Gladstone Land Corporation (Nasdaq: LAND) (“Gladstone Land” or the
“Company”) today reported financial results for the fourth quarter
and year ended December 31, 2019. A description of funds from
operations (“FFO”), core FFO (“CFFO”), adjusted FFO (“AFFO”), and
net asset value (“NAV”), all non-GAAP (generally accepted
accounting principles in the United States) financial measures, is
located at the end of this press release. All per-share
references are to fully-diluted, weighted-average shares of the
Company’s common stock unless noted otherwise. For further
detail, please refer to the Company’s Annual Report on Form 10-K
(the “Form 10-K”), which is available on the Investor Relations
section of the Company’s website at www.GladstoneFarms.com.
Highlights for fiscal year 2019:
- Portfolio Activity: -- Property
Acquisition: Acquired 26 new farms, consisting of
13,330 total acres in four different states (CA, FL, MI, & NE),
for approximately $252.7 million. On a weighted-average
basis, these farms were acquired at an initial, minimum net
capitalization rate of 6.5%. However, all leases on these
farms contain certain provisions (e.g., annual rent escalations or
participation rents) that are expected to drive cash rents higher
in future years. -- Leasing Activity:
Executed 24 lease agreements on certain of our farms in six
different states (AZ, CA, FL, MI, NE, & TX) that are expected
to result in an aggregate increase in annual net operating income
of approximately $1.1 million, or 11.0%, over that of the prior
leases.
- Financing Activity—New Long-term
Borrowing: Secured a total of approximately $169.5
million of new, long-term borrowings from nine different lenders
(including four new lenders) at an expected weighted-average
effective interest rate of 3.64%. On a weighted-average
basis, these rates are fixed for the next 7.7 years.
- Equity Activity: -- Series B
Preferred Stock: Issued and sold 3,626,076 shares of
our 6.00% Series B Cumulative Redeemable Preferred Stock (the
“Series B Preferred Stock”) for net proceeds of approximately $81.6
million. -- OP Units: Issued
288,303 common units of limited partnership interests in Gladstone
Land Limited Partnership (“OP Units”) as partial consideration for
the acquisition of a new farm, constituting an aggregate fair value
of approximately $3.3 million as of the acquisition
date. -- Common Stock: Through an
overnight offering (including the underwriters’ exercise of a
portion of the over-allotment option) and our “at-the-market”
program (the “ATM Program”), issued and sold a total of 2,474,439
shares of our common stock for aggregate net proceeds of
approximately $27.8 million.
- Increased and Paid Distributions:
Increased the monthly distribution run rate on our common stock by
0.11% and paid total cash distributions of $0.13380 per share of
common stock for October, November, and December 2019.
Fourth Quarter 2019 Results:
Net income for the quarter was approximately $958,000, compared
to approximately $523,000 in the prior quarter. Net loss to
common stockholders and non-controlling OP Unitholders during the
quarter was approximately $627,000, or $0.03 per share, compared to
approximately $638,000, or $0.03 per share, in the prior
quarter.
AFFO for the quarter was approximately $3.5 million, an increase
of approximately $589,000, or 19.9%, from the prior quarter, while
AFFO per common share increased to approximately $0.17 for the
current quarter, compared to $0.14 for the prior quarter.
Common stock dividends declared were approximately $0.13 per share
for each quarter. The increase in AFFO was primarily driven
by higher lease revenues recorded in the current quarter, partially
offset by an increase in operating expenses.
Total lease revenues increased by approximately $2.5 million, or
22.5%, primarily driven by approximately $1.5 million of
participation rents recorded during the current quarter, compared
to approximately $848,000 in the prior quarter, and additional
rents earned from recent acquisitions. Our core operating
expenses increased primarily due to higher related-party fees,
which was driven by an incentive fee earned by our investment
adviser during the current quarter due to our pre-incentive fee FFO
surpassing the required hurdle rate, and increased general and
administrative expenses, specifically, higher professional fees and
additional costs spent on marketing and advertising. In
addition, interest expense on borrowings increased due to
additional borrowings, and dividends declared on the Series B
Preferred Stock increased due to additional issuances during and
since the prior quarter.
Cash flows from operations for the current quarter decreased,
primarily due to additional rental payments received related to new
acquisitions, which were higher in the prior quarter. Our NAV
per share decreased by $0.08 from the prior quarter to $11.41 at
December 31, 2019, primarily driven by the dilutive effect of
certain equity issuances during the quarter and ongoing capital
improvements made on certain of our farms (which won't be reflected
in the fair values of the properties until the respective projects
are completed), partially offset by valuation increases in certain
of our farms that were re-appraised during the current quarter and
a decrease in the fair value of our long-term borrowings due to
changes in market interest rates.
Fiscal Year 2019 Results:
Net income for the year was approximately $1.8 million, compared
to approximately $2.8 million in the prior year. Net (loss)
income available to common stockholders and non-controlling OP
Unitholders during the year was approximately $(2.5) million, or
$(0.12) per share, compared to approximately $2.4 million, or $0.15
per share, in the prior year. AFFO for the year was
approximately $11.3 million, an increase of approximately $2.9
million, or 34.3%, from the prior year, while AFFO per common share
increased to approximately $0.57 for the current year, compared to
$0.51 for the prior year. Common stock dividends declared
were approximately $0.53 per share for each year.
The increase in AFFO was primarily driven by additional lease
revenues earned on recent acquisitions and approximately $2.3
million of participation rents recorded during the current year, as
compared to approximately $1.2 million in the prior year. The
increase in lease revenues was partially offset by higher interest
expense (due to additional borrowings), an increase in dividends
paid on our Series B Preferred Stock (due to additional shares
issued during the current year), higher related-party fees
(primarily due to the incentive fee earned during the current year)
and increased property-operating expenses as a result of our recent
acquisitions.
Subsequent to December 31,
2019:
- Portfolio
Activity: -- Property
Acquisitions: Acquired two new farms, consisting of
1,325 total acres, for $7.5 million. These farms were
acquired at an initial, minimum net capitalization rate of
5.5%. However, the lease on these farms contains certain
provisions (e.g., annual rent escalations) that are expected to
drive cash rents higher in future years.
- Leasing Activity: -- New
Leases: Executed seven new lease agreements on
certain of our farms in four different states (AZ, CA, NC, &
NE) that are expected to result in an aggregate increase in annual
net operating income of approximately $294,000, or 9.0%, over that
of the prior leases. -- Lease
Termination: Terminated two leases encompassing four
farms in Arizona, for which we received a termination payment of
approximately $3.0 million. The four farms were immediately
re-leased to a new, unrelated third-party tenant.
- Financing Activity—New Long-term
Borrowing: Secured $8.1 million of new, long-term
borrowings at an interest rate of 2.66%, which rate is fixed for
the next 4.0 years.
- Equity
Activity: -- Series B
Preferred Stock: Issued and sold 911,383 shares of
the Series B Preferred Stock for net proceeds of approximately
$20.5 million. -- Common Stock:
Issued and sold 409,800 shares of our common stock for net proceeds
of approximately $5.4 million under the ATM Program.
- Increased Distributions: Increased our
distribution run rate by 0.11%, declaring monthly cash
distributions of $0.04465 per share of common stock (including OP
Units held by non-controlling OP Unitholders) for each of January,
February, and March 2020. This marks our 17th distribution
increase over the past 20 quarters, during which time we’ve
increased the distribution run rate by a total of 48.8%.
Comments from David Gladstone, President and CEO of
Gladstone Land: “This was another strong quarter and
a wonderful year overall for Gladstone Land. 2019 saw the
Company acquire over $250 million of new farms during the year, its
best year ever, and it was also very successful on the leasing
front. With the relatively high net yields produced by the
rents we expect to receive in the future from our 2019
acquisitions, coupled with the low interest rates secured on the
related borrowings, Gladstone Land has been able to lock in
extremely favorable returns on these acquisitions that should be
profitable to the Company for many years. In addition,
Gladstone Land was able to achieve considerable increases in rental
rates on lease renewals during 2019, which it expects to add nicely
to its bottom line in the future. The Company believes these
increased rental rates are indicative of the continued appreciation
in value of these underlying farms. Gladstone Land also
surpassed its own expectations in the amount of participation rents
received, almost double that of the prior year, driven primarily by
strong production and pricing from several of its farms growing
nuts, such as almonds and pistachios. 2019 was a great year
for Gladstone Land and one that the Company believes sets itself up
nicely for the future. We are looking forward to continuing
our growth and overall success in 2020.”
Quarterly Summary
Information(Dollars in thousands, except per-share
amounts)
|
For and As of the Quarters Ended |
|
Change |
|
Change |
|
12/31/2019 |
|
9/30/2019 |
|
($ / #) |
|
(%) |
Operating Data: |
|
|
|
|
|
|
|
Total operating revenues |
$ |
13,489 |
|
|
$ |
11,012 |
|
|
$ |
2,477 |
|
|
22.5 |
% |
Total operating expenses, net of credits |
(6,965 |
) |
|
(5,575 |
) |
|
(1,390 |
) |
|
24.9 |
% |
Other expenses, net |
(5,566 |
) |
|
(4,914 |
) |
|
(652 |
) |
|
13.3 |
% |
Net income |
$ |
958 |
|
|
$ |
523 |
|
|
$ |
435 |
|
|
83.2 |
% |
Less: Dividends declared on Series B Preferred Stock |
(1,585 |
) |
|
(1,161 |
) |
|
(424 |
) |
|
36.5 |
% |
Net loss available to common stockholders and
non-controlling OP Unitholders |
(627 |
) |
|
(638 |
) |
|
11 |
|
|
(1.7 |
)% |
Plus: Real estate and intangible depreciation and
amortization |
3,838 |
|
|
3,419 |
|
|
419 |
|
|
12.3 |
% |
Plus: Losses on dispositions of real estate assets, net |
174 |
|
|
134 |
|
|
40 |
|
|
29.9 |
% |
Adjustments for unconsolidated entities(1) |
1 |
|
|
— |
|
|
1 |
|
|
N/A |
|
FFO available to common stockholders and non-controlling OP
Unitholders |
3,386 |
|
|
2,915 |
|
|
471 |
|
|
16.2 |
% |
Plus: Acquisition- and disposition-related expenses |
109 |
|
|
119 |
|
|
(10 |
) |
|
(8.4 |
)% |
Less: Other receipts, net(2) |
— |
|
|
(11 |
) |
|
11 |
|
|
N/A |
|
CFFO available to common stockholders and non-controlling
OP Unitholders |
3,495 |
|
|
3,023 |
|
|
472 |
|
|
15.6 |
% |
Net adjustment for normalized cash rents(3) |
(117 |
) |
|
(226 |
) |
|
109 |
|
|
(48.2 |
)% |
Plus: Amortization of debt issuance costs |
169 |
|
|
161 |
|
|
8 |
|
|
5.0 |
% |
AFFO available to common stockholders and non-controlling
OP Unitholders |
$ |
3,547 |
|
|
$ |
2,958 |
|
|
$ |
589 |
|
|
19.9 |
% |
|
|
|
|
|
|
|
|
Share and Per-Share Data: |
|
|
|
|
|
|
|
Weighted-average common stock outstanding—basic and diluted |
20,931,296 |
|
|
20,763,615 |
|
|
167,681 |
|
|
0.8 |
% |
Weighted-average common OP Units outstanding(4) |
288,303 |
|
|
222,494 |
|
|
65,809 |
|
|
29.6 |
% |
Weighted-average total common shares outstanding |
21,219,599 |
|
|
20,986,109 |
|
|
233,490 |
|
|
1.1 |
% |
|
|
|
|
|
|
|
|
Diluted net loss per weighted-average total common share |
$ |
(0.030 |
) |
|
$ |
(0.030 |
) |
|
$ |
0.001 |
|
|
(3.0 |
)% |
Diluted FFO per weighted-average total common share |
$ |
0.160 |
|
|
$ |
0.139 |
|
|
$ |
0.021 |
|
|
14.9 |
% |
Diluted CFFO per weighted-average total common share |
$ |
0.165 |
|
|
$ |
0.144 |
|
|
$ |
0.021 |
|
|
14.4 |
% |
Diluted AFFO per weighted-average total common share |
$ |
0.167 |
|
|
$ |
0.141 |
|
|
$ |
0.026 |
|
|
18.6 |
% |
Cash distributions declared per total common share |
$ |
0.134 |
|
|
$ |
0.134 |
|
|
$ |
0.000 |
|
|
0.1 |
% |
|
|
|
|
|
|
|
|
Balance Sheet Data: |
|
|
|
|
|
|
|
Net investments in real estate, at cost(5) |
$ |
794,769 |
|
|
$ |
743,409 |
|
|
$ |
51,360 |
|
|
6.9 |
% |
Total assets |
$ |
816,787 |
|
|
$ |
757,027 |
|
|
$ |
59,760 |
|
|
7.9 |
% |
Total indebtedness(6) |
$ |
513,799 |
|
|
$ |
483,689 |
|
|
$ |
30,110 |
|
|
6.2 |
% |
Total equity |
$ |
278,970 |
|
|
$ |
253,290 |
|
|
$ |
25,680 |
|
|
10.1 |
% |
Total common shares outstanding |
21,224,961 |
|
|
21,176,378 |
|
|
48,583 |
|
|
0.2 |
% |
|
|
|
|
|
|
|
|
Other Data: |
|
|
|
|
|
|
|
Cash flows from operations |
$ |
7,467 |
|
|
$ |
9,646 |
|
|
$ |
(2,179 |
) |
|
(22.6 |
)% |
Farms owned |
111 |
|
|
105 |
|
|
6 |
|
|
5.7 |
% |
Acres owned |
86,535 |
|
|
81,586 |
|
|
4,949 |
|
|
6.1 |
% |
Occupancy rate(7) |
100.0 |
% |
|
100.0 |
% |
|
— |
% |
|
— |
% |
Farmland portfolio value |
$ |
877,485 |
|
|
$ |
824,506 |
|
|
$ |
52,979 |
|
|
6.4 |
% |
NAV per common share |
$ |
11.41 |
|
|
$ |
11.49 |
|
|
$ |
(0.08 |
) |
|
(0.7 |
)% |
(1) Represents our pro-rata share of depreciation expense
recorded in unconsolidated entities during the
period.(2) Consists of net property and casualty (recoveries)
losses and the cost of related repairs that were expensed as a
result of damage caused by natural disasters on certain of our
properties.(3) This adjustment removes the effects of
straight-lining rental income, as well as the amortization related
to above-market lease values and lease incentives and accretion
related to below-market lease values, deferred revenue, and tenant
improvements, resulting in rental income reflected on a modified
accrual cash basis. The effect to AFFO is that cash rents
received pertaining to a lease year are normalized over that
respective lease year on a straight-line basis, resulting in cash
rent being recognized ratably over the period in which the cash
rent is earned.(4) Represents OP Units held by non-controlling
OP Unitholders.(5) Consists of the initial acquisition price
(including the costs allocated to both tangible and intangible
assets acquired and liabilities assumed), plus subsequent
improvements and other capitalized costs associated with the
properties, and adjusted for accumulated depreciation and
amortization.(6) Consists of the principal balances
outstanding of all indebtedness, including our lines of credit,
notes and bonds payable, and our Series A Term Preferred
Stock.(7) Based on gross acreage.
Annual Summary
Information(Dollars in thousands, except per-share
amounts)
|
For and As of the Years Ended |
|
Change |
|
Change |
|
12/31/2019 |
|
12/31/2018 |
|
($ / #) |
|
(%) |
Operating Data: |
|
|
|
|
|
|
|
Total operating revenues |
$ |
40,692 |
|
|
$ |
36,687 |
|
|
$ |
4,005 |
|
|
10.9 |
% |
Total operating expenses, net of credits |
(21,386 |
) |
|
(24,575 |
) |
|
3,189 |
|
|
(13.0 |
)% |
Other expenses, net |
(17,544 |
) |
|
(9,346 |
) |
|
(8,198 |
) |
|
87.7 |
% |
Net income |
$ |
1,762 |
|
|
$ |
2,766 |
|
|
$ |
(1,004 |
) |
|
(36.3 |
)% |
Less: Dividends declared on Series B Preferred Stock |
(4,240 |
) |
|
(379 |
) |
|
(3,861 |
) |
|
1,018.7 |
% |
Net (loss) income available to common stockholders and
non-controlling OP Unitholders |
(2,478 |
) |
|
2,387 |
|
|
(4,865 |
) |
|
N/A |
|
Plus: Real estate and intangible depreciation and
amortization |
12,790 |
|
|
9,375 |
|
|
3,415 |
|
|
36.4 |
% |
Plus (less): Losses (gains) on dispositions of real estate
assets, net |
328 |
|
|
(5,532 |
) |
|
5,860 |
|
|
N/A |
|
Adjustments for unconsolidated entities(1) |
1 |
|
|
— |
|
|
1 |
|
|
N/A |
|
FFO available to common stockholders and non-controlling OP
Unitholders |
10,641 |
|
|
6,230 |
|
|
4,411 |
|
|
70.8 |
% |
Plus: Acquisition- and disposition-related expenses |
380 |
|
|
274 |
|
|
106 |
|
|
38.7 |
% |
(Less) plus: Other (receipts) charges, net(2) |
(1 |
) |
|
1,790 |
|
|
(1,791 |
) |
|
N/A |
|
CFFO available to common stockholders and non-controlling
OP Unitholders |
11,020 |
|
|
8,294 |
|
|
2,726 |
|
|
32.9 |
% |
Net adjustment for normalized cash rents(3) |
(382 |
) |
|
(485 |
) |
|
103 |
|
|
(21.2 |
)% |
Plus: Amortization of debt issuance costs |
630 |
|
|
582 |
|
|
48 |
|
|
8.2 |
% |
AFFO available to common stockholders and non-controlling
OP Unitholders |
$ |
11,268 |
|
|
$ |
8,391 |
|
|
$ |
2,877 |
|
|
34.3 |
% |
|
|
|
|
|
|
|
|
Share and Per-Share Data: |
|
|
|
|
|
|
|
Weighted-average common stock outstanding—basic and diluted |
19,602,533 |
|
|
15,503,341 |
|
|
4,099,192 |
|
|
26.4 |
% |
Weighted-average common OP Units outstanding(4) |
235,613 |
|
|
809,022 |
|
|
(573,409 |
) |
|
(70.9 |
)% |
Weighted-average total common shares outstanding |
19,838,146 |
|
|
16,312,363 |
|
|
3,525,783 |
|
|
21.6 |
% |
|
|
|
|
|
|
|
|
Diluted net (loss) gain per weighted-average total common
share |
$ |
(0.125 |
) |
|
$ |
0.146 |
|
|
$ |
(0.271 |
) |
|
(185.4 |
)% |
Diluted FFO per weighted-average total common share |
$ |
0.536 |
|
|
$ |
0.382 |
|
|
$ |
0.154 |
|
|
40.5 |
% |
Diluted CFFO per weighted-average total common share |
$ |
0.555 |
|
|
$ |
0.508 |
|
|
$ |
0.047 |
|
|
9.3 |
% |
Diluted AFFO per weighted-average total common share |
$ |
0.568 |
|
|
$ |
0.514 |
|
|
$ |
0.054 |
|
|
10.4 |
% |
Cash distributions declared per total common share |
$ |
0.534 |
|
|
$ |
0.532 |
|
|
$ |
0.002 |
|
|
0.4 |
% |
|
|
|
|
|
|
|
|
Balance Sheet Data: |
|
|
|
|
|
|
|
Net investments in real estate, at cost(5) |
$ |
794,769 |
|
|
$ |
541,656 |
|
|
$ |
253,113 |
|
|
46.7 |
% |
Total assets |
$ |
816,787 |
|
|
$ |
565,119 |
|
|
$ |
251,668 |
|
|
44.5 |
% |
Total indebtedness(6) |
$ |
513,799 |
|
|
$ |
366,976 |
|
|
$ |
146,823 |
|
|
40.0 |
% |
Total equity |
$ |
278,970 |
|
|
$ |
181,053 |
|
|
$ |
97,917 |
|
|
54.1 |
% |
Total common shares outstanding |
21,224,961 |
|
|
18,462,219 |
|
|
2,762,742 |
|
|
15.0 |
% |
|
|
|
|
|
|
|
|
Other Data: |
|
|
|
|
|
|
|
Cash flows from operations |
$ |
21,370 |
|
|
$ |
10,408 |
|
|
$ |
10,962 |
|
|
105.3 |
% |
Farms owned |
111 |
|
|
85 |
|
|
26 |
|
|
30.6 |
% |
Acres owned |
86,535 |
|
|
73,205 |
|
|
13,330 |
|
|
18.2 |
% |
Occupancy rate(7) |
100.0 |
% |
|
99.6 |
% |
|
0.4 |
% |
|
0.4 |
% |
Farmland portfolio value |
$ |
877,485 |
|
|
$ |
617,866 |
|
|
$ |
259,619 |
|
|
42.0 |
% |
NAV per common share |
$ |
11.41 |
|
|
$ |
12.88 |
|
|
$ |
(1.47 |
) |
|
(11.4 |
)% |
(1) Represents our pro-rata share of depreciation expense
recorded in unconsolidated entities during the
period.(2) Consists of net property and casualty (recoveries)
losses and the cost of related repairs that were expensed as a
result of damage caused by natural disasters on certain of our
properties and, for the year ended December 31, 2018, only, the net
impact of the incremental farming operations incurred by our
taxable REIT subsidiary.(3) This adjustment removes the
effects of straight-lining rental income, as well as the
amortization related to above-market lease values and lease
incentives and accretion related to below-market lease values,
deferred revenue, and tenant improvements, resulting in rental
income reflected on a modified accrual cash basis. The effect
to AFFO is that cash rents received pertaining to a lease year are
normalized over that respective lease year on a straight-line
basis, resulting in cash rent being recognized ratably over the
period in which the cash rent is earned.(4) Represents OP
Units held by non-controlling OP Unitholders.(5) Consists of
the initial acquisition price (including the costs allocated to
both tangible and intangible assets acquired and liabilities
assumed), plus subsequent improvements and other capitalized costs
associated with the properties, and adjusted for accumulated
depreciation and amortization.(6) Consists of the principal
balances outstanding of all indebtedness, including our lines of
credit, notes and bonds payable, and our Series A Term Preferred
Stock.(7) Based on gross acreage.
Conference Call for
Stockholders: The Company will hold a conference
call on Thursday, February 20, 2020, at 8:30 a.m. (EST) to
discuss its earnings results. Please call (855) 363-1762 to
enter the conference. An operator will monitor the call and
set a queue for any questions. A conference call replay will
be available beginning one hour after the call and will be
accessible through February 27, 2020. To hear the replay,
please dial (855) 859-2056, and use playback conference number
3596941. The live audio broadcast of the Company’s conference
call will also be available online at the Company’s website,
www.GladstoneFarms.com. The event will be archived and
available for replay on the Company’s website through April 20,
2020.
About Gladstone Land Corporation:Founded in
1997, Gladstone Land is a publicly traded real estate investment
trust that acquires and owns farmland and farm-related properties
located in major agricultural markets in the U.S. and leases its
properties to unrelated third-party farmers. The Company,
which reports the aggregate fair value of its farmland holdings on
a quarterly basis, currently owns 113 farms, comprised of
approximately 88,000 acres in 10 different states, valued at
approximately $885 million. Gladstone Land's farms are
predominantly located in regions where its tenants are able to grow
fresh produce annual row crops, such as berries and vegetables,
which are generally planted and harvested annually. The
Company also owns farms growing permanent crops, such as almonds,
apples, figs, olives, pistachios, and other orchards, as well as
blueberry groves and vineyards, which are generally planted every
10 to 20-plus years and harvested annually. The Company may
also acquire property related to farming, such as cooling
facilities, processing buildings, packaging facilities, and
distribution centers. The Company pays monthly distributions
to its stockholders and has paid 84 consecutive monthly cash
distributions on its common stock since its initial public offering
in January 2013. The Company has increased its common
distributions 17 times over the prior 20 quarters, and the current
per-share distribution on its common stock is 0.04465 per month, or
0.53580 per year. Additional information, including detailed
information about each of the Company's farms, can be found at
www.GladstoneFarms.com.
Owners or brokers who have farmland for sale in the U.S. should
contact:
- Eastern U.S. – Bill Frisbie at (703) 287-5839 or
Bill.F@GladstoneLand.com;
- Midwest U.S. – Bill Hughes at (618) 606-2887 or
Bill.H@GladstoneLand.com; or
- Western U.S. – Bill Reiman at (805) 263-4778 or
Bill.R@GladstoneLand.com, or Tony Marci at (831) 225-0883 or
Tony.M@GladstoneLand.com.
Lenders who are interested in providing us with long-term
financing on farmland should contact Jay Beckhorn at (703) 587-5823
or Jay.Beckhorn@GladstoneCompanies.com.
For stockholder information on Gladstone Land, call (703)
287-5893. For Investor Relations inquiries related to any of
the monthly dividend-paying Gladstone funds, please visit
www.GladstoneCompanies.com.
Non-GAAP Financial Measures:
FFO: The National
Association of Real Estate Investment Trusts (“NAREIT”) developed
FFO as a relative non-GAAP supplemental measure of operating
performance of an equity REIT in order to recognize that
income-producing real estate historically has not depreciated on
the basis determined under GAAP. FFO, as defined by NAREIT,
is net income (computed in accordance with GAAP), excluding gains
(or losses) from sales of property and impairment losses on
property, plus depreciation and amortization of real estate assets,
and after adjustments for unconsolidated partnerships and joint
ventures. The Company believes that FFO per share provides
investors with an additional context for evaluating its financial
performance and as a supplemental measure to compare it to other
REITs; however, comparisons of its FFO to the FFO of other REITs
may not necessarily be meaningful due to potential differences in
the application of the NAREIT definition used by such other
REITs.
CFFO: CFFO is FFO,
adjusted for items that are not indicative of the results provided
by the Company’s operating portfolio and affect the comparability
of the Company’s period-over-period performance. These items
include certain non-recurring items, such as acquisition- and
disposition-related expenses, the net incremental impact of
operations conducted through our taxable REIT subsidiary, income
tax provisions, and property and casualty losses or
recoveries. Although the Company’s calculation of CFFO
differs from NAREIT’s definition of FFO and may not be comparable
to that of other REITs, the Company believes it is a meaningful
supplemental measure of its sustainable operating
performance. Accordingly, CFFO should be considered a
supplement to net income computed in accordance with GAAP as a
measure of our performance. For a full explanation of the
adjustments made to arrive at CFFO, please read the Company’s Form
10-Q, filed today with the SEC.
AFFO: AFFO is CFFO,
adjusted for certain non-cash items, such as the straight-lining of
rents and amortizations into rental income (resulting in cash rent
being recognized ratably over the period in which the cash rent is
earned). Although the Company’s calculation of AFFO differs
from NAREIT’s definition of FFO and may not be comparable to that
of other REITs, the Company believes it is a meaningful
supplemental measure of its sustainable operating performance on a
cash basis. Accordingly, AFFO should be considered a
supplement to net income computed in accordance with GAAP as a
measure of our performance. For a full explanation of the
adjustments made to arrive at AFFO, please read the Company’s Form
10-Q, filed today with the SEC.
A reconciliation of FFO (as defined by NAREIT), CFFO, and AFFO
(each as defined above) to net income (loss), which the Company
believes is the most directly-comparable GAAP measure for each, and
a computation of fully-diluted net income (loss), FFO, CFFO, and
AFFO per weighted-average share is set forth in the Quarterly
Summary Information table above. The Company’s presentation
of FFO, CFFO, or AFFO, does not represent cash flows from operating
activities determined in accordance with GAAP and should not be
considered an alternative to net income as an indication of its
performance or to cash flow from operations as a measure of
liquidity or ability to make distributions.
NAV: Pursuant to a valuation policy
approved by our board of directors, our valuation team, with
oversight from the chief valuation officer, provides
recommendations of value for our properties to our board of
directors, who then review and approve the fair values of our
properties. Per our valuation policy, our valuations are
derived based on either the purchase price of the property; values
as determined by independent, third-party appraisers; or through an
internal valuation process, which process is, in turn, based on
values as determined by independent, third-party appraisers.
In any case, we intend to have each property valued by an
independent, third-party appraiser at least once every three years,
or more frequently in some instances. Various methodologies
are used, both by the appraisers and in our internal valuations, to
determine the fair value of our real estate, including the sales
comparison, income capitalization (or a discounted cash flow
analysis), and cost approaches of valuation. NAV is a
non-GAAP, supplemental measure of financial position of an equity
REIT and is calculated as total equity available to common
stockholders and non-controlling OP Unitholders, adjusted for the
increase or decrease in fair value of our real estate assets and
encumbrances relative to their respective costs bases.
Further, we calculate NAV per share by dividing NAV by our total
shares outstanding (inclusive of both our common stock and OP Units
held by non-controlling third parties). A reconciliation of
NAV to total equity, to which the Company believes is the most
directly-comparable GAAP measure, is provided below (dollars in
thousands, except per-share amount):
Total
equity per balance sheet |
|
|
$ |
278,970 |
|
Fair value adjustment for long-term assets: |
|
|
|
Less: net cost basis of tangible and intangible real estate
holdings(1) |
$ |
(794,769 |
) |
|
|
Plus: estimated fair value of real estate holdings(2) |
877,485 |
|
|
|
Net fair value adjustment for real estate holdings |
|
|
82,716 |
|
Fair value adjustment for long-term liabilities: |
|
|
|
Plus: book value of aggregate long-term indebtedness(3) |
513,699 |
|
|
|
Less: fair value of aggregate long-term
indebtedness(3)(4) |
(514,233 |
) |
|
|
Net fair value adjustment for long-term indebtedness |
|
|
(534 |
) |
Estimated NAV |
|
|
361,152 |
|
Less: fair value of Series B Preferred Stock(5) |
|
|
(118,897 |
) |
Estimated NAV available to common stockholders and
non-controlling OP Unitholders |
|
|
$ |
242,255 |
|
Total common shares and OP Units outstanding(6) |
|
|
21,224,961 |
|
Estimated NAV per common share and OP
Unit |
|
|
$ |
11.41 |
|
|
|
|
|
|
|
(1) Consists of the initial acquisition price (including the
costs allocated to both tangible and intangible assets acquired and
liabilities assumed), plus subsequent improvements and other
capitalized costs associated with the properties, and adjusted for
accumulated depreciation and amortization.(2) As determined by
the Company's valuation policy and approved by its board of
directors.(3) Includes the principal balances outstanding of
all long-term borrowings (consisting of notes and bonds payable)
and the Series A Term Preferred Stock.(4) Long-term notes and
bonds payable were valued using a discounted cash flow model.
The Series A Term Preferred Stock was valued based on its closing
stock price as of December 31, 2019.(5) Valued at the
security's liquidation value.(6) Includes 20,936,658 shares of
common stock and 288,303 OP Units held by non-controlling OP
Unitholders.
Comparison of our estimated NAV and estimated NAV per share to
similarly-titled measures for other REITs may not necessarily be
meaningful due to possible differences in the calculation or
application of the definition of NAV used by such REITs. In
addition, the trading price of our common shares may differ
significantly from our most recent estimated NAV per share
calculation. The Company’s independent auditors have neither
audited nor reviewed our calculation of NAV or NAV per share.
For a full explanation of our valuation policy, please read the
Company’s Form 10-K, filed today with the SEC.
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS:Certain statements
in this press release, including, but not limited to, the Company’s
ability to maintain or grow its portfolio and FFO, expected
increases in capitalization rates, benefits from increases in
farmland values, increases in operating revenues, and the increase
in NAV per share, are “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as
amended. These forward-looking statements inherently involve
certain risks and uncertainties, although they are based on the
Company’s current plans that are believed to be reasonable as of
the date of this press release. Factors that may cause actual
results to differ materially from these forward-looking statements
include, but are not limited to, the Company’s ability to procure
financing for investments, downturns in the current economic
environment, the performance of its tenants, the impact of
competition on its efforts to renew existing leases or re-lease
real property, and significant changes in interest rates.
Additional factors that could cause actual results to differ
materially from those stated or implied by its forward-looking
statements are disclosed under the caption “Risk Factors” within
the Company's Form 10-K for the fiscal year ended December 31,
2019, as filed with the SEC on February 19, 2020, and certain other
documents filed with the SEC from time to time. The Company
cautions readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date
made. The Company undertakes no obligation to publicly update
or revise any forward-looking statements, whether as a result of
new information, future events, or otherwise, except as required by
law.
Gladstone Land Corporation, +1-703-287-5893
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