Gladstone Land Announces First Quarter 2025 Results

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

MCLEAN, VA / ACCESS Newswire / May 12, 2025 / Gladstone Land Corporation (Nasdaq:LAND) ("Gladstone Land" or the "Company") today reported financial results for the first quarter and year ended March 31, 2025. A description of funds from operations ("FFO"), core FFO ("CFFO"), and adjusted FFO ("AFFO"), all non-GAAP (generally accepted accounting principles in the United States) financial measures, appear at the end of this press release. All per-share references are to fully-diluted, weighted-average shares of common stock, unless noted otherwise. For further detail, please refer to the Quarterly Report on Form 10-Q (the "Form 10-Q"), which is available on the Investors section of the Company's website at www.GladstoneLand.com.

First Quarter 2025 Activity:

• Portfolio Activity:

  • Property Sales: Sold seven farms, consisting of 8,189 total acres in Florida and Nebraska, for an aggregate sales price of $64.5 million, resulting in a total net gain of approximately $15.7 million.

  • Lease Activity: Executed six amended or new lease agreements during the quarter. With one of these leases, we changed the lease structure to eliminate the base rent and provide the tenant a cash allowance in exchange for significantly increasing our participation rent component, the majority of which is expected to be recognized in the fourth quarter of 2025. The remaining five leases are expected to result in an aggregate decrease in annual net operating income of approximately $236,000 from that of the prior leases.

  • Vacant, Direct-operated, and Non-accrual Properties: During all or a portion of the quarter, we had 15 farms that were either vacant, direct-operated (via management agreements with unrelated third parties), or on which lease revenues were recognized on a cash basis. During the quarter, we entered into a lease agreement on one property that was previously on non-accrual; as such, we currently have five farms that are vacant, two properties (encompassing four farms) that are direct-operated, and three properties (encompassing five farms) on non-accrual status.

• Debt Activity:

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

  • Interest Patronage: Recorded approximately $1.7 million of interest patronage, or refunded interest, related to our 2024 borrowings from various Farm Credit associations. Total 2024 interest patronage resulted in a 21.9% reduction (approximately 101 basis points) to the interest rate of such borrowings.

• Paid Distributions: Paid monthly cash distributions totaling $0.1401 per share of common stock during the quarter ended March 31, 2025.

First Quarter 2025 Results:

Net income for the quarter was approximately $15.1 million, compared to approximately $13.6 million in the prior-year quarter. Net income attributable to common stockholders during the quarter was approximately $9.1 million, or $0.25 per share, compared to approximately $7.4 million, or $0.21 per share, in the prior-year quarter. AFFO for the quarter was approximately $2.0 million, or $0.06 per share, compared to approximately $5.1 million, or $0.14 per share, in the prior-year quarter. Common stock dividends declared were approximately $0.14 per share for both periods.

Total cash lease revenues decreased, primarily due to a $5.7 million reduction in fixed base cash rents. This decrease was primarily driven by the execution of certain lease agreements pursuant to which we reduced or eliminated the fixed base rent amounts or, in some cases, provided certain tenants with cash lease incentives, in exchange for significantly increasing our participation rent components in the leases, the majority of which is expected to be realized in the fourth quarter of 2025. Fixed base cash rents also decreased due to the sale of seven farms in the first quarter of 2025, as well as a decrease in revenue from certain vacant, direct-operated, and non-accrual properties. These decreases were partially offset by a $465,000 increase in participation rents, largely from additional wine grape sales, and $2.4 million of additional income recorded during the current quarter due to the receipt of a lease termination fee from an outgoing tenant who leased three of our farms.

Excluding a capital gains fee earned during the current quarter, which is not payable until after the end of the fiscal year and is subject to further adjustment as additional assets are sold or otherwise disposed of, aggregate related-party fees decreased by approximately $60,000 during the current quarter, primarily driven by a lower base management fee due to the sale of 12 farms during 2024. Excluding related-party fees, our recurring core operating expenses increased by approximately $425,000, mainly due to higher property operating expenses incurred related to certain farms that were vacant, direct-operated, or on non-accrual status at some point during the quarter, including additional property taxes and increased legal costs. Interest expense decreased due to debt repayments made over the past year.

Cash flows from operations for the current quarter increased by approximately $1.0 million from the prior-year quarter, largely due to additional cash payments received for participation rents and receipt of the termination fee noted above, partially offset by a decrease in cash rent payments received due to recent farm sales and as a result of changes in lease structures on certain farms as noted above.

Subsequent to March 31, 2025:

• Portfolio Activity-Lease Activity: Entered into a renewable energy lease with a wind company on a portion of one of our farms that is expected to provide for additional income of approximately $166,000 per year.

• Second Quarter Distributions: Declared monthly cash distributions of $0.0467 per share of common stock for each of April, May, and June.

Comments from David Gladstone, President and CEO of Gladstone Land: "We continue to maneuver through the challenges presented to many growers and owners of permanent crop farms in the western part of the country. With the approach we've decided to take on certain of these farms (where we reduced or eliminated base rents and, in some cases, provided cash lease incentives, in exchange for significantly increasing our participation rent percentage), our earnings for 2025 will be more reliant upon participation rents than in years past, with the large majority expected to come in the fourth quarter. We intend this to be a temporary change for us, with the goal of reverting these leases back to standard leases with fixed base rents as early as the 2026 crop year, or we may also look to sell some of these farms if we are unable to reach agreements with tenants to lease these farms at satisfactory rental rates in the near future. However, we believe this arrangement will be the most profitable structure for this specific set of farms for the 2025 crop year due to the history of high yields on most of these farms, which allows for strong crop insurance, and we continue to see prices for certain of these crops trending upwards. We also currently have 10 properties (encompassing 14 of our 150 farms) that are either vacant, being direct-operated via agreements with third-party management groups, or where current tenants are behind in their payments to us and are on non-accrual status. We continue to be in discussions with various groups to either lease or buy certain of these and other farms in our portfolio, and we hope to have these remaining issues resolved by the end of the year. In the meantime, we continue to look for opportunities to acquire more water at below-market prices to provide additional water security to our farms and the growers who lease them. Our balance sheet remains strong, with nearly 100% of our outstanding debt held at fixed interest rates. In addition, we continue to maintain high levels of liquidity, with access to over $180 million of immediately available capital, including $38 million in cash, and we also have nearly $150 million in unencumbered properties that could be pledged as additional collateral, if needed."

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