Continued Strong Value Appreciation through
Asset Sales plus Increase to Guidance
Farmland Partners Inc. (NYSE: FPI) (“FPI” or the “Company”)
today reported financial results for the three and nine months
ended September 30, 2023.
Selected Highlights
During the quarter ended September 30, 2023,
the Company:
- recorded net income of $4.3 million, or $0.07 per share
available to common stockholders, compared to $1.1 million, or
$0.01 per share available to common stockholders for the same
period in 2022;
- recorded AFFO of ($0.5) million, or ($0.01) per share, compared
to $2.5 million, or $0.05 per share, for the same period in
2022;
- completed 35 farm dispositions for approximately $71.1 million
in aggregate consideration and recognized an aggregate gain on sale
of approximately $10.3 million;
- completed one farm acquisition for total consideration of $11.0
million;
- finished the quarter with access to liquidity of $163.1
million; and
- repurchased 618,073 shares of its common stock at a weighted
average price of $10.89 per share.
Subsequent to September 30, 2023, the
Company:
- repurchased an additional 152,211 shares of its common stock at
a weighted average price of $10.28 per share (with year-to-date
repurchases totaling 6,365,616 shares at a weighted average price
of $10.98 per share);
- completed two farm dispositions for approximately $2.6 million
in aggregate consideration; and
- renewed approximately 65% of leases expiring in 2023 (by
acreage) with average rent increases of 18% to 20%.
Planned Transactions:
- FPI plans to sell up to approximately $65 million of additional
farmland, which (including consummated sales) would bring the
Company’s total up to approximately $190 million of sales for the
year; and
- has two acquisition transactions under advanced negotiations
for an aggregate purchase price of $16.1 million.
CEO Comments
Luca Fabbri, President and Chief Executive Officer: “Against a
backdrop of global economic and geopolitical uncertainty, the US
agriculture industry in general, and farmland as an asset class in
particular, continue to offer stability to consumers and investors
alike. We have been leveraging this stability by continuing to
selectively prune our portfolio, with a focus on farms that are not
long-term strategic fits for the portfolio. With proceeds from
asset sales, we are redeploying capital through stock buybacks,
debt repayment and attractive asset acquisitions. The strong lease
renewals we have been securing are a testament to the robust health
of the farm economy and the overall quality of our portfolio.”
Financial and Operating Results
- The tables below show financial and operating results for the
three and nine months ended September 30, 2023 and 2022.
For the three months
ended
For the nine months
ended
(in thousands)
September 30,
September 30,
Financial Results:
2023
2022
Change
2023
2022
Change
Net Income
$
4,315
$
1,119
285.6
%
$
13,927
$
5,250
165.3
%
Net income per share available to common
stockholders
$
0.07
$
0.01
600.0
%
$
0.22
$
0.05
340.0
%
AFFO
$
(465
)
$
2,498
NM
$
(46
)
$
5,764
NM
AFFO per weighted average common
shares
$
(0.01
)
$
0.05
NM
$
0.00
$
0.11
NM
Adjusted EBITDAre
$
6,317
$
7,131
(11.4
)
%
$
18,804
$
19,649
(4.3
)
%
Operating Results:
Total Operating Revenues
$
11,617
$
13,140
(11.6
)
%
$
35,874
$
39,387
(8.9
)
%
Operating Income
$
15
$
4,725
(99.7
)
%
$
7,608
$
12,496
(39.1
)
%
Net Operating Income (NOI)
$
8,815
$
9,352
(5.7
)
%
$
26,536
$
28,815
(7.9
)
%
__________________________
NM = Not Meaningful
- See “Non-GAAP Financial Measures” for complete definitions of
AFFO, Adjusted EBITDAre, and NOI and the financial tables
accompanying this press release for reconciliations of net income
to AFFO, Adjusted EBITDAre and NOI.
Acquisition and Disposition Activity
- During the nine months ended September 30, 2023, the Company
acquired three properties for total consideration of $20.0
million.
- During the nine months ended September 30, 2023, the Company
completed 54 property dispositions for cash consideration of $121.7
million and total gain on sale of $23.2 million.
Balance Sheet
- The Company had total debt outstanding of $422.8 million at
September 30, 2023, compared to total debt outstanding of $439.5
million at December 31, 2022.
- At September 30, 2023, the Company had access to liquidity of
$163.1 million, consisting of $6.1 million in cash and $157.0
million in undrawn availability under its credit facilities,
respectively, compared to cash of $7.7 million and $169.0 million
in undrawn availability under its credit facilities at December 31,
2022.
- During the nine months ended September 30, 2023, the Company
repurchased 6,213,405 shares of its common stock at a weighted
average price of $11.00 per share.
- As of October 20, 2023, the Company had 49,389,288 shares of
common stock outstanding on a fully diluted basis.
Dividend Declarations
The Company’s Board of Directors declared a
quarterly cash dividend of $0.06 per share of common stock and
Class A Common OP unit. The dividends are payable on January 16,
2024, to stockholders and common unit holders of record on January
2, 2024.
2023 Earnings Guidance and Supplemental Package
For 2023 earnings guidance, please see page 15 of the
supplemental package, which can be accessed through the Investor
Relations section of the Company's website.
Conference Call Information
The Company has scheduled a conference call on October 26, 2023,
at 11:00 a.m. (U.S. Eastern Time) to discuss the financial results
and provide a company update.
The call can be accessed live over the phone by dialing
1-888-660-6359 and using the conference ID 2818086. The conference
call will also be available via a live listen-only webcast and can
be accessed through the Investor Relations section of the Company's
website, www.farmlandpartners.com.
A replay of the conference call will be available beginning
shortly after the end of the event until November 5, 2023, by
dialing 1-800-770-2030 and using the playback ID 2818086. A replay
of the webcast will also be accessible on the Investor Relations
section of the Company's website for a limited time following the
event.
About Farmland Partners Inc.
Farmland Partners Inc. is an internally managed real estate
company that owns and seeks to acquire high-quality North American
farmland and makes loans to farmers secured by farm real estate. As
of September 30, 2023, the Company owns and/or manages
approximately 178,200 acres in 20 states, including Alabama,
Arkansas, California, Colorado, Florida, Georgia, Illinois,
Indiana, Iowa, Kansas, Louisiana, Michigan, Mississippi, Missouri,
Nebraska, North Carolina, Oklahoma, South Carolina, Texas, and
Virginia. In addition, the Company owns land and buildings for four
agriculture equipment dealerships in Ohio leased to Ag Pro under
the John Deere brand. The Company has approximately 26 crop types
and over 100 tenants. The Company elected to be taxed as a real
estate investment trust, or REIT, for U.S. federal income tax
purposes, commencing with the taxable year ended December 31, 2014.
Additional information: www.farmlandpartners.com or (720)
452-3100.
Forward-Looking Statements
This press release includes “forward-looking statements” within
the meaning of the federal securities laws, including, without
limitation, statements with respect to our outlook and the outlook
for the farm economy generally, proposed and pending acquisitions
and dispositions, financing activities, crop yields and prices and
anticipated rental rates. Forward-looking statements generally can
be identified by the use of forward-looking terminology such as
“may,” “should,” “could,” “would,” “predicts,” “potential,”
“continue,” “expects,” “anticipates,” “future,” “intends,” “plans,”
“believes,” “estimates” or similar expressions or their negatives,
as well as statements in future tense. Although the Company
believes that the expectations reflected in such forward-looking
statements are based upon reasonable assumptions, beliefs and
expectations, such forward-looking statements are not predictions
of future events or guarantees of future performance and our actual
results could differ materially from those set forth in the
forward-looking statements. Some factors that might cause such a
difference include the following: the on-going war in Ukraine and
its impact on the world agriculture market, world food supply, the
farm economy, and our tenants’ businesses; general volatility of
the capital markets and the market price of the Company’s common
stock; changes in the Company’s business strategy, availability,
terms and deployment of capital; the Company’s ability to refinance
existing indebtedness at or prior to maturity on favorable terms,
or at all; availability of qualified personnel; changes in the
Company’s industry, interest rates or the general economy; adverse
developments related to crop yields or crop prices; the degree and
nature of the Company’s competition; the timing, price or amount of
repurchases, if any, under the Company's share repurchase program;
the ability to consummate acquisitions or dispositions under
contract; and the other factors described in the section entitled
“Risk Factors” in the Company’s Annual Report on Form 10-K for the
year ended December 31, 2022, and the Company’s other filings with
the Securities and Exchange Commission. Any forward-looking
information presented herein is made only as of the date of this
press release, and the Company does not undertake any obligation to
update or revise any forward-looking information to reflect changes
in assumptions, the occurrence of unanticipated events, or
otherwise.
Farmland Partners Inc.
Consolidated Balance
Sheets
As of September 30, 2023 and
December 31, 2022
(in thousands)
September 30,
December 31,
2023
2022
ASSETS
Land, at cost
$
913,056
$
980,521
Grain facilities
11,150
11,349
Groundwater
13,044
17,682
Irrigation improvements
44,368
50,097
Drainage improvements
10,590
12,543
Permanent plantings
46,612
50,394
Other
6,781
6,967
Construction in progress
6,234
14,810
Real estate, at cost
1,051,835
1,144,363
Less accumulated depreciation
(36,299
)
(38,447
)
Total real estate, net
1,015,536
1,105,916
Deposits
26
148
Cash and cash equivalents
6,057
7,654
Assets held for sale
6,295
33
Loans and financing receivables, net
19,881
21,921
Right of use asset
454
325
Deferred offering costs
—
63
Accounts receivable, net
5,615
7,055
Derivative asset
2,133
2,084
Inventory
3,257
2,808
Equity method investments
4,118
4,185
Intangible assets, net
2,040
2,055
Goodwill
2,706
2,706
Prepaid and other assets
579
3,196
TOTAL ASSETS
$
1,068,697
$
1,160,149
LIABILITIES AND EQUITY
LIABILITIES
Mortgage notes and bonds payable, net
$
420,464
$
436,875
Lease liability
454
325
Dividends payable
2,972
3,333
Accrued interest
4,805
4,135
Accrued property taxes
2,639
2,008
Deferred revenue
70
44
Accrued expenses
7,203
9,215
Total liabilities
438,607
455,935
Commitments and contingencies
Redeemable non-controlling interest in
operating partnership, Series A preferred units
101,228
110,210
EQUITY
Common stock, $0.01 par value, 500,000,000
shares authorized; 48,338,160 shares issued and outstanding at
September 30, 2023, and 54,318,312 shares issued and outstanding at
December 31, 2022
469
531
Additional paid in capital
580,453
647,346
Retained earnings
14,834
3,567
Cumulative dividends
(82,978
)
(73,964
)
Other comprehensive income
3,225
3,306
Non-controlling interests in operating
partnership
12,859
13,218
Total equity
528,862
594,004
TOTAL LIABILITIES, REDEEMABLE
NON-CONTROLLING INTERESTS IN OPERATING PARTNERSHIP AND EQUITY
$
1,068,697
$
1,160,149
Farmland Partners Inc.
Consolidated Statements of
Operations
Three and Nine Months Ended
September 30, 2023 and 2022
(in thousands except per share
amounts)
For the Three Months
Ended
For the Nine Months
Ended
September 30,
September 30,
2023
2022
2023
2022
OPERATING REVENUES:
Rental income
$
9,432
$
9,081
$
28,510
$
27,823
Tenant reimbursements
705
883
2,574
2,470
Crop sales
814
2,471
1,689
4,316
Other revenue
666
705
3,101
4,778
Total operating revenues
11,617
13,140
35,874
39,387
OPERATING EXPENSES
Depreciation, depletion and
amortization
1,904
1,665
5,905
5,076
Property operating expenses
2,099
2,115
6,709
6,128
Cost of goods sold
703
1,673
2,629
4,444
Acquisition and due diligence costs
3
24
17
86
General and administrative expenses
2,651
2,505
8,161
8,613
Legal and accounting
398
407
924
2,479
Impairment of assets
3,840
—
3,840
—
Other operating expenses
4
26
81
65
Total operating expenses
11,602
8,415
28,266
26,891
OPERATING INCOME
15
4,725
7,608
12,496
OTHER (INCOME) EXPENSE:
Other (income) expense
(41
)
(366
)
23
(380
)
(Income) loss from equity method
investment
(5
)
—
17
(16
)
(Gain) loss on disposition of assets
(10,293
)
48
(23,179
)
(3,948
)
Interest expense
6,230
3,891
16,998
11,461
Total other expense
(4,109
)
3,573
(6,141
)
7,117
Net income before income tax (benefit)
expense
4,124
1,152
13,749
5,379
Income tax (benefit) expense
(191
)
33
(178
)
129
NET INCOME
4,315
1,119
13,927
5,250
Net (income) attributable to
non-controlling interests in operating partnership
(105
)
(25
)
(331
)
(135
)
Net income attributable to the Company
4,210
1,094
13,596
5,115
Nonforfeitable distributions allocated to
unvested restricted shares
(21
)
(16
)
(64
)
(47
)
Distributions on Series A Preferred
Units
(743
)
(728
)
(2,228
)
(2,408
)
Net income available to common
stockholders of Farmland Partners Inc.
$
3,446
$
350
$
11,304
$
2,660
Basic and diluted per common share
data:
Basic net income available to common
stockholders
$
0.07
$
0.01
$
0.22
$
0.05
Diluted net income available to common
stockholders
$
0.07
$
0.01
$
0.22
$
0.05
Basic weighted average common shares
outstanding
48,432
53,495
51,079
49,908
Diluted weighted average common shares
outstanding
48,432
53,495
51,079
49,908
Dividends declared per common share
$
0.06
$
0.06
$
0.18
$
0.17
Farmland Partners Inc.
Reconciliation of Non-GAAP
Measures
Three and Nine Months Ended
September 30, 2023 and 2022
For the three months ended
September 30,
For the nine months ended
September 30,
(in thousands except per share
amounts)
2023
2022
2023
2022
Net income
$
4,315
$
1,119
$
13,927
$
5,250
(Gain) loss on disposition of assets
(10,293
)
48
(23,179
)
(3,948
)
Depreciation, depletion and
amortization
1,904
1,665
5,905
5,076
Impairment of assets
3,840
—
3,840
—
FFO
$
(234
)
$
2,832
$
493
$
6,378
Stock-based compensation and incentive
509
351
1,474
1,595
Deferred impact of interest rate swap
terminations
—
19
198
113
Real estate related acquisition and due
diligence costs
3
24
17
86
Distributions on Preferred units and
stock
(743
)
(728
)
(2,228
)
(2,408
)
AFFO
$
(465
)
$
2,498
$
(46
)
$
5,764
AFFO per diluted weighted average share
data:
AFFO weighted average common shares
49,997
55,000
52,652
51,563
Net income available to common
stockholders of Farmland Partners Inc.
$
0.07
$
0.01
$
0.22
$
0.05
Income available to redeemable
non-controlling interest and non-controlling interest in operating
partnership
0.01
0.01
0.05
0.06
Depreciation, depletion and
amortization
0.04
0.03
0.11
0.10
Impairment of assets
0.08
0.00
0.07
0.00
Stock-based compensation and incentive
0.01
0.01
0.03
0.03
(Gain) on disposition of assets
(0.21
)
0.00
(0.44
)
(0.08
)
Distributions on Preferred units and
stock
(0.01
)
(0.01
)
(0.04
)
(0.05
)
AFFO per diluted weighted average
share
$
(0.01
)
$
0.05
$
0.00
$
0.11
For the three months
ended
For the nine months
ended
September 30,
September 30,
(in thousands)
2023
2022
2023
2022
Net income
$
4,315
$
1,119
$
13,927
$
5,250
Interest expense
6,230
3,891
16,998
11,461
Income tax (benefit) expense
(191
)
33
(178
)
129
Depreciation, depletion and
amortization
1,904
1,665
5,905
5,076
Impairment of assets
3,840
—
3,840
—
(Gain) loss on disposition of assets
(10,293
)
48
(23,179
)
(3,948
)
EBITDAre
$
5,805
$
6,756
$
17,313
$
17,968
Stock-based compensation and incentive
509
351
1,474
1,595
Real estate related acquisition and due
diligence costs
3
24
17
86
Adjusted EBITDAre
$
6,317
$
7,131
$
18,804
$
19,649
Farmland Partners Inc.
Reconciliation of Non-GAAP
Measures
Three and Nine Months Ended
September 30, 2023 and 2022
For the three months ended
September 30,
For the nine months ended
September 30,
($ in thousands)
2023
2022
2023
2022
OPERATING REVENUES:
Rental income
$
9,432
$
9,081
$
28,510
$
27,823
Tenant reimbursements
705
883
2,574
2,470
Crop sales
814
2,471
1,689
4,316
Other revenue
666
705
3,101
4,778
Total operating revenues
11,617
13,140
35,874
39,387
Property operating expenses
2,099
2,115
6,709
6,128
Cost of goods sold
703
1,673
2,629
4,444
NOI
8,815
9,352
26,536
28,815
Depreciation, depletion and
amortization
1,904
1,665
5,905
5,076
Acquisition and due diligence costs
3
24
17
86
General and administrative expenses
2,651
2,505
8,161
8,613
Legal and accounting
398
407
924
2,479
Impairment of assets
3,840
—
3,840
—
Other operating expenses
4
26
81
65
Other (income) expense
(41
)
(366
)
23
(380
)
(Income) loss from equity method
investment
(5
)
—
17
(16
)
(Gain) loss on disposition of assets
(10,293
)
48
(23,179
)
(3,948
)
Interest expense
6,230
3,891
16,998
11,461
Income tax (benefit) expense
(191
)
33
(178
)
129
NET INCOME
$
4,315
$
1,119
$
13,927
$
5,250
Non-GAAP Financial Measures
The Company considers the following non-GAAP measures as useful
to investors as key supplemental measures of its performance: FFO,
NOI, AFFO, EBITDAre and Adjusted EBITDAre. These non-GAAP financial
measures should be considered along with, but not as alternatives
to, net income or loss as a measure of the Company’s operating
performance. FFO, NOI, AFFO, EBITDAre and Adjusted EBITDAre, as
calculated by the Company, may not be comparable to other companies
that do not define such terms exactly as the Company.
FFO
The Company calculates FFO in accordance with the standards
established by the National Association of Real Estate Investment
Trusts, or NAREIT. NAREIT defines FFO as net income (loss)
(calculated in accordance with GAAP), excluding gains (or losses)
from sales of depreciable operating property, real estate related
depreciation, depletion and amortization (excluding amortization of
deferred financing costs), impairment write-downs of depreciated
property, and adjustments for unconsolidated partnerships and joint
ventures. Management presents FFO as a supplemental performance
measure because it believes that FFO is beneficial to investors as
a starting point in measuring the Company’s operational
performance. Specifically, in excluding real estate related
depreciation and amortization and gains and losses from sales of
depreciable operating properties, which do not relate to or are not
indicative of operating performance, FFO provides a performance
measure that, when compared year over year, captures trends in
occupancy rates, rental rates and operating costs. The Company also
believes that, as a widely recognized measure of the performance of
REITs, FFO will be used by investors as a basis to compare the
Company’s operating performance with that of other REITs. However,
other equity REITs may not calculate FFO in accordance with the
NAREIT definition as the Company does, and, accordingly, the
Company’s FFO may not be comparable to such other REITs’ FFO.
AFFO
The Company calculates AFFO by adjusting FFO to exclude the
income and expenses that the Company believes are not reflective of
the sustainability of the Company’s ongoing operating performance,
including, but not limited to, real estate related acquisition and
due diligence costs, stock-based compensation and incentive,
deferred impact of interest rate swap terminations, and
distributions on the Company’s preferred units.
Changes in GAAP accounting and reporting rules that were put in
effect after the establishment of NAREIT’s definition of FFO in
1999 result in the inclusion of a number of items in FFO that do
not correlate with the sustainability of the Company’s operating
performance. Therefore, in addition to FFO, the Company presents
AFFO and AFFO per share, fully diluted, both of which are non-GAAP
measures. Management considers AFFO a useful supplemental
performance metric for investors as it is more indicative of the
Company’s operational performance than FFO. AFFO is not intended to
represent cash flow or liquidity for the period and is only
intended to provide an additional measure of the Company’s
operating performance. Even AFFO, however, does not properly
capture the timing of cash receipts, especially in connection with
full-year rent payments under lease agreements entered into in
connection with newly acquired farms. Management considers AFFO per
share, fully diluted to be a supplemental metric to GAAP earnings
per share. AFFO per share, fully diluted provides additional
insight into how the Company’s operating performance could be
allocated to potential shares outstanding at a specific point in
time. Management believes that AFFO is a widely recognized measure
of the operations of REITs and presenting AFFO will enable
investors to assess the Company’s performance in comparison to
other REITs. However, other REITs may use different methodologies
for calculating AFFO and AFFO per share, fully diluted and,
accordingly, the Company’s AFFO and AFFO per share, fully diluted
may not always be comparable to AFFO and AFFO per share amounts
calculated by other REITs. AFFO and AFFO per share, fully diluted
should not be considered as an alternative to net income (loss) or
earnings per share (determined in accordance with GAAP) as an
indication of financial performance, or as an alternative to net
income (loss) earnings per share (determined in accordance with
GAAP) as a measure of the Company’s liquidity, nor are they
indicative of funds available to fund the Company’s cash needs,
including its ability to make distributions.
EBITDAre and Adjusted EBITDAre
The Company calculates Earnings Before Interest Taxes
Depreciation and Amortization for real estate (“EBITDAre”) in
accordance with the standards established by NAREIT in its
September 2017 White Paper. NAREIT defines EBITDAre as net income
(calculated in accordance with GAAP) excluding interest expense,
income tax, depreciation and amortization, gains or losses on
disposition of depreciated property (including gains or losses on
change of control), impairment write-downs of depreciated property
and of investments in unconsolidated affiliates caused by a
decrease in value of depreciated property in the affiliate, and
adjustments to reflect the entity’s pro rata share of EBITDAre of
unconsolidated affiliates. EBITDAre is a key financial measure used
to evaluate the Company’s operating performance but should not be
construed as an alternative to operating income, cash flows from
operating activities or net income, in each case as determined in
accordance with GAAP. The Company believes that EBITDAre is a
useful performance measure commonly reported and will be widely
used by analysts and investors in the Company’s industry. However,
while EBITDAre is a performance measure widely used across the
Company’s industry, the Company does not believe that it correctly
captures the Company’s business operating performance because it
includes non-cash expenses and recurring adjustments that are
necessary to better understand the Company’s business operating
performance. Therefore, in addition to EBITDAre, management uses
Adjusted EBITDAre, a non-GAAP measure.
The Company calculates Adjusted EBITDAre by adjusting EBITDAre
for certain items such as stock-based compensation and incentive
and real estate related acquisition and due diligence costs that
the Company considers necessary to understand its operating
performance. The Company believes that Adjusted EBITDAre provides
useful supplemental information to investors regarding the
Company’s ongoing operating performance that, when considered with
net income and EBITDAre, is beneficial to an investor’s
understanding of the Company’s operating performance. However,
EBITDAre and Adjusted EBITDAre have limitations as analytical tools
and should not be considered in isolation or as a substitute for
analysis of the Company’s results as reported under GAAP.
In prior periods, the Company has presented EBITDA and Adjusted
EBITDA. In accordance with NAREIT’s recommendation, beginning with
the Company’s reported results for the three months ended March 31,
2018, the Company is reporting EBITDAre and Adjusted EBITDAre in
place of EBITDA and Adjusted EBITDA.
Net Operating Income (NOI)
The Company calculates net operating income (NOI) as total
operating revenues (rental income, tenant reimbursements, crop
sales and other revenue), less property operating expenses (direct
property expenses and real estate taxes), less cost of goods sold.
Since net operating income excludes general and administrative
expenses, interest expense, depreciation and amortization,
acquisition-related expenses, other income and losses and
extraordinary items, it provides a performance measure that, when
compared year over year, reflects the revenues and expenses
directly associated with owning and leasing farmland real estate,
providing a perspective not immediately apparent from net income.
However, net operating income should not be viewed as an
alternative measure of the Company’s financial performance since it
does not reflect general and administrative expenses, interest
expense, depreciation and amortization costs, other income and
losses.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231025767902/en/
James Gilligan ir@farmlandpartners.com
Farmland Partners (NYSE:FPI)
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