Gladstone Land Corporation (NASDAQ:LAND) (the “Company”) today
reported financial results for the fourth quarter and year ended
December 31, 2016.
A reconciliation of funds from operations (“FFO”), Core FFO
(“CFFO”) and Adjusted FFO (“AFFO”), all non-GAAP (generally
accepted accounting principles in the United States) financial
measures, to net income, to which the Company believes is the most
directly-comparable GAAP measure for each, and a computation of
fully-diluted net income, FFO, CFFO and AFFO per weighted-average
share is set forth in the Quarterly and Annual 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, to which the Company
believes is its most directly-comparable GAAP measure, is also
located at the end of this press release. All per-share
references are to fully-diluted, weighted-average shares of common
stock of the Company unless otherwise noted. For further
detail, please refer to the Company’s Annual Report on Form 10-K
(the “Form 10-K”), filed today with the U.S. Securities and
Exchange Commission (the “SEC”), which can be retrieved from the
SEC’s website at www.SEC.gov or from the Company’s website at
www.GladstoneLand.com.
Please note that the limited information that follows in this
press release is not adequate for making an informed investment
judgment.
|
Quarterly Summary Information |
|
For and As of the Quarters Ended |
|
Change |
|
Change |
|
12/31/2016 |
|
9/30/2016 |
|
($ / #) |
|
(%) |
Operating Data: |
|
|
|
|
|
|
|
Total operating revenues |
$ |
4,920,325 |
|
|
$ |
4,469,174 |
|
|
$ |
451,151 |
|
|
10.1 |
% |
Total operating expenses, net of credits |
(2,663,809 |
) |
|
(2,663,340 |
) |
|
(469 |
) |
|
— |
% |
Other expenses, net |
(2,173,481 |
) |
|
(1,771,233 |
) |
|
(402,248 |
) |
|
22.7 |
% |
Net income available to common stockholders and OP
Unitholders |
$ |
83,035 |
|
|
$ |
34,601 |
|
|
$ |
48,434 |
|
|
140.0 |
% |
Plus: Real estate and intangible depreciation and
amortization |
1,443,720 |
|
|
1,431,846 |
|
|
11,874 |
|
|
0.8 |
% |
FFO available to common stockholders and OP
Unitholders |
$ |
1,526,755 |
|
|
$ |
1,466,447 |
|
|
$ |
60,308 |
|
|
4.1 |
% |
Plus: Acquisition-related expenses |
3,676 |
|
|
122,841 |
|
|
(119,165 |
) |
|
(97.0 |
)% |
Plus: Acquisition-related accounting fees |
36,750 |
|
|
50,500 |
|
|
(13,750 |
) |
|
(27.2 |
)% |
CFFO available to common stockholders and OP
Unitholders |
$ |
1,567,181 |
|
|
$ |
1,639,788 |
|
|
$ |
(72,607 |
) |
|
(4.4 |
)% |
Net rent adjustment(1) |
(123,579 |
) |
|
(146,192 |
) |
|
22,613 |
|
|
(15.5 |
)% |
Plus: Amortization of deferred financing costs |
105,992 |
|
|
65,584 |
|
|
40,408 |
|
|
61.6 |
% |
AFFO available to common stockholders and OP
Unitholders |
$ |
1,549,594 |
|
|
$ |
1,559,180 |
|
|
$ |
(9,586 |
) |
|
(0.6 |
)% |
|
|
|
|
|
|
|
|
Share and Per-Share Data: |
|
|
|
|
|
|
|
Weighted-average common shares outstanding – basic and diluted |
10,024,875 |
|
|
10,018,331 |
|
|
6,544 |
|
|
0.1 |
% |
Weighted-average OP Units outstanding(2) |
1,225,478 |
|
|
854,116 |
|
|
371,362 |
|
|
43.5 |
% |
Weighted-average total shares outstanding |
11,250,353 |
|
|
10,872,447 |
|
|
377,906 |
|
|
3.5 |
% |
|
|
|
|
|
|
|
|
Diluted net income per weighted-average total share |
$ |
0.007 |
|
|
$ |
0.003 |
|
|
$ |
0.004 |
|
|
132.0 |
% |
Diluted FFO per weighted-average total share |
$ |
0.136 |
|
|
$ |
0.135 |
|
|
$ |
0.001 |
|
|
0.6 |
% |
Diluted CFFO per weighted-average total share |
$ |
0.139 |
|
|
$ |
0.151 |
|
|
$ |
(0.012 |
) |
|
(7.6 |
)% |
Diluted AFFO per weighted-average total share |
$ |
0.138 |
|
|
$ |
0.143 |
|
|
$ |
(0.005 |
) |
|
(4.0 |
)% |
Cash distributions declared per common share |
$ |
0.128 |
|
|
$ |
0.124 |
|
|
$ |
0.004 |
|
|
3.0 |
% |
|
|
|
|
|
|
|
|
Balance Sheet Data: |
|
|
|
|
|
|
|
Net investments in real estate, at cost(3) |
$ |
325,746,790 |
|
|
$ |
308,737,982 |
|
|
$ |
17,008,808 |
|
|
5.5 |
% |
Total assets |
$ |
333,985,019 |
|
|
$ |
316,306,732 |
|
|
$ |
17,678,287 |
|
|
5.6 |
% |
Total indebtedness(4) |
$ |
237,509,029 |
|
|
$ |
217,230,127 |
|
|
$ |
20,278,902 |
|
|
9.3 |
% |
Total equity |
$ |
87,777,162 |
|
|
$ |
86,545,055 |
|
|
$ |
1,232,107 |
|
|
1.4 |
% |
Total common shares + OP Units outstanding(2) |
11,474,133 |
|
|
11,240,181 |
|
|
233,952 |
|
|
2.1 |
% |
|
|
|
|
|
|
|
|
Other Data: |
|
|
|
|
|
|
|
Cash flows from operations |
$ |
1,190,642 |
|
|
$ |
947,327 |
|
|
$ |
243,315 |
|
|
25.7 |
% |
Farms owned |
58 |
|
|
56 |
|
|
2 |
|
|
3.6 |
% |
Acres owned |
50,592 |
|
|
33,800 |
|
|
16,792 |
|
|
49.7 |
% |
Occupancy rate |
100.0 |
% |
|
100.0 |
% |
|
— |
|
|
— |
% |
Farmland portfolio value |
$ |
401,121,991 |
|
|
$ |
379,983,991 |
|
|
$ |
21,138,000 |
|
|
5.6 |
% |
Net asset value per share |
$ |
14.21 |
|
|
$ |
13.68 |
|
|
$ |
0.53 |
|
|
3.9 |
% |
(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
1,449,258 and 1,215,306 OP Units held by non-controlling limited
partners as of December 31 and September 30, 2016,
respectively.(3) Consists of the initial acquisition price
(including the costs allocated to both tangible and intangible
assets acquired and liabilities assumed), plus subsequent
improvements and other capitalized costs associated with the
properties, and adjusted for accumulated depreciation and
amortization.(4) Includes the principal balances outstanding
of all borrowings, including mortgage notes and bonds payable and
lines of credit, plus our Term Preferred Stock.
|
Annual Summary Information |
|
For and As of the Years Ended |
|
Change |
|
Change |
|
12/31/2016 |
|
12/31/2015 |
|
($ / #) |
|
(%) |
Operating Data: |
|
|
|
|
|
|
|
Total operating revenues |
$ |
17,316,617 |
|
|
$ |
11,901,461 |
|
|
$ |
5,415,156 |
|
|
45.5 |
% |
Total operating expenses, net of credits |
(10,260,030 |
) |
|
(7,332,680 |
) |
|
(2,927,350 |
) |
|
39.9 |
% |
Other expenses, net |
(6,583,099 |
) |
|
(4,000,236 |
) |
|
(2,582,863 |
) |
|
64.6 |
% |
Net income available to common stockholders and OP
Unitholders |
$ |
473,488 |
|
|
$ |
568,545 |
|
|
$ |
(95,057 |
) |
|
(16.7 |
)% |
Plus: Real estate and intangible depreciation and
amortization |
5,187,249 |
|
|
3,113,492 |
|
|
2,073,757 |
|
|
66.6 |
% |
Less: Gains on sale of real estate |
— |
|
|
(14,483 |
) |
|
14,483 |
|
|
(100.0 |
)% |
FFO available to common stockholders and OP
Unitholders |
$ |
5,660,737 |
|
|
$ |
3,667,554 |
|
|
$ |
1,993,183 |
|
|
54.3 |
% |
Plus: Acquisition-related expenses |
246,389 |
|
|
467,048 |
|
|
(220,659 |
) |
|
(47.2 |
)% |
Plus: Acquisition-related accounting fees |
114,650 |
|
|
90,040 |
|
|
24,610 |
|
|
27.3 |
% |
(Minus) plus: Other (receipts) charges, net(1) |
— |
|
|
(408,172 |
) |
|
408,172 |
|
|
(100.0 |
)% |
CFFO available to common stockholders and OP
Unitholders |
$ |
6,021,776 |
|
|
$ |
3,816,470 |
|
|
$ |
2,205,306 |
|
|
57.8 |
% |
Net rent adjustment(2) |
(439,134 |
) |
|
(483,080 |
) |
|
43,946 |
|
|
(9.1 |
)% |
Plus: Amortization of deferred financing costs |
241,302 |
|
|
106,806 |
|
|
134,496 |
|
|
125.9 |
% |
AFFO available to common stockholders and OP
Unitholders |
$ |
5,823,944 |
|
|
$ |
3,440,196 |
|
|
$ |
2,383,748 |
|
|
69.3 |
% |
|
|
|
|
|
|
|
|
Share and Per-Share Data: |
|
|
|
|
|
|
|
Weighted-average common shares outstanding – basic and diluted |
10,007,350 |
|
|
8,639,397 |
|
|
1,367,953 |
|
|
15.8 |
% |
Weighted-average OP Units outstanding(3) |
766,351 |
|
|
— |
|
|
766,351 |
|
|
— |
Weighted-average total shares outstanding |
10,773,701 |
|
|
8,639,397 |
|
|
2,134,304 |
|
|
24.7 |
% |
|
|
|
|
|
|
|
|
Diluted net income per weighted-average total share |
$ |
0.044 |
|
|
$ |
0.066 |
|
|
$ |
(0.022 |
) |
|
(33.2 |
)% |
Diluted FFO per weighted-average total share |
$ |
0.525 |
|
|
$ |
0.425 |
|
|
$ |
0.101 |
|
|
23.8 |
% |
Diluted CFFO per weighted-average total share |
$ |
0.559 |
|
|
$ |
0.442 |
|
|
$ |
0.117 |
|
|
26.5 |
% |
Diluted AFFO per weighted-average total share |
$ |
0.541 |
|
|
$ |
0.398 |
|
|
$ |
0.142 |
|
|
35.8 |
% |
Cash distributions declared per common share |
$ |
0.495 |
|
|
$ |
0.465 |
|
|
$ |
0.030 |
|
|
6.5 |
% |
|
|
|
|
|
|
|
|
Balance Sheet Data: |
|
|
|
|
|
|
|
Net investments in real estate, at cost(4) |
$ |
325,746,790 |
|
|
$ |
222,196,559 |
|
|
$ |
103,550,231 |
|
|
46.6 |
% |
Total assets |
$ |
333,985,019 |
|
|
$ |
228,684,025 |
|
|
$ |
105,300,994 |
|
|
46.0 |
% |
Total indebtedness(5) |
$ |
237,509,029 |
|
|
$ |
142,733,157 |
|
|
$ |
94,775,872 |
|
|
66.4 |
% |
Total equity |
$ |
87,777,162 |
|
|
$ |
78,006,719 |
|
|
$ |
9,770,443 |
|
|
12.5 |
% |
Total common shares + OP Units outstanding(3) |
11,474,133 |
|
|
9,992,941 |
|
|
1,481,192 |
|
|
14.8 |
% |
|
|
|
|
|
|
|
|
Other Data: |
|
|
|
|
|
|
|
Cash flows from operations |
$ |
8,402,522 |
|
|
$ |
4,753,835 |
|
|
$ |
3,648,687 |
|
|
76.8 |
% |
Farms owned |
58 |
|
|
43 |
|
|
15 |
|
|
34.9 |
% |
Acres owned |
50,592 |
|
|
16,810 |
|
|
33,782 |
|
|
201.0 |
% |
Occupancy rate |
100.0 |
% |
|
100.0 |
% |
|
— |
|
|
— |
% |
Farmland portfolio value |
$ |
401,121,991 |
|
|
$ |
285,315,980 |
|
|
$ |
115,806,011 |
|
|
40.6 |
% |
Net asset value per share |
$ |
14.21 |
|
|
$ |
14.20 |
|
|
$ |
0.01 |
|
|
0.1 |
% |
(1) 2015 adjustments consist of the removal of (i) a credit
received from our Adviser related to a property acquisition, (ii)
repairs incurred as a result of a fire on one of our properties in
2014 that were expensed during 2015, and (iii) insurance proceeds
received during 2015 as a result of the same fire.(2) 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.(3) There were 1,449,258 and zero OP Units held
by non-controlling limited partners as of December 31, 2016
and 2015, respectively.(4) 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.(5) Includes the principal balances outstanding
of all borrowings, including mortgage notes and bonds payable and
lines of credit.
Highlights for Fiscal Year
2016:
- Property Acquisitions: Acquired 15 new
farms, consisting of 33,780 total acres, for approximately $99.7
million. On a weighted-average basis, these farms were
acquired at an initial, overall capitalization rate of 5.2%, with
provisions within certain of the leases (such as revenue-sharing
agreements or upward rental resets based on increases in inflation
indices) expected to drive that figure higher in future years;
- Leasing Activities: Renewed two leases
with existing tenants, both of which were originally set to expire
in 2016, resulting in an average increase in overall annualized
income of 13.4% compared to that of the previous leases;
- Project Completions: Completed certain
irrigation improvements on three of our farms at a total cost of
approximately $2.1 million, which, as stipulated in the respective
lease agreements, will result in additional straight-line rental
income to us of approximately $285,000 per year;
- Financing Activities:
- Obtained an aggregate of $54.4 million of new, long-term
borrowings at an expected weighted-average effective interest rate
of 3.06%, which rates are fixed for a weighted-average term of
eight years;
- Amended borrowing facilities with our two largest lenders:
- Expanded our borrowing facility with Federal Agricultural
Mortgage Corporation (commonly referred to as "Farmer Mac") by
66.7%, increasing the size from $75.0 million to $125.0 million,
and extended its term by two years; and
- Amended our credit facility with Metropolitan Life Insurance
Company (commonly referred to as "MetLife"), through which we did
the following:
- Expanded the overall size of the facility from $125 million to
$200 million;
- Reduced the interest rate on approximately $85.9 million of
existing borrowings by 19 basis points, resulting in annual
interest savings of approximately $163,000, and fixed the new rate
at 3.16% for 10 years; and
- Increased the overall loan-to-value ratio on the underlying
collateral from 58% to 60%; and
- Issued $28.8 million of 6.375% term preferred stock, which is
mandatorily-redeemable in five years (the “Term Preferred Stock”);
and
- In connection with certain acquisitions during the year, issued
1,449,258 units of limited partnership interests in our operating
partnership (“OP Units”) at a weighted-average price of $9.90 per
OP Unit, constituting an aggregate fair value of approximately
$14.4 million as of the acquisition dates; and
Distributions:
- Increased our monthly cash distributions twice during the year
for a total increase in our distribution run rate of 6.3%; and
- Paid total cash distributions during the year of $0.495 per
share of common stock (including OP Units held outside of the
Company).
Q4 2016 Results: Net income for the
quarter was approximately $83,000, or $0.01 per share, compared to
approximately $35,000, or $0.00 per share, in the prior
quarter. AFFO for the quarter was approximately $1.5 million,
or $0.14 per share, which decreased slightly from the prior
quarter, primarily due to an increase in the performance-based
incentive fee earned by our adviser during the quarter, additional
dividend payments made on our Term Preferred Stock, which was only
outstanding for a portion of the prior quarter, and increased
interest expense due to additional borrowings. Increases in
these expenses were mostly offset by additional rental income
recorded as a result of our recent acquisitions. We declared
and paid distributions during the quarter of $0.1275 per share.
For the fourth quarter, our core operating expenses (which we
define as our total operating expenses, less depreciation and
amortization expense, acquisition-related expenses, any fee
credits, and certain other one-time expenses) increased by
approximately $108,000, or 9.7%, from the previous quarter,
primarily due to an increase in the incentive fee earned by our
adviser. Excluding the incentive fees earned in each of the
comparable quarters, our core operating expenses decreased by
approximately $39,000, or 3.6%, from the previous quarter,
primarily due to lower professional fees (mainly additional
third-party appraisal fees incurred in the prior quarter for
updating the valuations on certain of our farms) and lower general
and administrative expenses (due to writing off approximately
$21,000 of bad debt expense in the prior quarter).
Our NAV per share increased by $0.53 from the prior quarter to
$14.21 at December 31, 2016, primarily due to (i) a rise in
market interest rates, which led to a devaluation of our long-term,
fixed-rate borrowings, and (ii) an increase of approximately $3.0
million, or $0.26 per share, due to the net appreciation in value
of our farmland portfolio, the majority of which was a result of
the near completion of an almond orchard development project on one
of our California farms.
FY 2016 Results: Net income for the year
was approximately $473,000, or $0.04 per share, compared to
approximately $569,000, or $0.07 per share, in the prior
year. AFFO for the year was approximately $5.8 million, or
$0.54 per share, compared to approximately $3.4 million, or $0.40
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 Term Preferred Stock).
Subsequent to December 31,
2016:
- Property Acquisition: Acquired an
organic vegetable farm in Florida, consisting of 3,748 total acres,
for $54.0 million at an initial capitalization rate of 5.0%;
- Financing Activities:
Obtained $32.4 million in new, long-term borrowings from an
existing lender at a weighted-average effective interest rate of
3.33%, which rates, on a weighted-average basis, are fixed for the
next 5+ years; and
- Increased Distributions: Increased our
distribution run rate by 1.2%, declaring monthly cash distributions
of $0.043 per share of common stock (including OP Units held
outside of the Company) for each of January, February, and March,
2017. This marks our fifth distribution increase over the
past 25 months, during which time we’ve increased the distribution
run rate by a total of 43.3%.
Comments from David Gladstone, President and CEO of the
Company: “2016 was our strongest year, and we
believe that 2017 will be even better, as we started the year by
making our largest acquisition to date. We've grown the
number of farms we own at a steady pace with high-quality farms
that we believe will continue to help us increase our distributions
to shareholders. This growth has led to increased earnings
(which we measure primarily by AFFO) per share, which, in turn,
allowed us to increase the distribution rate on our common stock
twice during the year. We have now increased the
distributions on our common stock five times over the past 25
months for a total increase of 43% over that time. And these
distributions we pay out to our stockholders have been fully
covered by our funds from operations for the past five
quarters. We are seeking to continue to increase our
distributions to stockholders as we increase our earnings, or
AFFO."
Conference Call for
Stockholders: The Company will hold a conference
call on Wednesday, February 22, 2017, 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 March 22, 2017. To hear the replay, please
dial (855) 859-2056, and use playback conference number
56219748. 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 22,
2017.
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 intends to
report the current fair value of its farmland on a quarterly basis;
as of December 31, 2016, the estimated net asset value of the
Company was $14.21 per share. Gladstone Land currently owns
59 farms, comprised of 54,340 acres in 7 different states across
the U.S., valued at approximately $455 million. Its acreage
is predominantly concentrated in locations where its tenants are
able to grow fresh produce annual row crops, such as berries and
vegetables, which are planted and harvested annually or more
frequently, as well as permanent crops, such as almonds,
blueberries, and pistachios, which are planted every 10 to 20-plus
years. The Company also may acquire property related to
farming, such as cooling facilities, processing buildings,
packaging facilities, and distribution centers. Gladstone
Land has paid 48 consecutive monthly cash distributions on its
common stock since its initial public offering in January
2013. The current per-share distribution is $0.043 per month,
or $0.516 per year. Additional information can be found at
www.GladstoneLand.com and www.GladstoneFarms.com.
Owners or brokers who have farmland for sale in the U.S. should
contact:
- Bill Frisbie at (703) 287-5839 or Bill.F@GladstoneLand.com –
Eastern U.S.
- Bill Reiman at (805) 263-4778 or Bill.R@GladstoneLand.com –
Western U.S.
- Bill Hughes at (618) 606-2887 or Bill.H@GladstoneLand.com –
Midwest U.S.
For stockholder information on Gladstone Land, call (703)
287-5893. Information on the business activities of all of
the Gladstone funds can be found at
www.GladstoneCompanies.com. For Investor Relations inquiries
related to any of the monthly dividend paying Gladstone funds,
please visit www.Gladstone.com.
Non-GAAP Financial Measures:
FFO: The National
Association of Real Estate Investment Trusts (“NAREIT”) developed
FFO as a relative non-GAAP supplemental measure of operating
performance of an equity REIT in order to recognize that
income-producing real estate historically has not depreciated on
the basis determined under GAAP. FFO, as defined by NAREIT,
is net income (computed in accordance with GAAP), excluding gains
(or losses) from sales of property and impairment losses on
property, plus depreciation and amortization of real estate assets,
and after adjustments for unconsolidated partnerships and joint
ventures. The Company believes that FFO per share provides
investors with an additional context for evaluating its financial
performance and as a supplemental measure to compare it to other
REITs; however, comparisons of its FFO to the FFO of other REITs
may not necessarily be meaningful due to potential differences in
the application of the NAREIT definition used by such other
REITs.
CFFO: CFFO is FFO,
adjusted for items that are not indicative of the results provided
by the Company’s operating portfolio and affect the comparability
of the Company’s period-over-period performance. These items
include certain non-recurring items, such as acquisition-related
expenses, income tax provisions and property and casualty losses or
recoveries. Although the Company’s calculation of CFFO
differs from NAREIT’s definition of FFO and may not be comparable
to that of other REITs, the Company believes it is a meaningful
supplemental measure of its sustainable operating
performance. Accordingly, CFFO should be considered a
supplement to net income computed in accordance with GAAP as a
measure of our performance. For a full explanation of the
adjustments made to arrive at CFFO, please read the Company’s Form
10-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:
|
|
|
|
|
|
Total equity per
balance sheet |
|
|
$ |
87,777,162 |
|
Fair value adjustment
for long-term assets: |
|
|
|
Less: net cost basis of tangible and intangible real estate
holdings(1) |
$ |
(325,746,790 |
) |
|
|
Plus: estimated fair value of real estate holdings(2) |
401,121,991 |
|
|
|
Net fair
value adjustment for real estate holdings |
|
|
75,375,201 |
|
Fair value adjustment
for long-term liabilities: |
|
|
|
Plus: book value of aggregate long-term indebtedness(3) |
220,959,029 |
|
|
|
Less: fair value of aggregate long-term
indebtedness(3)(4) |
(221,052,764 |
) |
|
|
Net fair
value adjustment for long-term indebtedness |
|
|
(93,735 |
) |
Estimated
NAV |
|
|
$ |
163,058,628 |
|
|
|
|
|
Total
shares outstanding(5) |
|
|
11,474,133 |
|
|
|
|
|
Estimated NAV
per share |
|
|
$ |
14.21 |
|
(1) Consists of the initial acquisition price (including
the costs allocated to both tangible and intangible assets acquired
and liabilities assumed), plus subsequent improvements and other
capitalized costs associated with the properties, and adjusted for
accumulated depreciation and amortization.(2) As determined by
the Company's valuation policy and approved by its board of
directors.(3) Includes the principal balances outstanding of
all long-term borrowings (consisting of mortgage notes and bonds
payable) and the Term Preferred Stock.(4) Long-term mortgage
notes and bonds payable were valued using a discounted cash flow
model. The Term Preferred Stock was valued based on its
closing stock price as of December 31, 2016.(5) Includes
$10,024,875 shares of common stock and 1,449,258 OP Units held by
non-controlling limited partners (representing 12.6% of all OP
Units issued and outstanding).
Comparison of estimated NAV and estimated NAV per share to
similarly-titled measures for other REITs may not necessarily be
meaningful due to possible differences in the calculation or
application of the definition of NAV used by such REITs. In
addition, the trading price of our common shares may differ
significantly from our most recent estimated NAV per share
calculation. The Company’s independent auditors have neither
audited nor reviewed our calculation of NAV or NAV per share.
For a full explanation of our valuation policy, please read the
Company’s Form 10-K, filed today with the SEC.
Certain statements in this press release, including, but not
limited to, the Company’s ability to maintain or grow its portfolio
and FFO, expected increases in capitalization rates, benefits from
increases in farmland values, increases in operating revenues, and
the increase in net asset value per share are “forward-looking
statements” within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. These forward-looking statements
inherently involve certain risks and uncertainties, although they
are based on the Company’s current plans that are believed to be
reasonable as of the date of this press release. Factors that
may cause actual results to differ materially from these
forward-looking statements include, but are not limited to, the
Company’s ability to procure financing for investments; downturns
in the current economic environment; the performance of its
tenants; the impact of competition on its efforts to renew existing
leases or re-lease real property; and significant changes in
interest rates. Additional factors that could cause actual
results to differ materially from those stated or implied by its
forward-looking statements are disclosed under the caption "Risk
Factors" of its Form 10-K for the fiscal year ended
December 31, 2016, as filed with the SEC on February 21,
2017. 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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