What Farmland Partners (FPI) Said on Its Q3 Earnings Call

Key Points

• Third-quarter results deteriorated sharply: Farmland Partners reported a $15.5 million net loss and negative AFFO of $2.1 million, pressured by higher credit-loss and litigation reserves plus a $12 million impairment on California farms.
• 2026 AFFO guidance was reduced to $8.9 million–$10.7 million, or $0.21–$0.25 per share, with the additional credit reserve and litigation contingency accounting for most of the reduction.
• Midwest lease renewals are currently flat to slightly higher, while the company repurchased approximately 1.7 million shares at an average $10.32 per share. Management also said it expects its Sabrepoint litigation claims to exceed $100 million but prefers a settlement.

Farmland Partners NYSE: FPI reported a third-quarter net loss of $15.5 million, or $0.36 per share available to common stockholders, as higher reserves tied to a loan exposure and litigation, along with a California asset impairment, weighed on results.

The real estate investment company recorded net income of $0.5 million, or $0.00 per share, in the comparable 2025 quarter. Adjusted funds from operations, or AFFO, was negative $2.1 million, or negative $0.05 per weighted-average share, compared with AFFO of $2.9 million, or $0.07 per share, a year earlier.

For the first nine months of 2026, Farmland Partners posted a net loss of $11.7 million, or $0.28 per share, compared with net income of $10.4 million, or $0.18 per share, during the same period of 2025. Nine-month AFFO totaled $1.7 million, or $0.04 per weighted-average share, down from $6.5 million, or $0.14 per share, in the prior-year period.

Reserves and California Impairment Weigh on Results

Executive Chairman Paul Pittman described the quarter as difficult from an earnings perspective because of reserves and “negative surprises,” while emphasizing that the company’s core farmland portfolio remains strong and is becoming increasingly concentrated in the Midwest.

Chief Financial Officer Susan Landi said revenue benefited from higher oil-and-gas royalty receipts and higher interest income, reflecting a higher average balance of loans under the FPI Loan Program and financing receivables. Those gains were offset by lower rental income following prior-year asset dispositions and lower crop sales in 2026.

Expenses rose year over year, primarily because of an increased provision for credit losses associated with the FPI Loan Program and a higher estimated litigation loss contingency, Landi said.

During the question-and-answer session, President and CEO Luca Fabbri said a $12 million impairment charge related to California farms that are either held for sale or earmarked for sale. He characterized those properties as farms the company does not “particularly like.”

Pittman said the company also continued to reserve against risk involving the same borrower discussed in earlier quarters. The borrower made payments during the quarter and caught up on some interest obligations, he said, but a planned asset sale that was expected to reduce Farmland Partners’ exposure did not close.

“When we were expecting a substantial additional reduction in our exposure and then it doesn’t happen,” Pittman said, “you have to take that as a bad fact.”

Landi said the company’s aggregate exposure through loans and financing receivables was $51 million. Fabbri said the exposure is supported by significant collateral, including real estate as well as other collateral and guarantees that are more difficult to value. He said the company used conservative assumptions that significantly discount non-real-estate collateral in its analysis.

Pittman said management believes it is adequately reserved at this point and is not anticipating an additional reserve in the fourth quarter, though future developments could change that assessment.

Outlook Reduced on Non-Recurring Charges

Farmland Partners updated its 2026 AFFO guidance to a range of $8.9 million to $10.7 million, or $0.21 to $0.25 per share. Landi said changes from the company’s July outlook were primarily related to the additional credit-loss reserve and the increased litigation loss contingency.

Those two items accounted for $0.095 of the company’s $0.10 decrease in AFFO-per-share guidance, according to Landi.

The company had approximately $107 million of undrawn capacity on its lines of credit at the end of the third quarter.

Midwest Leasing and Share Repurchases

Fabbri said the company is about one-third of the way through its lease-renewal process for renewing leases, which is focused heavily on Midwest farmland. He said farmers are facing uncertainty around profitability despite what he described as relatively favorable yields and crop prices, as elevated costs—particularly diesel costs during the harvest season—pressure farm-level earnings.

Lease renewals so far have been “relatively flat to slightly up,” Fabbri said, although he added that the process remains too early to determine the final aggregate outcome. He noted that the current renewal cycle follows a particularly strong cycle about three years ago.

Management continues to view Midwest farmland as an attractive asset class. However, Fabbri said the company sees its own shares as the best farmland acquisition opportunity because they trade at what management considers a significant discount to net asset value.

During the quarter, Farmland Partners repurchased about 1.7 million shares at an average price of $10.32 per share. Asked whether the board could renew the company’s existing repurchase authorization after the company nearly reached its limit, Pittman said that was a “reasonable assumption.”

Sabrepoint Litigation

Pittman also discussed the company’s litigation involving Sabrepoint, saying Farmland Partners received what he characterized as a strong appellate-level decision in Texas that allows its claims to proceed. He said the company expects Sabrepoint may seek review by the Texas Supreme Court, which he said could further delay the process.

Pittman said the company hopes to reach a settlement rather than take the matter through a full trial. He said Farmland Partners believes damages should exceed $100 million, while cautioning that the company may not recover that amount because, in his view, Sabrepoint may not have sufficient resources to cover the full alleged damages.

About Farmland Partners (NYSE:FPI)

Farmland Partners Inc is a real estate investment trust (REIT) that owns and manages agricultural land in the United States. The company leases its farmland to farmers and agricultural operators, who use the properties to grow crops and conduct related farming activities.

Farmland Partners' portfolio is primarily focused on high-quality farmland used to produce major row crops, including corn, soybeans, wheat and cotton, as well as specialty crops in selected markets. Its properties are located across a range of prominent agricultural regions, providing exposure to diverse soil types, growing conditions and crop economies.

Founded in 2013 and headquartered in Denver, Colorado, Farmland Partners became a publicly traded company on the New York Stock Exchange in 2014.

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