Gladstone Land Announces Fourth Quarter and Year Ended 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 / ACCESS Newswire / February 19, 2025 / Gladstone Land Corporation (Nasdaq:LAND) ("Gladstone Land" or the "Company") today reported financial results for the fourth quarter and year ended December 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 common stock, unless noted otherwise. For further detail, please refer to the Annual Report on Form 10-K (the "Form 10-K"), which is available on the Investors section of the Company's website at www.GladstoneLand.com.

Highlights for Fiscal Year 2024:

• Portfolio Activity:

  • Disposition Activity:

    • Sold 12 farms, consisting of 4,395 total acres in Florida and Michigan, for gross proceeds of approximately $70.6 million, which, after accounting for closing costs, resulted in a total net gain of approximately $10.0 million.

  • Lease Activity: Executed 31 amended or new lease agreements during the year as follows:

    • On annual row crop farms, we renewed or amended 12 different leases that are expected to result in an aggregate increase in annual net operating income of approximately $556,000, or 14.4%, over that of the prior leases.

    • On permanent crop farms, we executed 19 amended or new leases. With seven of these leases, we changed the lease structure whereby we eliminated the base rent, and in some cases, provided the tenants with a cash allowance, in exchange for significantly increasing the participation rent component in these leases, the majority of which will be recognized in the second half of 2025. The remaining 12 leases are expected to result in an aggregate decrease in annual net operating income of approximately $728,000, or 8.6%, from that of the prior leases.

  • Vacant, Direct-operated, and Non-accrual Properties: During all or a portion of the year, we had 26 farms that were either vacant, direct-operated (via management agreements with unrelated third parties), or on which lease revenues were recognized on a cash basis. The year-over-year impact on our operations as a result of these properties was a decrease in net operating income of approximately $2.1 million. We have since sold or leased certain of these farms, and we currently have 12 farms that are either vacant, direct-operated, or on non-accrual status.

  • California Water Activity: Secured an additional 8,987 net acre-feet (over 2.9 billion gallons) of water assets at a total cash cost of approximately $2.1 million, or $236 per net acre-foot, and recognized approximately $453,000 of non-cash revenue, which represents the estimated fair value of certain water assets obtained.

• Debt Activity:

  • Loan Repayments: Repaid approximately $33.6 million of loans, the majority of which were either maturing or scheduled for a price reset.

  • 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 16,595 shares of our 5.00% Series E Cumulative Redeemable Preferred Stock (the "Series E Preferred Stock") for net proceeds of approximately $373,000.

  • Common Stock - ATM Program: Sold 346,216 shares of our common stock for net proceeds of approximately $4.6 million under our "at-the-market" program (the "ATM Program").

  • Repurchase Program: Repurchased a total of 316,822 shares of our 6.00% Series B Cumulative Redeemable Preferred Stock (the "Series B Preferred Stock") and our 6.00% Series C Cumulative Redeemable Preferred Stock (the "Series C Preferred Stock") at an average repurchase price of $20.93 per share for a total gain on repurchase of approximately $505,000.

• Increased and Paid Distributions: Increased the distribution run rate on our common stock by a total of 1.08% and paid monthly cash distributions totaling $0.5595 per share of common stock during the quarter ended December 31, 2024.

Fourth Quarter 2024 Results:

Net income for the quarter was approximately $539,000, compared to approximately $1.8 million in the prior-year quarter. Net loss to common stockholders during the quarter was approximately $5.5 million, or $0.15 per share, compared to approximately $4.3 million, or $0.12 per share, in the prior-year quarter. AFFO for the quarter was approximately $3.4 million, or $0.09 per share, compared to approximately $5.4 million, or $0.15 per share, in the prior-year quarter. Common stock dividends declared were approximately $0.14 per share for both periods.

Total cash lease revenues decreased, driven by lower fixed base cash rents on certain properties, partially offset by additional participation rents recorded during the current quarter. Fixed base cash rents decreased by approximately $4.9 million, primarily due to the execution of certain lease agreements in 2024, pursuant to which we agreed to reduce the fixed base rent amounts and, in some cases, provided certain tenants with cash lease incentives, in exchange for increasing the participation rent components in the leases, the majority of which will be recognized in the second half of 2025. Fixed base cash rents also decreased due to the sale of a large farm in Florida during the first quarter of 2024, as well as a decrease in revenue from certain vacant, direct-operated and non-accrual properties. Participation rents increased by approximately $1.5 million, primarily driven by stronger production yields (i.e., pounds per acre) on certain almond and pistachio farms (partly due to the alternate-bearing nature of these tree crops), partially offset by lower prices for both crops during the 2023-2024 marketing period.

Aggregate related-party fees decreased by approximately $1.0 million during the fourth quarter, primarily driven by an incentive fee earned by our investment adviser in the prior-year quarter. Excluding related-party fees, our recurring core operating expenses remained relatively flat quarter-over-quarter. Interest expense decreased due to debt repayments made over the past year.

Cash flows from operations for the current quarter decreased by approximately $5.8 million from the prior-year quarter, largely due to a decrease in cash rent payments received as a result of changes in lease structures on certain farms as noted above, as well as fewer payments received from farms that were either vacant, direct-operated, or on non-accrual status. This decrease was partially offset by lower related-party fees and interest payments made. Our estimated NAV per share decreased by $4.15 from the prior-year quarter to $14.91 at December 31, 2024, primarily due to valuation decreases in certain of our farms that were re-appraised over the past year and an increase in the fair value of our fixed, long-term borrowings and certain preferred securities (driven by changes in market interest rates and conditions).

Fiscal Year 2024 Results:

Net income for the year was approximately $13.3 million, compared to approximately $14.6 million in the prior year. Net loss to common stockholders during the year was approximately $10.5 million, or $0.29 per share, compared to approximately $9.9 million, or $0.28 per share, in the prior year. AFFO for the year was approximately $16.7 million, or $0.47 per share, compared to approximately $20.3 million, or $0.57 per share in the prior year. Common stock dividends declared were approximately $0.56 per share for 2024, compared to approximately $0.55 per share for 2023.

The decrease in AFFO was primarily driven by a decrease in fixed base cash rents during 2024 (for the reasons noted above), partially offset by an increase in revenue from participation rents and decreases in both related party fees (due to an incentive fee earned by our investment adviser in the prior year) and interest expense (due to loan repayments made over the past two years). Revenue from participation rents was approximately $9.4 million in 2024, compared to approximately $5.9 million in 2023, primarily attributable to higher production yields on certain almond and pistachio farms. Aggregate related-party fees decreased by approximately $1.8 million due to an incentive fee earned in the prior year versus none in 2024. Excluding related-party fees, our recurring core operating expenses increased by approximately $611,000, primarily due to additional property taxes paid by us on behalf of certain of our tenants and on properties that were either vacant, direct-operated, or on non-accrual status. Cash flows from operations decreased by approximately $10.5 million from the prior year, primarily due to the sale of the farm mentioned above, changes in lease structures on certain farms, and fewer collections from vacant, direct-operated, or non-accrual farms. This decrease was partially offset by lower related-party fees and interest payments made.

Subsequent to December 31, 2024:

• Portfolio Activity

  • Property Sales: Sold seven farms, consisting of 8,189 total acres in Florida and Nebraska, for total gross proceeds of approximately $64.5 million, which, after accounting for closing costs, resulted in a total net gain of approximately $15.7 million.

  • Lease Activity: Executed two new lease agreements on two of our permanent crop farms in California that are expected to result in an aggregate decrease in annual net operating income of approximately $184,000 from that of the prior leases.

• Debt Activity - Loan Repayments: Repaid approximately $19.4 million of loans that were scheduled to reprice to market rates later in 2025.

• First Quarter Distributions: Declared monthly cash distributions of $0.0467 per share of common stock for each of January, February, and March.

Comments from David Gladstone, President and CEO of Gladstone Land: "Our annual row crop farms, including those in California and Florida, continue to perform, both in terms of value appreciation and rent growth. The market for many permanent crop farms in the west has been negatively impacted by lower crop prices, higher input costs, and water uncertainty. As such, we've been taking a different approach with the leases on some of these farms, whereby we will grant the tenants a cash allowance to cover a portion of their growing costs in return for receiving a larger portion of the gross crop proceeds on the farms. We may also decide to operate some of these farms ourselves with the help of a third-party operator. While we intend for this to be a temporary structural change for us, we believe this arrangement will be the most profitable structure for this specific set of farms due to the history of high yields on most of these farms, which allows for strong crop insurance, and we continue to see prices for certain of these crops trending upwards. We may also look to sell some of these farms if we are unable to reach agreements with tenants to lease these farms at satisfactory rental rates in the near future. We currently have nine properties (encompassing 12 of our 150 farms) that are either vacant, being direct-operated via agreements with third-party management groups, or where current tenants are behind in their payments to us and are on non-accrual status. We continue to be in discussions with various groups to either lease or buy certain of these and other farms in our portfolio, and we hope to have these remaining issues resolved by the end of the year. In the meantime, we continue to acquire more water at below-market prices, providing additional water security to our farms and those growers who lease them. Our balance sheet remains strong, with nearly 100% of our borrowings at fixed rates, and we continue to maintain high levels of liquidity and overall access to capital."

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