NYSE:FPI Farmland Partners Q3 2024 Earnings Report $10.42 +0.04 (+0.39%) Closing price 03:59 PM EasternExtended Trading$10.43 +0.01 (+0.10%) As of 06:30 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings History Farmland Partners EPS ResultsActual EPS$0.02Consensus EPS $0.01Beat/MissBeat by +$0.01One Year Ago EPS-$0.01Farmland Partners Revenue ResultsActual Revenue$13.32 millionExpected Revenue$11.88 millionBeat/MissBeat by +$1.44 millionYoY Revenue GrowthN/AFarmland Partners Announcement DetailsQuarterQ3 2024Date10/30/2024TimeAfter Market ClosesConference Call DateThursday, October 31, 2024Conference Call Time11:00AM ETUpcoming EarningsFarmland Partners' Q1 2025 earnings is scheduled for Wednesday, May 7, 2025, with a conference call scheduled on Thursday, May 8, 2025 at 11:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfilePowered by Farmland Partners Q3 2024 Earnings Call TranscriptProvided by QuartrOctober 31, 2024 ShareLink copied to clipboard.There are 10 speakers on the call. Operator00:00:00Thank you for standing by and welcome to the Farmland Partners Incorporated Third Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. Thank you. I would now like to turn the call over to Luca Fabri, President and CEO. Operator00:00:32Please go ahead. Speaker 100:00:34Thank you, Rochelle. Good morning and welcome to Pharma and Partners' Q3 2024 earnings conference call and webcast. We truly appreciate your taking the time to join us for these calls because we see them as a very important opportunity to share with you our thinking and our strategy in a format less formal and more interactive than public filings and press releases. I will now turn over the call to our General Counsel, Christine Garrison, for some customary preliminary remarks. Christine? Operator00:01:00Thank you, Luca, and thank you Speaker 200:01:01to everyone on the call. The press release announcing our Q3 earnings was distributed after market close yesterday. The supplemental package has been posted to the Investor Relations section of our website under the subheader Events and Presentations. For those who listen to the recording of this presentation, we remind you that the remarks made herein are as of today, October 31, 2024, and will not be updated subsequent to this call. During this call, we will make forward looking statements, including statements related to the future performance of our portfolio, our identified and potential acquisitions and dispositions, impact of acquisitions, dispositions and financing activities, business development opportunities as well as comments on our outlook for our business, rents and the broader agricultural markets. Speaker 200:01:45We will also discuss certain non GAAP financial measures, including net operating income, FFO, adjusted FFO, EBITDAre and adjusted EBITDAre. Definitions of these non GAAP measures as well as reconciliations to the most comparable GAAP measures are included in the company's press release announcing Q3 2024 earnings, which is available on our website farmlandpartners.com and is furnished as an exhibit to our current report on Form 8 ks dated October 30, 2024. Listeners are cautioned that these statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond our control. These risks and uncertainties can cause actual results to differ materially from our current expectations and we advise listeners to review the risk factors discussed in our press release distributed yesterday and in documents we have filed with or furnished to the SEC. I would now like to turn the call to our Executive Chairman, Paul Pittman. Speaker 200:02:41Paul? Speaker 300:02:43Thanks, Christine. A series of comments here about both operations and asset sales and the future prospects of the company. The sort of headline is that this was an incredibly strong quarter on many different levels. It was strong operationally. It was also quite strong in terms of asset sales, although those asset sales were all worked on in most of the Q3 didn't actually close until early Q4. Speaker 300:03:18But when you step back and think about this company, there are 2 really important themes that we have emphasized over and over. One is that the appreciation of the asset class, meaning the underlying farmland, is a very big part of the total return to an investor in farmland. We've said that now for probably a decade. I'm not sure the market overall grasps it frankly, but we've certainly said it and we've now proven it. We will have sold in the last 24 months over $500,000,000 of farmland at very, very significant gains to our shareholders. Speaker 300:04:09That is really what happens with this asset class. That's why you do it. That long term appreciation is incredibly powerful. The current yield, as we all know, is modest, but it's decent as well. And you think about the company, we will have in approximately 12 month period of time distributed $1.45 to our shareholders. Speaker 300:04:37That's a huge return on a $10 or $11 stock price. I don't think the market gives us credit for that. We continue to be seriously undervalued as a company. But what we have said is that we are going to get the value in our underlying portfolio to our shareholders either by seeing the stock price increase or by fundamentally returning capital to shareholders by stock buybacks and distributions. So we're true to that sort of course of action and we intend to stick with it. Speaker 300:05:15Couple of other significant things that have occurred. We have cut the debt load of the company by almost half. I have never been very concerned about leverage levels in our asset in the way we run our asset class. We've always stayed right around 40%. There are many investors though who frankly have shared with us their concerns that they would receive less leverage. Speaker 300:05:39At this point, we are less levered than we have ever been as a company since we went public. And hopefully, the market will reward us for that. When you think about the value of the underlying portfolio, in most of these phone calls, I'm pretty clear about what I think it is. I think we're valued based on our internal valuations of our assets somewhere in the $16 to $17 per share range. We get to that number by doing an internal valuation of each individual asset that we update from time to time. Speaker 300:06:23Of the assets that we have now sold, as I said, about $500,000,000 of assets in the last 2 years, We have sold those assets slightly above our internal valuation metrics on average, but not meaningfully above, call it 5% or so. But what that does is that gives me incredible confidence in how accurate our internal valuations are. You never really know what a real estate asset is worth until you sell it. But we are making sales that more or less are equal to or just as I said a little bit above what our internal valuations on average say. There is one section of our portfolio where I have less confidence in the actual valuation. Speaker 300:07:14A few investors have asked this question and that's our California specialty crop assets. Determining value of specialty crop assets is way more difficult than determining value of row crop farms for the following reasons. The tree health and tree age is a whole another sort of vector of value that you have to think about as well as long term water outlook, worldwide demand for those crops, so on and so forth. So it's a much more challenging valuation exercise because a big percentage of your asset base is not raw land. But even if we are mispricing our California assets and our internal work by $50,000,000 to pick a number, this is a stock that still should be worth $15 to $16 a share. Speaker 300:08:08So in any way you look at it, I continue to believe we are trading at a deep, deep discount to underlying value. One of the comments I read on the Internet suggested that we should change our name from Farmland Partners to just partners because we don't own any land anymore. It's a kind of what I call keyboard courage snarky comment from some random person. It's ridiculous. We own $1,000,000,000 of farmland more or less still today. Speaker 300:08:41We are the 2nd largest landowner in what I believe is the most important ag state in the country and that's Illinois. We are still a very large landowner. We are still very much in business. That's not to undermine the point I made. We are going to get that value gap closed one way or the other. Speaker 300:09:00But the idea that we're a tiny company and irrelevant is just not true. We're still one of the larger holders of ag land in the United States. And certainly among public market choices, one of the larger holders as well. With I think the only other comment I want to make about the remaining portfolio is that Illinois has always been our most important date in terms of total acres owned and dollars. It is we think that is the place where appreciation in the portfolio is stronger than anywhere else in the country. Speaker 300:09:41And we haven't really even tapped into ever selling those assets. Someday, we will sell them if we need to, to close this valuation gap. But what we think we are doing is gradually concentrating to a portfolio that is of the very, very best quality in terms of land, in terms of appreciation value, in terms of tenant base and we'll continue to do that as time goes by. I'll be back for the Q and A session. But with that, I'm going to turn it over to you, Luca. Speaker 100:10:16Thank you, Paul. I just would like to kind of quickly reemphasize a couple of the points that Paul made. This was a very, very strong quarter operationally, a strength that we've built over the last 18 to the cost control measures that we've put in place and with portfolio restructuring that we've put in place with the transactions that we've done. And the transactions that we've announced after the quarter closed really enabled us to significantly further improve the P and L by reducing leverage very, very materially and therefore kind of putting our balance sheet in a very, very strong position. I just want to spend a little bit of time quickly on the special dividend that we announced. Speaker 100:10:56We announced a range of $1 to $1.10 There are really two drivers behind this special dividend. One is frankly a tax requirement as a REIT that we have to distribute the gains that we have accumulated over the year. But it's also a very, very strong business signal that we want to send to our shareholders that the gains that we have talked about as being kind of incorporated in our portfolio are very, very real and we want to give our shareholders a very, very tangible measure of these gains by issuing this special dividend. The exact amount of the special dividend is still a little bit influx. That's why we gave a range, substantially hinged upon the actual performance of the company and the net income in the Q4. Speaker 100:11:45In terms of timing, last year, we announced a special dividend. We declared it in mid December with a record date of late December and a payment in the first half of January. We expect this year to fall in the same timing pattern. Having said that, I will turn the call over to Susan for her overview of the company's financial performance. Susan? Speaker 400:12:10Thank you, Luca. I'm going to cover a few items today, including the summary of the 3 9 months ended for September 30, 2024 a review of capital structure and interest rates comparison of year to date revenue and updated guidance for 2024. I'll be referring to the supplemental package, which is available in the Investor Relations section of our website under the subheader Events and Presentations. First, I will share a few metrics that appear on Page 2. For the 3 months ended September 30, 2024, net income was $1,800,000 or $0.02 per share available to common stockholders, which was lower than the same period for 2023, largely due to the impacts of dispositions that occurred in 2023. Speaker 400:12:58AFFO was $1,400,000 or $0.03 per weighted average share, which was higher than the same period for 2023. AFFO was positively impacted by lower property taxes and depreciation due to fewer properties, lower interest expense and increased volume and profitability of crop sales on our directly operated properties. For the 9 months ended September 30, 2024 net income was $1,200,000 or negative $0.02 per share available to common stockholders, which was lower than the same period for 2023, largely due to the impacts of dispositions that occurred in 2023. AFFO was $4,700,000 or $0.10 per weighted average share, which was higher than the same period for 2023. AFFO was positively impacted by $1,200,000 of income from forfeited deposits from the Q1, lower property taxes and depreciation due to fewer properties, lower interest expense and increased volume and profitability of crop sales on our directly operated properties. Speaker 400:14:05Next, I'm going to review some operating expenses and other items that are located on page 5. Property operating expenses were lower for the 3 9 months ended for September 30, 2024, caused by lower tax expenses, insurance and repairs. Depreciation, depletion and amortization was lower for the 3 9 months ended, for 2024 caused by asset dispositions in 2023 and more assets becoming fully depreciated, which was partially offset by depreciable assets being placed into service. G and A expenses increased for the 9 months ended December 30, 2024 compared to the prior year due to a one time severance expense of $1,400,000 which was recognized in Q2. This is partially offset by lower compensation and travel expense. Speaker 400:14:57General and administrative expenses decreased for the 3 months ended September 30, 2024, as a result of the company's ongoing cost reductions and is primarily related to lower compensation and travel expenses. Impairment of assets was also lower for the 3 9 months ended September 30, 2024 from the prior year due to a held for sale asset in 2023 that was written down to its estimated fair value less cost to sell. Gain on disposition of assets was lower for the 3 9 months ended in 2024 as no farms were sold during the 9 months ended and the current year, only small fixed asset dispositions on a few properties were recorded. Note that $2,100,000 of the gain recognized in the current quarter relates to the recognition of a deferred gain from a disposition that occurred in December of 2023. Interest expense decreased for the 3 9 months ended September 30, 2024 due to lower outstanding debt, partially offset by higher interest rates. Speaker 400:16:08Next, moving on to Page 12, there are a few capital structure items that I would like to point out. As of September 30, 2024 floating rate debt net of the swap as a percent of total debt was approximately 20%. As of the date of this call approximately $100,000,000 of floating rate debt and approximately $89,000,000 of fixed rate debt has been repaid. Additionally, the swap reduces our exposure of floating rate debt to 0. We had undrawn capacity on the lines of credit of approximately $132,000,000 at the end of the Q3 of 2024 and as of today our availability is at the full capacity of approximately $169,000,000 dollars Our weighted average cost of debt decreased from 5.34 percent at the end of Q3 2024 to 5.05% after repayments. Speaker 400:17:10As of September 30, 2024, we have 2 MetLife loans with rate resets in the 4th quarter on debt totaling approximately $27,000,000 MetLife's term loan number 11 repriced effective October 1st to 5.35 percent. MetLife number 12 was set to reprice in December. Both of these loans were subsequently repaid in full. Page 14 breaks down the different revenue categories with comments at the bottom to describe the differences between periods. A few points that I'd like to highlight are, as expected, fixed farm rent did decrease by approximately 3.5%. Speaker 400:17:50This is primarily due to dispositions in 2023. The decreases in fixed farm rent were partially offset by 2024 acquisitions and higher rents from lease renewals. Direct operations is the combination of crop sales plus crop insurance plus cost of goods sold. It was up by $1,600,000 over the prior year due to a larger volume and profitability of crop sales and lower impairment expense. Page 15 is our outlook for 2024. Speaker 400:18:25The assumptions we used are listed at the bottom. We had 3 acquisitions in Q1 of 2024 and 2 dispositions of 52 properties in October for $308,000,000 in aggregate consideration, of which $189,000,000 was used to reduce debt. No other transactions are included in the projections. On the revenue side, fixed farm rent changes reflect the full year impact of 2023 transactions, plus the Q the 3 Q1 twenty twenty four acquisitions and a few lease changes that occurred during 2024. In addition, we negotiated to retain all 20 24 rent on the properties disposed in October of 2024. Speaker 400:19:10Direct operations is up primarily due to higher performance in citrus farms under direct operations. On the expense side, G and A expenses are up due to additional one time costs related to the FRI transaction. Interest expense declined due to $189,000,000 in debt reductions that occurred in October as well as updated forward curves. The forecasted range of AFFO is 11.8 dollars to $14,800,000 or $0.24 to $0.30 per share, an increase of $0.04 on both the high and low end of the range from last quarter. Because we were able to realize meaningful tax gains on our disposition thus far in Q4, we are anticipating a special dividend to shareholders at year end in the range of $1 to $1.10 per share. Speaker 400:20:04This summarizes where we stand today and wraps up our comments this morning. Thank you all for participating. Operator, you can now begin the Q and A session. Operator00:20:14Thank you. We will now begin the question and answer session. Speaker 500:20:32And while we're gathering Speaker 100:20:35the Q and A, yes, Rochelle, sorry. I just want to address a question that came in via email. It was regarding a subsequent event that happened in the Q4. We made a $22,000,000 loan for former tenant under our FPI loan program. The question was about the terms of this loan and the interest rate specifically. Speaker 100:21:00We don't typically disclose interest rate on the interest rates on the loans that we make. I can say that this was a, from our perspective, a strong piece of business. Otherwise, we wouldn't have made this loan, and that's all I can really tell based on our practices on disclosing this type of information. Having said that, Rochelle, back to you on Speaker 600:21:22the Q and A. Operator00:21:23Thank you, Luca. Your first question from the line is from Rob Stevenson with Janney. Your line is open. Speaker 700:21:31Good morning, guys. Luca, what was the annualized revenue on the 52 farms that you sold? Trying to get a feel given that you will continue to collect that and that's in the guidance on how much $25,000,000 revenue is going to come down just based off of this transaction? Speaker 100:21:52Yes, Rob. Susan is kind of pulling up that information. So give us a second. If you have another question, we can maybe address another question first while Susan pulls up that information. Speaker 700:22:04Yes. I guess the other question is, crop sales increased pretty meaningfully year over year. I think it was 2,600,000 dollars the Q3 of this year versus $800,000 last year. I'm just curious as to what drove that? Speaker 100:22:18Yes. This is specifically related to one farm, our Condor avocado farm. We had a very, very strong crop with good crop prices and that was specifically the driver. We also had a good performance on citrus. So that combination really drove those crop sales. Speaker 700:22:38Okay. And then, what does this level of asset sales plus you did what you did last year due to your ability to sell any significant amount of assets in 2025 given the REIT rules and all? Speaker 300:22:53Luca, let me handle that one. We will probably be if we choose to sell assets, we're waiting to see what the stock price does, because it's all about getting either a fair value in our stock or we will continue asset sales. We'll be in a relatively restricted position, very similar rules to what we faced this year, which is probably a limitation of about to about 7 transactions in a calendar year. But as you can see from what we did this year, we're pretty creative about figure if we need to make an asset sale or want to make an asset sale, we'll figure out how to get relatively high volume of dollars transacted and still be within the rules. But we'll be in the same set of rules we kind of face this year. Speaker 100:23:49Okay. And Susan had the answer to your question, Rob. Susan, go ahead. Yes. Speaker 400:23:55Hi, Rob. Thanks for the question. The full year annualized revenues for the farm sales was approximately $11,200,000 Speaker 700:24:06Okay, that's helpful. So basically, I mean, you've already I think in the release, it said it was like $10,900,000 of annual interest savings. So I mean, you're basically net net from a net income standpoint, you're going to wind up being mostly whole just off of those two things offsetting? Speaker 100:24:25No, because we also have significant savings, for example, on property taxes, on maintenance and so on and so forth. And so we have it's not just the savings on interest. Yes. So we've got about it. Yes. Speaker 100:24:41We had about $2,000,000 in annualized savings on the cost side as well. Speaker 700:24:47Okay. Even better. Okay. And then last one for me, Luca or Paul, how much something to rightsize the common dividend given the massive amount of sales that you've done given your overall size? Speaker 300:25:07You mean rightsize mean reduce or Speaker 700:25:10Yes. The ongoing common. Speaker 300:25:14What we're doing to the company right now, if anything, would lead to an increase in the regular common dividend, not a decrease. On a current yield basis, these transactions are highly accretive. As Luca just explained, we've got interest rate savings plus savings on property taxes and other operating expenses in excess of the revenue that we received. There's other opportunities for some cost control in the company in terms of team size and travel and other things. We have a lot less land to worry about, so things are easier to manage. Speaker 300:25:53So this is a from a current yield basis, this is incredibly positive thing the cash flow of the company. The challenge and the reason that we always are careful when we sell is these farms might appreciate might have continued to appreciate it quite rapidly and we've now given up our share of that. So this is there should not be any concern that there's a change in the 2025 year to the negative of the regular dividend. Speaker 700:26:27Okay. That's incredibly helpful. Thank you guys. Appreciate the time this morning. Speaker 300:26:31Yes. Operator00:26:38Your next question comes from the line of Scott Fortune with ROTH Capital Partners. Please ask your question. Speaker 800:26:46Yes, good morning. Thanks for the questions. Just want to get into the kind of the sales, unpack that from a geographic standpoint. I know you're wanting to keep a lot in the corn belt in the Illinois side, but as we calculate the asset closed, dollars 289,000,000 which is roughly about $7,000 per acre well above the U. S. Speaker 800:27:07Average, about $5,500, but just kind of your sense for now what farms were sold and kind of the percentages kind of weighing out towards the corn belt and now you have still a fair amount in California from that standpoint. Just kind of unpack that sale a little bit farther from that standpoint. Speaker 300:27:27I'll take that question. This is Paul. So most of the assets we sold were in the Southeastern United States, Carolinas, Florida, etcetera, and the Delta, Arkansas, Louisiana in particular. We also sold most of the land that we owned in Nebraska. So we geographically concentrated these sales. Speaker 300:27:53We still own a handful of assets in all of those states, but not very many. And so that's the geography of what we sold. The Delta in particular, we had some incredibly high quality farms. I'm so sorry to let them go. Wearing the ex farmer hat, which is what I really am, it made me cry to sell those farms. Speaker 300:28:20But we got great value for them and that's what we do. And so we may build the position back up gradually in those regions depending on kind of what happens with stock price and everything else with the company. As far as the average price, I just want to kind of for educational purposes focus on something. Average price of farmland in the United States is almost an irrelevant fact. The USDA puts it out. Speaker 300:28:54It is about 5,500 as you said, Scott. But think about it the following way. You wouldn't find a metric of an average price per room for hotel transactions across the United States to be particularly relevant, right, a roadside rundown hotel in the middle of Kansas and something in the middle of Manhattan or Los Angeles or just completely different markets. That is also true in farmland. Even on a state level, averages are sort of a little bit misleading on a national level, but shockingly so. Speaker 300:29:32The national level with the national average price of farmland in Iowa or Illinois will be $15,000 $16,000 $17,000 maybe more for the very good stuff. And if you go to a place like Western South Dakota, there's probably a lot of land trading at $1100 or $1200 an acre. And so just be careful with these averages when you think about it. We tend to own higher quality than average farmland in each location we work in. And the state level data is going to get you a little bit closer to thinking about sales prices and stuff. Speaker 300:30:09But I just wanted to add that educational note. Speaker 800:30:13Yes, I appreciate that. But my point is that obviously your portfolio is still very well positioned in those high or those high average the price farmlands, right, in the Corn Belt going forward from that standpoint after these sales? Speaker 300:30:29We will have raised the average value because all of the land we own in Illinois is probably worth more than that $7,000 an acre average we got on the big transaction. Speaker 800:30:42Right. That's the point and which is very valuable for obviously in your shares up. But follow-up on that, can you provide a little more color on kind of the health of the farmer? Obviously, commodity pricing pressure has been there, a lot of volatility. But can I get a sense for the rent increases in 2025? Speaker 800:31:00Thanks for providing kind of what's coming off, but what your expectations have been about 5% to 10% kind of what are the discussions there? What's the expectation for 2025 with the rent increases going forward? Speaker 300:31:13Yes, it still continues to be a challenging environment for farmers. I think it's important to note, when I say challenging for farmers, what that means is not as good as the last couple of years. It doesn't mean massive bankruptcies. It doesn't mean huge negative sorts of events and stories in the asset class. And the reason for that is just super simple common sense point. Speaker 300:31:41You're not going to drive the worldwide food production system to a negative margin for very long, right? Just think about that for a second. You're not going to drive farmers around the world and particularly in the United States out of business with commodity pricing because the result is starvation. So that's what keeps it so stable. That being said, it's a challenging market. Speaker 300:32:05You're going to be here in a cycle where margins are very skinny. Despite what you read in the press, they're still positive and they're positive on a cash flow basis because many, many farmers own a huge portion of their land base. And if you own your piece of farmland as a farmer outright, meaning that other than property taxes, you have no current cash cost for that land, there is virtually no commodity price that makes production on that land negative. If you don't have a land cost, you will always be making money. That's what keeps these farmers kind of stable through time. Speaker 300:32:45So back to your rent question. What I would expect and you're trying to build a model, I'd look at a flat rent projection for next year. We were hoping we could squeeze out a 5% to 10% gain. That's what we've said prior to this in our calls. I don't think it will be quite that good. Speaker 300:33:04I personally thought you'd start to get some commodity price recovery in the last little few weeks. We sort of have, but I'm not sure that will continue. And so we're in we're right in the throes of the rent cycle. We've gotten some upticks in rents, but I think our average will turn out to be flat to at best kind of 5% up. That kind of range is where I think we'll settle out for the year. Speaker 800:33:31Got it. Appreciate the color. I'll jump back in the queue. Operator00:33:37The next question comes from the line of Buck Horan with Raymond James. Your line is open. Speaker 500:33:44Hey, thanks. Good morning, guys. Congratulations on all the progress in the transaction so far. Great job. And I kind of wanted to just dive in on the G and A expenses and maybe just help me walk through just conceptualizing what's embedded fully for theirs this year. Speaker 500:34:01So am I thinking about it correctly that if you kind of strip out the severance costs and kind of these one time transaction costs that are showing up here in the Q4, but is there any reason that G and A expenses wouldn't normalize back to kind of that, call it $10,000,000 to $11,000,000 range for next year? Speaker 300:34:23So Luca, I'd like you and Susan to address this in detail, but I'll start with a couple of comments to give you some time to think. What we've gradually tried to do is lessen the overheads of the company with some very selective reductions in staff. We're a small company and everybody who's on this team or even been on this team is an incredibly high quality contributor. So this is a difficult thing for us to do. But if you're dedicated to getting the stock price up or alternatively shrink the company and return money to shareholders, you've got to be willing to do that. Speaker 300:35:04It's something I've always done through my career. You got it. Anybody can run a money losing company. You got to figure out how to run one that makes money. And so we're just very focused on that. Speaker 300:35:15So we have reduced travel, reduced at the most senior levels, me in particular, thought about reducing compensation and have in fact reduced compensation somewhat. We made the change at the CFO level. So we'll continue to do those little things. But there's not a lot more that we can do. We are a small, small company already and continued shrinkage is difficult, although we'll certainly look for the ideas. Speaker 300:35:45Luca or Susan, if you have anything specific to Buck's specific question of the range we're likely to go back to, go ahead. Speaker 100:35:55Yes. But we're not prepared to address 2025 projections and guidance at this point. But as you know that I think as we would know that in the supplemental, there was a pickup in the forecast range for general and administrative expenses in the latest round. That pickup was due largely to the costs related to these large transactions. So they are largely onetime events as was the severance payment to James. Speaker 100:36:27So by and large, if you look at the earlier forecast ranges that did not include those elements, that's probably something that we'll revert to, if not something hopefully better than that, meaning lower. Speaker 500:36:43Got it. Got it. Very helpful. And just broadly speaking, maybe this Speaker 600:36:47is high level, you tell me if Speaker 500:36:50you got any anecdotes on this or not, but are you seeing any sort of signs in the transaction market more recently that farmers or potential buyers and or sellers of farmland are waiting for the outcome of this election to make any sort of deals or price out valuation ranges. Would you expect there to be any sort of change in the outlook for farm valuations depending on the outcome? Speaker 300:37:19No, I don't. This is Paul again. I don't think so. One of the things about this asset class is it's I mean, it's its own little line, right? I mean, it's farmers are actually not very many of them left in the United States. Speaker 300:37:37They live in places that most of the people on this phone call just fly over. They have their own world view, their own political views. But at the end of the day, they're out there working hard to produce food every day. And we're in a state, we're in an area of cycle right now where farmland values are basically going to be flat. Like this morning, I was reading about the industry because I always spend an hour or 2 in the mornings reading about the industry. Speaker 300:38:06I read 2 articles both about Iowa. One article was headlined Iowa Farm Values Fall for the First Time Ever. And I think the article concluded that farmland values have fallen something like 2.5%, 23% to 24% in Iowa. That was the first start. And by the way, that's smaller than the measurement error. Speaker 300:38:28So I don't know what that really means if anything. It was something out of the Fed, Kansas, Nebraska, the other states surrounding Iowa, Missouri had increases. But then the second article that I read said there is a piece of CRP ground, conservation reserve program ground, meaning it can't even be farmed. There were 2 pieces of CRP land in the state of Iowa, one sold at 17,000 an acre and one sold at 20,000 an acre last week. That's farm ground you can only hunt pheasants on. Speaker 300:39:00Now it didn't trade I mean, there's not a big like pheasant hunter market. So it didn't trade to pheasant hunters. It traded to some family who's going to wait out that contract for another 3 to 5 years probably and then be able to begin farming the ground. So the demand for land continues to be incredibly strong among these successful farm families. And I don't think that changes. Speaker 300:39:22As you guys have all heard me say in these calls, this is a crisis surge and then they plateau for a while. We're now in one of these plateaus, but they're going to surge again. It's probably a year or 2 away, but they will surge again. And I'm in cycle 5 or 6 in my career now. It's always the same story over and over. Speaker 300:39:43But we're in this kind of a little bit of a consolidation plateau phase because of general farmer profitability. Hope that helps, Buck. Speaker 500:39:52Yes. Thanks again, guys. Congrats and good Speaker 100:39:54luck. Yes. Operator00:39:58Your next question comes from John Massocca with B. Riley. Your line is open. Speaker 100:40:05Good morning. Good morning. Speaker 600:40:09So, apologies if I missed this in the prepared remarks, but it looks like there were about $20,000,000 of additional dispositions versus the kind of portfolio that was announced or completed earlier this month. Can you just provide a little color on what that was and did it look like the larger portfolio deal that you did as well? Speaker 300:40:27Yes, those were those was a series of properties that were sold in Western Arkansas. If you go back to our website, you can probably see what's no longer there if you want to try to figure it out a little bit. But it's a series of farms in Western Arkansas. They were actually sold to somebody that is going to produce timber on those properties for the purpose. They've been farm ground historically, but they're certainly capable of being high quality timber ground. Speaker 300:40:56And I think the company that bought them has kind of an angle that's partly carbon offsets, partly timber production. But they offered us a nice strong price for those properties and so we made the sale. And I don't remember the exact gains, but it's either slightly above or slightly below what was on the major portfolio. It's a solid transaction. Speaker 600:41:22Okay. And understanding you have a lot of volume on this activity to digest at this point. Where does that kind of leave you if you did want to do a transaction in the remainder of the year? Speaker 300:41:34In the remainder of the year, we could do a handful of transactions. We're in what's called a 7 transaction kind of year. Just I won't bore you with the complexity of the tax law that drives that, but we have the ability to do 7 transactions in a calendar year. I think we've done 3 or 4 so far. So there may be a few other this is an active time of the year for buying and selling properties. Speaker 300:42:01The fall of the year always is. And so we may have another few dispositions, but we might have an acquisition. So it's I don't think there's a there's not a world shifting event likely in the remainder of the year though. Speaker 600:42:18Okay. And then maybe thinking about the disposition proceeds you have and the kind of uses that were already laid out in the earnings release here, just kind of rough math when factoring in the special dividend, etcetera. I kind of have you at say $60,000,000 and change, dollars 50,000,000 and change of kind of additional capital that either isn't earmarked for the special dividend or hasn't been used in debt repayment yet. I mean, how are you thinking about deploying that capital assuming I'm right in debt repayment or stock buybacks or acquisition? Speaker 300:42:53Yes. You're probably a little bit light on our remaining setting aside borrowing the amount of cash we sort of have left over, but you're close. So the deal that we'll do with the remaining cash is we'll intend to buybacks in the press releases surrounding the large transaction that, that was one of the intended uses of funds. That's still an intended use of funds. We have, of course, been on a blackout period and haven't been able to participate in the market at all. Speaker 300:43:24But we certainly will in the coming couple of months. And then we might, as we get close to the end of the year, make additional debt repayments. And then, of course, we have nominally something like $50,000,000 kind of set aside that's going to fund that distribution when we go to make it. Speaker 600:43:47Are there any, I mean, limitations on debt pay downs due to maybe friction costs associated with still on the in the debt stack or is that pretty open? Speaker 300:43:57No. We have the team, Luca, Susan and one of our other important team members, a guy named Rich Keck, they've worked very, very hard. We have essentially avoided debt repayment penalties in these transactions and we'll continue to try to do so. And that's about negotiating rights to repay at least a certain percentage of any loan and relatively liberal collateral substitution rules into the original documentation for those loans. So we've done a thanks to the efforts of the team, we've done a good job to avoid debt repayment penalties. Speaker 600:44:42Okay. I appreciate the color. That's it for me. Thank you very much. Operator00:44:48The next question comes from Craig Kucera with Lucid Capital Markets. Your line is open. Speaker 900:44:56Yes. Hey, good morning, guys. I wanted to dive a little deeper on the debt repayments you have already done. Did you pay down the swap portion of the Rabobank facility and kind of just eliminate all of that? Or is that still outstanding? Speaker 300:45:12I'm going to turn that over Speaker 700:45:15to the Speaker 300:45:15team in Denver. Tim, you're going to handle it. Go ahead. Speaker 400:45:19Yes. So we paid that we paid a good chunk of the Rabo loan down. We're sitting at approximately $11,800,000 at this point and we have amended the swap. The swap actually, the notional on the swap is covers the full $11,800,000 Speaker 100:45:40So just to be clear right now, if you look at the table that will come out on the Q and also the table in the supplemental, the Rabobank loan is still listed at its kind of notion of terms, but it is entirely swapped. So you have to look into the footnote and I believe that the effective interest rate that we are paying on that loan with the swap is 3.81%. Yes, Susan is nodding. So yes, that's the right number. Speaker 900:46:07Okay, great. And just one more for me. Given a somewhat tougher farming environment, are you seeing any additional opportunities to make loans for the FPI loan program beyond what you already did earlier this quarter? Speaker 300:46:20Yes, I'll take that one. Yes, we are. There's probably some opportunity to make loans. And if we can make those loans at a substantial spread to our cost of capital, we'll certainly do so. These tend to be relatively short term loans, meaning a year or 2 length of term. Speaker 300:46:41And so we're completely open for business on the loan program subject to getting high quality collateral, number 1, and number 2, a good spread against our cost of capital. Speaker 600:46:53All right. Thanks. Appreciate it. Operator00:46:57There are no further questions from the line. I will now turn the conference back over to Luca for the closing remarks. Speaker 100:47:05Thank you, Rochelle. And thank you, everybody. We appreciate your interest in our company and look forward to updating you on our activities and results in the coming quarters. Thanks, everybody. Operator00:47:17Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallFarmland Partners Q3 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K)Quarterly report(10-Q) Farmland Partners Earnings HeadlinesFarmland Partners Inc. Announces Date for First Quarter 2025 Earnings Release and Conference CallMay 2 at 1:29 AM | finance.yahoo.comFarmland Partners (FPI) to Release Earnings on TuesdayApril 28, 2025 | americanbankingnews.comHere’s How to Claim Your Stake in Elon’s Private Company, xAII predict this single breakthrough could make Elon the world’s first trillionaire — and mint more new millionaires than any tech advance in history. And for a limited time, you have the chance to claim a stake in this project, even though it’s housed inside Elon’s private company, xAI.May 5, 2025 | Brownstone Research (Ad)Jim Cramer on Farmland Partners Inc. (FPI): ‘I Kind Of Like The Idea As A Spec’March 12, 2025 | insidermonkey.comFarmland Partners downgraded to Neutral from Buy at Lucid CapitalFebruary 25, 2025 | markets.businessinsider.comFarmland Partners projects 2025 AFFO per share of $0.25–$0.30 supported by asset sales and rent renewalsFebruary 20, 2025 | msn.comSee More Farmland Partners Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Farmland Partners? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Farmland Partners and other key companies, straight to your email. Email Address About Farmland PartnersFarmland Partners (NYSE:FPI) is an internally managed real estate company that owns and seeks to acquire high-quality North American farmland and makes loans to farmers secured by farm real estate. As of December 31, 2023, the Company owns and/or manages approximately 171,100 acres in 16 states, including Arkansas, California, Colorado, Florida, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Nebraska, North Carolina, Oklahoma, South Carolina and Texas. In addition, the Company owns land and buildings for four agriculture equipment dealerships in Ohio leased to Ag Pro under the John Deere brand. The Company has approximately 26 crop types and over 100 tenants. The Company elected to be taxed as a real estate investment trust, or REIT, for U.S. federal income tax purposes, commencing with the taxable year ended December 31, 2014.View Farmland Partners ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Is Reddit Stock a Buy, Sell, or Hold After Earnings Release?Warning or Opportunity After Super Micro Computer's EarningsAmazon Earnings: 2 Reasons to Love It, 1 Reason to Be CautiousRocket Lab Braces for Q1 Earnings Amid Soaring ExpectationsMeta Takes A Bow With Q1 Earnings - Watch For Tariff Impact in Q2Palantir Earnings: 1 Bullish Signal and 1 Area of ConcernVisa Q2 Earnings Top Forecasts, Adds $30B Buyback Plan Upcoming Earnings American Electric Power (5/6/2025)Advanced Micro Devices (5/6/2025)Marriott International (5/6/2025)Constellation Energy (5/6/2025)Arista Networks (5/6/2025)Brookfield Asset Management (5/6/2025)Duke Energy (5/6/2025)Energy Transfer (5/6/2025)Mplx (5/6/2025)Ferrari (5/6/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 10 speakers on the call. Operator00:00:00Thank you for standing by and welcome to the Farmland Partners Incorporated Third Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. Thank you. I would now like to turn the call over to Luca Fabri, President and CEO. Operator00:00:32Please go ahead. Speaker 100:00:34Thank you, Rochelle. Good morning and welcome to Pharma and Partners' Q3 2024 earnings conference call and webcast. We truly appreciate your taking the time to join us for these calls because we see them as a very important opportunity to share with you our thinking and our strategy in a format less formal and more interactive than public filings and press releases. I will now turn over the call to our General Counsel, Christine Garrison, for some customary preliminary remarks. Christine? Operator00:01:00Thank you, Luca, and thank you Speaker 200:01:01to everyone on the call. The press release announcing our Q3 earnings was distributed after market close yesterday. The supplemental package has been posted to the Investor Relations section of our website under the subheader Events and Presentations. For those who listen to the recording of this presentation, we remind you that the remarks made herein are as of today, October 31, 2024, and will not be updated subsequent to this call. During this call, we will make forward looking statements, including statements related to the future performance of our portfolio, our identified and potential acquisitions and dispositions, impact of acquisitions, dispositions and financing activities, business development opportunities as well as comments on our outlook for our business, rents and the broader agricultural markets. Speaker 200:01:45We will also discuss certain non GAAP financial measures, including net operating income, FFO, adjusted FFO, EBITDAre and adjusted EBITDAre. Definitions of these non GAAP measures as well as reconciliations to the most comparable GAAP measures are included in the company's press release announcing Q3 2024 earnings, which is available on our website farmlandpartners.com and is furnished as an exhibit to our current report on Form 8 ks dated October 30, 2024. Listeners are cautioned that these statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond our control. These risks and uncertainties can cause actual results to differ materially from our current expectations and we advise listeners to review the risk factors discussed in our press release distributed yesterday and in documents we have filed with or furnished to the SEC. I would now like to turn the call to our Executive Chairman, Paul Pittman. Speaker 200:02:41Paul? Speaker 300:02:43Thanks, Christine. A series of comments here about both operations and asset sales and the future prospects of the company. The sort of headline is that this was an incredibly strong quarter on many different levels. It was strong operationally. It was also quite strong in terms of asset sales, although those asset sales were all worked on in most of the Q3 didn't actually close until early Q4. Speaker 300:03:18But when you step back and think about this company, there are 2 really important themes that we have emphasized over and over. One is that the appreciation of the asset class, meaning the underlying farmland, is a very big part of the total return to an investor in farmland. We've said that now for probably a decade. I'm not sure the market overall grasps it frankly, but we've certainly said it and we've now proven it. We will have sold in the last 24 months over $500,000,000 of farmland at very, very significant gains to our shareholders. Speaker 300:04:09That is really what happens with this asset class. That's why you do it. That long term appreciation is incredibly powerful. The current yield, as we all know, is modest, but it's decent as well. And you think about the company, we will have in approximately 12 month period of time distributed $1.45 to our shareholders. Speaker 300:04:37That's a huge return on a $10 or $11 stock price. I don't think the market gives us credit for that. We continue to be seriously undervalued as a company. But what we have said is that we are going to get the value in our underlying portfolio to our shareholders either by seeing the stock price increase or by fundamentally returning capital to shareholders by stock buybacks and distributions. So we're true to that sort of course of action and we intend to stick with it. Speaker 300:05:15Couple of other significant things that have occurred. We have cut the debt load of the company by almost half. I have never been very concerned about leverage levels in our asset in the way we run our asset class. We've always stayed right around 40%. There are many investors though who frankly have shared with us their concerns that they would receive less leverage. Speaker 300:05:39At this point, we are less levered than we have ever been as a company since we went public. And hopefully, the market will reward us for that. When you think about the value of the underlying portfolio, in most of these phone calls, I'm pretty clear about what I think it is. I think we're valued based on our internal valuations of our assets somewhere in the $16 to $17 per share range. We get to that number by doing an internal valuation of each individual asset that we update from time to time. Speaker 300:06:23Of the assets that we have now sold, as I said, about $500,000,000 of assets in the last 2 years, We have sold those assets slightly above our internal valuation metrics on average, but not meaningfully above, call it 5% or so. But what that does is that gives me incredible confidence in how accurate our internal valuations are. You never really know what a real estate asset is worth until you sell it. But we are making sales that more or less are equal to or just as I said a little bit above what our internal valuations on average say. There is one section of our portfolio where I have less confidence in the actual valuation. Speaker 300:07:14A few investors have asked this question and that's our California specialty crop assets. Determining value of specialty crop assets is way more difficult than determining value of row crop farms for the following reasons. The tree health and tree age is a whole another sort of vector of value that you have to think about as well as long term water outlook, worldwide demand for those crops, so on and so forth. So it's a much more challenging valuation exercise because a big percentage of your asset base is not raw land. But even if we are mispricing our California assets and our internal work by $50,000,000 to pick a number, this is a stock that still should be worth $15 to $16 a share. Speaker 300:08:08So in any way you look at it, I continue to believe we are trading at a deep, deep discount to underlying value. One of the comments I read on the Internet suggested that we should change our name from Farmland Partners to just partners because we don't own any land anymore. It's a kind of what I call keyboard courage snarky comment from some random person. It's ridiculous. We own $1,000,000,000 of farmland more or less still today. Speaker 300:08:41We are the 2nd largest landowner in what I believe is the most important ag state in the country and that's Illinois. We are still a very large landowner. We are still very much in business. That's not to undermine the point I made. We are going to get that value gap closed one way or the other. Speaker 300:09:00But the idea that we're a tiny company and irrelevant is just not true. We're still one of the larger holders of ag land in the United States. And certainly among public market choices, one of the larger holders as well. With I think the only other comment I want to make about the remaining portfolio is that Illinois has always been our most important date in terms of total acres owned and dollars. It is we think that is the place where appreciation in the portfolio is stronger than anywhere else in the country. Speaker 300:09:41And we haven't really even tapped into ever selling those assets. Someday, we will sell them if we need to, to close this valuation gap. But what we think we are doing is gradually concentrating to a portfolio that is of the very, very best quality in terms of land, in terms of appreciation value, in terms of tenant base and we'll continue to do that as time goes by. I'll be back for the Q and A session. But with that, I'm going to turn it over to you, Luca. Speaker 100:10:16Thank you, Paul. I just would like to kind of quickly reemphasize a couple of the points that Paul made. This was a very, very strong quarter operationally, a strength that we've built over the last 18 to the cost control measures that we've put in place and with portfolio restructuring that we've put in place with the transactions that we've done. And the transactions that we've announced after the quarter closed really enabled us to significantly further improve the P and L by reducing leverage very, very materially and therefore kind of putting our balance sheet in a very, very strong position. I just want to spend a little bit of time quickly on the special dividend that we announced. Speaker 100:10:56We announced a range of $1 to $1.10 There are really two drivers behind this special dividend. One is frankly a tax requirement as a REIT that we have to distribute the gains that we have accumulated over the year. But it's also a very, very strong business signal that we want to send to our shareholders that the gains that we have talked about as being kind of incorporated in our portfolio are very, very real and we want to give our shareholders a very, very tangible measure of these gains by issuing this special dividend. The exact amount of the special dividend is still a little bit influx. That's why we gave a range, substantially hinged upon the actual performance of the company and the net income in the Q4. Speaker 100:11:45In terms of timing, last year, we announced a special dividend. We declared it in mid December with a record date of late December and a payment in the first half of January. We expect this year to fall in the same timing pattern. Having said that, I will turn the call over to Susan for her overview of the company's financial performance. Susan? Speaker 400:12:10Thank you, Luca. I'm going to cover a few items today, including the summary of the 3 9 months ended for September 30, 2024 a review of capital structure and interest rates comparison of year to date revenue and updated guidance for 2024. I'll be referring to the supplemental package, which is available in the Investor Relations section of our website under the subheader Events and Presentations. First, I will share a few metrics that appear on Page 2. For the 3 months ended September 30, 2024, net income was $1,800,000 or $0.02 per share available to common stockholders, which was lower than the same period for 2023, largely due to the impacts of dispositions that occurred in 2023. Speaker 400:12:58AFFO was $1,400,000 or $0.03 per weighted average share, which was higher than the same period for 2023. AFFO was positively impacted by lower property taxes and depreciation due to fewer properties, lower interest expense and increased volume and profitability of crop sales on our directly operated properties. For the 9 months ended September 30, 2024 net income was $1,200,000 or negative $0.02 per share available to common stockholders, which was lower than the same period for 2023, largely due to the impacts of dispositions that occurred in 2023. AFFO was $4,700,000 or $0.10 per weighted average share, which was higher than the same period for 2023. AFFO was positively impacted by $1,200,000 of income from forfeited deposits from the Q1, lower property taxes and depreciation due to fewer properties, lower interest expense and increased volume and profitability of crop sales on our directly operated properties. Speaker 400:14:05Next, I'm going to review some operating expenses and other items that are located on page 5. Property operating expenses were lower for the 3 9 months ended for September 30, 2024, caused by lower tax expenses, insurance and repairs. Depreciation, depletion and amortization was lower for the 3 9 months ended, for 2024 caused by asset dispositions in 2023 and more assets becoming fully depreciated, which was partially offset by depreciable assets being placed into service. G and A expenses increased for the 9 months ended December 30, 2024 compared to the prior year due to a one time severance expense of $1,400,000 which was recognized in Q2. This is partially offset by lower compensation and travel expense. Speaker 400:14:57General and administrative expenses decreased for the 3 months ended September 30, 2024, as a result of the company's ongoing cost reductions and is primarily related to lower compensation and travel expenses. Impairment of assets was also lower for the 3 9 months ended September 30, 2024 from the prior year due to a held for sale asset in 2023 that was written down to its estimated fair value less cost to sell. Gain on disposition of assets was lower for the 3 9 months ended in 2024 as no farms were sold during the 9 months ended and the current year, only small fixed asset dispositions on a few properties were recorded. Note that $2,100,000 of the gain recognized in the current quarter relates to the recognition of a deferred gain from a disposition that occurred in December of 2023. Interest expense decreased for the 3 9 months ended September 30, 2024 due to lower outstanding debt, partially offset by higher interest rates. Speaker 400:16:08Next, moving on to Page 12, there are a few capital structure items that I would like to point out. As of September 30, 2024 floating rate debt net of the swap as a percent of total debt was approximately 20%. As of the date of this call approximately $100,000,000 of floating rate debt and approximately $89,000,000 of fixed rate debt has been repaid. Additionally, the swap reduces our exposure of floating rate debt to 0. We had undrawn capacity on the lines of credit of approximately $132,000,000 at the end of the Q3 of 2024 and as of today our availability is at the full capacity of approximately $169,000,000 dollars Our weighted average cost of debt decreased from 5.34 percent at the end of Q3 2024 to 5.05% after repayments. Speaker 400:17:10As of September 30, 2024, we have 2 MetLife loans with rate resets in the 4th quarter on debt totaling approximately $27,000,000 MetLife's term loan number 11 repriced effective October 1st to 5.35 percent. MetLife number 12 was set to reprice in December. Both of these loans were subsequently repaid in full. Page 14 breaks down the different revenue categories with comments at the bottom to describe the differences between periods. A few points that I'd like to highlight are, as expected, fixed farm rent did decrease by approximately 3.5%. Speaker 400:17:50This is primarily due to dispositions in 2023. The decreases in fixed farm rent were partially offset by 2024 acquisitions and higher rents from lease renewals. Direct operations is the combination of crop sales plus crop insurance plus cost of goods sold. It was up by $1,600,000 over the prior year due to a larger volume and profitability of crop sales and lower impairment expense. Page 15 is our outlook for 2024. Speaker 400:18:25The assumptions we used are listed at the bottom. We had 3 acquisitions in Q1 of 2024 and 2 dispositions of 52 properties in October for $308,000,000 in aggregate consideration, of which $189,000,000 was used to reduce debt. No other transactions are included in the projections. On the revenue side, fixed farm rent changes reflect the full year impact of 2023 transactions, plus the Q the 3 Q1 twenty twenty four acquisitions and a few lease changes that occurred during 2024. In addition, we negotiated to retain all 20 24 rent on the properties disposed in October of 2024. Speaker 400:19:10Direct operations is up primarily due to higher performance in citrus farms under direct operations. On the expense side, G and A expenses are up due to additional one time costs related to the FRI transaction. Interest expense declined due to $189,000,000 in debt reductions that occurred in October as well as updated forward curves. The forecasted range of AFFO is 11.8 dollars to $14,800,000 or $0.24 to $0.30 per share, an increase of $0.04 on both the high and low end of the range from last quarter. Because we were able to realize meaningful tax gains on our disposition thus far in Q4, we are anticipating a special dividend to shareholders at year end in the range of $1 to $1.10 per share. Speaker 400:20:04This summarizes where we stand today and wraps up our comments this morning. Thank you all for participating. Operator, you can now begin the Q and A session. Operator00:20:14Thank you. We will now begin the question and answer session. Speaker 500:20:32And while we're gathering Speaker 100:20:35the Q and A, yes, Rochelle, sorry. I just want to address a question that came in via email. It was regarding a subsequent event that happened in the Q4. We made a $22,000,000 loan for former tenant under our FPI loan program. The question was about the terms of this loan and the interest rate specifically. Speaker 100:21:00We don't typically disclose interest rate on the interest rates on the loans that we make. I can say that this was a, from our perspective, a strong piece of business. Otherwise, we wouldn't have made this loan, and that's all I can really tell based on our practices on disclosing this type of information. Having said that, Rochelle, back to you on Speaker 600:21:22the Q and A. Operator00:21:23Thank you, Luca. Your first question from the line is from Rob Stevenson with Janney. Your line is open. Speaker 700:21:31Good morning, guys. Luca, what was the annualized revenue on the 52 farms that you sold? Trying to get a feel given that you will continue to collect that and that's in the guidance on how much $25,000,000 revenue is going to come down just based off of this transaction? Speaker 100:21:52Yes, Rob. Susan is kind of pulling up that information. So give us a second. If you have another question, we can maybe address another question first while Susan pulls up that information. Speaker 700:22:04Yes. I guess the other question is, crop sales increased pretty meaningfully year over year. I think it was 2,600,000 dollars the Q3 of this year versus $800,000 last year. I'm just curious as to what drove that? Speaker 100:22:18Yes. This is specifically related to one farm, our Condor avocado farm. We had a very, very strong crop with good crop prices and that was specifically the driver. We also had a good performance on citrus. So that combination really drove those crop sales. Speaker 700:22:38Okay. And then, what does this level of asset sales plus you did what you did last year due to your ability to sell any significant amount of assets in 2025 given the REIT rules and all? Speaker 300:22:53Luca, let me handle that one. We will probably be if we choose to sell assets, we're waiting to see what the stock price does, because it's all about getting either a fair value in our stock or we will continue asset sales. We'll be in a relatively restricted position, very similar rules to what we faced this year, which is probably a limitation of about to about 7 transactions in a calendar year. But as you can see from what we did this year, we're pretty creative about figure if we need to make an asset sale or want to make an asset sale, we'll figure out how to get relatively high volume of dollars transacted and still be within the rules. But we'll be in the same set of rules we kind of face this year. Speaker 100:23:49Okay. And Susan had the answer to your question, Rob. Susan, go ahead. Yes. Speaker 400:23:55Hi, Rob. Thanks for the question. The full year annualized revenues for the farm sales was approximately $11,200,000 Speaker 700:24:06Okay, that's helpful. So basically, I mean, you've already I think in the release, it said it was like $10,900,000 of annual interest savings. So I mean, you're basically net net from a net income standpoint, you're going to wind up being mostly whole just off of those two things offsetting? Speaker 100:24:25No, because we also have significant savings, for example, on property taxes, on maintenance and so on and so forth. And so we have it's not just the savings on interest. Yes. So we've got about it. Yes. Speaker 100:24:41We had about $2,000,000 in annualized savings on the cost side as well. Speaker 700:24:47Okay. Even better. Okay. And then last one for me, Luca or Paul, how much something to rightsize the common dividend given the massive amount of sales that you've done given your overall size? Speaker 300:25:07You mean rightsize mean reduce or Speaker 700:25:10Yes. The ongoing common. Speaker 300:25:14What we're doing to the company right now, if anything, would lead to an increase in the regular common dividend, not a decrease. On a current yield basis, these transactions are highly accretive. As Luca just explained, we've got interest rate savings plus savings on property taxes and other operating expenses in excess of the revenue that we received. There's other opportunities for some cost control in the company in terms of team size and travel and other things. We have a lot less land to worry about, so things are easier to manage. Speaker 300:25:53So this is a from a current yield basis, this is incredibly positive thing the cash flow of the company. The challenge and the reason that we always are careful when we sell is these farms might appreciate might have continued to appreciate it quite rapidly and we've now given up our share of that. So this is there should not be any concern that there's a change in the 2025 year to the negative of the regular dividend. Speaker 700:26:27Okay. That's incredibly helpful. Thank you guys. Appreciate the time this morning. Speaker 300:26:31Yes. Operator00:26:38Your next question comes from the line of Scott Fortune with ROTH Capital Partners. Please ask your question. Speaker 800:26:46Yes, good morning. Thanks for the questions. Just want to get into the kind of the sales, unpack that from a geographic standpoint. I know you're wanting to keep a lot in the corn belt in the Illinois side, but as we calculate the asset closed, dollars 289,000,000 which is roughly about $7,000 per acre well above the U. S. Speaker 800:27:07Average, about $5,500, but just kind of your sense for now what farms were sold and kind of the percentages kind of weighing out towards the corn belt and now you have still a fair amount in California from that standpoint. Just kind of unpack that sale a little bit farther from that standpoint. Speaker 300:27:27I'll take that question. This is Paul. So most of the assets we sold were in the Southeastern United States, Carolinas, Florida, etcetera, and the Delta, Arkansas, Louisiana in particular. We also sold most of the land that we owned in Nebraska. So we geographically concentrated these sales. Speaker 300:27:53We still own a handful of assets in all of those states, but not very many. And so that's the geography of what we sold. The Delta in particular, we had some incredibly high quality farms. I'm so sorry to let them go. Wearing the ex farmer hat, which is what I really am, it made me cry to sell those farms. Speaker 300:28:20But we got great value for them and that's what we do. And so we may build the position back up gradually in those regions depending on kind of what happens with stock price and everything else with the company. As far as the average price, I just want to kind of for educational purposes focus on something. Average price of farmland in the United States is almost an irrelevant fact. The USDA puts it out. Speaker 300:28:54It is about 5,500 as you said, Scott. But think about it the following way. You wouldn't find a metric of an average price per room for hotel transactions across the United States to be particularly relevant, right, a roadside rundown hotel in the middle of Kansas and something in the middle of Manhattan or Los Angeles or just completely different markets. That is also true in farmland. Even on a state level, averages are sort of a little bit misleading on a national level, but shockingly so. Speaker 300:29:32The national level with the national average price of farmland in Iowa or Illinois will be $15,000 $16,000 $17,000 maybe more for the very good stuff. And if you go to a place like Western South Dakota, there's probably a lot of land trading at $1100 or $1200 an acre. And so just be careful with these averages when you think about it. We tend to own higher quality than average farmland in each location we work in. And the state level data is going to get you a little bit closer to thinking about sales prices and stuff. Speaker 300:30:09But I just wanted to add that educational note. Speaker 800:30:13Yes, I appreciate that. But my point is that obviously your portfolio is still very well positioned in those high or those high average the price farmlands, right, in the Corn Belt going forward from that standpoint after these sales? Speaker 300:30:29We will have raised the average value because all of the land we own in Illinois is probably worth more than that $7,000 an acre average we got on the big transaction. Speaker 800:30:42Right. That's the point and which is very valuable for obviously in your shares up. But follow-up on that, can you provide a little more color on kind of the health of the farmer? Obviously, commodity pricing pressure has been there, a lot of volatility. But can I get a sense for the rent increases in 2025? Speaker 800:31:00Thanks for providing kind of what's coming off, but what your expectations have been about 5% to 10% kind of what are the discussions there? What's the expectation for 2025 with the rent increases going forward? Speaker 300:31:13Yes, it still continues to be a challenging environment for farmers. I think it's important to note, when I say challenging for farmers, what that means is not as good as the last couple of years. It doesn't mean massive bankruptcies. It doesn't mean huge negative sorts of events and stories in the asset class. And the reason for that is just super simple common sense point. Speaker 300:31:41You're not going to drive the worldwide food production system to a negative margin for very long, right? Just think about that for a second. You're not going to drive farmers around the world and particularly in the United States out of business with commodity pricing because the result is starvation. So that's what keeps it so stable. That being said, it's a challenging market. Speaker 300:32:05You're going to be here in a cycle where margins are very skinny. Despite what you read in the press, they're still positive and they're positive on a cash flow basis because many, many farmers own a huge portion of their land base. And if you own your piece of farmland as a farmer outright, meaning that other than property taxes, you have no current cash cost for that land, there is virtually no commodity price that makes production on that land negative. If you don't have a land cost, you will always be making money. That's what keeps these farmers kind of stable through time. Speaker 300:32:45So back to your rent question. What I would expect and you're trying to build a model, I'd look at a flat rent projection for next year. We were hoping we could squeeze out a 5% to 10% gain. That's what we've said prior to this in our calls. I don't think it will be quite that good. Speaker 300:33:04I personally thought you'd start to get some commodity price recovery in the last little few weeks. We sort of have, but I'm not sure that will continue. And so we're in we're right in the throes of the rent cycle. We've gotten some upticks in rents, but I think our average will turn out to be flat to at best kind of 5% up. That kind of range is where I think we'll settle out for the year. Speaker 800:33:31Got it. Appreciate the color. I'll jump back in the queue. Operator00:33:37The next question comes from the line of Buck Horan with Raymond James. Your line is open. Speaker 500:33:44Hey, thanks. Good morning, guys. Congratulations on all the progress in the transaction so far. Great job. And I kind of wanted to just dive in on the G and A expenses and maybe just help me walk through just conceptualizing what's embedded fully for theirs this year. Speaker 500:34:01So am I thinking about it correctly that if you kind of strip out the severance costs and kind of these one time transaction costs that are showing up here in the Q4, but is there any reason that G and A expenses wouldn't normalize back to kind of that, call it $10,000,000 to $11,000,000 range for next year? Speaker 300:34:23So Luca, I'd like you and Susan to address this in detail, but I'll start with a couple of comments to give you some time to think. What we've gradually tried to do is lessen the overheads of the company with some very selective reductions in staff. We're a small company and everybody who's on this team or even been on this team is an incredibly high quality contributor. So this is a difficult thing for us to do. But if you're dedicated to getting the stock price up or alternatively shrink the company and return money to shareholders, you've got to be willing to do that. Speaker 300:35:04It's something I've always done through my career. You got it. Anybody can run a money losing company. You got to figure out how to run one that makes money. And so we're just very focused on that. Speaker 300:35:15So we have reduced travel, reduced at the most senior levels, me in particular, thought about reducing compensation and have in fact reduced compensation somewhat. We made the change at the CFO level. So we'll continue to do those little things. But there's not a lot more that we can do. We are a small, small company already and continued shrinkage is difficult, although we'll certainly look for the ideas. Speaker 300:35:45Luca or Susan, if you have anything specific to Buck's specific question of the range we're likely to go back to, go ahead. Speaker 100:35:55Yes. But we're not prepared to address 2025 projections and guidance at this point. But as you know that I think as we would know that in the supplemental, there was a pickup in the forecast range for general and administrative expenses in the latest round. That pickup was due largely to the costs related to these large transactions. So they are largely onetime events as was the severance payment to James. Speaker 100:36:27So by and large, if you look at the earlier forecast ranges that did not include those elements, that's probably something that we'll revert to, if not something hopefully better than that, meaning lower. Speaker 500:36:43Got it. Got it. Very helpful. And just broadly speaking, maybe this Speaker 600:36:47is high level, you tell me if Speaker 500:36:50you got any anecdotes on this or not, but are you seeing any sort of signs in the transaction market more recently that farmers or potential buyers and or sellers of farmland are waiting for the outcome of this election to make any sort of deals or price out valuation ranges. Would you expect there to be any sort of change in the outlook for farm valuations depending on the outcome? Speaker 300:37:19No, I don't. This is Paul again. I don't think so. One of the things about this asset class is it's I mean, it's its own little line, right? I mean, it's farmers are actually not very many of them left in the United States. Speaker 300:37:37They live in places that most of the people on this phone call just fly over. They have their own world view, their own political views. But at the end of the day, they're out there working hard to produce food every day. And we're in a state, we're in an area of cycle right now where farmland values are basically going to be flat. Like this morning, I was reading about the industry because I always spend an hour or 2 in the mornings reading about the industry. Speaker 300:38:06I read 2 articles both about Iowa. One article was headlined Iowa Farm Values Fall for the First Time Ever. And I think the article concluded that farmland values have fallen something like 2.5%, 23% to 24% in Iowa. That was the first start. And by the way, that's smaller than the measurement error. Speaker 300:38:28So I don't know what that really means if anything. It was something out of the Fed, Kansas, Nebraska, the other states surrounding Iowa, Missouri had increases. But then the second article that I read said there is a piece of CRP ground, conservation reserve program ground, meaning it can't even be farmed. There were 2 pieces of CRP land in the state of Iowa, one sold at 17,000 an acre and one sold at 20,000 an acre last week. That's farm ground you can only hunt pheasants on. Speaker 300:39:00Now it didn't trade I mean, there's not a big like pheasant hunter market. So it didn't trade to pheasant hunters. It traded to some family who's going to wait out that contract for another 3 to 5 years probably and then be able to begin farming the ground. So the demand for land continues to be incredibly strong among these successful farm families. And I don't think that changes. Speaker 300:39:22As you guys have all heard me say in these calls, this is a crisis surge and then they plateau for a while. We're now in one of these plateaus, but they're going to surge again. It's probably a year or 2 away, but they will surge again. And I'm in cycle 5 or 6 in my career now. It's always the same story over and over. Speaker 300:39:43But we're in this kind of a little bit of a consolidation plateau phase because of general farmer profitability. Hope that helps, Buck. Speaker 500:39:52Yes. Thanks again, guys. Congrats and good Speaker 100:39:54luck. Yes. Operator00:39:58Your next question comes from John Massocca with B. Riley. Your line is open. Speaker 100:40:05Good morning. Good morning. Speaker 600:40:09So, apologies if I missed this in the prepared remarks, but it looks like there were about $20,000,000 of additional dispositions versus the kind of portfolio that was announced or completed earlier this month. Can you just provide a little color on what that was and did it look like the larger portfolio deal that you did as well? Speaker 300:40:27Yes, those were those was a series of properties that were sold in Western Arkansas. If you go back to our website, you can probably see what's no longer there if you want to try to figure it out a little bit. But it's a series of farms in Western Arkansas. They were actually sold to somebody that is going to produce timber on those properties for the purpose. They've been farm ground historically, but they're certainly capable of being high quality timber ground. Speaker 300:40:56And I think the company that bought them has kind of an angle that's partly carbon offsets, partly timber production. But they offered us a nice strong price for those properties and so we made the sale. And I don't remember the exact gains, but it's either slightly above or slightly below what was on the major portfolio. It's a solid transaction. Speaker 600:41:22Okay. And understanding you have a lot of volume on this activity to digest at this point. Where does that kind of leave you if you did want to do a transaction in the remainder of the year? Speaker 300:41:34In the remainder of the year, we could do a handful of transactions. We're in what's called a 7 transaction kind of year. Just I won't bore you with the complexity of the tax law that drives that, but we have the ability to do 7 transactions in a calendar year. I think we've done 3 or 4 so far. So there may be a few other this is an active time of the year for buying and selling properties. Speaker 300:42:01The fall of the year always is. And so we may have another few dispositions, but we might have an acquisition. So it's I don't think there's a there's not a world shifting event likely in the remainder of the year though. Speaker 600:42:18Okay. And then maybe thinking about the disposition proceeds you have and the kind of uses that were already laid out in the earnings release here, just kind of rough math when factoring in the special dividend, etcetera. I kind of have you at say $60,000,000 and change, dollars 50,000,000 and change of kind of additional capital that either isn't earmarked for the special dividend or hasn't been used in debt repayment yet. I mean, how are you thinking about deploying that capital assuming I'm right in debt repayment or stock buybacks or acquisition? Speaker 300:42:53Yes. You're probably a little bit light on our remaining setting aside borrowing the amount of cash we sort of have left over, but you're close. So the deal that we'll do with the remaining cash is we'll intend to buybacks in the press releases surrounding the large transaction that, that was one of the intended uses of funds. That's still an intended use of funds. We have, of course, been on a blackout period and haven't been able to participate in the market at all. Speaker 300:43:24But we certainly will in the coming couple of months. And then we might, as we get close to the end of the year, make additional debt repayments. And then, of course, we have nominally something like $50,000,000 kind of set aside that's going to fund that distribution when we go to make it. Speaker 600:43:47Are there any, I mean, limitations on debt pay downs due to maybe friction costs associated with still on the in the debt stack or is that pretty open? Speaker 300:43:57No. We have the team, Luca, Susan and one of our other important team members, a guy named Rich Keck, they've worked very, very hard. We have essentially avoided debt repayment penalties in these transactions and we'll continue to try to do so. And that's about negotiating rights to repay at least a certain percentage of any loan and relatively liberal collateral substitution rules into the original documentation for those loans. So we've done a thanks to the efforts of the team, we've done a good job to avoid debt repayment penalties. Speaker 600:44:42Okay. I appreciate the color. That's it for me. Thank you very much. Operator00:44:48The next question comes from Craig Kucera with Lucid Capital Markets. Your line is open. Speaker 900:44:56Yes. Hey, good morning, guys. I wanted to dive a little deeper on the debt repayments you have already done. Did you pay down the swap portion of the Rabobank facility and kind of just eliminate all of that? Or is that still outstanding? Speaker 300:45:12I'm going to turn that over Speaker 700:45:15to the Speaker 300:45:15team in Denver. Tim, you're going to handle it. Go ahead. Speaker 400:45:19Yes. So we paid that we paid a good chunk of the Rabo loan down. We're sitting at approximately $11,800,000 at this point and we have amended the swap. The swap actually, the notional on the swap is covers the full $11,800,000 Speaker 100:45:40So just to be clear right now, if you look at the table that will come out on the Q and also the table in the supplemental, the Rabobank loan is still listed at its kind of notion of terms, but it is entirely swapped. So you have to look into the footnote and I believe that the effective interest rate that we are paying on that loan with the swap is 3.81%. Yes, Susan is nodding. So yes, that's the right number. Speaker 900:46:07Okay, great. And just one more for me. Given a somewhat tougher farming environment, are you seeing any additional opportunities to make loans for the FPI loan program beyond what you already did earlier this quarter? Speaker 300:46:20Yes, I'll take that one. Yes, we are. There's probably some opportunity to make loans. And if we can make those loans at a substantial spread to our cost of capital, we'll certainly do so. These tend to be relatively short term loans, meaning a year or 2 length of term. Speaker 300:46:41And so we're completely open for business on the loan program subject to getting high quality collateral, number 1, and number 2, a good spread against our cost of capital. Speaker 600:46:53All right. Thanks. Appreciate it. Operator00:46:57There are no further questions from the line. I will now turn the conference back over to Luca for the closing remarks. Speaker 100:47:05Thank you, Rochelle. And thank you, everybody. We appreciate your interest in our company and look forward to updating you on our activities and results in the coming quarters. Thanks, everybody. Operator00:47:17Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.Read morePowered by