Gladstone Land Corporation (Nasdaq:LAND) (“Gladstone Land” or the
“Company”) today reported financial results for the fourth quarter
and year ended December 31, 2017.
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 (loss) income, which the Company
believes is the most directly-comparable GAAP measure for each, and
a computation of fully-diluted net (loss) income, FFO, CFFO, and
AFFO per weighted-average share is set forth in the Quarterly
Summary Information tables 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, 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 Annual Report on Form 10-K
(the “Form 10-K”), filed today with the U.S. Securities and
Exchange Commission (the “SEC”), which is available on the SEC’s
website at www.SEC.gov and the Company’s website at
www.GladstoneLand.com.
Please note that the limited information that follows in this
press release is a summary and is not adequate for making an
informed investment judgment.
|
Quarterly Summary
Information(Dollars in thousands, except per-share
amounts) |
|
|
|
|
|
|
|
For and As of the Quarters Ended |
|
Change |
|
Change |
|
12/31/2017 |
|
9/30/2017 |
|
($ / #) |
|
(%) |
Operating Data: |
|
|
|
|
|
|
|
Total operating revenues |
$ |
6,812 |
|
|
$ |
6,564 |
|
|
$ |
248 |
|
|
3.8 |
% |
Total operating expenses, net of credits |
(3,864 |
) |
|
(3,645 |
) |
|
(219 |
) |
|
6.0 |
% |
Other expenses, net |
(3,164 |
) |
|
(3,166 |
) |
|
2 |
|
|
(0.1 |
)% |
Net (loss) income available to common stockholders and OP
Unitholders |
$ |
(216 |
) |
|
$ |
(247 |
) |
|
$ |
31 |
|
|
(12.6 |
)% |
Plus: Real estate and intangible depreciation and
amortization |
2,114 |
|
|
2,051 |
|
|
63 |
|
|
3.1 |
% |
(Less) plus: (Gains) losses on disposals of real estate
assets |
(56 |
) |
|
78 |
|
|
(134 |
) |
|
(171.8 |
)% |
FFO available to common stockholders and OP
Unitholders |
$ |
1,842 |
|
|
$ |
1,882 |
|
|
$ |
(40 |
) |
|
(2.1 |
)% |
Plus: Acquisition-related expenses |
60 |
|
|
22 |
|
|
38 |
|
|
172.7 |
% |
Plus: Acquisition-related accounting fees |
14 |
|
|
47 |
|
|
(33 |
) |
|
(70.2 |
)% |
CFFO available to common stockholders and OP
Unitholders |
$ |
1,916 |
|
|
$ |
1,951 |
|
|
$ |
(35 |
) |
|
(1.8 |
)% |
Net rent adjustment(1) |
(45 |
) |
|
(174 |
) |
|
129 |
|
|
(74.1 |
)% |
Plus: Amortization of deferred financing costs |
159 |
|
|
130 |
|
|
29 |
|
|
22.3 |
% |
AFFO available to common stockholders and OP
Unitholders |
$ |
2,030 |
|
|
$ |
1,907 |
|
|
$ |
123 |
|
|
6.4 |
% |
|
|
|
|
|
|
|
|
Share and Per-Share Data: |
|
|
|
|
|
|
|
Weighted-average common shares outstanding – basic and diluted |
13,666,560 |
|
|
12,271,925 |
|
|
1,394,635 |
|
|
11.4 |
% |
Weighted-average OP Units outstanding(2) |
1,095,159 |
|
|
1,444,435 |
|
|
(349,276 |
) |
|
(24.2 |
)% |
Weighted-average total shares outstanding |
14,761,719 |
|
|
13,716,360 |
|
|
1,045,359 |
|
|
7.6 |
% |
|
|
|
|
|
|
|
|
Diluted net (loss) income per weighted-average total share |
$ |
(0.015 |
) |
|
$ |
(0.018 |
) |
|
$ |
0.003 |
|
|
18.7 |
% |
Diluted FFO per weighted-average total share |
$ |
0.125 |
|
|
$ |
0.137 |
|
|
$ |
(0.012 |
) |
|
(9.1 |
)% |
Diluted CFFO per weighted-average total share |
$ |
0.130 |
|
|
$ |
0.142 |
|
|
$ |
(0.012 |
) |
|
(8.7 |
)% |
Diluted AFFO per weighted-average total share |
$ |
0.138 |
|
|
$ |
0.139 |
|
|
$ |
(0.002 |
) |
|
(1.1 |
)% |
Cash distributions declared per total share |
$ |
0.132 |
|
|
$ |
0.132 |
|
|
$ |
0.000 |
|
|
0.2 |
% |
|
|
|
|
|
|
|
|
Balance Sheet Data: |
|
|
|
|
|
|
|
Net investments in real estate, at cost(3) |
$ |
451,864 |
|
|
$ |
447,332 |
|
|
$ |
4,532 |
|
|
1.0 |
% |
Total assets |
$ |
462,278 |
|
|
$ |
456,560 |
|
|
$ |
5,718 |
|
|
1.3 |
% |
Total indebtedness(4) |
$ |
331,738 |
|
|
$ |
325,986 |
|
|
$ |
5,752 |
|
|
1.8 |
% |
Total equity |
$ |
117,951 |
|
|
$ |
118,986 |
|
|
$ |
(1,035 |
) |
|
(0.9 |
)% |
Total common shares + OP Units outstanding(2) |
14,799,679 |
|
|
14,712,408 |
|
|
87,271 |
|
|
0.6 |
% |
|
|
|
|
|
|
|
|
Other Data: |
|
|
|
|
|
|
|
Cash flows from operations |
$ |
(1,155 |
) |
|
$ |
2,993 |
|
|
$ |
(4,148 |
) |
|
(138.6 |
)% |
Farms owned |
73 |
|
|
72 |
|
|
1 |
|
|
1.4 |
% |
Acres owned |
63,014 |
|
|
61,794 |
|
|
1,220 |
|
|
2.0 |
% |
Occupancy rate(5) |
100.0 |
% |
|
100.0 |
% |
|
— |
|
|
— |
% |
Farmland portfolio value |
$ |
533,297 |
|
|
$ |
531,664 |
|
|
$ |
1,633 |
|
|
0.3 |
% |
Net asset value per share |
$ |
13.96 |
|
|
$ |
14.15 |
|
|
$ |
(0.19 |
) |
|
(1.3 |
)% |
(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 1,008,105 and 1,227,383 OP Units (as defined below) held by
non-controlling limited partners as of December 31, 2017, and
September 30, 2017,
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 indebtedness, including
our lines of credit, mortgage notes and bonds payable, and our
Series A Term Preferred
Stock.(5) Includes one
farm currently leased (on a temporary basis) to our taxable REIT
subsidiary.
|
Annual Summary
Information(Dollars in thousands, except per-share
amounts) |
|
|
|
|
|
|
|
For and As of the Years Ended |
|
Change |
|
Change |
|
12/31/2017 |
|
12/31/2016 |
|
($ / #) |
|
(%) |
Operating Data: |
|
|
|
|
|
|
|
Total operating revenues |
$ |
25,122 |
|
|
$ |
17,317 |
|
|
$ |
7,805 |
|
|
45.1 |
% |
Total operating expenses, net of credits |
(13,746 |
) |
|
(10,261 |
) |
|
(3,485 |
) |
|
34.0 |
% |
Other expenses, net |
(11,410 |
) |
|
(6,583 |
) |
|
(4,827 |
) |
|
73.3 |
% |
Net (loss) income available to common stockholders and OP
Unitholders |
$ |
(34 |
) |
|
$ |
473 |
|
|
$ |
(507 |
) |
|
(107.2 |
)% |
Plus: Real estate and intangible depreciation and
amortization |
7,237 |
|
|
5,187 |
|
|
2,050 |
|
|
39.5 |
% |
Plus: Loss on dispositions of real estate assets, net |
21 |
|
|
— |
|
|
21 |
|
|
NM |
FFO available to common stockholders and OP
Unitholders |
$ |
7,224 |
|
|
$ |
5,660 |
|
|
$ |
1,564 |
|
|
27.6 |
% |
Plus: Acquisition-related expenses |
127 |
|
|
246 |
|
|
(119 |
) |
|
(48.4 |
)% |
Plus: Acquisition-related accounting fees |
97 |
|
|
115 |
|
|
(18 |
) |
|
(15.7 |
)% |
CFFO available to common stockholders and OP
Unitholders |
$ |
7,448 |
|
|
$ |
6,021 |
|
|
$ |
1,427 |
|
|
23.7 |
% |
Net rent adjustment(1) |
(509 |
) |
|
(439 |
) |
|
(70 |
) |
|
15.9 |
% |
Plus: Amortization of deferred financing costs |
524 |
|
|
241 |
|
|
283 |
|
|
117.4 |
% |
AFFO available to common stockholders and OP
Unitholders |
$ |
7,463 |
|
|
$ |
5,823 |
|
|
$ |
1,640 |
|
|
28.2 |
% |
|
|
|
|
|
|
|
|
Share and Per-Share Data: |
|
|
|
|
|
|
|
Weighted-average common shares outstanding – basic and diluted |
12,055,791 |
|
|
10,007,350 |
|
|
2,048,441 |
|
|
20.5 |
% |
Weighted-average OP Units outstanding(2) |
1,358,790 |
|
|
766,351 |
|
|
592,439 |
|
|
77.3 |
% |
Weighted-average total shares outstanding |
13,414,581 |
|
|
10,773,701 |
|
|
2,640,880 |
|
|
24.5 |
% |
|
|
|
|
|
|
|
|
Diluted net (loss) income per weighted-average total share |
$ |
(0.003 |
) |
|
$ |
0.044 |
|
|
$ |
(0.046 |
) |
|
(105.8 |
)% |
Diluted FFO per weighted-average total share |
$ |
0.539 |
|
|
$ |
0.525 |
|
|
$ |
0.013 |
|
|
2.5 |
% |
Diluted CFFO per weighted-average total share |
$ |
0.555 |
|
|
$ |
0.559 |
|
|
$ |
(0.004 |
) |
|
(0.7 |
)% |
Diluted AFFO per weighted-average total share |
$ |
0.556 |
|
|
$ |
0.540 |
|
|
$ |
0.016 |
|
|
2.9 |
% |
Cash distributions declared per total share |
$ |
0.524 |
|
|
$ |
0.495 |
|
|
$ |
0.029 |
|
|
5.8 |
% |
|
|
|
|
|
|
|
|
Balance Sheet Data: |
|
|
|
|
|
|
|
Net investments in real estate, at cost(3) |
$ |
451,864 |
|
|
$ |
325,747 |
|
|
$ |
126,117 |
|
|
38.7 |
% |
Total assets |
$ |
462,278 |
|
|
$ |
333,985 |
|
|
$ |
128,293 |
|
|
38.4 |
% |
Total indebtedness(4) |
$ |
331,738 |
|
|
$ |
237,509 |
|
|
$ |
94,229 |
|
|
39.7 |
% |
Total equity |
$ |
117,951 |
|
|
$ |
87,777 |
|
|
$ |
30,174 |
|
|
34.4 |
% |
Total common shares + OP Units outstanding(2) |
14,799,679 |
|
|
11,474,133 |
|
|
3,325,546 |
|
|
29.0 |
% |
|
|
|
|
|
|
|
|
Other Data: |
|
|
|
|
|
|
|
Cash flows from operations |
$ |
6,515 |
|
|
$ |
8,403 |
|
|
$ |
(1,888 |
) |
|
(22.5 |
)% |
Farms owned |
73 |
|
|
58 |
|
|
15 |
|
|
25.9 |
% |
Acres owned |
63,014 |
|
|
50,592 |
|
|
12,422 |
|
|
24.6 |
% |
Occupancy rate(5) |
100.0 |
% |
|
100.0 |
% |
|
— |
|
|
— |
% |
Farmland portfolio value |
$ |
533,297 |
|
|
$ |
401,122 |
|
|
$ |
132,175 |
|
|
33.0 |
% |
Net asset value per share |
$ |
13.96 |
|
|
$ |
14.21 |
|
|
$ |
(0.25 |
) |
|
(1.8 |
)% |
(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 1,008,105 and 1,449,258 OP Units (as defined below) held by
non-controlling limited partners as of December 31, 2017, and
December 31, 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 indebtedness, including
our lines of credit, mortgage notes and bonds payable, and our
Series A Term Preferred
Stock.(5) Includes one
farm currently leased (on a temporary basis) to our taxable REIT
subsidiary.
Highlights for fiscal year
2017:
- Property Acquisitions: Acquired 16 new
farms, consisting of 12,641 total acres across 6 states, for
approximately $128.7 million. On a weighted-average basis,
these farms were acquired at an initial, minimum net capitalization
rate of 5.3%; however, all of the leases on these farms contain
certain provisions (e.g., revenue-sharing payments or annual rent
escalations) that are expected to drive rents higher in future
years.
- Property Disposition: Sold a 219-acre
farm in Hillsborough County, Florida, to the existing tenant for
$3.9 million, recognizing a net gain on the sale (inclusive of
closing costs) of approximately $85,000.
- Leasing Activities: Extended or renewed
10 agricultural leases that were originally scheduled to expire in
either 2017 or 2018. Each of these leases were renewed for
additional terms ranging between one and five years with aggregate
annualized rents of approximately $2.2 million, representing an
aggregate decrease of approximately $167,000 (or approximately
7.0%) from that of the prior leases. No downtime, leasing
commissions, or tenant improvements, were incurred in connection
with any of these renewals.
- Project Completion: Completed the development
of an almond orchard on one of our California properties (which
consists of three separate farms) at a total cost of approximately
$8.4 million. As a result, we expect to receive approximately
$5.2 million of additional rent throughout the term of the lease on
the farm, which expires in January 2031.
- Financing Activities:
- New Long-term Borrowings: Obtained an
aggregate of $108.7 million of new, long-term borrowings from 8
different lenders (including 4 new lenders) at an expected
weighted-average effective interest rate of 3.62%. On a
weighted-average basis, these rates are fixed for the next 7.1
years.
- Facility Expansion: Expanded the size of
the credit facility with our largest lender and reduced the unused
fee on all borrowings under the facility (subject to amounts
drawn).
- Equity Activities:
- Follow-on Common Stock Offering:
Completed two overnight common stock offerings, issuing a total of
2,975,749 new shares for net proceeds of approximately $32.9
million.
- ATM Program: Issued and sold 544,075
shares of common stock under our ATM Program for net proceeds of
approximately $7.0 million.
- Increased and Paid Distributions:
- Increased our monthly distributions four times during the year,
resulting in a total increase in our distribution run rate of
3.8%.
- Paid total cash distributions during the year of $0.52 per
share of common stock (including outstanding common units of
limited partnership interests in Gladstone Land Limited Partnership
(“OP Units”) that are held outside of the Company).
Q4 2017 Results: Net loss for the quarter
was approximately $216,000, or $0.01 per share, compared to
approximately $247,000, or $0.02 per share, in the prior
quarter. AFFO for the quarter was approximately $2.0 million,
or $0.14 per share, and increased by 6.4% from the prior quarter,
primarily as a result of a crop share payment received from one of
our pistachio farms in California and additional rental revenues
earned on our recent acquisitions, partially offset by the lost
rental income from the one farm currently leased (on a temporary
basis) to our taxable REIT subsidiary (“TRS”) (which rental income
was eliminated in consolidation). AFFO per share decreased by
1.1% from the prior quarter, primarily as a result of the
additional shares issued in connection with an overnight common
stock offering completed in September 2017 and through our ATM
Program during the quarter. Our core operating expenses
(which we define as our total operating expenses, less depreciation
and amortization expense, acquisition-related expenses, and certain
other one-time expenses) increased by approximately $64,000 from
the prior quarter, primarily due to approximately $149,000 of
aggregate deferred rent balances written off due to two early lease
terminations and increased repairs and maintenance expenses
incurred on our sole gross-leased farm, partially offset by a
decrease in related-party fees. The aggregate amount of fees
recorded as due to our adviser and administrator decreased by
approximately $142,000 from the prior quarter, primarily due to no
performance-based incentive fee being earned by our adviser during
the current quarter. Cash flows from operations for the
quarter and year ended December 31, 2017, were impacted by the
following: (i) the receipt of two years of prepaid rent upon
the closing of three farms we acquired during the three months
ended March 31, 2016 (approximately $1.6 million of which prepaid
rent related to cash rent earned during the year ended
December 31, 2017), and (ii) approximately $1.3 million of
costs paid during the three months ended December 31, 2017, in
connection with the initial operations on the farm leased by our
TRS. Our NAV per share decreased by $0.19 from the prior
quarter to $13.96 at December 31, 2017, primarily driven by
ongoing capital improvements made on certain of our farms, which
won't be reflected in the properties' fair values until the
respective projects are completed.
FY 2017 Results:
Net loss for the year was approximately $34,000, or $0.00 per
share, compared to net income of approximately $473,000, or $0.04
per share, in the prior year. AFFO for the year was
approximately $7.5 million, or $0.56 per share, compared to
approximately $5.8 million, or $0.54 per share, in the prior
year. AFFO increased primarily due to additional rental
income earned on our recent acquisitions, partially offset by
additional interest expense due to increased overall borrowings
(including our Series A Term Preferred Stock).
Subsequent to December 31,
2017:
- Property Acquisition: Acquired a
161-acre farm in Kern County, California, for approximately $2.9
million.
- Equity Activity:
- ATM Program: Issued and sold 96,590
shares of common stock under our ATM Program for net proceeds of
approximately $1.3 million.
- Series B Preferred Stock: Launched a
continuous public offering of up to $150.0 million of 6.00% Series
B Cumulative Redeemable Preferred Stock (the “Series B Preferred
Stock”), which is expected to be sold on a “reasonable best
efforts” basis over the next five years.
- Increased Distributions: Increased our
distribution run rate by 0.3%, declaring monthly cash distributions
of $0.04425 per share of common stock (including OP Units held
outside of the Company) for each of January, February, and March
2018. This marks our ninth distribution increase over the
past 37 months, during which time we’ve increased the distribution
run rate by a total of 47.5%.
Comments from David Gladstone, President and CEO of the
Gladstone Land: “2017 was a year of strong growth
for us, as we added $129 million of new farms and further
diversified our farmland holdings by expanding into two new states
and increasing both the number of tenants who lease farms from us
and the number of different crops grown on our farms. We are
looking forward to continuing this momentum into the new year, and
we also have several farms with revenue-sharing rent components
that are scheduled to come online during 2018. We increased
our distributions to shareholders four times during 2017 for a
total increase in our distribution run rate of 3.8%, and we've
already increased it once in 2018, as well. We hope to be
able to continue to meet our goal of frequently increasing our
distributions in order to stay ahead of inflation.”
Conference Call for
Stockholders: The Company will hold a conference
call on Wednesday, February 21, 2018, 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 28, 2018. To hear the replay,
please dial (855) 859-2056, and use playback conference number
54452575. The live audio broadcast of the Company’s
conference call will also be available online at the Company’s
website, www.GladstoneLand.com. The event will be archived
and available for replay on the Company’s website through April 21,
2018.
About Gladstone Land Corporation:Gladstone Land
is a publicly-traded real estate investment trust that invests in
farmland and farm-related properties located in major agricultural
markets in the U.S., which it leases to farmers, and pays monthly
distributions to its stockholders. The Company reports the
current fair value of its farmland on a quarterly basis; as of
December 31, 2017, the estimated net asset value of the
Company was $13.96 per share. Gladstone Land currently owns
74 farms, comprised of 63,175 acres in 9 different states across
the U.S., valued at approximately $536 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 generally planted and harvested annually, as
well as permanent crops, such as almonds, blueberries, and
pistachios, which are planted every 10 to 20-plus years. The
Company may also acquire property related to farming, such as
cooling facilities, processing buildings, packaging facilities, and
distribution centers. Gladstone Land has paid 60 consecutive
monthly cash distributions on its common stock since its initial
public offering in January 2013. The current per-share
distribution is $0.04425 per month, or $0.531 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.
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.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-K, 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-K, 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 (inclusive of both our common
stock and OP Units held outside of the Company). 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 |
|
|
$ |
117,951 |
|
Fair value adjustment
for long-term assets: |
|
|
|
Less: net cost basis of tangible and intangible real estate
holdings(1) |
$ |
(451,864 |
) |
|
|
Plus: estimated fair value of real estate holdings(2) |
533,297 |
|
|
|
Net fair
value adjustment for real estate holdings |
|
|
81,433 |
|
Fair value adjustment
for long-term liabilities: |
|
|
|
Plus: book value of aggregate long-term indebtedness(3) |
321,738 |
|
|
|
Less: fair value of aggregate long-term
indebtedness(3)(4) |
(314,511 |
) |
|
|
Net fair
value adjustment for long-term indebtedness |
|
|
7,227 |
|
Estimated
NAV |
|
|
$ |
206,611 |
|
|
|
|
|
Total
shares outstanding(5) |
|
|
14,799,679 |
|
|
|
|
|
Estimated NAV
per share |
|
|
$ |
13.96 |
|
(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 Series A
Term Preferred Stock.(4)
Long-term mortgage 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,
2017.(5) Includes 13,791,574
shares of common stock and 1,008,105 OP Units held by
non-controlling limited partners (representing 6.8% of all OP Units
issued and outstanding as of December 31, 2017).
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-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 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” within
the Company's Form 10-K for the fiscal year ended December 31,
2017, as filed with the SEC on February 20, 2018, 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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