Yahoo Finance Gladstone Land Corp (LAND) Q1 2024 Earnings Call Transcript Highlights: Insights into Financial ...
Net Income: $13.6 million total; $7.4 million to common shareholders.
Earnings Per Share (EPS): $0.21 per share.
Adjusted Funds From Operations (AFFO): $5.1 million or $0.143 per share.
Dividend: $0.140 per common share for the current quarter.
Revenue Changes: Base cash rents decreased by about $1 million year-over-year.
Operating Expenses: Decreased by over $500,000 in the current quarter.
Net Asset Value (NAV) per Share: $18.50 as of March 31.
Liquidity: Access to over $200 million, including nearly $60 million cash on hand.
Debt Maturities: $35 million due over the next 12 months.
Common Dividend: Increased to $0.0466 per share per month.
Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Gladstone Land Corp reported a net income of $13.6 million and net income to common shareholders of $7.4 million, or $0.21 per share for the first quarter.
The company successfully sold a large farm in Florida for $66 million, realizing a net gain of approximately $10 million, which was $2 million more than its appraised value.
Gladstone Land Corp has continued to focus on water security, completing the construction of two groundwater recharge facilities which are expected to provide long-term sustainable water supplies.
The company has over $200 million of liquidity, including nearly $60 million of cash on hand, providing a strong financial position to manage upcoming obligations and investments.
Gladstone Land Corp raised its common dividend to $0.0466 per share per month, marking the 34th increase in the past 37 quarters.
Negative Points
The company is experiencing decreased demand for certain crops like almonds and pistachios, which is affecting the rental income from farms growing these crops.
Two properties encompassing four out of 168 farms are currently vacant, and properties encompassing 11 farms are under direct operating management, indicating challenges in leasing out all properties efficiently.
Adjusted FFO for the quarter was approximately $5.1 million or $0.143 per share, down from $5.9 million or $0.166 per share in the prior year quarter, primarily due to lost income from the sold farm and decreased revenues from properties that were either vacant or on nonaccrual status.
The company noted a cautious approach to new investments due to high cost of capital and insufficient increase in farmland rental rates to cover additional farming costs.
Gladstone Land Corp reported a decrease in net asset value per common share from $19.06 at the end of the previous quarter to $18.50, driven by a decrease in the fair value of preferred securities and a drop in valuations of certain farms.
Q & A Highlights
Q: Good morning, guys. David, or all of the 14 of the Michigan farms are leased to the same operator that you talked about as having the accident or there are multiple operators in there? A: Multiple. But I think it's only two now we're down to two. It was the same operator, but now we are working with a couple of different groups for them to lease, operate and potentially sell down the road.
Q: Okay. So all of the 14 Michigan farms that you talked about are blueberry farms. A: Yes.
Q: Okay. Then they are off five. Are the California farms, not farms or is there something else in there as well that's causing you issues? A: It's all that's sorry to say it that way.
Q: It's that's okay. And then I guess lastly, well, just to wrap it up, what was what is the Washington farm? A: No nonaccruals that was on cherries, apples and wine grapes. We're in the process of removing the Permian plantings and now marketing it to either be sold or leased as open ground or kind of a new development project for a potential buyer.
Q: Okay. And then I guess what we're talking about and what's what farms will grow like the Florida farm that you had, the big gain on was what was that growing without oranges? A: Now as vegetable produce kind of stuff that you'd see in the grocery store? I don't think there was let us there. But I think it was a lot of lot of produce that you'd see in the grocery store in the produce section. It was a very nice farm. Unfortunately, you have bombarded from from the people in Mexico and they can't make as much money. So people wanted us to lower the rent and we decided we wouldn't play that game of trying to beat the people in Mexico. So we put it up for sale. And as you probably have guessed, there are a lot of people who want farmland in Florida because it's being redeveloped. In fact, if you look around not too far from where that farm is, you'll find a lot of new golf golf outing places. And and just as a note we have the big farm right next to this one.
Q: Okay. Then I guess to wrap up this topic, the Louis, the [$750,000] impact from the 20 farms, is that spread relatively evenly on a per farm basis among the 20? Or is there certain of those farms represent a disproportionate amount of that [$750,000]? A: Net farms with it would be weighted more heavily in terms of the income differential.
Q: Okay. That's helpful. And then I guess the other question I have is you guys talked in detail about the water. You bought some more. You have a bunch of it on the on the books now on this get mark to market on a regular basis. And I guess the question here is it with all of the rain and everything in the aquifers four is got water worth less today than if we were in a drought situation. And so that that's going to fluctuate like securities mark-to-market on a quarterly basis or is that or GAAP not treating it? A: Similarly now these are being held at cost on our books and the water. We've got the water we've acquired lately. It's including the cash paid the cash amount we paid of about $130 per acre foot. Some of that we did get granted from a water district. So we didn't pay any money directly for the water. But so in our books, including the cash we pay, plus the income recognized that as a result of receiving that water, I think it's on our books for maybe $290 or $300 per acre foot. That is still below market even in a wet year as we were last year or average year as they're calling it right now on. But keep in mind that just a few years ago and water was trading regularity for between [$1,500 to $2,000] plus per acre foot so that's the that's the time that we're really holding it forward. That doesn't mean we're going to sell it for that amount.
Q: Okay. And then last one for me. How are you guys thinking about selective pruning in the portfolio? So obviously, you know, you may wind up selling some or all of the 20 farms that you talked about, et cetera, there that that are having issues. But any other farms similar to the Florida asset, which isn't under any real duress, et cetera, that you guys are thinking about monetizing and either redeploying into something else or buying back stock or reducing debt or anything along those lines at this point, given some market prices for land in certain markets. A: Well, if you pay us enough, we'll sell it all the time. It's nice. The prices aren't that different. So we aren't out marketing right now. However, I do think that marketing on some of the farms that we have that we've identified as we've talked about for you to sell, may tell us we should sell some other land as well but we're not out there looking for sales every day. It's a it's an interesting market.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
