Gladstone Land Announces First Quarter 2024 Results

Please note that the limited information that follows in this press release is a summary and is not adequate for making an informed investment decision.

MCLEAN, VA / ACCESSWIRE / May 7, 2024 / Gladstone Land Corporation (Nasdaq:LAND) ("Gladstone Land" or the "Company") today reported financial results for the first quarter ended March 31, 2024. A description of funds from operations ("FFO"), core FFO ("CFFO"), adjusted FFO ("AFFO"), and net asset value ("NAV"), all non-GAAP (generally accepted accounting principles in the United States) financial measures, appear at the end of this press release. All per-share references are to fully-diluted, weighted-average shares of the Company's common stock, unless noted otherwise. For further detail, please refer to the Company's Quarterly Report on Form 10-Q (the "Form 10-Q"), which is available on the Investors section of the Company's website at www.GladstoneLand.com.

First Quarter 2024 Activity:

• Portfolio Activity:
  • Property Disposition: Sold a 3,748-acre farm in Florida for approximately $65.7 million, which, after accounting for closing costs, resulted in a return on equity of 60% and a net gain of approximately $10.4 million.
  • Lease Activity: Executed four new or amended lease agreements on farms in two different states that are expected to result in an aggregate decrease in annual net operating income of approximately $801,000 from the prior leases. However, the majority of this decrease was due to one lease agreement executed on a nut farm in California, where we agreed to reduce the fixed base rent in exchange for increasing the upside potential of the participation rent component.
  • Vacant, Direct-operated, and Non-accrual Properties: During a portion of the quarter, we had 20 farms (5 in California, 14 in Michigan, and 1 in Washington) that were either vacant or on which lease revenues were recognized on a cash basis. The year-over-year impact on our operations (Q1 2024 versus Q1 2023) as a result of these properties was a decrease in net operating income of approximately $750,000.
  • California Water Activity: Obtained an additional 2,676 acre-feet (over 872 million gallons) of water credits at a total cash cost of approximately $345,000, or $129 per acre-foot, and recognized approximately $426,000 of non-cash revenue, which represents the estimated fair value of certain water credits obtained.
• Debt Activity:
  • Loan Repayments: Repaid approximately $16.2 million of bonds scheduled to mature.
  • Interest Patronage: Recorded approximately $1.9 million of interest patronage, or refunded interest, related to our 2023 borrowings from various Farm Credit associations. Including approximately $111,000 of 2023 interest patronage that was received during the third quarter of 2023, total 2023 interest patronage resulted in a 22.0% reduction (approximately 101 basis points) to the interest rate of such borrowings.
• Equity Activity - Series E Preferred Stock: Sold 11,340 shares of our 5.00% Series E Cumulative Redeemable Preferred Stock (the "Series E Preferred Stock") for net proceeds of approximately $255,000.
• Increased and Paid Distributions: Increased the distribution run rate on our common stock by 0.22% and paid monthly cash distributions totaling $0.1395 per share of common stock during the quarter ended March 31, 2024.

First Quarter 2024 Results:

Net income for the quarter was approximately $13.6 million, compared to approximately $1.8 million in the prior-year quarter. Net income to common stockholders during the quarter was approximately $7.4 million, or $0.21 per share, compared to a net loss to common stockholders of approximately $4.3 million, or $0.12 per share, in the prior-year quarter. AFFO for the quarter was approximately $5.1 million, or $0.14 per share, compared to approximately $5.9 million, or $0.17 per share, in the prior-year quarter. Common stock dividends declared were $0.140 per share for the current quarter, compared to $0.138 per share for the prior-year quarter.

Total cash lease revenues decreased by approximately $1.3 million, or 6.3%, from the prior-year quarter, primarily due to the sale of a large farm in Florida, as well as a decrease in revenue from vacant, direct-operated, and non-accrual properties.

Aggregate related-party fees remained relatively flat for the three months ended March 31, 2024, as compared to the prior-year period. Excluding related-party fees, our recurring core operating expenses decreased by $540,000 due to lower property operating expenses and general and administrative expenses incurred in the current-year quarter. The decrease in property operating expenses was driven by a decrease in costs incurred in connection with protecting water rights on certain farms in California, as well as a decrease in legal fees and third-party property management expenses incurred related to certain vacant, direct-operated, or non-accrual properties. General and administrative costs were lower primarily due to a decrease in stockholder-related expenses related to the annual stockholders' meeting and a decrease in professional fees, particularly lower accounting costs.

Cash flows from operations for the current quarter decreased by approximately $1.3 million from the prior-year quarter, largely due to a decrease in fixed lease cash payments received (primarily due to the sale of the Florida farm, as well as due to the timing of when certain cash rental receipts were received), partially offset by a decrease in interest payments made (due to reduced overall borrowings). Our estimated NAV per share increased by $1.38 from the prior-year quarter to $18.50 at March 31, 2024, primarily driven by a decrease in the fair value of certain preferred securities (due to increases in market interest rates).

Subsequent to March 31, 2024:

• Increased Distributions: Increased our distribution run rate by 0.22%, declaring monthly cash distributions of $0.0466 per share of common stock for each of April, May, and June. This marks our 34^th distribution increase over the past 37 quarters, during which time we have increased the distribution run rate by 55.3%.

Comments from David Gladstone, President and CEO of Gladstone Land: "Results for the quarter were largely as expected but were slightly down from last year due to the lost revenue from a large farm in Florida that we sold during the quarter for a gain of $10.4 million. We continue to work through issues with a few of our tenants. We currently have five properties (encompassing 15 of our 168 farms) that are either vacant or being direct-operated via agreements with third-party management groups. We continue to be in discussions with various groups to either buy or lease these farms, and we hope to have these situations resolved by the end of the year. Our balance sheet remains strong, with nearly 100% of our borrowings at fixed rates, significantly limiting the impact of increased interest rates. However, the high borrowing costs continue to impact our ability to purchase new farms and lease them at high enough rates. As such, we have continued to focus our efforts on securing additional water rights for our farms in California by taking advantage of surplus water supplies and storing water for future use on our farms."

Quarterly Summary Information
(Dollars in thousands, except per-share amounts)