts core FFO for certain noncash items, such as converting GAAP rents to normalized cash rents. We believe these metrics can be a better indication of our operating results and allow better comparability of our period-over-period performance. Now I'll turn it back to David Gladstone.
All right. Thank you. Let me just talk about the portfolio we have. We currently own about 98,000 acres across 142 farms and about 56,000 acre-feet of water, which is about 18 billion gallons. Our farms are in 14 different states and our water assets are all in California. We didn't have any acquisitions or dispositions this active quarter. But at quarter end, we sold a property consisting of two citrus farms in Florida for about $3 million. It was a small amount of acreage. The original tenant had defaulted on the lease and the replacement tenant was at a substantially lower rental rate. Given the continued weakness of the citrus markets, we felt it was best to sell the property and use the proceeds to pay off some related mortgages and other assets that we wanted to address. We may consider selling some additional farms over the next few quarters as part of our ongoing portfolio review. If we use most of the proceeds to pay down debt and buy back preferred stock, it will be very beneficial for us. We continue to take a disciplined approach to acquisitions and are staying active in the market so we are ready when conditions improve. It will make sense for us to start growing the portfolio again when interest rates have gone down. So anything you can do talking to the Fed and telling them to lower that rate, we'll be pleased to do some more transactions. As we've discussed in all of our prior calls, due to the market for permanent crops, particularly nuts and wine grapes, we modified the lease structure for a handful of farms to reduce the grower's fixed cost while allowing us to participate more in the upside with higher crop share participation. We are becoming much more involved in the operations. Overall, the 2025 almond and pistachio harvests were very strong with yields generally exceeding expectations. While the final pricing of the pistachio crop has not yet been determined, it takes a long time to finalize these things. We received indications from certain processors that our final price is expected to be higher than the prior year. So we expect to recognize a meaningful amount of additional revenues from that harvest in the fourth quarter of this year. We entered into similar arrangements for most of these farms for the 2026 crop, so we're continuing down the same path that we set up to get us through prior problems. The majority of the related revenues and earnings are again expected to be recognized during the fourth quarter. You'll hear from our accounting staff about how much of that we've got later. I also want to remind everyone that crop insurance continues to play an important role as it helps to limit downside risk on the farms, particularly given their strong production history. If we have a big year and then have some problems, insurance protects us from the big downside. Our goal is still to eventually transition these farms that we're doing on a shared basis back to more traditional lease structures with fixed base rent. The timing of that will depend on several factors, such as crop production, pricing, interest rates, input costs and, most importantly, water availability. We're finding some problems out there with water availability. Looking ahead, we have six leases scheduled to expire over the next six months. In total, these leases represent about 3.5% of our leasing revenue for the year ending 2026. We're currently in discussions with both existing and prospective tenants and expect to be able to renew each of the leases prior to expiration. We're also pursuing several alternative revenue opportunities, including water leases. We have farms that have water we can lease out, and some of the solar programs we've been discussing have generated cash rent payments from a couple of tenants during the quarter. However, we'll keep those tenants on nonaccrual status until we see a consistent pattern of timely payments. We'll stop here and turn it over to our Executive Vice President, Bill Reiman. Bill, are you in California today?
Yes. Actually in Idaho today, David. Thank you. As David said, the second quarter is really highlighted by strong demand in almond and pistachio markets. We've seen almost weekly price increases in almonds and significant increases in pistachio grower pricing. We also reported last quarter about an early marketing bonus that was announced in February; we received that in April. I read yesterday that these are the strongest almond prices we've had in 10 years. I haven't done that research myself, but those trends are encouraging. This upward trend in crop prices, coupled with generally uneventful weather and growing conditions, has kept our budget projections on track to outperform the 2025 crop year and is tracking well for 2026. Our primary pistachio processor recently announced an expected final pricing for the 2025 crop of at least $2.70 a pound per split in-shell, which is higher than we projected for much of the year. They also announced initial pricing for 2026 of $2.50 a pound per split in-shell, which is two-thirds higher than last year. These are significant price increases that will have a major impact on properties under modified lease arrangements, properties we operate directly and our crop share lease agreements. We began shaking almonds on July 28, so harvest season is here. The almond crop on our properties looks slightly larger than last year's crop, so we expect at least the same yields, maybe a little better. Reports across the state indicate yields are generally slightly lower, which is one factor supporting the price increases. Pistachio orchards are everywhere extremely light, as we reported last quarter. We believe the overall industry was initially a little overly optimistic, but because we were projecting a much lower crop than many others, the reality has settled in over the last 30 days. That has caused buyers to increase offers for the new crop well above last year's levels. Crop expenses continue to track within our original budgets. There's been a lot of discussion about how to handle a down year without jeopardizing what could be a very strong production year in 2027. We feel our processors are positioned in the industry to maintain pricing so that 2027 could resemble 2025, even if we have a large crop yield. The wine grape market hasn't changed much. The 2026 crop is early and harvest has started across the West. We expect the 2026 crop to be down, not just because of removals, but because the crop looks light. That's encouraging, and coupled with bulk wine inventories finally getting closer to manageable levels, we hope to see better demand for new crop this year and in the next couple of seasons; we may finally be on the backside of the oversupply situation. In real estate markets, we think most Western U.S. real estate markets have bottomed out and are starting to get stronger. We're seeing a strong divergence in valuations around water cost and availability. Properties with good cash flow potential are receiving strong attention. Coastal California values remain flat with higher-than-normal inventory. The Pacific Northwest is stable, with quality properties transacting swiftly. Values and rents are stable. Stable interest rates combined with profitable crop prices are resulting in a bit more lending activity. Growers are finding it a little easier to get lines of credit; it appears banks have money to lend. There is a clear path to cover debt payments and financing deals can get done. On water, winter was a bit disappointing from a snowpack perspective and federal water allocations were disappointing. We did get an additional 3% bump in allocation yesterday, which helps free up a small amount of water and lowers pricing in some of our water deals. We're finding decent purchase opportunities, but we remain diligent and conservative with acquisitions. Our goal is to acquire water only at a price that fits the economics of a particular crop in a particular area. Looking at long-term forecasts, many expect a very strong El Niño this winter. We're preparing for a long wetter period this upcoming winter, which should create opportunities for water acquisitions and taking on excess flood flows during storms. We continue to evaluate opportunities and aim to strengthen water security across the portfolio through long-term and short-term purchases, investments in delivery and storage infrastructure, and identifying synergies across our farm assets. That's it for me, and I'll turn it over to our CFO, Lewis Parrish.
All right. Thank you, Bill. Good morning, everyone. I'll start with a brief update on some recent financing activity. We did not secure any new borrowings or repay any loans during the quarter. However, after quarter end, we repaid a $3 million mortgage loan in connection with the property sale David mentioned earlier. During the quarter, we added several unencumbered properties to certain existing and new credit facilities that increased our immediately available capital by about $50 million. We issued about $14 million of common stock under the ATM program earlier in the quarter at an average cost of capital of about 5.5%. Those proceeds were used to repay our line of credit and fund preferred stock repurchases. We have not issued any additional shares since April, given where the stock has been trading. Also since April 1, we've repurchased $13 million of preferred stock at an average repurchase yield of 7.2%, resulting in a total gain of about $1.1 million over that time. Turning to our operating results: For the second quarter, we reported a net loss of about $8.5 million and a net loss to common shareholders of $13.5 million, or $0.32 per share. Adjusted FFO for the second quarter was negative $1.6 million, or negative $0.04 per share, compared to negative $3.5 million, or negative $0.10 per share, in the same quarter last year. The improvement in AFFO was primarily driven by higher operating cash revenue and lower interest costs, partially offset by higher property operating expenses. Year-over-year fixed base cash rents increased by about $900,000 driven by rent collected from certain tenants that remain on nonaccrual status as well as leases executed over the past year. These increases were partially offset by lost revenue from farms sold over the past year. Participation rents increased slightly, primarily due to higher almond prices for the 2025 crop. Direct farming operations generated a net profit of about $590,000 during the quarter, primarily driven by the harvest and sale of an orange crop on a Florida farm following the early termination of a prior tenant's lease as well as higher almond prices. On the expense side, our recurring cash operating expenses increased by about $560,000. Total related party fees increased primarily due to a higher administration fee, and the increase in property operating expenses was largely driven by higher professional fees associated with protecting water rights on certain farms in California and additional costs related to properties that were vacant, directly operated or on nonaccrual status. G&A expenses increased primarily due to higher stock-related expenses and increased professional fees. Cash flows from operations increased largely as a result of higher cash receipts from participation rates and crop sales, a decrease in cash allowances paid to certain tenants, and lower interest payments. Turning to liquidity, we currently have about $125 million of immediately available capital, and we also have about $110 million of unpledged properties that could be used as additional collateral. Over 95% of our borrowings are currently at fixed rates with a weighted average interest rate of 3.45% locked in for an average of another 2.3 years. Looking at upcoming debt maturities, we have roughly $33 million of loans maturing over the next 12 months. Given the value of the underlying collateral, we do not anticipate any issue refinancing these loans should we choose to do so. In addition, we have $17 million of scheduled principal amortization payments over that time, representing less than 4% of our total debt outstanding. We also have about $148 million of loans with fixed-rate terms that are scheduled to reset over the next year, though the loans themselves are not maturing. This includes about $130 million of loans under our MetLife facility that are scheduled to reprice in January 2027. We are actively evaluating all of our options with respect to these loans ahead of the scheduled resets. Finally, regarding the common distributions in July, we declared a monthly dividend of $0.0467 per share for the third quarter of 2026, keeping the dividend flat. At the current stock price of $8.21, that represents a 6.8% annualized yield, which is well above the REIT sector average. With that, I'll turn it back over to David.
Well, thank you, Lewis. Overall, demand for prime farmland growing berries and vegetables remains stable across most regions, particularly along the coast of California. We're also starting to see some signs of improvement in certain permanent crops, both in pricing and the broader economics around those crops. We are hopeful that the worst is over and behind us, but it's still too early to say we are fully in the clear. In closing, over the long run, we expect inflation, particularly in the food sectors that we're in, to continue to move higher, and we expect the values of underlying farmland to increase over time as a result. We expect this especially to be true for healthy foods such as fresh fruits and vegetables and nuts, as long-term trends toward healthier eating habits continue to grow. Now I'll open up for questions. Operator, please proceed.
分析師問答
Our first question comes from the line of Gaurav Mehta with Alliance Global Partners.
I wanted to ask you on the participation rents. Could you provide some color on how much participation rent you are expecting in the second half of this year?
I don't think we're prepared to give a final number yet just because the pistachio pricing is still in flux and the bonus for the 2025 crop is not finalized. We do have a pretty good handle on initial pricing for the 2026 crop, but yields are still unknown at this point. I'll let Bill comment on this more. Given where we think yields may be and the higher pricing, we are expecting higher amounts this year, but we're not prepared to give a final range at this time. Bill, anything you want to add on yields?
Yes. It's still very early. We're literally less than two weeks into almond harvest, so it's too early to have a lot of confidence in any trends. So far, so good, but there's a long way to go. Pistachios probably won't start until closer to September 1, so it's too early on crop yield to give meaningful guidance. Pricing is much stronger than a year ago, which pushes us toward a positive outcome.
Second question, a follow-up on the second quarter fixed revenues. Were there any nonrecurring one-time items in the revenue number for the second quarter?
There was one item: we received a cash payment from a tenant who we placed on nonaccrual status in Q1 of 2026. For the quarterly revenue, that was about $700,000. We would like for that to be recurring, but since that tenant remains on nonaccrual status, I would not assume it's a recurring payment at this time.
All right. And the last question, can you provide some details on the impairment charge you recognized on four farms in Arizona?
Yes. That relates to one property that consists of four different farms in Arizona. We signed a purchase and sale agreement with a buyer subsequent to quarter end, so we marked it down to the sale price per that agreement. That transaction has not closed yet, but we expect it to close hopefully in late Q3 or possibly early Q4.
Our next question comes from the line of Craig Kucera with Lucid Capital Markets.
I want to walk through the pistachio market update. I appreciate the additional color. Last quarter, we discussed that you received about $0.50 a pound in your first-quarter marketing bonus. I thought it might be anywhere from an additional $0.40 to $0.90. Based on this update, it looks like you may be expecting toward the high end of that range, like an additional dollar per pound this year. Is that fair?
I would definitely say it's on the upper end of that range.
Craig, just to add, based on what the processor said—while they didn't fully commit—the expectation being at least $2.70 per pound would imply an additional bonus of at least $0.70 per pound. Read into that 'at least' what you will, but that does have us thinking it's on the higher end of the range we mentioned.
Got it. Mechanically, how should we think about the $2.50 starting price for 2026, which is up two-thirds from last year? How should we think about the timing of when that's recognized—maybe one-third this year and two-thirds next year, or how should we think about that?
A lot depends on yield. From a pricing standpoint, the $2.50 is the initial guaranteed price, so we will get $2.50 per pound that gets delivered to the processor. The bonus on top of that, which could be $1 or more, would be recognized in Q4 of 2027. The yield piece of that equation is not known yet. I'll let Bill comment further, but the yield and crop insurance outcomes are the remaining variables.
On yields, we haven't started pistachio harvest yet, but this is an off year and the fruit situation is challenging. There's a lot of blanking and issues from a heat spell in March that affected pollination, so we have crop drop and small sizes. These factors put downward pressure on yield. We'll have a clearer picture by mid-November for total production. We have opened some crop insurance claims on blocks we know will be under the insurance breakpoint. So it's a bit hard to forecast yield and how crop insurance will pay out at this stage.
Our next question comes from the line of John Massocca with B. Riley Securities.
Starting with the vacant assets you still have today, any update on potential resolutions for those ten farms?
Yes. For the majority of that acreage, we think we are close on getting some alternative leases in place, as David mentioned—solar leases and perhaps some cattle leases or programs. We believe some of those will be executed before the end of Q3. For others, we're still talking with prospective tenants and hoping to secure leases.
Everything moves slower these days, but we have activity on virtually all of them. In some cases the deal is effectively made and we know what we'll receive and when, but we don't have completed contracts yet. A lot of the recent vacancies were due to transitions—pulling almond trees out—which took time to clean up. At the same time, we've been working through what comes next for those properties, and that explains the timing.
And maybe rough brackets, any potential ballpark on what the NOI contribution could be from resolving those vacancies?
Some of the properties could get close to their historical performance.
From the three properties we think we're closest on, we estimate that could add about $1.5 million annually.
In terms of upcoming lease expirations, any color on how discussions are going with existing tenants or new tenants and the outlook for those properties as leases roll?
Over the next six months, these are relatively standard leases and we expect to probably renew with existing tenants at similar terms. The rent from these expirations makes up about 3.5% of our current annualized rent, so we expect those numbers to stay pretty flat.
Anything to be aware of going forward that could cause oscillations in property operating expenses? You mentioned water. Some leases have water contribution agreements—could that be a variable given potential changes in water availability between now and El Niño?
There is one property where we are responsible for bringing a portion of the water to the property. We usually recognize the cost of that water usage one quarter in arrears because it takes time for final numbers and costs to be processed through the water district. In Q1, we recognized about $200,000 of that water cost, and that was water actually used in Q4. Most of this water is likely to be used in the second half of the year, so I would expect a slight uptick in Q4 as we recognize water used in Q3 and potentially some water costs in Q1 of 2027.
And to add, with yesterday's federal water allocation announcement that increased allocation by 3%, although that doesn't sound like a lot, it can lower pricing in some categories. There's a tiered pricing structure for water and that small increase bumped some pricing down a tier, which can reduce the cost of supplemental water until the next water year. So the upward pressure on water expense we were expecting might be reversed for now. As we approach the wet season, more water is likely to become available and reservoir management will prompt some owners to sell, which typically lowers prices. So we see potential downward pressure on water operating expense as we head into winter.
Okay. Lastly, and because it's topical, any tenants with exposure to leafy green cultivation and any impact you're seeing there? I know it's probably not a large portion of the portfolio, but curious how to think about that.
There are negative impacts. The cyclospora outbreak—while it hasn't been definitively linked to domestically grown fresh produce—has affected demand across fresh produce because of how information moves through the market. Demand has decreased and markets are down in fresh produce areas. This is typically a quick-moving market and if it's short-lived, it will be a temporary blip. But as of now, demand is down and we'll see how planting and markets adjust as we transition into winter.
Operator, any further questions?
No, Mr. Gladstone, there are no other questions. I'll turn the floor back to you for final comments.
Okay. Thank you very much. This is a bit of a bumpy call as we try to figure out what's going on in the marketplace. We'll have a lot more for you next quarter, and hope you save up all those good questions for us to answer. That's the end of this.
Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.