Q4 2022 Gladstone Land Corp Earnings Call
Greetings and welcome to the Gladstone Land Corporation fiscal year end earnings call. At this time all participants are in a listen only mode. A brief question answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded it is now my pleasure to introduce your host.
Our president David Gladstone. Thank you David you may begin.
Well. Thank you Paul that was a nice introduction and this is David Gladstone and welcome to the quarterly conference call for Gladstone Land. This is also our year end. So you get a double barrel place and our systems are things that we're going to tell you about and thank you all for calling in today. We appreciate you taking the time to listen.
During our presentation, we always start off with Michael La County, He's our general Counsel and Secretary and he is the president of Gladstone administration. The administrator for all the Gladstone funds, Michael you're up thanks, David Good morning, everybody. Today's report May include forward looking statements under the Securities Act of 1933, the Securities Exchange Act of 19.
34, including those regarding our future performance.
These forward looking statements involve certain risks and uncertainties that are based on our current plans, we believe to be reasonable and many factors may cause our actual results to be materially different.
Future results expressed or implied by these forward looking statements, including all risk factors in our forms 10-Q, 10-K and other documents we file with the SEC find these on our website that Gladstone land Dot com, specifically, the investor's page or on the SEC's website at Www Dot said that G O V and we undertake no obligation.
To publicly update or revise any of these forward looking statements, whether as a result of new information future events or otherwise except as required by law.
Today, we will discuss <unk>, which is funds from operations <unk> is a non-GAAP accounting term defined as net income excluding the gains or losses from the sale of real estate and any impairment losses from property plus depreciation and amortization of real estate assets May also discuss core <unk>, which we generally define as <unk> adjusted for certain.
Nonrecurring revenues and expenses and adjusted <unk>, which further adjusts core <unk> for certain noncash items, such as converting GAAP rents to normalized cash rents that we believe these are better indications of our operating results and allow better comparability of our period over period performance. So please take the opportunity to visit our web.
Site once again Gladstone land Dot com.
Setup, our email notification service. So you can stay up to date on the company could also find us on Facebook keyword. There is the Gladstone companies and Twitter at Gladstone comps that today's call is an overview of our results. So we ask that you review our press release and 10-K, both issued yesterday for more detailed information and you can find them on the investor.
First page of our website with that I'll turn it back to David Gladstone.
Michael I'll start off with a brief overview of our farmland holdings. We currently own about 116000 acres on 169 farms in about 45000 acre feet of banked.
Banked water acreage foot is.
Is equal to about 327000 gallons. So that's about 14.6 billion gallons of water that we have in the ground and California, mostly.
And together, they're valued at about 1.6 billion for both the land and the water. Our farms are in 15 different states and more importantly, send 29 different growing regions.
Farms continue to be a 100% occupied and leased to about 90 different tenant farmers all of whom are unrelated to us.
And the tenants on these farms are growing about 60 different types of crops, but mostly fruits and vegetables and nuts.
Too slow paying tenants and partly due to excess supply in market for their respective crops.
Market, sometimes get oversupplied and can be slow to cure themselves, but they usually do over a certain period of time.
Slower sales so it takes a while to get there as.
As we've mentioned in the past couple of calls the acquisition activities remained slower for us and in the past as we continue to be much more selective in the type of farms, we're looking at.
Higher interest rates also impact the level of returns, we're going to able to achieve on any new acquisition.
But to that too will pass with inflation and interest rates continue to rise and the risk of recession, becoming more likely we believe it's a good time to be much more selective with our capital.
But overall, our existing farmland portfolio continues to perform pretty much as expected with the exceptions of the issues, we're having with two tenants, which led us to reverse out about a million dollars in revenue in the fourth quarter.
And so we hope to collect that in the future, but there's no guarantees on that.
But despite those issues we have another very strong quarter for you and from an operating standpoint.
Good results from our partition participation rents.
As recorded about $4 7 million in additional income during this quarter.
This resulted in a record total participation rents of about $7.7 million this year compared with about $5 2 million in 2021 so nice increase there in participation rents.
The increase was largely driven by strong yields on our pistachio farms, coupled with a continued strong demand for the crop we.
We had lower results on our arm on farms and this is due to a weaker arm on prices as the amount of ahmann market continues to be hampered by oversupply and a and exaggerated by the supply chain disruptions.
That arose during the Covid pandemic.
And so sold all over the world and quite frankly, almonds in California. He ended up all over Europe , and especially in India for example.
Finally, we continue to be able to renew all expiring leases without incurring any downtime on any of our farms. We did change up a couple of the leases structure wise.
In which we reduced our fixed base rent in exchange for increasing the crop share components, we'll see this nice wet year in California, if that was the right thing to do.
We think we're in good shape for those once the numbers come in but we'll have to wait for the year and in order for that to be proved out.
Excluding those leases, we continue to execute well.
At higher rental rates when one small acquisition during the fourth quarter of 443 acres. It's an open ground piece, we bought it for about $3 million. This grand is adjacent to the farm we already own.
Right next door and has both surface water rights in groundwater pumping rights.
So the intention is to use these water rights.
As an additional source of water for our nearby farm.
We also sell water. We also can sell water credits on our property to tenants on the other farms that are near hours for the year in the team acquired over 3000, new acres six different states for a total of $65 million.
Overall, then initial cash yield to us on these investments is about five 8%.
And the leases on these farms contain certain provisions such as participation rents that we just mentioned and we also have annual escalations.
Which if you go from one year to the next year it may be up by three or 4%.
And that should push the figures higher in the future for these farms.
On the leasing front, we renewed nine leases on the farms for different states in total knees renewals are expected to result in a decrease in annual net operating income of about 857000 from the prior leases mainly because we have moved some of those leases from fixed rates to.
Participation rents.
However, this decrease was the result of a lease amendment and we executed three of our permanent planning farms in which either reduced or fix the base rent are agreed to cover some fixed amount of our bonds operating costs.
Excluding these three leases lease renewals executed on our farms growing row crops are expected to result in an increase in net operating income of approximately $66000.
It's about a 12% increase over the prior leases.
Looking ahead, we only have one lease scheduled to expire over the next six months it makes up less than 1% of our total annualized lease revenue.
We are in discussions with a current tenant.
This farm regarding the extensions and we believe we'll be able to achieve a slight rent increase on this farm, but we arent currently expecting any downtime to occur on the result of this upcoming exploration.
A few other items to mention before we get over to Louis in the financial World.
Inflation continues to be forefront, most people's mind as well as ours. The headline inflation numbers of course are about 6.4% per year, that's much higher than.
Where you want it to be adding.
On the other hand this is a category that's going to benefit from that.
Called food at home, it's a category that was up by 11.3%. So that's way ahead of $6 four for the entire nation.
This is a category where nearly all of the crops grown on our farms falls into that category and most of our crops are sold in grocery stores. So when you go in the grocery store and you look at the produce section, that's where you'd find the products that our farmers are producing.
We believe the increase in food prices will vary substantially cover I'll cover the outpace the inflation that's going on now that should mitigate the increase in operating costs at many of our farmers are experiencing now.
Regardless regarding the recent floods in California, and that's a new one to talk about as floods in California.
You know we are always sad to hear about the devastation caused by natural disasters, especially this one in a in a California. However, all of the rain and snow brought some relief to the region that has experienced drought conditions for most of the past three years.
And you're talking about extra feet.
Of snow in the mountains that will melt this summer in and let all of the areas down below which is.
I know all of our people in California are very happy about what's going on.
As a result of the storms the snowpack levels are nearly two times their 20 year historical average most reservoirs in this state are also nearing their historical norms. In addition, there were no longer any areas in California that.
Or in the two most severe dry categories, which is the first time in three years, that's been the case.
No one is proclaiming the drought to be over of course much more rain is still needed to recharge most of the aquifers, we'd love to see the accuracy get fully recharge, we won't get that out of this rain storm, but maybe as it happens over the next couple of years, we can get there.
All of our farms are in the west have wells on them as well as those in the east and so far none of our farms have suffered water shortages due to the well to not being able to reach the aquifers. In addition, we continue to look at the opportunities to provide additional sources of water on our farms and we are constantly working on that.
State of California hasn't done all they could do in order to help us capture that water that's coming down one final note on the recent floods out west none of our songs arms suffered any extensive damage as a result of the storms. We had one farm that lost some shade structures.
<unk>, which we're protecting blueberry bushes from the wind and I'll, let adverse weather elements, but generally speaking the bushes are fine and the structures are covered by insurance. So we will just build those back.
They are forecasting rain out there all day today and for the next six days, so we're going to see a lot more water coming out there.
Finally regarding our capture of plant capital plans the offering of our series C preferred stock was terminated in December after selling about 254 million of securities over the prior three years.
Interest rates rose, leading a neat leading.
Acquisition activity was slow down it became difficult to put those proceeds to work at an effective manner. So we just pull that out in last month January 2023 we began selling our new series E preferred stock, which carries an interest rate of 5%.
Sales are beginning slow as we expected. So don't expect this to sell at the same paces series C with selling but we like having multiple sources of capital available to us. So we know a habit when we need. It. In addition, we started to using our ATM program that's at.
The market program, which allows us to keep selling common stock.
Directly to anyone who shows up once it again few months ago. The plan to continue to do so as long as the prices fixed sense for us we stopped selling that when the price dropped below 19 and are well, we'll see what happens over the next six months got a great strong company. So.
We think it'll start selling again.
I'm going to stop at this point that's enough on the operations and now I'll turn it over to our CFO Lewis Parrish to talk more about the numbers Lewis. Thank you David and good morning, everyone I'll begin by briefly going over our balance sheet.
We did not incur any new borrowings during the quarter, but we did repay about $19 million of loan during and since the fourth quarter that were scheduled to mature.
Edwin sites since the beginning of the fourth quarter and raised net proceeds of $27 million.
From sales of our series C preferred stock Abba.
$800000 from sales of our new series E preferred stock and $20 million from sales of our common stock through the ATM program.
Moving onto our operating results first I'll note that for the fourth quarter, we had net income between $1 million and net loss to common shareholders of $4 8 million or.
<unk> 14 per common share for.
For the year, we had net income of about $4 7 million and a net loss to shareholders $50 million or 43 cents per share.
On a quarter over quarter basis, adjusted <unk> for the fourth quarter was approximately $6 8 million or 19.5 cents per share and that was compared to $7 $2 million or 27 cents per share in the third quarter dividends.
Dividends declared per common share were $13.07 in both quarters.
And on an annual basis adjusted <unk> for 2022 was approximately $24 $8 million compared to $24 million 21, an increase of 22%.
<unk> per share was 71 six cents in 2026.
Six 8.1, an increase of 7%.
Dividends declared were $54 six and 2020 to $54, one and 22.
Common dividend payout ratio was about 76% of <unk> in 2022 versus 81% in 2021.
Primary driver behind the increases in <unk> was higher top line revenues, partially offset by increases in related party fees and additional financing costs.
Fixed base cash rents decreased by about $1 million or 5% on a quarter over quarter basis, and increased by about $11 million or 16% on a year over year basis.
The increase for the year was primarily driven by additional revenues earned from recent acquisitions and completed Capex projects. This increase was partially offset by the by the execution of execution of certain lease amendments through which we reduced the fixed base rent in exchange for increasing the participation rent component.
In addition, as David mentioned, we reversed about $1 million of previously recognized revenue in Q4 as a result of credit issues with two tenants.
Going forward revenue from these leases will be recognized on a cash basis until such time that full collection of their future rental payments as again deemed to be probable.
During the fourth quarter, we recorded about $4 $7 million of participation rents that compares to $3 million in the prior quarter and for the year, we had about $7 $7 million of participation rents versus $5 $2 million last year.
On a same property basis, and including participation rents are 2022 lease revenues increased by about $418000 over that of 2021.
On the expense side, excluding reimbursable expenses, and certain nonrecurring or non cash expenses, our core operating expenses increased by about $890000 on a quarter over quarter basis, and by about two and a half million dollars on a year over year basis.
Quarter over quarter total total related party fees increased by about $1.1 million and that was driven by a higher incentive fee earned by our adviser in the fourth quarter.
On a year over year basis related party fees increased by about $1.8 million. This was primarily driven by higher base management fee due to additional assets acquired.
Removing related party fees, our core operating expenses decreased by about 2% to $40000 on a quarter over quarter basis and increased by about $735000 on a year over year basis.
The increase in the annual period was primarily due to higher professional fees, particularly audit fees and appraisal costs as well as an increase in certain property tax obligations.
One final note on 2022 expenses during the third quarter, we wrote off about $800000 of deferred it unallocated costs related to the series C offering as a result of the of an amendment that reduced that offering size.
With that we'll move on to net asset value, we had 30 farms revalued during the quarter, albeit 33rd party appraisals.
Overall these farms increased in value by about $9 million or two 5% over their previous valuations from about a year ago.
So as of December 31st our portfolio was valued at approximately $1 6 billion and all of this valuation was supported by either third party appraisals or the purchase prices.
So based on these updated valuations and including the fair value of our debt and all preferred stock our net asset value per common share at December 31st with $17.08, which is up by 52 cents from last quarter.
Turning to liquidity, including availability on our lines of credit and other Undrawn notes. We currently have over to a new $200 million of dry powder and we also have over $90 million of Unpledged properties over.
Over 99, 8% of our borrowings are currently at fixed rates and on a weighted average basis. These rates are fixed at 326% for another five years.
As a result, we have experienced minimal impact from the recent increases in interest rates.
However, the rate increases do impact our ability to finance new acquisitions. It also play a factor in our decision to repay versus refinance maturing loans.
But with respect to our current debt load. We believe we are well protected against further interest rate hikes for the foreseeable future.
Regarding upcoming debt maturities, we have about $53 million coming due over the next 12 months.
About $36 million of that represents various loan maturities and the properties collateralized. These loans have increased by by both by a total of $14 million since their respective acquisitions. So we do not foresee any problems refinancing any of these loans, if we choose to do so.
So removing those maturities, we only have about $17 million of amortizing principal payments coming due over the next 12 months, that's less than 3% of our current debt outstanding.
Finally regarding our common distributions.
We recently raised our common dividend dividend again to $4 five nine cents per share per month. This march 29th time, we've raised our common dividend over the past 32 quarters, resulting in an overall increase of 53% over that period.
With that I'll turn the program back over to David.
Thank you Louis says very nicer board, it's nice when you have number good numbers to report to the market.
Continue to stay active in the market showed a good opportunity for us in itself, but as mentioned over and over as we've gone through this we're being very selective and cautious in our acquisitions.
It's a time to be careful and.
And just a few final points before we close it out and ask for some questions.
I believe that investing in farmland and growing crops that contribute to healthy lifestyles, such as fruits and vegetables and nuts.
We are following the trend that they see in the marketplace. Today overall, the van demand for prime farmland growing berries, and vegetables remains stable to strong in almost all of the areas, where our farms are located particularly along the west coast.
Including <unk>.
Farms in California, Oregon, and the state of Washington, and on the East Coast, especially in Florida, and some of the other states as we've gone up the up the coast and in the East.
And overall farmland continues to perform comparatively well to other asset classes, there's a group called knee Kris.
That run the knee Creek farmland index, which currently is made up of about $15 $3 billion worth of with the farm land in our 116 acres is included in that.
So we know that they have averaged an annual return of about 12.8% over the past 20 years per year with no negative year doing that period. This is better than both the S&P index.
And the overall REIT index, each of which had three or more negative years over that same time period versus zero for farmland.
I just wanted to mention one thing as you know, we're all publicly traded and we have no control over the stock price, but if we were a fun closed end fund with no market.
We would've had a return in terms of percentage gain of 23 point, 17% last year.
And 21.43% in 'twenty 'twenty. One these are really strong returns in the private marketplace, where there's no.
No way of selling your stock.
If our company was a fixed fund. These days, we think the institutional shareholders would be very pleased with the progress that we've made.
But please remember that purchasing stock in this company is a long term investment in farmland I think.
Investments in our stock is really two parts similar to gold lot of gold bugs around in this world today. It's hard this is a hard asset its farmland that's dirt.
It has an intrinsic value because there's a limited amount of good farm land and it's being used up by urban development, especially in California, and Florida, where we have a lot of farms and.
And unlike goal and other alternative assets, it's an active asset with cash flows coming in and we believe it's much better than a bond fund because keeps increasing the dividend and the value of the assets are going up we expect.
Pecked inflation, particularly in the food section to continue to increase and we expect values in the underlying farmland to increase as a result.
And we expect to especially be true in the fresh produce and food sector that we're in.
The trend in United States is eating more healthy foods and thank goodness, we are in the right spot for that.
As to the future I think we're gonna have income strong income during the next few years and there's one statement that you can make on that and that's because people have to eat and since we are producing food we're going to get it sold the question at what price now while I have some questions from those who follow us.
Operator, if you'll come on please and.
The listeners ask some questions.
Thank you we will now be conducting a question and answer session.
I would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star Q1 moment. Please while we poll for questions.
Okay.
Okay.
Thank you. Our first question is from Gaurav Mehta with E S.
Please proceed with your question.
Good morning.
Last question on the million dollar write off can you maybe provide some color on what drove the write off in Boston ability of collecting those rent.
She has so it's two tenants one of them is a and on grower in California, one is a blueberry grow or up in Michigan.
Each of them has.
There were three leases with each of those two tenants that led to this write off.
It was about $939000 of previously recognized revenue and.
On top of that of course, we lost about $400000 of not loss, but we didnt record $400000 of revenue that would've been recorded at the state on accrual basis.
For the arm and grower in California. This is this is one of our I guess compared to our other unintended. It's one of our smaller tenants or is on the smaller side compared to the other on our growers out there.
In addition to that they also.
On a processing plant, where they process about $30 million of rins per year, so with the weaker almond market.
They were kind of hit doubly if you will not just on the growing side, but also to.
Do the processing operations, so being there sizing getting hit on two sides like that impacted them more than it has or other unintended.
On the grower in Michigan.
So a couple of things with with this one.
From an operational standpoint, he has made good money on our farms.
However, he had a kind of a medical emergency earlier in the year. He was on in ICU for several months.
And that.
Led to a.
Slow slow we didn't put much pressure on him during that time, because because of this situation.
And he also my we think he also over extended himself in terms of just expanding as operations too quickly. So I just put them at a little cash crunch, but we're working with both of these tenants to try to get caught up with payments.
But until we have a clear path forward in both these booked revenue from both all of these leases will be recognized on a cash basis and recognize it when the cash comes in we have received a couple of payments from one of these tenants subsequent to year end. So we will have some income recognized in 2023 from these.
But right right now are we just.
You can't put a full faith in all of the future rental payments from from each of these leases.
Okay.
Second question I was hoping if you could provide some color on the cap rates that youre seeing in that position market for the farms.
Cap rates haven't changed much.
If you're not willing to let them.
Leased the ground that.
5%, 5.5% than a cap.
Cap rate they they won't release it so.
Since we're borrowing money at about that rate, it's really hard for us to justify the risk reward ratio of buying farms and then just capturing enough money to pay the cap rate on that so we're very slow right now it's gonna change grab that what happens is that.
You get this adjustment of interest rates going up and the farmers are willing to wait it out some of them won't be able to wait it out. So we will see some good opportunities as time goes on.
To take land at that rate, but it's awfully good for our shareholders.
Okay. Thank you.
We have any other questions.
Thank you. Our next question is from Rob Stevenson with Janney Montgomery Scott. Please proceed with your question.
Good morning, guys.
David are you going to need to re tenant that almond grower in California, the blueberry girl in Michigan This year.
I don't know I My guess is the almond grow will catch up.
He'll eventually sell enough almonds to pay us and so even though we put some of that money on.
Write off for a whole whatever you want to call. It. So we will get that won the blueberry Guy is we're really worried about him he's gone through a hell of a.
He had an explosion on the farm and it burnt him pretty bad. So we're hopeful that he recovers. His son is helping him now so seems to be coming back, but it's hard to know we we hate to put pressure on these farmers when they get in a situation like that because it sends the wrong.
Long message, we're really in partnership with our farmers and.
We hate to push them too hard but on the other hand, we have a lady sitting at the table with me today that collects on all of these and I'm.
I'm going to send her out to California show collected for US I just I'm just teasing now she's sitting here laughing anyway. The bottom line of it. All is these people are going to pay we've got money coming in from all of our farms with exception these and at the end of the day, we'll get this money and we'll be fine. So.
I'm not worried about that it's not it's not like a disaster bandwidth that everybody had back in 089.
Okay. Lewis what is your incremental cost of debt today. If you guys had to go out there and issue something new what are you going to pay for that and is it a line of credit or one of the farm Bureau's on a net basis that your cheapest source.
She was horse would definitely be one of the.
Farm credit associations, I mean, right now our line of credit is quite expensive and in the high sixes. So that's that's explains why we arent, making much use of that.
If we were to borrow from one of the farm credit associations on a net basis after patronage, we'd probably be in the high fives, maybe low sixes at the island.
Okay. That's helpful.
About 150 basis points higher than that okay.
And so you guys have a fairly decent amount of cash on the balance sheet, so and given the commentary about the slow acquisition environment now expected in the first half of the year. How are you guys thinking about utilizing the common ATM as well as the series E preferred in the first half of the year.
You know assuming that the stock price goes back up to a point to where you would issue a T. F. You guys still going to you know ratably issue in the first half of the year and pre fund hopefully more acquisition in the back half for you guys could have hit pause on all of that because you've got enough capital for now how are you guys thinking about that.
Well the company is in extremely good shape today, we've got money coming in from all of the rest of the farms, we only mentioned to farmers that arent doing as well. So we're in great shape to meet our dividends and go forward.
But youre right. The question has kind of be in is today I've got other people sitting around the table listening for this one.
That is what are we going to do with our cash can we buy some more farms. We've got people that are looking at good opportunities, but there's no reason to take that much risk at this point in time and our farmland partners. So we're going to we're going to be slow and using up our equity in <unk>.
I'm going to jump out there ahead of time and besides the farmers are not going to make much money, if they have to pay five or 6% rent.
Rent.
On a cap rate basis. So there is no use pushing this.
This one and saying, let's let's put the things on the books and then hopefully we can refinance them or do something with them later I'd rather play it safe at this point in time, especially since we're so strong in terms of cash flows coming in from the other farms.
That's the right answer you wanted to hear so you can ride by the stock on this one.
One last one for me David how are you guys thinking about the indoor vertical farms yesterday Realty income announced a partnership with plenty just curious as to whether indoor vertical farms or something you guys spent any time on yeah.
Yeah, No I'm well the state of Virginia is backing out one of the large strawberry growers and we're certainly interested in that but generally speaking the indoor farms have one major problem and that is if there are more than one storey high youre, giving up an enormous amount of light in.
And or Jay from the Sun and second of all there arent any even if you go with the high wattage bulbs. They just aren't strong enough to grow the way Sun does.
You could take one acre of lettuce farms in California, and and grow more lettuce than you could ever grow indoors. So for us we're watching it we have someone here in the office.
Actually sitting at the table now so he he comes out of that business is our parents were in that business of.
Building those are vertical farms, but I haven't seen any of the two story or three store I think they have even gotten some six storey ones out there grow anything other than.
Small greens those seem to work okay.
Not in the small greens business and there aren't that many restaurants that are willing to pay the price for those small grains you have some of them in there they're higher quality in terms of Cleveland. This generally speaking and so it's it's coming don't know when but will be there if it comes in we.
We are watching all of these people.
Pour money into them I don't know, Rob I don't think there's any of them that make a decent decent amount of money and the.
Glass ones are still better than the ones that are six stories tall and I think we are one day find one of those that we think is right and do it just to be in the business, but right now we're on the sidelines and not doing those.
Okay helpful. Thanks, guys I appreciate the time.
Okay, we have any other questions.
Our next question is from John <unk> with Ladenburg Thalmann. Please proceed with your question.
Good morning, Good morning, John .
No.
Maybe what's the outlook for some of the non permanent crop types in the portfolio you mentioned the positive with Aman, sorry negative with the positive with SaaS shows, but what are you seeing in terms of berries fresh vegetables other crops on the inflation front.
They are all strong and if you go to the grocery store and pick up some strawberries, you'll see how much you're paying for each of those strawberries, it's it's getting a little bit ridiculous sometimes but.
It's only a for a few months out of the year for example, Florida makes a lot of money in these months that we're in and then it turns over to California, and they start making money, we do see imports coming in from lots of different places mostly.
If there are blueberries, there coming out of that or not one of the Latin American places and strawberries are special and I would say, 90% of the strawberries are for the United States are grown in California, not to diminish the good ones that come from Florida, either they're wonderful N.
So we're seeing things in the Strawberry and lettuce, you know we have the largest cabbage farm in the world.
So eat plenty of Slaw would you please and.
It's just a wonderful business to be in right now.
And so where we're really happy with where everything's is except for a couple of guys that are a little slow on their payments.
Okay, and then on the Almond side has any of the kind of oversupply issues in that.
Crop type impacted land pricing for almond farms at all even transactions youre seeing in the market today.
Oh sure when you get an oversupply like that and the farmer can't make very much money if at all.
It really does depress when when we get our Aman farms and we put them in front of our people that are doing the valuations they pull them down in terms of what they're worth lucky.
Luckily, we're not in any of them to such an extent that it would have a big impact on us, but it's it always hurts when you have an oversupply, but that normally corrects itself.
As people go out of the business or if the product picks up again, we wish the people in India would start eating more almonds I used to eat a lot, but it's really hard to get at.
And the way, where we were blocked and trying to ship them there for a while you couldn't even get them over their much less get them Eaton.
It's it's like anything else, we're very lucky in that most of our products are not shipped outside of the United States. In fact, I'd say, maybe 80 or 90% are Eaton here, but.
But all of the ones on the ground are great.
<unk> berries are doing well, except for the one farm up north it's a it's a good business to be in right now we're not suffering the way that some other people are under this inflationary experience that we're all going through.
Okay, and then one quick detailed one.
Roughly what's the split in terms of the size of.
Do rent from the blueberry pharma versus the Alvin pharma that are on cash accounting.
I think the write off was pre.
Pretty much a 50 50 split if you look at it from terms of.
Can annualized basis, it's probably about two thirds arming grower and one third the blueberry quicker.
Okay. That's it for me. Thank you very much and John just so you know we have some farmers that want to take over those farms, we just reluctant to push somebody out and push somebody else. In however, we may have to do that and it really hurts my feelings.
Because so many of these farmers have worked so hard to make it work.
Next question please.
Thank you. Our next question is from Craig <unk> with B Riley Securities. Please proceed with your question.
Hey, good morning, guys, one blue is good.
Good morning, as we sit sort of midway through first quarter do you have any thoughts on an interest patronage that may be received here in the first quarter.
No we haven't received.
I don't know if we received any communications from farm credit.
Banks, yet it should be coming in probably later this month early next month.
I would know Reed.
We haven't received any communication however, we would expect.
The Reed refined.
And if we're talking about kind of what kind of basis point reduction to be a little bit lower than the prior two years and only reason, we say that is because I think in the past two years.
<unk> tried to give back a little bit more to help out local growers.
With the pandemic, mostly most people think of the pandemic is it's kind of a thing of the past I'm not sure if that will continue it might but that's just kind of our expectation, but we really don't have any information yet to estimate that.
Okay.
Okay, Great I think he had about.
$20 million in Capex. This year do you have any large capex projects and the budget for 'twenty three.
Well, we keep quibbling those down simply because we want to conserve cash, but most of those are related to making sure that we have.
Water for our farms. So we have a lot of that going on we're always always spending money to make our wells a little deeper or pipes that are run it from one farm to another or one source to another.
But we don't have I think the biggest one is about $7 million in it.
Yeah, I think we had we had two sizable ones that came from recent acquisitions.
One was an acquisition in.
Florida in December 'twenty, one and another one.
And your ends up in the Pacific Northwest and the state of Washington, and Oregon in July .
So were both of those two acquisitions were bought with the understanding that they were development projects, either expanding plentiful acreage or planting new two new wind vineyards and installing new irrigation infrastructure. So that was part of the original underwriting of both of those deals and we are earning additional rent on.
And both of those.
Projects and the funds are paid out by us.
How big are those.
I think one is about Florida, one was about $3 million and the other ones about two and a half or so okay.
And both of those will the farm the one in Florida is mostly complete the one in the Pacific Northwest will continue for the probably for the rest of this year and into next year as well.
Okay, Great and just one more for me.
Circling back to the receivable write downs I think earlier last year, you had a renewal where you you took lower base rent in exchange for higher participation income.
And I think you actually referenced that in your in your commentary in the press release, where any of those farms were you restructure the lease last year related to the the rent receivable write downs this quarter.
No that was a different farm in the Midwest that.
We got our crop share and came out making some money on that farm. This these these tenants hadn't gone any any restructuring of leases like that.
Okay, great. Thanks.
Paul you got any more questions.
David There are no further questions at this time Oh.
Oh Shucks, we wanted more questions.
Anyway, we thank you all for calling in and if you don't have any more questions you're going to have to wait till next quarter. That's the end of this call.
Okay.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.