Gladstone Land NASDAQ: LAND reported a sharp increase in third-quarter adjusted funds from operations, helped by higher nut prices and the earlier-than-usual recognition of revenue from its 2025 pistachio crop. Management cautioned, however, that a smaller 2026 pistachio harvest is likely to weigh on revenue over the next year.
The farmland owner also faces higher borrowing costs on loans scheduled to reprice in January and a difficult market for property sales. During the earnings call, executives disclosed that a buyer had canceled a contract for an Arizona farm, after management initially discussed two properties under contract for a combined $30 million.
Earnings rise on crop payments
Chief Financial Officer Lewis Parrish said third-quarter net income was about $11 million, including $6.1 million attributable to common shareholders, or $0.14 per share. Adjusted funds from operations, or AFFO, rose to $15.1 million, or $0.35 per share, from $1.4 million, or $0.04 per share, a year earlier. Common dividends declared were $0.14 per share in both quarters.
Parrish attributed much of the AFFO increase to an early announcement of a 2025 pistachio crop bonus by the company’s primary processor, allowing Gladstone Land to recognize revenue sooner than usual. Stronger almond and pistachio prices also increased participation rents and profits from directly operated farms.
Participation rents rose by about $11.4 million year over year, while direct farming operations produced approximately $2.9 million in net profit during the quarter. Fixed base rents declined by roughly $400,000, primarily because of vacant and non-accrual properties and property sales. Recurring cash operating expenses increased by about $1.1 million, largely due to higher property expenses.
Asked about fourth-quarter results, Parrish said some crop-share revenue normally recognized in that period had already been recorded in the third quarter. He described the timing of crop insurance payments as a key uncertainty, with some potentially recognized in the fourth quarter and some possibly arriving in the first quarter of 2027.
Smaller pistachio crop clouds outlook
Chief Executive Officer David Gladstone said final pricing for the 2025 pistachio crop was expected to be at least 21% higher than in 2024. Initial pricing for the 2026 crop had been announced at 67% above the initial 2025 price, he said, but higher prices might not fully offset substantially lower yields.
Executive Vice President Bill Reiman said an early spring heat spell hurt pistachio production across the industry, including at Gladstone Land’s orchards. The company expects significant crop insurance proceeds for pistachios and some wine grape blocks, though Reiman said insurance generally covers crop investment costs rather than profitability.
Most insurance proceeds are expected to be recognized in the fourth quarter of 2026, leaving less revenue from the 2026 crop to be recognized in 2027 than in a typical year, Reiman said. He added that the almond crop was strong, with yields trending higher and pricing at profitable levels. Wine grapes remained challenged by oversupply and weak pricing.
Gladstone said the company’s adviser waived its third-quarter incentive fee because of uncertainty surrounding the 2026 crop’s effect on 2027 earnings. Preserving the dividend remains a priority, he said.
Property sales and lease changes
Gladstone Land owns approximately 98,000 acres across 143 farms in 14 states, along with nearly 56,000 acre-feet of water assets in California, according to the CEO. The company sold two Florida citrus farms during the quarter for about $3 million and acquired a Washington state farm after a tenant defaulted under a forbearance agreement. The property was transferred as partial satisfaction of outstanding rent obligations.
Management initially said two other properties were under contract for a combined $30 million. Later in the call, Reiman said the buyer of the Arizona farm had canceled the prior day after determining that operating costs would be too high. He characterized the current farmland market as a buyer’s market and said selling assets to redeploy capital would be a slow process.
The company has seven farms that are wholly or partially vacant and is recognizing rent on a cash basis for four tenants, Gladstone said. Seven leases representing about 6.8% of year-to-date 2026 lease revenue are scheduled to expire over the next six months; management expects to renew them before expiration.
Gladstone Land has modified some leases to reduce tenants’ fixed costs in exchange for greater participation in crop proceeds. Reiman said the company expects one small almond farm to return to a traditional lease and does not anticipate new modified leases for 2027. Parrish said the company might also take over direct operation of two Pacific Northwest vineyards associated with the defaulting tenant.
After quarter-end, the company granted two solar companies options to purchase up to 5,600 acres in California. The five- to six-year agreements carry combined annual option payments starting at about $331,000 and increasing over time. Both properties are currently leased for farming, executives said.
Debt repricing ahead
Parrish said Gladstone Land had more than $105 million in immediately available capital and over $110 million in unpledged properties. About $34 million of loans mature over the next 12 months, alongside roughly $16 million in scheduled principal payments.
Another $132 million of loans have fixed-rate terms due to reset within a year, including approximately $130 million under a MetLife facility scheduled to reprice in January 2027. Parrish said refixing those MetLife loans at current rates would likely mean an increase of roughly 250 basis points. The company is discussing rates with MetLife, considering other lenders and evaluating whether to use potential sale proceeds to repay some debt.
Since July 1, Gladstone Land has repurchased about $13 million of preferred stock at an average repurchase yield of 7.3%, Parrish said. Future repurchases will depend on borrowing costs, cash needs and the yields available on the company’s securities.
About Gladstone Land (NASDAQ:LAND)
Gladstone Land Corporation is a real estate investment trust (REIT) that owns and leases farmland. The company focuses primarily on high-quality agricultural properties that produce specialty crops, such as fruits, vegetables, nuts and vineyards, as well as annual row crops. Gladstone Land generally leases its properties to experienced farmers and agricultural operators under long-term, often triple-net lease agreements. These arrangements typically make tenants responsible for property operating expenses, while the company seeks to generate rental income from a diversified portfolio of farmland.
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