Q4 2020 Gladstone Land Corp Earnings Call
We are really strong results that we think we're going to have in 'twenty and 'twenty one.
[noise] participation rents in us or similar to last year that we experienced in 2020 of about $2 4 million versus $2 $3 million in 2019.
Hopeful of being able to report a very nice increase in participation rents in 2021.
We have some participation rents that are coming in this year that should push us up beyond 2.4, we will see when we get there we continue to be able to renew all of our expiring leases without incurring any downtime on any of our farms, we continued to execute renewals that.
Overall higher rental rates on farms, and the especially in the regions, we focus and.
Each of the Kosta are of strong we continue to see that grow but we're still having thank goodness. We don't have a lot of farms. There, we're still having not much increase in rents in the mid west.
The rent collections.
To have remained strong for us we've collected all of the base rents owed during 2020, except for about $43000 from one tenant says the tenant who fell into financial difficulty. After the government shut his operations down and doing an inspection on us.
Farm for something like list area or some other problem.
We don't expect to be able to collect this amount a he's got a real problem, but we did replace that tenant on that farm.
With the larger tenant under a 10 year lease and the rental rate was a little bit higher than we had on the previous rent it was about 5% higher.
Well, we had an excellent year for 'twenty and 'twenty it'd be really hard to.
Fault that year at all so for 'twenty and 'twenty. One we started out we've collected all of the base rents except for about $97000 from two tenants are those two tenants of just fallen behind a little bit because of the fruits and vegetables, they're collecting so we will end up collecting those over the next.
Coming months over all of the operations of our farms remained relatively strong the demand for the products has grown very nicely and these are products like berries, vegetables, and nuts, which are center of our of things that we're doing majority.
The majority of the crops grown by the farmers, we lease our farms too are sold to grocery stores and that's the that's very important to know because we're not selling to restaurants or schools or industrial outlets. So as a result.
We've not had the problem that those areas have the day band for produce and many other foods at grocery stores remains high we expect this to continue in 2021.
Moving on to our total farmland ownership. We currently on about 101000 acres 137 farms Ah ha and it's about $1 2 billion. So we were really excited we didn't throw a part of here, but we should have we are excited to pass the billion dollar of fair market value of the <unk>.
Foreign land, we own our farms are located now in 13 different states more importantly in 27 different growing areas.
Our farms continue to be 100% occupied at least the 81 different tenants all of whom are unrelated to us and the tenants on these farms of growing over 55 different crops. Given now we own a good number of farms that are enough in enough different growing regions with many.
A different farmers and many different types of crops I think we're sufficiently diversified to provide safety and security for the cash flows coming from these rents.
Diversification helps protect the dividend that we pay to our shareholders and that's an important thing for us since we are dividend oriented.
During the fourth quarter of the team acquired 14 farms for about $192 million of member 156 is that was in the last three weeks.
And it was a it was very busy around here doing the end of the year holidays overall of the initial net cash yield to us on these investments during that quarter was about five 5%. In addition, our leases on these farms contain certain provisions such as increases in participations.
And annual Escalations.
That should push that figure higher in the future.
And just a reminder, as my accountants keeps telling me the yield figures. They do include all of the operating expense that we are responsible for its not much but most of these leases are triple net so there should be shouldn't be too many additions to the expense side of it on the leasing front since the beginning of.
Of the fourth quarter, we either executed leases or extended the leases on five of our properties located in California, and Colorado The Lee.
And not California properties were renewed at the same or higher rental rates, while on the collar, Colorado leases were renewed at a little bit lower rates. However, the two Colorado leases, we changed the lease structure, whereby the lower fixed base rent amount was lowered and the additional.
Participation rent component was increase so we were looking at that one to help out the farmer. There. This means that if the farmer has an average of Goodyear will expect the end up similar to where we would have been under the previous lease.
Possibly even better of course of we end up worse at the farm of ends of having a bad year.
But we will not know the overall results of that until the until the pharma collects all of the things that he is growing and selling on the on the properties. Looking ahead, we only have one lease scheduled to expire over the next six months and it makes up less than one half of 1% of our annual lease revenue.
We're in discussions and the existing tenant and well we have some.
We have some potential new tenants.
We arent expected to any downtime on this farm that's coming due during this half of the year overall, we're currently expecting new leases on the farmers to be similar to where they aren't a day.
I don't think we're going to have any problems keeping that cash flow coming on.
One other thing I'd like to talk about is where we are on environmental social and government standards. This is the standard called ESG.
We're stewards of of agricultural land and in various regions throughout the United States, and we understand our ability and our responsibility to positively affect the environment in which we operate we are developing of good ESG standard unique to our position within the agricultural industry.
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And once that development has.
Regressed enough then we'll try to define it for you and let you understand what we're trying to do.
Our portfolio is diversified and the operations put us on a unique position to make a significant impact of among a multitude of producers.
With all of their unique opportunities that each one of these farms seems to have something different. So we will have to look at it on a.
Meg a giant scale and then in more detail, we hope to learn from the diversity and become a source of incorporating our learning into various communities and commodities that we operate in both now and in the future of finally I wanted to briefly mention that we file for a new company called Gladstone.
<unk>, it's a special purpose acquisition Corp of ours spak of lot of people don't like it but it's just another way of becoming public.
And in this relationship.
It is very similar to the Gladstone land, except that it is.
Possibly the first and maybe.
Maybe it will make that one as big as this one over the next five years, it's going to be buying the operating assets of the.
These farms over the past several years, we've had some of the owners come to us and say by their business and in some cases, we'd offered of by just the land what they wanted to keep the land and the operations together.
So as a REIT and Gladstone land can't own operating companies because the operating income is not permitted in the REIT standards for tax purposes.
And Gladstone the acquisitions back was created potentially to take advantage of such opportunities as when Gladstone land would not participate.
So what we do is highly dependent on the kind of large farming businesses. We may buy at this point, we don't have any large farm operations the identified but if we do we'll continue to make sure that all potential conflicts of interest with Gladstone land are appropriate resolved with our board of directors.
We will keep you informed on that we have this situation with our other companies. The two bdcs and we have of procedure in place for doing all of that now to make sure. It works and we'll be back to you. Once we decide how we're going to integrate the two companies, but certainly those that are buying operations.
We will have to we have to make sure. They go into this new company. So let me stop at this point I'll be back in a little while the talk some more about it and we'll go to Lewis and Lewis take.
Sure. Thank you David and good morning, everyone I'll begin with our balance sheet during the fourth quarter of total assets increased by about $189 million, primarily due to a new farm acquisitions.
From a financing perspective during and subsequent to the fourth quarter, we secured about $154 million of new long term borrowings at a weighted average rate of 283%, which is fixed for the next eight plus years on.
On the equity side since the beginning of the fourth quarter, we raised about $65 million of net proceeds through sales of our common stock.
The follow on offering that we completed in October the which we raised $26 million of an offering price of $14 40 per share.
And about $39 million of sales through our ATM program at an average issuance price of $14 70 per share.
Over the same type of period. We've also raised about $22 million of net proceeds from sales of the series C preferred stock.
As of the series B preferred stock, which we recently listed on NASDAQ under the ticker of land Oh, our plan with the series C preferred stock is the sort of small amounts over the course of the next several years. So that we're better able to match the timing of the proceeds coming in with finding new farms the bi.
And finally, just last month, we raised about $58 million of net proceeds through the issuance of a new 5% series B term preferred stock, which is also traded on NASDAQ under the ticker of land M.
About $29 million of these proceeds were used to redeem our series a term preferred stock, which carried a coupon of six $3 75 per cent and had a mandatory redemption date of September 2021.
Moving on to our operating results.
First I'll note that for the fourth quarter, we had net income of about $91000 net loss of common shareholders of $2 4 million.
<unk> per common share for.
For the year, we had net income of $5 million net.
The net loss per common shareholders of $4 $4 million for $19.05 per common share.
On.
On a quarter over quarter basis, adjusted <unk> for the fourth quarter was approximately $3 6 million compared to $3 $1 million on the third quarter, an increase of about 14%.
The per share was $14 seven in the fourth quarter versus $14.03 in the third quarter, an increase of about 3% increase.
The increases to the per share figures were a bit muted due to the equity proceeds raised during the quarter, we have not yet been fully invested.
Dividends declared per share were $13.05 in the fourth quarter and $13.04 in the third quarter on.
Annual basis adjusted <unk> for 2020 was about $14 3 million compared to $11 $3 million in 2019, an increase of 27%.
<unk> per share was $64 one from 2020 versus $56 eight of 2019 increase of 13%.
Dividends declared per share were <unk> $53 seven from 2020 and 53 four in 2019.
Our payout ratios using the <unk> was about 84% of 2020 versus 94% in 2019.
The main driver behind the increases in <unk> over the higher top line revenues from a cash rent perspective rental income increased by about $1 1 million or 8% on a quarter over quarter basis, and by about $12 3 million or 31% on a year over year basis, and this was primarily primarily due to additional revenues earned on our recent acquisitions.
On the same property basis, and including participation rents, but excluding income recognized due to early lease terminations.
One of 20 of these revenue increased by by approximately $748000 or two 2% over that of 2019. This.
This increase was primarily due to recent lease renewals or amendments at net higher rental rates.
During the fourth quarter, we recorded about $1 $2 million of participation rents compared to $1 $1 million in the third quarter.
Here, we reported participation rents of about $2 4 million versus $2 $3 million last year.
During 2020, we had 19 farms under leases that had an active participation rent component versus 18 farms during 2019.
Several more farms with participation rent components that are scheduled to come on line later in 2021.
On the expense side, excluding reimbursable expenses, and certain nonrecurring or non cash expenses, our core operating expenses increased by about $141000 on a quarter over quarter basis, primarily driven by slightly higher management and incentive fees earned by our adviser during the current quarter.
We're moving our related party fees of core operating expenses were relatively flat increasing by only $8000 from the prior quarter.
On a year over year basis, our core operating expenses increased by about $3 $8 million.
Primarily driven by higher related party fees and partially also due to a credit to certain fees that are granted to us by our adviser during 2019.
We're moving related party fees, our core operating expenses in 2020 decreased by about $820000 from 2019, and this was primarily driven by a decrease in our property operating expenses as we incurred a significant amount of costs. During the first half of 2019 related to the generator rentals. The power of some new wells on one of our properties.
Moving on to net asset value, we only had 10 farms revalued during the quarter and all via third party appraisals and overall the values on these particular funds remained flat from their prior valuations. So as of December 31, our farms were valued at about $1 2 billion.
All of which was valued based on either the third party appraisals or the actual purchase prices.
Based on these updated valuations and including the fair value of our debt and all preferred stock our net asset value per share per common share at December 31 was $12 23.
Which is up by 26 cents of our 2% from last quarter.
The main driver of the increase was the issuance of common stock at prices higher than our estimated NAV as of September 30th.
Turning to our capital makeup and overall liquidity from a leverage standpoint, our loan to value ratio on our total from holding on the fair value basis of net of cash was about 53% at December 31, we.
We continue to be comfortable with our current leverage levels, given the relative low risk of high quality of farmland as an overall asset class and the security of the resulting cash flows.
In addition over 99% of our borrowings are currently at fixed rates and on a weighted average basis. These rates are fixed at 338% for another six years out so.
So we believe we are currently well protected on the debt side against any future interest rate volatility.
And with the weighted average maturity of these borrowings being 10 years out we also feel that we're protected against any potential liquidity issues.
The current economic uncertainty to continue for a prolonged period.
Regarding upcoming debt maturities, we have about $31 million coming due over the next 12 months. However, about $17 million of this represents the maturities of four loans coming due the <unk>.
The property is collateralized on these loans of increase in value by a total of $6 million since their respective acquisitions. So we do not foresee any problems the refinancing any of these loans.
So we're moving those maturities, we only have about $14 million of amortizing principal payments coming due over the next 12 months or about 2% of our total debt outstanding.
From a liquidity standpoint, including available the ability on our lines of credit. We currently have over $70 million of dry powder.
After expanding our credit credit facilities with both the Metlife and farmer Mac. During 2020, we have ample availability under our two largest borrowing facilities and we continue to be in discussions with other lenders for new borrowings and potentially new credit facilities.
We don't currently foresee of credit freeze on AG lending in the near term future borrowings continue to be readily available to us from multiple lenders and at very favorable terms.
Finally, I'll touch on all of our common distributions.
We recently raised our dividend again to four $4 95 per share per month over the past 24 quarters. We've raised our common dividend 21 times, resulting in an overall increase of 40, 983% in our monthly common distributions over this time.
Since 2013, we paid 96 consecutive monthly dividends of common shareholders totaling $4 98 per share in total distributions and of course this flow on top of dividends paid to our preferred shareholders.
Paying dividends to our shareholders is paramount to our business plan and our goal continues to be the increase the common dividend at a rate that outpaces inflation.
We're not quite there yet, but we do believe that we're heading in the right direction.
At our current distribution run rate and with where our common stock prices of the day the yield on our common stock is about two 9% and when considering the relative stability and security of the underlying assets and the related cash flows. We believe the stock offers a compelling investment alternative.
With that I'll turn the program back over to David.
Thank you Louis that was a nice report.
For us the acquisition activity really picked up towards the end of the year. Some of that was generated by tax laws that are expected to change.
Even today, we continue to see a good amount of buying opportunities coming our way.
Probably half of about $250 million worth of backlog.
Probably close on about 80% of that.
But certain aspects of our due diligence process of ended taking a much longer time than normal.
Due to the various travel restrictions.
All of the other things going on in the marketplace out there some of our banks.
All working from home that takes up extra time some of the government offices of close we can't get data that we need but hopefully some of these restrictions will be starting sort of starting to lighten up in the near future and allow us to move a little quicker than we're doing today.
And just the final point or two here I'd like to make we still believe investing in farmland and growing crops that contribute to a healthy lifestyle, such as fruits and vegetables and nuts as well as many of the other tree fruits that we have from cherries, and apples and figs in Orange is sort of makes you hungry for go into lunch today.
So following the trend we're seeing in the market today, that's where we want US day currently about 85% of our total crop revenues come from farms that are growing types of food that you would find in either the producers in that section of your local grocery store.
We consider these foods to be among the healthiest type of foods, and we continue to see a growing trend toward organic among these foods, how about 40% of our fresh produce acreage is either organic or transitioning to organic and over 10% of our permanent crops seas of the tree crops as well as Bush's acreage.
Falls into that same organic category, we believe the orkin organic sector will continue to be of strong growth area. In addition, more than 95% of our crops are in the non GMO categories. So we're aiming toward the healthy side of the.
Food production. Another major reason why our business strategy to focus on farmland growing fresh produce is due to the effect of inflation. According to the Bureau of Labor statistics. The overall annual CPI generally keeps pace with inflation. However over the past 40 years, including many of the current years.
Fruits and the fruits and vegetable segment of the food category has outpaced the total food CPI by a multiple of one six times so the.
The charging more for the fruits and vegetables in the nuts than they have in the past. This is one of many financial advisors tell their clients to invest in farms in farm land because it acts as a hedge against inflation.
And while prices of commodity grain crops, such as corn soy and wheat are typically more volatile and susceptible to global supply and demand fresh produce is mostly insulated from global volatility mainly because of the crops of generally consumed locally within a short time after being harvested.
I'm, telling you this because we often confused with the.
Farms that where the farmers growing corn soy of wheat, which are mostly were staying clear of simply because we have to compete with other countries like Brazil and Argentina in Ukraine.
Where the cost of production and even after shipping is lower than we can produce it for in the United States.
And those farmers can undercut our prices and they have done so in the past so they drive down the price. So that many of our farmers have not been able to make a good living off of their farms theyre growing corn or wheat grain prices are much higher this year, because Brazil, and Argentina have been on a drought.
On the farms and these countries of largely depend on range for water and as you know almost all of our farms have their own source of water even multiple sources. If we are in places like California.
Overall demand for Prime farm land growing berries, and vegetables remains stable to strong in almost every area of our farms, particularly along the west coast, including most of California, Oregon, Washington, and certainly across the East coast, especially in Florida on some of the other states and.
Overall farm the farm land continues to perform well compared to other asset classes. Despite some recent downturns in certain regions of the decrease index of farmland, which is currently made up of about $12 $3 billion worth of of agricultural properties. It's averaged about 13, 6% over the past.
Last 15 years compared with about $10 five for the S&P index and even lower for the overall REIT index. So we're doing something right and I think we're in good shape.
Those 15 years, the farmland index did not have a negative year on like the S&P, which I had two of three negative years over that same period farmland has generally provided investors with the safe Haven during turbulent times and in fact in the financial marketplace as both land prices and food <unk>.
Rice is especially for fresh produce have continued to rise steadily and that certainly was proved out doing this last pandemic.
We've seen prices increase in the grocery stores than most people were buying their food there anyway. So in closing remember that purchasing stock in this company is the long term investment in farm land.
And the investment in our stock really has two parts. One of course is it similar to go. It is after all of the hard assets. That's been here since the beginning of the Earth.
And that has intrinsic value, but the because there's limited amounts of good farm land and it's being used up by urban development, especially in California, and Florida, where we have so many farms.
And second unlike goal and the other alternative assets, it's an active investment with the cash flows to investors and we believe we're better than of bond fund because we keep increasing the dividends.
We expect inflation, particularly in the food sector to increase and we expect the values of the underlying farm land to increase as a result, we expect.
Expect this is especially true in fresh produce and the food sector is the trends that more people are eating healthy foods and continue that we continue to grow.
But the Gladstone wouldn't be much if we didn't have all of these good people operating and managing it buying and leasing farm land is complex is a lot of.
You've got to be on the ground and so as a result, so if you like what we're doing please buy some stock keep eating fresh fruits and vegetables and nuts.
Now operator, if you'll come on and you can have some people ask some questions for us to try to answer.
Absolutely, ladies and gentlemen, if you would like to ask the question at this time. Please press star one on your telephone keypad, you'll hear a confirmation on the indicates your line is my question queue. You May Press Star two if you would like to remove your question from the queue from <unk>.
Participants using speaker equipment, it may be necessary to take of your handset before pressing the star keys.
Our first question is coming from the line of Nate Crossett with Aaron Berg. Please proceed with your question.
Yeah.
Hey, good morning, Thanks for taking the question.
Obviously theres a lot of deal flow towards the end of the year, maybe you can just the Q the current pipeline right now.
I know you guys don't give formal guidance, but maybe you can give us the main puts and takes that we should be thinking about for 2000 Twenty's line.
And then also on the deal flow I think you mentioned tax potential tax changes and I'm. Just curious if your ability to offer O. P units is helping you get deals.
We haven't seen too much of the O P units I think one of the small deals we have its about $3 million. They want O. P units. We've got a couple of other small ones that may go down that line, but generally speaking when you're talking about a larger transaction.
We've got one in the pipeline for about $939 million, they want cash because they want the turnaround and use that money to grow their business.
Can't answer all of those kind of questions of what's going through People's mind, but if the current administration puts in its large capital gains tax it's gonna be it'll.
It'll be very hurtful to those people, who want to sell and maybe more people will take a P units.
It's just that we finally reached the size that people would take the <unk> units because we're strong we're not going to blow away overnight and we've already weathered one of the worst downturns in the history of this country, which is still going on today. It's a we don't have our people back to work and we don't have a lot of businesses operating so.
I think we will do very well in this year of 2021.
Okay.
Yes. That's helpful. You mentioned that there was kind of a large deal on the work I mean, what should we kind of be thinking about it on.
Normalized run rate for volumes in any given year kind of given your size right now I know, it's not an easy question to answer but.
Any guidance.
We'd love to help you build your projections and you're on your computer.
Lewis is here Louis why don't you answer that you've got your projections.
So.
In the past two years, we've done $256 million of the.
Of the acquisitions each year.
We have enough on the pipeline, where we could do that but given the debt were just in February and.
Nothing is closed yet still a lot left of the year I think under we have about $150 million or so under Psa.
Obviously, no guarantee that we can close on all of those on.
Now we would we would expect to the to.
To be able to do about $200 million of that.
Acquisitions, that's kind of our internal minimum target.
Might come in lower than that just three years ago. I think we were at about 150 or so.
Maybe we'll even beat last year and the year before by the kind of too early to say, but $200 million is kind of an internal number that we pencil in.
Okay. That's helpful.
Year Guide you on funding the acquisitions chain in the land.
Three months, just given the fact that your stock has done.
Back wood.
Have a lease with land.
Could be as you probably know there are a number of the larger companies like down the street from US you've got the hotel operator and.
They have us not us back, but they have Ah.
What are they have they have of read up the street from US in fact, one of our people left and went to work for that so.
So this is Hilton there right down the street from Us and the and there is right up right up above us. So yeah. They do that I've got a study how they do that because I want to make sure. There's never any conflict of about the answers. Yes. If you got a huge purchase and your spak.
And you needed to sell off or if you're just using the spec sales of real estate, we'd certainly want the reached to pick that up and I think it would I don't know that anybody's gonna come in and.
I don't even know if we have to do that voluntarily of offer it to the world as long as we got good indications of the value for the each of the farms and we do that is you know every quarter, we're valuing our real estate. So I think internally and I know the folks at price Waterhouse have to sign on.
Off on any of the valuations, we do and read as well as we have a couple of people on the outside that are looking at it. So I know we can make sure we pay in the right amount. We just have to make sure that we don't have a conflict of any kind of.
Right right now on the acquisition side of it you know Wanna make sure that there's not a competition between the smack in land there there wouldn't be because.
Correct me, if I'm wrong here the stack would only go after a farm that was being operated that's great. That's the first the test of course and every we have conflicts because we've got four companies and they're all involved in different parts of the marketplace and so we've set up a method of review.
Doing each one of those of who's Who's Gonna take it for example, you might have a buy out that's being worked on by a by of fun and R. Lending company would like to help them. So that would mean pretty automatically that we couldn't have the couldn't have the buyout fun.
Doing it if we're going to do the lending on it. So it's it's the thing we go through every time every day Oh comes through we have a form we fill out we go through the board reviews. It every quarter of where we sent these deals so allocation of deals.
Is something that we deal with the every single quarter with our board and justifying why it went one place of the other.
Think we haven't covered.
When you have the two business development companies that operate on to the 1940 Act. The problem. There is we have to get well, how we're doing it signed off by the S. E C and we do have an agreement with the SEC that allows us to determine where it goes as well as which can invest in it so.
It is filled with bureaucracy and paperwork, but I think it's work for us for a long time and I had the same situations. When I was running another company and we had multiple fun. So it's not unusual in the fact that someone like Hilton who's right here and I'm <unk>.
Yard is doing it for their operating business, which is next door and doing it for their <unk>, which is just up the street I think we can do the same thing if we can justify the way they're doing it.
Okay, great that that that makes sense and then the last question on on the acquisition say David issue of out there competing of the marketplace of you seen new types of institutional investors come in or you're competing against kind of the same.
In a cast of characters.
I haven't seen anybody of new show up we've seen some changes in those people that are out there, but generally speaking it's the same crowd and we don't see any giant gorilla, showing up and saying I'd like to be in the in the acquisition business.
Okay perfect I appreciate the time, Okay next question.
Thank you. Our next question is coming from the cranky.
Security. Please proceed.
Okay.
Hey, Good morning, guys. On you are you expecting any large lease terminations in 2021 like we saw on early 2020.
No not expecting it of course, it could happen, but we don't see anybody that's having those kind of problems generally speaking the agricultural world has missed this big recession that we fun all our company's grinding through and we've been very lucky in that it hasn't touched us at all.
I think it's actually increase the sales of most of our agricultural goods on the grocery stores doing better because of that.
Whether it'll change now that everybody's getting a shot in their arm I don't know I think it's gonna take a while Craig before things lighten up when we get back everybody's thinking that boy when we get everybody vaccinated the world will come back together.
You're looking at of two to three year upward tick and you still have 850000 people on.
On there welfare roles for this this month. So on me. This week. So it's still a big number of claims.
And that that's very hard to put back together and it'll come back together, but just like in 2008. It took a long time to get there.
And yeah, two three years will look back at this in.
Pull out our little mask that we put on and laugh a little bit, but it'll be a while before we get there.
Got it and just thinking about your property operating expenses I know you've shifted more and more of your leasing towards Triple net you know you look to the back half of this year, it's running close to 300000, the quarters is that a pretty good.
Run rate for 2021, as you're thinking about it.
The thing Lewis is that of fair thing for them to put in his projections I think the the third and fourth quarter of pretty flat. So that that's a pretty good normalised number force going forward again last year, we had some additional.
Printing expenses to a lot of a lot of cost for the rent them.
Commercial grade generators to run from well that that hadn't been connected to the the permanent power grid yet.
The the past record of them pretty flat, we did we did and by a lot of new farms of the fourth quarter and all of the one of those leases are triple net so one one of those one of those properties will have some real estate taxes on but that shouldn't be there shouldn't be much of an increase to the the walk through I've gone away for the past two quarters.
Got it and I'd like to talk about your leasing in negotiations here on the fourth quarter of an earlier. This quarter. You go back to the 2019, you were getting pretty solid double digit increases. The rents are you know most of the 2020th factor third quarter. Some of that you know you were transitioning from you know double net to triple.
On that and maybe have the reduction of expenses, but we're seeing good double digit NOI spreads could you give us some color on on sort of what happened.
You know with the fourth quarter and an earlier in the first quarter was there anything unique to those situations of crop types to have rinse slip a bit.
So these are the the to the.
The two main leases very.
Cook Redheads were on from.
Actually the only two dry land farms that we own our portfolio out on the Colorado.
Now the those are the two weeks of the David mentioned that we change the least structure, we reduce the base rent in exchange for adding of crop share components of them. There were no crowd share components of the prior leases I think the base rate was about cut in half and and as David was saying if if the farmer has an average of good year, we should we expect to come out.
Pretty similar in the and of course and the by.
By giving by giving by giving their grow of this rent structure, which we did to help him out we are a little bit at risk. If he has a bad year will will come in lower than the war than we were of previously we won't know that until until probably queue for this year, but we did just the the the least is the only renewed them for two years. So.
After a couple of years you know if the commodity prices continue their higher trains there right now we're hopeful of being able to negotiate of beverly's here in the next couple of years on those two properties.
Okay. Thanks, that's it for me.
Any other questions.
Mister Gladstone, we have no additional questions at this time would you like to make any additional closing remarks.
Well, we appreciate everybody, calling in and giving us some good questions. Hopefully we've updated you know so you can move forward with the projections and will be out there working for you. That's the end of this conference and thank you all again.
Thank you, ladies and gentlemen of just have to sort of checks on the country. Once again, we thank you for your participation in you may disconnect you like this time.
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