American Farmland Company (NYSE MKT LLC: AFCO) (the “Company”),
a specialized real estate investment trust focused on the
ownership, acquisition, development and management of a portfolio
of diversified, high-quality U.S. farmland, today announced
financial and operating results for the quarter ended March 31,
2016.
“During the first quarter, we completed the Sun Dial
acquisition, true showpiece permanent crop orchards, which
increased our assets by approximately 30%, and which is expected to
be accretive to funds from operations,” said Thomas S.T. Gimbel,
Chief Executive Officer. “While we are extremely proud of the high
quality farmland portfolio that we have assembled, we are
disappointed with the stock price performance of our shares, which
have consistently traded at a substantial discount to our NAV since
our IPO last year. We believe our NAV reasonably reflects the value
of our properties and, accordingly, we recently announced the
commencement of a review of strategic alternatives aimed at
enhancing shareholder value. We are in the early stages of this
review and look forward to reporting back to shareholders once our
Board of Directors has completed the review or has otherwise
approved a specific action.”
Highlights and Recent Activity
Include
- Generated Adjusted Funds from
Operations (AFFO) attributable to the Company of $0.04 per diluted
share for the quarter ended March 31, 2016 as compared to $0.08 per
diluted share for the quarter ended March 31, 2015;
- Reported total operating revenues of
$2.4 million for the quarter ended March 31, 2016 as compared to
$2.3 million for the quarter ended March 31, 2015;
- Reported net operating income (NOI) of
$3.1 million for the quarter ended March 31, 2016 as compared to
$1.9 million for the quarter ended March 31, 2015, with the
increase being primarily due to cash rents received for the portion
of the 2015/2016 crop season which commenced in advance of the
lease commencement dates for the Sun Dial properties (defined
below), which rents are being recognized as operating revenues on a
straight-lined basis over the respective lease terms;
- Generated same-property operating
revenues of $1.5 million for the quarter ended March 31, 2016 as
compared to $2.3 million for the quarter ended March 31, 2015, due
primarily to lower participating rent from the Golden Eagle Ranch
which as previously disclosed stems from lower 2015 production
yield and lower almond prices;
- Completed the previously announced
acquisition of a portfolio of mature permanent crop properties (the
“Sun Dial properties” or “Sun Dial acquisition”) aggregating to
four mature permanent crop farms comprising 2,186 gross acres and
1,718 net plantable acres for a gross purchase price of $63.5
million, excluding transaction costs;
- Declared and paid a cash dividend of
$0.0625 per share on the common stock of the Company and a
quarterly cash distribution of $0.0625 per unit on the operating
partnership units of American Farmland Company L.P. for the first
quarter of 2016; and
- Announced that the Company has retained
Citigroup Global Markets Inc. and Raymond James & Associates,
Inc. to assist in conducting a review of strategic alternatives to
enhance shareholder value, which may include, among other potential
actions, joint venture arrangements, a merger of the Company, or a
sale of all or part of the Company and/or its assets.
Financial and Operating
Highlights
AFFO attributable to the Company was $0.6 million, or $0.04 per
diluted share, for the first quarter of 2016, as compared to $0.9
million, or $0.08 per diluted share, for the first quarter of 2015.
AFFO attributable to the Company for the first quarter of 2016
includes an add-back to Funds from Operations (FFO) of a $1.3
million straight line rent adjustment, primarily related to the
cash rents received for the portion of the 2015/2016 crop season
which commenced in advance of the lease commencement dates for the
Sun Dial properties, which rents are being recognized as operating
revenues on a straight-lined basis over the respective lease terms.
The Sun Dial properties are predominantly comprised of fresh citrus
varieties and almonds which have different crop seasons around
which base rental payments are set. The crop year for the citrus
farms is from July of one year through June of the following year,
and the crop year for the almond farms is from December of one year
through November of the following year.
Net loss attributable to the Company was $(1.9) million, or
$(0.12) per diluted share, for the first quarter of 2016, as
compared to net income of $0.3 million, or $0.03 per diluted share,
for the first quarter of 2015. The net loss was impacted by higher
depreciation due to the larger depreciable asset base and higher
professional fees and general and administrative expenses
associated with operating as an independent public company as
compared to the prior year quarter.
Total operating revenues for the first quarter of 2016 were $2.4
million, an increase of $0.1 million or 4.2%, as compared to the
first quarter of 2015. The increase in total operating revenues
over the prior year quarter was primarily due to higher fixed rent
in the incremental amount of $0.7 million largely driven by new
leases at properties acquired during the first quarter of 2016 (the
Sun Dial properties which includes Cougar Ranch, Cheetah Ranch,
Puma Ranch and Lynx Ranch) and the third quarter of 2015 (the
second and smaller tranche of Golden Eagle Ranch and Kingfisher
Ranch), higher real estate tax recoveries in the amount of $0.1
million, which increases were largely offset by $0.7 million of
lower participating rent driven primarily by the first tranche of
Golden Eagle Ranch.
As the Company previously disclosed, Golden Eagle Ranch
generated strong participating revenues in 2015 due to the strength
of its 2014 crop production as well as high almond prices
throughout the majority of 2015 when the 2014 crop was sold by the
tenant. However, the 2015 crop production at Golden Eagle Ranch was
significantly lower than its 2014 crop production due to poor
growing conditions. Lower 2015 farm production combined with a
decline in almond prices is expected to result in substantially
lower participating rents from Golden Eagle Ranch for the full year
2016 than were recorded in 2015, as occurred in the first quarter
of 2016. Due to the year over year decline in participating rents
expected from Golden Eagle Ranch during 2016, the Company continues
to expect 2016 total operating revenues generated from
same-property farms to be lower in 2016 than in 2015.
Revenues from participating leases exhibit variability from year
to year and are therefore subject to seasonality in the timing of
recognition as well as the amount of participating revenues to be
recognized, due to fluctuating crop prices, variable production
yields (subject to weather conditions and the alternate bearing
nature of certain crops, among other factors), the timing of crop
harvests and crop sales, contracts for minimum price guarantees and
any applicable crop insurance claims (settlement amounts and timing
of settlements). Variability in crop revenues from year to year is
common in the farming industry, and we therefore expect variability
in the Company’s participating rents to continue as long as we
continue to use participating lease types.
Total operating revenues for the Company’s same-property farms
were $1.5 million for the quarter ended March 31, 2016, a decrease
of $0.8 million, or 33.5%, from $2.3 million for the quarter ended
March 31, 2015. The same-property portfolio includes only farms
owned by the Company for the entirety of both periods presented,
which included all farms except for the Sun Dial properties
acquired during the first quarter of 2016 (Cougar Ranch, Cheetah
Ranch, Puma Ranch and Lynx Ranch) and the properties acquired
during the third quarter of 2015 (the second tranche of Golden
Eagle Ranch and Kingfisher Ranch). The decrease in same-property
total operating revenues was primarily due to $0.7 million of lower
participating rent driven by lower participating rent from the
first tranche of Golden Eagle Ranch as previously discussed, as
well as lower fixed rent in the amount of $0.1 million driven by
lower fixed rent at several properties where leases were
restructured to have lower fixed rent but higher participating
components as well as two of the Company’s commodity row crop farms
which experienced lease renewals at lower rates.
NOI for the first quarter of 2016 was $3.1 million, an increase
of $1.2 million as compared to the first quarter of 2015. The
increase in NOI over the prior year quarter was primarily due to
the cash rents received for the portion of the 2015/2016 crop
season which commenced in advance of the lease commencement dates
for the Sun Dial properties, which rents are being recognized as
operating revenues on a straight-lined basis over the respective
four and five year terms of these leases, but which is included in
the reconciliation from net income attributable to the Company to
NOI through a $1.3 million straight line rent adjustment. As
detailed in the “Non-GAAP Financial Measures” section below, the
Company’s definition of NOI, which is intended to reflect a “cash
basis” net operating income, includes the impact of the advance
cash rents received from the Sun Dial properties, which for
generally accepted accounting principles (GAAP) purposes will be
recognized on a straight-lined basis over the lease terms.
All of the Company’s non-development farms were under lease as
of March 31, 2016.
See “Non-GAAP Financial Measures” for definitions of FFO, Core
FFO, AFFO, NOI and NAV and the financial tables accompanying this
press release for reconciliations of net income to FFO, Core FFO,
AFFO and NOI and of NAV to Company stockholders’ equity.
Development Activities
The development of Blue Cypress Farm, located in Brevard County,
Florida, was substantially completed and a lease was executed
during the first quarter of 2016 with a tenant for the 2016 crop
season with a first commercial crop expected later in 2016. As a
result, Blue Cypress Farm was reclassified to the
specialty/vegetable row crop segment for the first quarter of
2016.
The Company had five farms in development as of March 31, 2016.
Operating loss from development farms was $0.1 million for the
first quarter of 2016. In the normal course of its strategic review
of properties, the Company regularly evaluates the possibilities to
recycle capital currently deployed in certain of its non-yielding
development farms into new income-yielding acquisitions.
Investing Activities
On January 27, 2016, wholly-owned subsidiaries of the Company
completed the previously announced Sun Dial acquisition comprising
approximately 2,186 gross acres and approximately 1,718 net
plantable acres for a combined purchase price of $63.5 million
excluding transaction costs ($65.0 million including transaction
costs), from Sun Dial Farms, LLC and its affiliates (the
“Sellers”). The acquisition substantially increased the Company’s
farmland assets by approximately 30%. The properties are located
across multiple counties in California, each with its own on-site
well(s) and / or surface water, and are being operated as four
distinct farms (Cougar Ranch, Cheetah Ranch, Puma Ranch and Lynx
Ranch), with properties grouped into a particular farm based on
crop type and location. Crops planted include almonds, lemons,
mandarins and several other fresh citrus varieties as well as a
small planting of prunes.
The properties were previously owner-occupied and, as a result,
do not have a prior leasing history. Upon closing, the Company
entered into four separate participating leases with affiliates of
the Sellers, which are expected to provide a blended first year
fixed base rent yield of approximately 5% of the purchase price,
with the potential for additional income from formulaic
participation in the crop revenue above a fixed threshold and with
the base rent and fixed threshold each having annual escalators.
Affiliates of the Sellers are also the tenants on the Company’s
Golden Eagle Ranch property. The acquisition was funded from cash
on hand and additional borrowings under the Company’s existing
revolving credit facilities.
Financing Activities
During the first quarter of 2016, the Company drew on its
existing revolving credit facilities to partially fund the purchase
price of the Sun Dial acquisition. As of March 31, 2016,
approximately $81 million was outstanding under such revolving
credit facilities. Each of the Company’s four secured revolving
credit facilities, which have maturities between January 2019 and
January 2021, provides for a drawn borrowing cost of 3-month London
Interbank Offered Rate plus 130 basis points (approximately 1.93%
as of March 31, 2016) and may be prepaid at any time without
penalty to the Company. The Company believes it is in compliance
with the covenants of its credit facilities.
Quarterly Dividends
On March 2, 2016, the Board of Directors of the Company approved
and declared a quarterly cash dividend of $0.0625 per share on the
common stock of the Company and a quarterly cash distribution of
$0.0625 per unit on the units of limited partnership interest of
American Farmland Company, L.P. for the first quarter of 2016. The
dividend was paid on March 31, 2016 to stockholders of record of
the Company at the close of business on March 21, 2016. The
distribution was paid on March 31, 2016 to unitholders of record of
American Farmland Company, L.P. at the close of business on March
21, 2016.
FOR ADDITIONAL INFORMATION
For additional information about the Company, please see the
“Investor Relations” section of American Farmland Company’s website
at www.americanfarmlandcompany.com.
ABOUT AMERICAN FARMLAND COMPANY
American Farmland Company is an internally managed real estate
investment trust and a Maryland corporation focused on owning and
acquiring a diversified portfolio of high-quality farmland,
consisting of mature permanent, specialty/vegetable row and
commodity row crop farms, as well as farmland development, located
in select major agricultural regions throughout the United States.
As of the date of this release, the Company’s portfolio consists of
22 farms located on both coasts as well as in the Corn Belt and the
Delta regions and consists of approximately 18,322 gross acres of
farmland, with more than 21 major crop types (approximately 40 when
including crop varieties). The Company typically consolidates farms
in the same area and crop types into a single financial unit for
reporting purposes although they may not be contiguous land
parcels.
NON-GAAP FINANCIAL MEASURES
The Company believes FFO, Core FFO, AFFO, NOI and NAV are
non-GAAP financial measures that investors may find useful as key
supplemental measures of its performance. These non-GAAP financial
measures should be considered along with, but not as alternatives
to, net income or loss, and stockholders’ equity. Further, these
non-GAAP financial measures as calculated by the Company may not be
comparable to how other companies define and calculate such
terms.
FFO attributable to the Company
The Company believes FFO attributable to the
Company is a useful, supplemental measure of its operating
performance that is a recognized metric used extensively by the
real estate industry and, in particular, REITs. The Company
calculates FFO attributable to the Company in accordance with the
standards established by the National Association of Real Estate
Investment Trusts (NAREIT). NAREIT defines Funds From Operations
(FFO) as net income (loss) computed in accordance with generally
accepted accounting principles (GAAP), excluding gains (or losses)
from sales of depreciated real estate assets, real estate related
depreciation and amortization (excluding amortization of deferred
financing costs) and after adjustments for unconsolidated
partnerships and joint ventures in which the reporting entity
holds an interest. The Company believes that net income
attributable to the Company is the most directly comparable GAAP
measure to FFO attributable to the Company. FFO
attributable to the Company, however, does not represent an
alternative to net income attributable to the Company as an
indicator of the Company’s performance or “Cash Flows from
Operating Activities” as determined by GAAP as a measure of the
Company’s capacity to fund cash needs, including the payment of
dividends.
Management presents FFO attributable to the Company as a
supplemental performance measure because it believes that FFO
attributable to the Company 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 farms, which do not relate to or are not
indicative of operating performance, FFO attributable to the
Company provides a performance measure that, when compared year
over year, captures trends in occupancy rates, rental rates and
operating costs. Management also believes that, as a
widely recognized measure of the performance of REITs, FFO
attributable to the Company 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
attributable to the Company in accordance with the NAREIT
definition as does the Company, and, accordingly, the
Company’s FFO attributable to the Company may not be comparable to
such other REITs’ FFO attributable to the Company.
Core FFO attributable to the Company and
Adjusted FFO (AFFO) attributable to the Company
The Company calculates Core FFO attributable to the Company by
adding back to FFO attributable to the Company (i) performance fees
payable to related parties (which ceased following
the Internalization Transaction), (ii)
acquisition-related expenses (or due diligence costs incurred in
non-consummated transactions), and (iii) other income and expense
items considered to be one-time in nature (including the
expense related to the Company’s Internalization Transaction
incurred concurrent with the Offering). The Company calculates
AFFO attributable to the Company by adding back to Core FFO
attributable to the Company (i) amortization of deferred financing
costs, (ii) stock-based compensation expense, (iii) non-real estate
depreciation and amortization expense, if any (iv)
straight line rent adjustments, and (v) above and below market
lease amortization adjustments.
Management believes Core FFO attributable to
the Company and AFFO attributable to the Company
are important supplemental measures of operating
performance because they are measures of cash
flow available for stockholders and measures that can be
analyzed in conjunction with the ability to pay
dividends. The Company is required in certain instances
to expense costs for GAAP purposes related to acquiring farms, such
as the acquisition fee paid
to its agricultural sub-adviser, and legal,
professional and other fees (including transfer taxes in some
cases) associated with closing the purchase of each
property, which do not correlate with the ongoing operations
of its existing properties. In addition, the
amortization of costs to obtain financing is a non-cash expense
item, as is stock-based compensation expense. The Company
believes that net income attributable to the Company is the
most directly comparable GAAP measure to Core FFO attributable to
the Company and AFFO attributable to the Company. Core FFO
attributable to the Company and AFFO attributable to the Company,
however, do not represent alternatives to net income attributable
to the Company as an indicator of the Company’s performance or
“Cash Flows from Operating Activities” as determined by GAAP as a
measure of the Company’s capacity to fund cash needs, including the
payment of dividends. Other equity REITs may not calculate Core FFO
attributable to the Company and AFFO attributable to the
Company as does the Company, and, accordingly, the
Company’s Core FFO attributable to the Company and AFFO
attributable to the Company may not be comparable to such
other REITs’ calculations of these measures.
Net Operating Income (NOI)
Management believes NOI provides useful information to investors
regarding the Company’s results of operations because it reflects
only those income and expense items that are incurred at the
property level and when compared across periods reflects the impact
on operations from trends in occupancy, rental rates, including
participating rents, property operating costs and acquisition and
disposition activity, on an unleveraged basis and excluding general
and administrative overhead costs. Management believes that net
income attributable to the Company is the most directly comparable
GAAP measure to NOI, which, to calculate NOI, is adjusted to add
back net income attributable to non-controlling interests, income
tax expense, loss or gain on sale of assets, other expense
(principally interest expense), depreciation, straight line rent
adjustments, amortization of acquired above and below market lease
intangibles, management and performance fees-related party,
acquisition-related expenses (or due diligence costs on
non-consummated transactions), professional fees (excluding
incurred at the property operating level), sub-advisory fees, and
general and administrative expenses. However, NOI should only be
used as a supplemental measure of the Company’s financial
performance and does not represent an alternative to net income
attributable to the Company as an indicator of the Company’s
performance or “Cash Flows from Operating Activities” as determined
by GAAP. Other REITs may use different methodologies for
calculating NOI and, accordingly, the Company’s NOI may not be
comparable to other REITs.
Net Asset Value (NAV) per share
The Company estimates the fair value of its farms based on
appraised value, expressed in terms of net asset value (NAV). NAV
is calculated as stockholders’ equity of the Company, as adjusted
for the increase or decrease in fair value of the portfolio
attributable to the Company, and then divided by the Company’s
total common shares outstanding. For purposes of determining the
adjustment between the investment in real estate on a GAAP basis
and on a fair value basis, all of the costs associated with the
acquisition of all properties were added to the cost thereof
(irrespective of whether the acquisition was treated as a business
combination or not), and no effect was given to straight-lining
rental income. In addition, all capital expenditures and
development costs post-acquisition are capitalized and thereafter
added to the cost of all of the properties, and included in net
book value, for purposes of the fair value analysis. Management
presents NAV as a supplemental non-GAAP measure because it believes
that NAV is beneficial to investors in measuring whether the
company’s investments in real estate have appreciated in value, in
aggregate, since their respective dates of acquisition. The Company
believes that stockholders’ equity of the Company is the most
directly comparable GAAP measure to NAV. Due to possible
differences in the calculation or application of the definition of
NAV, including the reliance on independent, third-party appraisers
in determining fair value, a comparison of the Company's NAV to
similar measures utilized by other REITs may not necessarily be
meaningful.
In determining the fair value of the investments in real estate,
the Company has historically relied on independent third-party
appraisal firms that employ a certified appraiser with local
knowledge and expertise who is certified as either an A.R.A. or
M.A.I. appraiser or state certified as a Certified General Real
Estate Appraiser or a Certified General Appraiser and who performed
their formal appraisals as of December 31 in each calendar
year for each property (except as noted below). The Company’s
independent auditors have not audited or reviewed these appraisals.
Properties that were purchased in the fourth quarter of any
calendar year were not appraised until December 31 of the calendar
year end following the year of acquisition. Until first appraised,
such properties were valued at cost. Each full appraisal was
prepared in conformity with the Uniform Standards of Professional
Appraisal Practice and utilized at least one of the following three
approaches to value:
(i) the cost approach, which establishes value
by estimating the current costs of reproducing the improvements
(less loss in value from depreciation) and adding land value to it;
(ii) the income capitalization approach, which establishes value
indicated by the subject property's net earning power based on the
capitalization of income; and/or (iii) the comparable sales
approach, which establishes value indicated by recent sales of
comparable properties in the market place,
with each approach leading to a final opinion of the appraised
value of the subject property by the appraiser. The income
capitalization approach is very sensitive to the final
capitalization rate chosen, with small changes in the
capitalization rate resulting in significant changes in market
value. Factors considered during the land valuation process
utilized for the comparable sales approach, include, among others,
prominence of location, size, shape, availability of utilities,
zoning, topography, property rights, financing, property
improvements, market conditions and land use mix. Though the three
approaches are interrelated and one or more of the approaches may
be selected by the appraiser depending on applicability, generally
in the appraisal of agricultural property, the comparable sales
approach is most often utilized. In the case of our development
properties, the cost approach tends to be more frequently relied
upon due to the lack of (i) income (as the properties are
under development and are not bearing crops that generate
commercial income) and (ii) comparable sales of cropland farms
undergoing development (sales are typically either of raw land or
of mature farms), and in the early years of development until the
farm is producing a commercially viable crop, despite the
potentially significant capital expenditures, development
properties are often compared to raw land, which may significantly
undervalue the property. While management believes that values
presented fairly reflect current market conditions, such values are
subjective and are based on assumptions, judgments and estimates
that are dependent upon market conditions that are subject to
change without notice and, therefore, may prove to be inaccurate.
Such inaccuracies may have a material impact on the Company’s
overall portfolio valuation. The value of each property will
ultimately be determined by the timing of, and market conditions
that exist upon, the disposition of each property.
FORWARD-LOOKING STATEMENTS
Certain matters discussed in this press release constitute
forward-looking statements within the meaning of the federal
securities laws. These forward-looking statements include, without
limitation, statements concerning projections, predictions,
expectations, estimates, or forecasts as to the Company’s business,
financial or operational results, and future economic performance,
as well as statements of management’s goals and objectives and
other similar expressions concerning matters that are not
historical facts. The words “may,” “believe,” “estimate,” “expect,”
“intend,” “plan,” “predict,” “project,” “forecast,” “potential,”
“will,” “would,” “could,” “should,” “continue,” and similar
expressions or their negatives, as well as statements in future
tense, are intended to identify forward-looking statements,
although not all forward-looking statements contain these
identifying words. The Company may not actually identify any viable
strategic alternatives, execute any strategic alternative, or
achieve the plans, intentions or expectations (including enhancing
shareholder value) disclosed in these forward-looking statements,
and you should not place undue reliance on these forward-looking
statements. Forward-looking statements are based on management’s
beliefs, assumptions and expectations of future performance, taking
into account all information available at the time those statements
are made or management’s good faith belief as of that time with
respect to future events and, accordingly, actual results or events
could differ materially from the plans, intentions and expectations
disclosed in the forward-looking statements. Estimates of the
Company’s value, such as net asset value (NAV), are based on a
variety of assumptions and there can be no assurances that such
estimates will prove accurate. Furthermore, these forward-looking
statements should be considered as subject to the many risks and
uncertainties that exist in the Company’s operations and business
environment. Such risks and uncertainties could cause actual
results to differ materially from those projected. These
uncertainties include, but are not limited to, economic, business
and financial conditions, the Company’s business strategy and
leverage, the Company’s ability to identify and implement any
viable strategic alternatives, generate sufficient cash flow to
service outstanding indebtedness, the Company’s ability to obtain
outside financing, availability, terms and deployment of capital,
general volatility of the capital markets and the market price of
the Company’s common stock, industry, interest rates or the general
economy, degree and nature of competition, risks generally
associated with real estate acquisitions, dispositions and
development, the Company’s ability to identify farms to acquire and
to complete acquisitions, the Company’s ability to effectively
manage growth, the ability of the Company’s tenants to successfully
manage their business and pay contractual rents when due, the
variability in revenues relating to participating rent from crop
yields, crop prices, the timing of payments or other factors,
regulatory and tax law changes and other risk factors, including
those detailed in the sections of the Company’s most recent 10-K
and other filings with the SEC titled “Risk Factors”. Except as
required by law, the Company undertakes no obligation to update
publicly any forward-looking statements for any reason after this
date to conform these statements to actual results or changes in
the Company’s expectations.
AMERICAN FARMLAND COMPANY AND
SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
March 31, 2016 December 31, 2015
ASSETS: Investments in real estate—net $ 236,490,722 $ 171,342,731
Cash and cash equivalents 6,481,725 14,518,788 Rent receivable
1,022,069 1,766,254 Deferred financing costs, net 527,731 558,992
Other assets 665,126 2,099,336 Total assets $
245,187,373 $ 190,286,101
LIABILITIES AND EQUITY:
LIABILITIES: Borrowings under credit facilities $ 80,950,000 $
27,200,000 Accrued expenses and other liabilities 3,661,381
2,377,305 Legacy performance fee payable to Agricultural
Sub-Adviser 1,106,307 1,106,307 Unearned rent 4,091,373
834,858
Total liabilities
89,809,061 31,518,470 Commitments and contingencies
EQUITY: Common stock, $0.01 par value—300,000,000 shares
authorized; 16,921,897 shares issued and outstanding at March 31,
2016 and 16,890,847 shares issued and outstanding at December 31,
2015 169,219 168,908 Additional paid-in-capital 150,033,027
149,846,969 Accumulated deficit (20,646,612 )
(17,644,793 ) Company stockholders’ equity 129,555,634 132,371,084
Non-controlling interests in operating partnership
25,822,678 26,396,547 Total equity 155,378,312
158,767,631 Total liabilities and equity $ 245,187,373 $
190,286,101
AMERICAN FARMLAND COMPANY AND
SUBSIDIARIES
Consolidated Statements of
Operations
(Unaudited)
For the Three Months Ended March 31, 2016
2015 OPERATING REVENUES: Fixed rent $ 2,081,832 $
1,370,894 Participating rent 136,788 822,061 Recovery of real
estate taxes 183,472 116,391 Other income 23,750
18,050 Total operating revenues 2,425,842 2,327,396
OPERATING EXPENSES: Depreciation 954,831 443,980 Management and
performance fees—related party — 689,145 Property operating
expenses 585,108 440,242 Due diligence costs on non-consummated
transactions 136,862 — Professional fees 394,249 99,181
Sub-advisory fees 646,072 — General and administrative expenses
1,609,405 65,015 Total operating expenses
4,326,527 1,737,563 OPERATING (LOSS) INCOME
(1,900,685 ) 589,833 Interest income (872 ) (546 ) Interest
expense and financing costs 372,598 95,860 Total
other expense 371,726 95,314 (LOSS) INCOME BEFORE
LOSS ON SALE OF ASSETS (2,272,411 ) 494,519 Loss on sale of assets
(7,258 ) — (LOSS) INCOME BEFORE INCOME TAXES
(2,279,669 ) 494,519 Income tax provision 34,053
79,832 NET (LOSS) INCOME (2,313,722 ) 414,687 Less net (loss)
income attributable to non-controlling interests (369,522 )
128,757 NET (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY $
(1,944,200 ) $ 285,930 (LOSS) EARNINGS PER WEIGHTED AVERAGE COMMON
SHARE: Basic and diluted $ (0.12 ) $ 0.03
WEIGHTED AVERAGE SHARES OF COMMON STOCK
OUTSTANDING:
Basic and diluted 16,901,083 10,890,847
Reconciliation of Net Income Attributable to the Company to
FFO, Core FFO and AFFO Attributable to the Company
The following table sets forth a reconciliation of FFO
attributable to the Company, Core FFO attributable to the Company
and AFFO attributable to the Company to net income attributable to
the Company, the most directly comparable GAAP equivalent, for the
periods presented.
For the Three Months Ended March 31, 2016
2015 Net (loss) income attributable to the Company $
(1,944,200 ) $ 285,930 Loss on sale of assets 7,258 — Depreciation
954,831 443,980 Non-controlling interests' share of above
adjustments (155,950 ) (76,243 )
FFO attributable
to the Company (1,138,061 ) 653,667
Weighted average shares 16,901,083 10,890,847
FFO attributable
to the Company per share $ (0.07 )
$ 0.06 FFO attributable to the Company
(1,138,061 ) 653,667 Performance fees—related party(1) — 276,858
Due diligence costs on non-consummated transactions 136,862 —
One-time expenses(2) 335,070 — Non-controlling interests' share of
above adjustments (76,498 ) (36,416 )
Core FFO
attributable to the Company (742,627 )
894,109 Weighted average shares 16,901,083
10,890,847
Core FFO attributable to the Company per share
$ (0.04 ) $ 0.08 Core FFO
attributable to the Company $ (742,627 ) $ 894,109 Amortization of
deferred financing costs 33,938 14,561 Straight line rent
adjustment(3) 1,275,573 1,999 Stock based compensation expense
283,913 — Non-controlling interests' share of above adjustments
(258,286 ) (2,844 )
AFFO attributable to the
Company 592,511 907,825 Weighted average shares
16,901,083 10,890,847
AFFO attributable to the Company per
share $ 0.04 $ 0.08 (1)
The Company’s prior external advisor previously received
performance allocations, which are referred to as performance fees.
Upon the consummation of the Internalization Transaction and
concurrent with the Offering, these fees were no longer payable.
(2) Includes recruitment fees and compensation expenses (whereby
the Company paid for incentive compensation forgone with a prior
employer) incurred in the hiring of an executive. (3) For the three
months ended March 31, 2016, includes the straight-line rent
adjustment related to the cash rents received for the portion of
the 2015/2016 crop season which commenced in advance of the lease
commencement dates for the Sun Dial properties, which rents are
being recognized as operating revenues on a straight-lined basis
over the respective lease terms. The Company received $1.9 million
of cash rents from the four Sun Dial properties during the first
quarter of 2016 and recorded GAAP fixed rent operating revenues of
$0.6 million for these four properties.
Reconciliation of Net Income Attributable to the Company to
NOI
The following table sets forth a reconciliation of NOI to Net
Income Attributable to the Company, the most directly comparable
GAAP equivalent, for the periods presented.
For the Three Months Ended March 31, 2016
2015 Net (loss) income attributable to the
Company $ (1,944,200 ) $
285,930 Net (loss) income attributable to non-controlling
interests (369,522 ) 128,757 Income tax provision 34,053 79,832
Loss on sale of assets 7,258 — Total other expense 371,726
95,314
Operating (loss) income (1,900,685
) 589,833 Depreciation 954,831 443,980 Straight line
rent adjustment(1) 1,275,573 1,999 Management and performance
fees—related party — 689,145 Due diligence costs on non-consummated
transactions 136,862 — Professional fees(2) 384,764 97,453
Sub-advisory fees 646,072 — General and administrative expenses
1,609,405 65,015
NOI $ 3,106,822
$ 1,887,425 (1) For the three months
ended March 31, 2016, includes the straight-line rent adjustment
related to the cash rents received for the portion of the 2015/2016
crop season which commenced in advance of the lease commencement
dates for the Sun Dial properties, which rents are being recognized
as operating revenues on a straight-lined basis over the respective
lease terms. The Company received $1.9 million of cash rents from
the four Sun Dial properties during the first quarter of 2016 and
recorded GAAP fixed rent operating revenues of $0.6 million for
these four properties. (2) Excludes professional fees incurred at
the property operating level.
Reconciliation of Net Asset Value (NAV) per Share to Company
Stockholders’ Equity
The following table provides a reconciliation of Net Asset Value
(NAV) per fully diluted share to Company stockholders’ equity as of
December 31, 2015.
As of December 31, 2015 Company
stockholders' equity $ 132,371,084 Revaluation adjustment
attributable to the Company(1) 37,419,678
Company stockholders' equity determined on
the basis of fair value(2)
169,790,762 Number of fully diluted common shares outstanding
16,890,847 NAV per share(3)
$ 10.05 (1)
Represents the difference between the appraised value of
each property and its net book value, after accumulated
depreciation and after adding back any acquisition-related expenses
that were expensed. The revaluation adjustment attributable to the
Company excludes the portion attributable to non-controlling
interests. (2) Increases in fair value are primarily driven by
changes in independent third-party appraisals, additional
development costs and acquisition-related expenses. (3) Net of
cumulative dividends paid. The estimated NAV per share following
the Offering and giving effect to the $2.52 per share dilutive
effect of the Offering and Internalization Transaction was $9.64
per share.
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version on businesswire.com: http://www.businesswire.com/news/home/20160516006419/en/
American Farmland CompanyLindsey Sichel or Andreas Spitzer,
212-484-3000www.americanfarmlandcompany.com
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