Gladstone Land Corporation (NASDAQ:LAND) (the “Company”) today
reported financial results for the third quarter ended September
30, 2016.
A reconciliation 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, to net income, to which the Company believes is the most
directly-comparable GAAP measure for each, and a computation of
fully-diluted net income, FFO, CFFO and AFFO and fully-diluted net
income per weighted-average share is set forth in the Summary
Information table below, and a description of each of FFO, CFFO and
AFFO is located at the end of this press release. In
addition, a description of net asset value (“NAV”), a non-GAAP
financial measure, and a reconciliation to total equity, to which
the Company believes is its most directly-comparable GAAP measure,
is also located at the end of this press release. All
per-share references are to fully-diluted, weighted-average shares
of common stock of the Company unless otherwise noted. For
further detail, please refer to the Company’s Quarterly Report on
Form 10-Q (the “Form 10-Q”), filed today with the U.S. Securities
and Exchange Commission (the “SEC”), which can be retrieved from
the SEC’s website at www.SEC.gov or from the Company’s website
at www.GladstoneLand.com.
Please note that the limited information that follows in this
press release is not adequate for making an informed investment
judgment.
Summary Information:
|
|
|
For and As of |
|
|
|
|
|
|
|
the Quarters Ended |
|
Change |
|
Change |
|
|
|
9/30/2016 |
|
6/30/2016 |
|
($ / #) |
|
(%) |
Operating Data: |
|
|
|
|
|
|
|
Total operating revenues |
$ |
4,469,174 |
|
|
$ |
4,244,441 |
|
|
$ |
224,733 |
|
|
|
5.3 |
% |
Total operating expenses, net of credits |
|
(2,663,340 |
) |
|
|
(2,650,404 |
) |
|
|
(12,936 |
) |
|
|
0.5 |
% |
Other expenses, net |
|
(1,771,233 |
) |
|
|
(1,478,177 |
) |
|
|
(293,056 |
) |
|
|
19.8 |
% |
Net income available to common stockholders and
OP Unit holders |
$ |
34,601 |
|
|
$ |
115,860 |
|
|
$ |
(81,259 |
) |
|
|
-70.1 |
% |
Plus: Real estate and intangible depreciation and
amortization |
|
1,431,846 |
|
|
|
1,334,973 |
|
|
|
96,873 |
|
|
|
7.3 |
% |
FFO available to common stockholders and OP
Unit holders |
$ |
1,466,447 |
|
|
$ |
1,450,833 |
|
|
$ |
15,614 |
|
|
|
1.1 |
% |
Plus: Acquisition-related expenses |
|
122,841 |
|
|
|
24,648 |
|
|
|
98,193 |
|
|
|
398.4 |
% |
Plus: Acquisition-related accounting fees |
|
50,500 |
|
|
|
12,900 |
|
|
|
37,600 |
|
|
|
291.5 |
% |
CFFO available to common stockholders and OP
Unit holders |
$ |
1,639,788 |
|
|
$ |
1,488,381 |
|
|
$ |
151,407 |
|
|
|
10.2 |
% |
Net adjustment for cash rents(1) |
|
(146,192 |
) |
|
|
(66,606 |
) |
|
|
(79,586 |
) |
|
|
119.5 |
% |
Plus: Amortization of deferred financing
costs |
|
65,584 |
|
|
|
35,372 |
|
|
|
30,212 |
|
|
|
85.4 |
% |
AFFO available to common stockholders and OP
Unit holders |
$ |
1,559,180 |
|
|
$ |
1,457,147 |
|
|
$ |
102,033 |
|
|
|
7.0 |
% |
|
|
|
|
|
|
|
|
|
|
Share and Per-Share Data: |
|
|
|
|
|
|
|
Weighted-average common shares outstanding – basic and
diluted |
|
10,018,331 |
|
|
|
9,992,941 |
|
|
|
25,390 |
|
|
|
0.3 |
% |
Weighted-average OP Units outstanding(2) |
|
854,116 |
|
|
|
745,879 |
|
|
|
108,237 |
|
|
|
14.5 |
% |
Weighted-average total shares outstanding |
|
10,872,447 |
|
|
|
10,738,820 |
|
|
|
133,627 |
|
|
|
1.2 |
% |
|
|
|
|
|
|
|
|
|
|
Diluted net income per weighted-average total
share |
$ |
0.003 |
|
|
$ |
0.011 |
|
|
$ |
(0.008 |
) |
|
|
-70.5 |
% |
Diluted FFO per weighted-average total share |
$ |
0.135 |
|
|
$ |
0.135 |
|
|
$ |
(0.000 |
) |
|
|
-0.2 |
% |
Diluted CFFO per weighted-average total share |
$ |
0.151 |
|
|
$ |
0.139 |
|
|
$ |
0.012 |
|
|
|
8.8 |
% |
Diluted AFFO per weighted-average total share |
$ |
0.143 |
|
|
$ |
0.136 |
|
|
$ |
0.008 |
|
|
|
5.7 |
% |
Cash distributions declared per common share |
$ |
0.124 |
|
|
$ |
0.124 |
|
|
$ |
- |
|
|
|
0.0 |
% |
|
|
|
|
|
|
|
|
|
|
Balance Sheet Data: |
|
|
|
|
|
|
|
Net investments in real estate, at cost(3) |
$ |
308,737,982 |
|
|
$ |
268,725,765 |
|
|
$ |
40,012,217 |
|
|
|
14.9 |
% |
Total assets |
$ |
316,306,732 |
|
|
$ |
275,185,109 |
|
|
$ |
41,121,623 |
|
|
|
14.9 |
% |
Total indebtedness(4) |
$ |
217,230,127 |
|
|
$ |
181,526,562 |
|
|
$ |
35,703,565 |
|
|
|
19.7 |
% |
Total equity |
$ |
86,545,055 |
|
|
$ |
82,227,141 |
|
|
$ |
4,317,914 |
|
|
|
5.3 |
% |
Total common shares + OP Units outstanding(2) |
|
11,240,181 |
|
|
|
10,738,820 |
|
|
|
501,361 |
|
|
|
4.7 |
% |
|
|
|
|
|
|
|
|
|
|
Other Data: |
|
|
|
|
|
|
|
Cash flows from operations |
$ |
947,327 |
|
|
$ |
2,030,785 |
|
|
$ |
(1,083,458 |
) |
|
|
-53.4 |
% |
Farms owned |
|
56 |
|
|
|
47 |
|
|
|
9 |
|
|
|
19.1 |
% |
Acres owned |
|
33,800 |
|
|
|
23,456 |
|
|
|
10,344 |
|
|
|
44.1 |
% |
Occupancy rate |
|
100.0 |
% |
|
|
100.0 |
% |
|
|
0.0 |
% |
|
|
0.0 |
% |
Farmland portfolio value |
$ |
379,983,991 |
|
|
$ |
337,171,991 |
|
|
$ |
42,812,000 |
|
|
|
12.7 |
% |
Net asset value per share |
$ |
13.68 |
|
|
$ |
13.68 |
|
|
$ |
- |
|
|
|
0.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) This adjustment removes the effects of
straight-lining rental income, as well as the amortization related
to above-market lease values 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. |
(2) There were 1,215,306 and 745,879 OP Units
held by non-controlling limited partners as of September 30 and
June 30, 2016, respectively. |
(3) 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. |
(4) Includes the principal balances outstanding
of all borrowings, including mortgage notes and bonds payable and
lines of credit, plus our Term Preferred Stock. |
|
Highlights for the
Quarter:
- Property Acquisitions: Acquired 9 new
farms, consisting of 10,344 total acres, for approximately $40.4
million. On a weighted-average basis, these farms were
acquired at an initial, overall capitalization rate of 4.8%, with
provisions within certain of the leases expected to drive that
figure higher in future years;
- Leasing Activities: Renewed our final
2016 lease expiration (a property in Salinas, CA) with the existing
tenant at a net increase in annualized income of 9.0% compared to
that of the previous lease;
- Financing
Activities:
- Obtained $4.1 million in new, long-term borrowings at an
expected, weighted-average effective interest rate of 3.10%, which
is fixed for seven years;
- Issued $28.8 million of 6.375% term preferred stock, which is
mandatorily-redeemable in five years (the “Term Preferred Stock”);
and
- In connection with certain acquisitions during the quarter,
issued 469,427 units of limited partnership interests in our
operating partnership (“OP Units”) at a weighted-average price of
$11.31 per OP Unit, constituting an aggregate fair value of
approximately $5.3 million as of the acquisition date; and
- Paid Distributions:
Paid monthly cash distributions of $0.04125 per share of common
stock (including OP Units held outside of the Company) for each of
July, August, and September, 2016.
Q3 2016 Results: Net income for the
quarter was approximately $35,000, or $0.00 per share, compared to
approximately $116,000, or $0.01 per share, in the prior
quarter. AFFO for the quarter was approximately $1.6 million,
or $0.14 per share, and increased by approximately 7.0% from the
prior quarter, primarily due to additional rental income recorded
as a result of our recent acquisitions and a decrease in the
performance-based incentive fee earned by our adviser during the
quarter, partially offset by additional dividend payments made on
our Term Preferred Stock, which was not outstanding during the
prior quarter. We declared and paid distributions during the
quarter of approximately $0.12 per share.
For the third quarter, our core operating expenses (which we
define as our total operating expenses, less depreciation and
amortization expense, acquisition-related expenses, any fee
credits, and certain other one-time expenses) decreased by
approximately $182,000, or 14.1%, from the previous quarter,
primarily due to a decrease in the incentive fee earned by our
adviser. Excluding the incentive fees earned in each of the
comparable quarters, our core operating expenses decreased by
approximately $45,000, or 4.0%, from the previous quarter,
primarily due to lower general and administrative expenses (due to
writing off approximately $64,000 of bad debt expense in the prior
quarter) and a decrease in stockholder-related expenses.
These decreases were partially offset by additional professional
fees incurred in connection with the level of acquisitions we had
during the quarter and for updating the valuations of certain of
our farms via third-party appraisals.
Our NAV per share remained flat during the quarter at $13.68 as
of September 30, 2016. The farms that were re-valued during
the quarter resulted in a net appreciation of approximately $2.5
million, or $0.22 per share, the majority of which came from
valuations as determined by third-party appraisers. However,
this increase was offset by the distributions we paid to our
shareholders, as well as the dilutive effect of issuing new OP
Units at prices below our NAV per share.
Subsequent to September 30,
2016:
- Property Acquisition: Acquired a
producing almond orchard in California, consisting of 197 acres,
for $6.5 million. The farm was acquired at an initial
capitalization rate of 5.0% but is expected to yield between 7.0%
and 10.0% when including the revenue-sharing portion of the
lease;
- Financing
Activities:
- Amended our credit facility with Metropolitan Life Insurance
Company (“MetLife”), through which we did the following:
- Expanded the overall size of the facility from $125 million to
$200 million;
- Reduced the interest rate on approximately $85.9 million of
existing borrowings by 19 basis points, resulting in annual savings
of approximately $163,000, and fixed the new rate at 3.16% for 10
years;
- Increased the overall loan-to-value ratio on the underlying
collateral from 58% to 60%, which, in conjunction with an increase
in overall collateral value as a result of having certain
properties re-appraised, increased our overall availability under
the facility by approximately $28.3 million;
- Obtained $25.5 million in new, long-term borrowings at an
expected, weighted-average effective interest rate of 3.16%, which
rate is fixed for 10 years. $21.0 million of these proceeds
were used to repay a portion of our variable-rate line of credit
with MetLife; and
- Increased
Distributions: Increased our
distribution run rate by 3.0%, declaring monthly cash distributions
of $0.0425 per share of common stock (including OP Units held
outside of the Company) for each of October, November, and
December, 2016. This marks our fourth distribution increase
over the past 22 months, during which time we’ve increased the
distribution run rate by a total of 41.7%.
Comments from the Company’s Chief Executive Officer,
David Gladstone: “We had a very strong quarter in
terms of both portfolio growth and operating results. From a
portfolio standpoint, we had our most active quarter to date,
adding over 10,000 acres of new farmland to our portfolio for
approximately $40.4 million. These new farms are spread
across three different states and grow a variety of crops, adding
to the overall diversity of our portfolio and increasing our tenant
base to 40 different tenants, all of whom are unrelated
parties. From an operational standpoint, we had our strongest
quarter to date, as we further increased our AFFO per share and
fully covered our distributions for the fourth consecutive
quarter. This growth also allowed us to increase the
distribution rate to our shareholders for the fourth time in the
past 22 months, and as we continue to grow our AFFO per share
through additional acquisitions and re-leasing existing farms at
increased rental rates, we expect the coverage ability provided by
AFFO to increase, as well. We believe that investing in our
stock is both an income investment, as well as an asset
appreciation investment, as we expect that the value of the
farmland we own will increase at a rate that outpaces that of
inflation.”
Conference Call for
Stockholders: The Company will hold a conference
call on Tuesday, November 15, 2016, 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
December 15, 2016. To hear the replay, please dial (855)
859-2056 and use conference number 46698640. The live audio
broadcast of the Company’s quarterly conference call will also be
available online at the Company’s website, www.GladstoneLand.com.
The event will also be archived and available for replay on the
Company’s website through January 15, 2017.
About Gladstone Land
Corporation:Gladstone Land is a
publicly-traded real estate investment trust that invests in
farmland located in major agricultural markets in the U.S., which
it leases to farmers, and pays monthly distributions to its
stockholders. The Company intends to report the current fair
value of its farmland on a quarterly basis; as of September 30,
2016, the estimated net asset value of the Company was $13.68 per
share. Gladstone Land currently owns 57 farms, comprised of
33,997 acres in 7 different states across the U.S., valued at
approximately $386 million. Its acreage is predominantly
concentrated in locations where its tenants are able to grow fresh
produce annual row crops, such as berries and vegetables, which are
planted and harvested annually or more frequently, as well as
permanent crops, such as almonds, blueberries, and pistachios,
which are planted every 10 to 20-plus years. The Company also
may acquire property related to farming, such as cooling
facilities, processing buildings, packaging facilities, and
distribution centers. Gladstone Land has paid 45 consecutive
monthly cash distributions on its common stock since its initial
public offering in January 2013. The current per-share
distribution is $0.0425 per month, or $0.51 per year.
Additional information can be found at www.GladstoneLand.com and
www.GladstoneFarms.com.
Owners or brokers who have farmland for sale in the U.S. should
contact:
- Bill Frisbie at (703) 287-5839 or Bill.F@GladstoneLand.com –
Eastern U.S.
- Bill Reiman at (805) 263-4778 or Bill.R@GladstoneLand.com –
Western U.S.
- Bill Hughes at (618) 606-2887 or Bill.H@GladstoneLand.com –
Midwest U.S.
For stockholder information on Gladstone Land, call (703)
287-5893. Information on the business activities of all of
the Gladstone funds can be found at
www.GladstoneCompanies.com. For Investor Relations inquiries
related to any of the monthly dividend paying Gladstone funds,
please visit www.Gladstone.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-related expenses, 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.
The Company’s presentation of FFO, as defined by NAREIT, or CFFO
or AFFO, as defined above, 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 an independent, third-party appraiser; 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 on a fee simple, “As
Is” basis, 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, 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. A reconciliation of NAV
to total equity, to which the Company believes is the most
directly-comparable GAAP measure, is provided below:
|
|
|
|
|
|
|
Total
equity per balance sheet |
|
|
$ |
86,545,055 |
|
|
Fair value
adjustment for long-term assets: |
|
|
|
|
Less: net cost basis of tangible and intangible real
estate holdings(1) |
|
$ |
(308,737,982 |
) |
|
|
Plus: estimated fair value of real estate
holdings(2) |
|
|
379,983,991 |
|
|
|
Net fair value adjustment for real estate holdings |
|
|
|
71,246,009 |
|
|
Fair value
adjustment for long-term liabilities: |
|
|
|
|
Plus: book value of aggregate long-term
indebtedness(3) |
|
|
195,797,127 |
|
|
|
Less: fair value of aggregate long-term
indebtedness(3)(4) |
|
|
(199,780,193 |
) |
|
|
Net fair value adjustment for long-term indebtedness |
|
|
|
(3,983,066 |
) |
|
Estimated NAV |
|
|
$ |
153,807,998 |
|
|
Total common shares outstanding(5) |
|
|
|
11,240,181 |
|
|
Estimated NAV per share |
|
|
$ |
13.68 |
|
|
|
|
|
|
|
|
(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 mortgage notes and bonds
payable) and the Term Preferred Stock. |
|
(4) Long-term mortgage notes and bonds payable valued using a
discounted cash flow model. Term Preferred Stock valued based
on its closing stock price as of September 30, 2016. |
|
(5) Includes 1,215,306 OP Units held outside of the Company,
representing 10.8% of all OP Units issued and outstanding. |
|
|
Comparison of 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-Q, filed today with the SEC.
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 net asset value 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" of its Form 10-K for the fiscal year ended December 31,
2015, as filed with the SEC on February 23, 2016, and its Form 10-Q
for the three and nine months ended September 30, 2016, as filed
with the SEC of even date herewith. 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
Gladstone Land (NASDAQ:LAND)
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Gladstone Land (NASDAQ:LAND)
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From Apr 2023 to Apr 2024